Becoming Strategy-Driven: Moving Beyond the Tired Notion of 'Business Alignment'

Ronald G.  Ross
Ronald G. Ross Co-Founder & Principal, Business Rule Solutions, LLC , Executive Editor, Business Rules Journal , and Co-Chair, Building Business Capability (BBC) Read Author Bio       || Read All Articles by Ronald G. Ross

Much has been said about the importance of business alignment.  I daresay no one would argue much against it.  It's like motherhood and apple pie.  But for all the hand-waving, real questions remain.  What are you aligning?  How do you align?

Discussions of business alignment generally center on aligning IT with the business.  But shouldn't that be a given?!  Methodologists recommend having lots of touch points in your IT development approach and creating and maintaining good interpersonal relationships.  But does that ensure good business practices — or just good GUIs?  And why just IT?  Aren't there other kinds of projects in the business?

I think it's time we put aside the tired notion of IT alignment.  In its place, we should focus on engineering real business solutions to real business problems based on deliberately structured business strategy.  Our approach should work exactly the same whether the business solution involves comprehensive automation, just partial automation — or none at all.  We should be aligning business solutions with business strategy, not simply IT with the business.

Principle #1.  Align business solutions with business strategy — not simply IT with the business.

  • There other kinds of projects in the business besides IT.

  • The approach should work exactly the same whether the business solution involves comprehensive automation, just partial automation — or none at all.

In short, if you want your business and IT architectures both to become smarter (and who doesn't these days?!), your approach to solution engineering should become strategy-driven.  What does that mean in practice?  Here's what it means to me.

Definition of Strategy-Driven:  Having a consistent ability in any set of circumstances to make a timely decision that, given all that you then know, is most likely to be optimal for the organization as a whole.

Timeframes and Scope

Before explaining further, we need to consider timeframes and scope and some misconceptions about them.  When you hear "strategy" or "strategic", there's a natural tendency to think longer term, rather than shorter term.  And to think more broadly (e.g., some entire line of business or the enterprise as a whole), rather than more locally (e.g., some particular business process or business capacity[1]).  Hence, what is "strategic" is generally differentiated from what is "tactical" and "operational".

It does not follow, however, that strategy is irrelevant at shorter timeframes or more narrow scopes.  Indeed, becoming strategy-driven requires coordinated engineering of business solutions at each level of timeframe and scope.  It makes no more sense to have strategy and not align activities with shorter timeframes or more narrow scope with that strategy, than to operate minute-to-minute and month-to-month with no strategy at all.

Principle #2.  Strategy applies at each level of timeframe and scope.

  • Strategy applies for medium-term and short-term timeframes as well as for the long term.

  • Strategy applies locally as well as broadly.

Let's take a closer look.  Table 1 outlines each of the three focal points of a strategy-driven approach.[2]

Table 1.  The Three Focal Points of a Strategy-Driven Approach

Focal Points

Timeframe

Scope

Typical Concerns

Alignment Issue

business planning decisions — Enterprise Strategy

1+ year

whole enterprise or LOB

  • Do we enter this market or that one?

  • Do we build this new production capacity, or purchase a company that already has it?

  • Do we price our goods as a commodity or as a specialty?

business capacity planning decisions — Business Capacity Strategy

1 - 18 months

business process or set of operational decisions

  • Do we re-engineer this business process this way or that way?

  • Do we envision these operational risks as very serious, or less so?

  • Do we establish these business policies, or those?

consistency with enterprise goals & business policies

operational business decisions

immediate

one particular operational business decision

  • How do we best price this purchase of this product by this customer at this point in time?

  • What's the best resource to assign this request right now?

  • Do we suspect fraud on this transaction happening right now?

policy performance measured against  Business Capacity Strategy

Several points stand out from this analysis.

  • First, a well-thought out strategy — or more accurately, strategies — are appropriate at each of the first two levels, not just the first.  Indeed, in terms of the work that most business analysts do, developing strategies at the second level (for business capacities) is probably more directly relevant than the first.[3]  By the way, contrary to what you might think, developing a Business Capacity Strategy does not take a lot of time — if you have the right approach[4] and the right people in the room.

  • Second, alignment should occur (must occur) for the second level with respect to the first, and the third level with respect to the second.  However, the kind of alignment in these two cases is naturally different.

  • Third, the kind of alignment appropriate for the third level involves the performance of operational decisioning, not the performance of business processes per se.  There is widespread confusion on this point.  When many experts talk about the performance of business processes they may or may not also mean the performance of operational decisioning with respect to business goals, risks, and policies (i.e., strategy).  Even when they do also mean that, unfortunately they seldom say it very clearly.

Principle #3.  To align at the operational level, look at the performance of operational decisioning, not of business processes per se.

  • You should monitor around business policies.
  • You should measure with respect to business goals and risks (i.e., strategy).

Structured Strategy

To clear up this confusion, let's examine the notion of strategy more carefully.  Is a strategy something you can see and touch?  Does it have form and texture?  You may have noticed earlier that I used the words deliberately structured in conjunction with strategy.  Can a strategy really have deliberate structure?

Absolutely!  In fact, there is even a standard now for it.[5]   Strategy is definitely something you can model.

By the way, a model of a strategy looks nothing whatsoever like a model of a process.  The latter focuses on transforms (tasks) and inputs and outputs.  The former focuses on ends and means — that is on goals and objectives, and tactics and business policies, respectively.  It also focuses on how you arrived at those particular ends and means in the first place[6] — in particular, risks.  These are not the kinds of things you should see in a process model.

Principle #4.  Strategy has structure.

  • Strategy can be modeled.
  • The structure of Strategy is based on ends and means.

Lest there be any doubt in your mind, becoming strategy-driven in no way diminishes the importance of business process models.  Nothing gets done in a company (or at least done very well) without well-organized processes.  Of course they should be modeled!  Processes produce the actual value add and puts it into the hands of customers.

But processes alone simply aren't enough.  With processes you can streamline workflow, but not respond intelligently to emerging risks and opportunities.  You can measure throughput and identify bottlenecks, but not assess whether your business policies are actually effective in achieving the results management wants.  You can standardize work for large numbers of people doing repetitive work, but not fine-tune the results of minute-to-minute decision-making.

What business process models lack is a direct connection to a key ingredient in any business strategy — business policies.  What are business policies?  Think about them as business rules in the making.  Business policies usually require additional clarification (read 'disambiguation') before they become fully practicable.[7]

More importantly for this discussion, business policies provide criteria for making optimal decisions during actual minute-to-minute business operations, often in highly risky or sensitive matters.  The point is that becoming strategy-driven ties directly to enterprise decision management (EDM).  As Raden and Taylor say in their ground-breaking book Smart Enough Systems,[8]  "All [operational business] decisions must be driven by your strategy if you are to deliver effectively on that strategy."

Principle #5.  Becoming strategy-driven requires business rules and decisioning.

  • Business policies are business rules in-the-making.
  • Business policies provide criteria for making optimal decisions during actual minute-to-minute business operations, often in highly risky or sensitive matters.

Measurement

How do you demonstrate business alignment?   Like many, I believe it's something you must be able to measure.  In other words, to prove you have business alignment you must measure the business performance of actual business operations.

In recent years, much discussion in this regard has centered on business activity modeling (BAM).  Frankly I find much of this discussion clouded by a narrow focus on business processes.  Measuring the effectiveness of business processes is simply not the same thing as measuring the effectiveness of a strategy.

Where can we look for greater clarity?  Roger Burlton has famously said, "The really rapid change is in the rules, not in the processes.  If you separate the rules, you can develop remarkably stable processes."

I think that hits the nail on the head.  With business processes, the focus is on the stability of how you operate; in strategy the focus is on rapid response and the capacity (or necessity) to evolve (read "change") your decisions as quickly as possible.  With strategy you need to measure the dynamic aspects of operational business activity.  These are very different animals.  Appropriate separation of concerns is presented in Table 2.

Principle #6.  Strategy-driven measures of business performance are about the capacity to change.

  • Business agility requires the capacity to change operational decisions quickly.
  • Changing operational decisions quickly requires business rules.

Table 2.  Process-Driven vs. Strategy-Driven Measures of Business Performance

Process Activity Monitoring (PAM)
… Based on Process Management

Change Activity Monitoring (CAM)
… Based on Decision Management

  • Throughput

  • Status of work in progress

  • Average, maximum and minimum elapsed time between events

  • Percent of work following exception path

  • Percent of work requiring manual intervention

  • Delays and waste by task

  • Queue volumes

  • Bottlenecks and resource load comparisons

  • Task performance speed by worker

  • Rate of work product defects

 

  • Achievement of business goals and objectives

  • Policy performance

  • Emerging business threats and opportunities

  • Actor activity near the thresholds of risk

  • Violation rates and potential patterns of fraud

  • Out-of-tolerance conditions

  • Rare circumstances (unmodeled scenarios)

  • Relative effectiveness of sanctions

  • Breakdowns in encoded decision logic

  • Rate of new product/service roll-out

  • Point-of-knowledge learning curves

The bottom-line is this.  To achieve business alignment you must become strategy-driven.  To be strategy-driven you must be able to respond dynamically and effectively to change.  To respond dynamically and effectively to change you need business rules and enterprise decision management (EDM).  It's really as simple as 1-2-3.

References

[1]  Business capacity is a term that Business Rule Solutions (BRS) uses to refer to some area of business capabilities that represents substantially less than the whole enterprise, but still encompasses significant business activity.  A business capacity often, but not always, corresponds to a complete business process.  In other cases, it might pertain to a complex set of operational decisions the company must perform on a continual basis.  return to article

[2]  BRS's methodology, Proteus, identifies an additional area of strategy concern pertaining more directly to automation.  This additional area arises in developing IT requirements as follows.  The strategy developed for engineering a business solution for a business capacity (i.e., a Business Capacity Strategy) is an initial step in developing a more complete business model with business people and business analysts.  Assuming significant automation, the key elements of this business model must be analyzed to determine what implications they hold for system development.  The distillation of these implications into a structured form embodies a System Solution Strategy, which is used to kick-off more traditional IT requirements development.  return to article

[3]  The seminal piece on using strategy as part of business modeling for re-engineering business processes and business capacities was written in 1998 by Gladys S.W. Lam, Co-Founder and Principal of BRS.  Refer to "Business Knowledge -- Packaged in a Policy Charter," DataToKnowledge Newsletter, Vol. 26, No. 3 (May/June 1998), URL: http://www.BRCommunity.com/a1998/a385.html.  Deliberately-structured strategy that is truly business-oriented rather than project-oriented is notoriously missing in most IT methodologies still today.  return to article

[4]  The focus must be on envisioning the day-to-day 'to-be' business and the risks associated with its on-going operation.  It has nothing to do with project strategy, business case, cost-benefit analysis, etc.  return to article

[5]  The Object Management Group (OMG) released a finalized version of the standard in September, 2007.  The standard was originally produced by the Business Rules Group (BRG) as "The Business Motivation Model:  Business Governance in a Volatile World" and is available free on www.BusinessRulesGroup.org.  For the OMG's UML version, see: http://www.omg.org/technology/documents/br_pm_spec_catalog.htm.  return to article

[6]  In the Business Motivation Model, these are called Assessments.  return to article

[7]  Practicable is an SBVR term.  The test for whether a rule is practicable is this:  Given a rule and a business situation where the rule applies, could a person (worker) who knows about the rule and who understands the associated vocabulary (important!) decide directly whether or not the business was in compliance?  return to article

[8]  Smart (Enough) Systems, by James Taylor & Neil Raden, Prentice-Hall, 2007, p. 12.  return to article

# # #

Standard citation for this article:


citations icon
Ronald G. Ross , "Becoming Strategy-Driven: Moving Beyond the Tired Notion of 'Business Alignment' " Business Rules Journal Vol. 9, No. 12, (Dec. 2008)
URL: http://www.brcommunity.com/a2008/b452.html

About our Contributor:


Ronald  G. Ross
Ronald G. Ross Co-Founder & Principal, Business Rule Solutions, LLC , Executive Editor, Business Rules Journal , and Co-Chair, Building Business Capability (BBC)

Ronald G. Ross is Principal and Co-Founder of Business Rule Solutions, LLC, where he actively develops and applies the IPSpeak methodology including RuleSpeak®, DecisionSpeak and TableSpeak.

Ron is recognized internationally as the "father of business rules." He is the author of ten professional books including the groundbreaking first book on business rules The Business Rule Book in 1994. His newest are:


Ron serves as Executive Editor of BRCommunity.com and its flagship publication, Business Rules Journal. He is a sought-after speaker at conferences world-wide. More than 50,000 people have heard him speak; many more have attended his seminars and read his books.

Ron has served as Chair of the annual International Business Rules & Decisions Forum conference since 1997., now part of the Building Business Capability (BBC) conference where he serves as Co-Chair. He was a charter member of the Business Rules Group (BRG) in the 1980s, and an editor of its Business Motivation Model (BMM) standard and the Business Rules Manifesto. He is active in OMG standards development, with core involvement in SBVR.

Ron holds a BA from Rice University and an MS in information science from Illinois Institute of Technology. Find Ron's blog on http://www.brsolutions.com/category/blog/. For more information about Ron visit www.RonRoss.info. Tweets: @Ronald_G_Ross

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