The Holistic Business Model - Strategy Management Processes

In the previous Blog I developed an overview diagram of a Consumer Products Business Entity Model. In the next three BLOGs we will develop this further for the three categories of Processes starting with the Strategic Management Processes.

Process Objectives

1. Provide clear strategic direction to the business
2. Determine strategic objectives (e.g., profitability/market growth)
3. Identify and allocate resources necessary to execute business strategy
4. Measure business performance against strategic objectives
5. Promote culture of continuous change/improvement
6. Maximise market value of the business

Critical Success Factors (CSF’s)

1. Creating and sustaining an appealing proposition to target customer/markets (1,2)
2. Maximise stakeholder value (4,6)
3. Successful  management change (3,4,5)
4. Maximise return on capital (4,6)
5. Adequate resource management processes (3)

Note: the numbers in the brackets correspond to the Objective Number(s)

Key Performance Indicators (KPI’s) Linked to CSF’s

• Market share; customer surveys (A)
• Share price; employee surveys; analyst ratings (B)
• Percent completion  to schedule; improvement in affected process KPI’s (C)
• Return on equity; return on assets (D)
• Satisfaction surveys of internal customers (E)

Note: the letters in the brackets correspond to the CSF’s

Inputs

Economic factors Markets Historical performance Competitor research

Consumers Substitutes Stakeholders Management/ employees

Suppliers Prior business plans Legislation Political influences Technology

Key Activities\

Outputs

Mission statement Strategic objectives Organisational structure Policies Customer needs identified Target markets identified

Risks and sensitivities Financial projections Clear allocation of responsibilities Capital requirements Human resource/needs

Training programmes Performance reviews Competitive position statement Business plan Communications strategy

Systems

Budgeting/forecasting Executive information systems

Competitor database Project management system

Human resource management system

Classes of Transactions

Routine

Non-Routine Merger and acquisition costs Non-routine investments (e.g. capital expenditure) Third-party training contracts Executive compensation contracts Divestitures

Accounting Estimates Write-off of existing assets Provision for future costs Recognition of intangible assets

Risks Which Threaten Objectives

1. Poor communication of strategy and implementation (1,2,4)
2. Poor operating capabilities/lack of appropriate resources (3,6)
3. Inadequate coordination between resource management and core business processes (1,3)
4. Missed opportunities/unforeseen threats (new competitors)/changing customer needs (5,6)
5. Loss of focus or inability to foster change (4,5)

Note: the numbers in the brackets correspond to the Objective Number(s)

Management Responses Linked to Risks

• Formal board approval of strategy and establishment of targets and objectives through the organization to support its delivery (A)
• Competitive benchmarking, customer surveys and performance evaluation (B,D)
• Regular board review of performance against strategic plan using balanced scorecard approach (C,E)
• Monitoring and responding to external forces (D)
• Planned performance reviews; disciplined management change process (C,E)

Note: the letters in the brackets correspond to the Risks Which Threaten Objectives

Risks Which Threaten Objectives

Unclear direction Lack of employee involvement

Undefined responsibilities Consistent failure to introduce new products/lines

Weak market position Poor financial results

Performance Improvement Observations

More rigorous planning and communication Visioning or needs assessment analyses

Introduce performance management systems Balanced scorecard

Merger and acquisition assistance More detailed market and competitor research to identify improvement opportunities

The above format is a standard template that is used with all Process Types and Categories within the Holistic Business Model.

The Strategy Management Processes establishes how the business model will be executed and the expected results achieved. It takes into account the Business Process Decomposition and Activity Monitoring along with the methods used to assure Continuous Performance Improvement. It also provides a means by which the Processes are allocated and responsibilities assigned within an organisation.

Business Process Levels

I tend to categorise processes based on the APQC’s Process Classification Framework. This enables me build a hierarchy of processes by decomposing them as per the above diagram and provide a means to monitor activities and assess the impact business process improvements.

Business Process Type

This relates to the three main types of Processes denied within the Holistic Business Model i.e. Strategy Management Processes, Core Operational Processes, Functional Processes

Process Categories

Represents the highest level of process in the enterprise as defined in the Value Chain, such as Manage customer service, Supply chain, Financial organisation, and Human resources.

Process Groups

Indicates the next level of processes and represents a group of processes. Perform after sales repairs, Procurement, Accounts payable, Recruit/source, and Develop sales strategy are examples of process groups.

Processes

A series of interrelated activities that convert inputs into results (outputs); processes consume resources and require standards for repeatable performance; and processes respond to control systems that direct the quality, rate, and cost of performance.

Process Elements (Activities)

Indicates key events performed when executing a process. Examples of activities include Receive customer requests, Resolve customer complaints, and Negotiate purchasing contracts.