Saturday, March 15, 2014

How to Connect the Dots between Business Strategy and Process

Without process, strategy is a mirage; without strategy, process is in darkness. 

It's a common misconception that 'strategy' applies only to strategic business initiatives and longer-term direction (Strategic Business Plans). The elements of strategy (business goals, business risks, etc.) can and should be applied to business problems of virtually any scope and any time frame. What are the ends you are trying to achieve, and what are the means such as processes you will use to achieve those ends?

How do strategy and business process relate? Business process should actually be born out of a strategy, sometimes strategies are more or less taken up like a project, with temporary objectives. But long term operations, such as a processes for customer services, when applied strategically saves much cost, allows you to become more competitive to achieve business goals.

The elements of strategy can be used to guide and evaluate development of business processes. In that way, you get independent checks and balances for the overall business solution you are trying to develop. Many times, people in organization follow processes mindlessly, at times just because it becomes a need. How can you develop the best or most appropriate business process if you don't know the strategy (business goals at all) for solving the business problem? Therefore, it is important for a clear set of objectives, planning, communication and training goes in a proper systems or process implementation, further on, the expected outcome happens over a period of time. 

 Process is key component to implement strategy. Business strategy relates to the high level definition of an organization’s vision, objectives and the key initiatives that are required to pursue those objectives given a particular starting point. Processes define how basic and routine functions are executed consistently across the organization to implement strategy. Processes are operational. Clearly, any existing business function that is in conflict with a new approved strategy is an issue, and the processes associated with that function are therefore problematic. Similarly, a new strategic initiative that involves the development of new business functions will require the definition of processes associated with those business functions.

An agile and smart process should be rigorous to adapt to the changes. Changes in strategy are reflected in business policies. Changes in business policies are reflected in changes to business rules. The business rules should be externalized from the business processes. An agile or smart process is rigorous to adapt to the changes; it can handle ad-hoc and exceptional matter smoothly. A business process is "smart" when it accommodates controlled excursions away from what would otherwise be a rigid sequence of steps. A smart process follows process management principles, but encourages innovation as well. .

The right set of metrics can demonstrate how well the process does for executing business strategy. Business needs to define metrics to know if the process is actually working or working for their best interests (business goals or strategies). The metrics of process shall reflect the business outcome management care about. Like most other aspects of business, business processes must integrate with and support the final outcome to produce a product or service and generate revenue. To fully optimize these processes, a business must establish KPIs and use business intelligence tools like balanced scorecards and forecasting, predictive analysis, 'what if' analysis and sensitivity analysis to determine how changes to a process might negatively or positively affect the business, and how to optimize it for improving performance..

Process underpins business capability, and capability underpins business strategy, thus, process thinking needs to be a type of strategic thinking, holistic, end to end and with strong focus on business goals set by strategy.


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