Process strategy is about putting your business strategy into action. It is the answer to the question which processes your business should operate and how it should configure these processes as an overall system to effectively take on its strategic position and execute on the formulated strategy. Your process strategy is a process view of your operations strategy.
What is Process Strategy?
Your process strategy should provide clarity on the following aspects:
- Which core and support processes should the company run and how should these work together as a system
- What is the degree of effectiveness versus efficiency of each process and how will this be measured
- The intended level of process maturity of each process
- The degree of automation (none, rule driven, AI)
- Use of off-the-shelf versus custom IT systems
- Prioritisation and type of investment in tangible and intangible resources (assets and potentials)
The deliverables that code your process strategy include the following (I will elaborate on the individual deliverables in future blog-posts):
|Process map||Shows your core and support processes augmented with information on e.g. competences, IT system strategy, automation.|
|Process-relationship diagram||Shows how your core and process|
|Customer-interaction diagram||Visualises the customer experience by showing your core processes interact with customer processes – particularly useful for service or customer-experience focused organisations and usually based on a Kano-analysis|
|Process-objective matrix||Details the KPIs and objectives in the ‘Process’ dimension of your strategy map or BSC|
|Resource & Potentials Objectives||Detail the KPIs and objectives in the ‘Potentials’ dimension of your strategy map or BSC|
|Implementation Programm||The projects and investments required to transition from the as-is to the to-be state|
As with all strategic analysis there is a time-dimension of where the organisation is now and where it intends to be in future, so it will be useful to have either separate versions of the deliverables comparing the current and the future intended state or a single version indicating both views.
How-To Design Your Process Strategy
Process strategy formulation builds on your business strategy. Typical deliverables of a business strategy formulation are, for example, a STEEPL analysis, an industry analysis, identification of key success factors, internal resource analysis, a SWOT and so on. The approach proposed here builds on a review of such artefacts to deduct the implications for your process strategy. If you do not have these ready, some preparation would be worthwhile.
In this post we will deduct our process strategy from our business strategy. But be aware that this is a two-way street as the capabilities you have or are able to build may well inform your business strategy.
The basic steps to design your process strategy are listed here. I will add some diagrams to visualise the key deliverables at a later stage:
- Process Map
- Review your STEEPL analysis to understand any constraints which processes you can run, must run, how you can run them, which you can outsource etc.
- Review your vision and mission statements, your strategic position and focus and the critical success factors to identify which core and support processes you need to run
- Review your SWOT analysis and your core, distinctive and dynamic competences to identify which process drive these and give these a visual ‘competence marker‘
- Don’t finalise the process map yet, this will be refined during the rest of the process
- Customer-interaction diagram
- This step is relevant for service or customer-focussed organisations (for organisations focussing on operational or product excellence this is optional and can be done at a later stage)
- Map your customer’s processes
- Map your processes that interact directly with the customer against the customer processes and define the input-output relationships
- Review or run a KANO analysis to identify which interactions you need to excel on and add a visual ‘customer performance marker’ on those processes
- Process-relationship diagram
- Map out the input-output relationships between the core processes you have identified
- Build a system of processes that clearly reflect your strategic position, strengthen your competences and is difficult to imitate – this is the most difficult step in the process and needs some deep thinking and clear trade-offs to create a unique and sustainable position for your organisation
- Benchmark your process map and process relationship map against your competitors or an industry standard – if you are too similiar, then you do not have a unique position and will end up competing on price – in this case go back to the previous point and drive for a unique position
- Mark processes that drive your unique position with a ‘position marker‘
- Check your ‘competence markers‘ whether they help drive your position and revise if needed
- Refine and finalise your process map based on the insights you have gained
- Define your digitisation and IT strategy for each process and add a ‘digitisation marker‘ (i.e. manual, standard ERP, custom, AI …)
- Define the level of process maturity you want to achieve for each process and add a ‘maturity marker‘ (e.g. from 1 to 5)
- Process-objective matrix
- List your strategic objectives
- Add objectives related to competences, customer interactions, position and process output
- Create a matrix that maps the processes to the objectives
- Add the objectives regarding output and customer interactions to the ‘process’ dimension of your balanced scorecard (BSC)
- Objectives for resources and potentials
- Define which tangible (assets, machinery, infrastructure etc.) and intangible (knowledge, skills, networks, brand etc.) you require to drive your processes efficiently and effectively
- Where these assets are provided by a support process add these to the process-objective matrix
- Where a project is required to provide the resource submit a project charter
- Implementation programme
- Where objectives can be attained by incremental changes within the resources of the line organisation, assign objectives to teams and departments
- For larger changes create a programme to be submitted to the PMO
Interpreting Your Business Strategy Deliverables
How well this process runs will depend on the quality of your business strategy formulation and the depth of your analysis. If this is done as a mechanical exercise that you get done with so you can get back to real work, the chances are high that your strategy will not address the real strategic issues and does not give you a competitive advantage.
Much has been written elsewhere on effective strategy formulation, here I give some simple guidance to the analysis of your business strategy:
|Area of assessment||Examples and comments|
|STEEPL||Authorities may regulate the design and execution of certain processes for compliance or safety reasons. The EU prescribes how customs process run or which sanctions checks need to be done for exports. In Brazil invoices must be validated before goods receipt and imports must be outsourced to approved brokers.|
|Critical success factors||Superior customer service, competitive cost or automated production are examples of critical success factors that are driven by processes and need to be addressed in the process design. Location of facilities would not be process related.|
|Strategic goals and priorities||If the strategic priority is market growth then processes related to marketing and customer relationships will carry high importance. If the strategy is technology leadership then innovation and R&D will carry more importance.|
|Strategic focus||According to Treacy and Wiersema (1992) companies need to suffice in all of the following areas but should focus on excelling in one of them: Customer intimacy, product or operational excellence. If the focus is on customer intimacy then customer relationship and experience processes will need to be designed comprehensively. This primarily relates to core processes that flow directly to the customer and not necessarily to support processes which can focus on efficiency. In case of a product focus the value chain will focus on production related processes.|
|Degree of vertical and horizontal integration||Textile merchants designing and producing their own label would be an example of vertical integration. This can influence the scope to be considered for BPM. If the textile merchant acquires or partners with another company in the same segment of the value chain this would be horizontal integration. This will require a choice to what degree the processes should be standardized.|
|Product strategy focus on service or product||Services are delivered as processes which need to be designed as interaction between the provider and the customer. In case of products, the production processes are usually executed without customer interaction, but products are always augmented by services such as sales, delivery, design or maintenance.|
|Analyse stakeholders for implications on process||Strategic stakeholders such NGOs or local vicinity may influence process design such as the need to reduce noise or purchase from local suppliers.|
Process Strategy Implementation
The focus of this blog-post is process strategy formulation and we take a closer look at implementation when we talk more about the role of Project Management Office and the strategic positioning of continuous improvement.
For now the a quick summary:
- Larger changes needed to realise your process strategy are submitted as projects and tracked within the PMO structure (examples are process re-engineering, infrastructure investments or a major organisational change).
- Progressive changes are managed by setting objectives for daily operations and implemented via continuous improvement measures.
Logically, for this to work, your organisation will need to have a working PMO structure and continuous improvement systems setup, as well as a clear distinction of what is a project and what is a continuous improvement measure.
Porter, M. (1996) What is Strategy? in Harvard Business Review https://hbr.org/1996/11/what-is-strategy (retrieved on 22.11.2020 11:07)
Treacy, M. and Wiersema, F., (1992) Customer Intimacy and other Value Disciplines in Harvard Business Review http://thecustomerconnection.nl/docs/member94427/Customer%20Intimacy%20and%20other%20value%20disciplines%20(Treacy%20&%20Wiersma).pdf (retrieved on 22.11.20 221:20)