Business Rules vs. Business Strategy            

Gladys S.W.  Lam
Gladys S.W. Lam Co-Founder & Principal, Business Rule Solutions, LLC , Publisher, Business Rules Journal and Executive Director, Building Business Capability (BBC) Read Author Bio       || Read All Articles by Gladys S.W. Lam

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If you've read my past few columns, you've seen me mention strategy as part of what I refer to as business knowledge. What you're probably wondering is: how do business rules and strategy relate? One of the ways to implement business strategy is through business policies. Business policies should be looked at as a "higher order" of business rules. Let's take a look at a real-life example.

The Importance of Simplifying Your Business Rules

Recently, we worked with a major financial institution where they found they took too long to adjudicate a mortgage application. A quick root cause analysis showed that their evaluation criteria for adjudicating a mortgage were too complex. Their automated system had to kick out over 50% of the applications for manual adjudication. This resulted in long adjudication times and inconsistent results.

Their strategy to stay competitive was to simplify their evaluation criteria. Those evaluation criteria are, of course, rules. Some of you might know that mortgage is adjudicated based on the 'five Cs'. Those 'five Cs' are:

Character — whether you were involved in fraudulent or criminal activities, terrorism, etc.

Credit — whether you have good credit scores

Capital — whether you have sufficient down payment

Capacity — whether you have the capacity to make payment

Collateral — whether the property has stable value

This particular financial institution found that they were taking too long to evaluate mortgage applications because it was looking at each one of these Cs in detail, each C with its own set of complex rules. During the strategy discussion session, one of the questions raised was whether they really NEEDED to evaluate each one of the Cs.

An intense discussion was centered around 'Collateral'. The final conclusion was that if there were enough collateral for the mortgage, then the financial institution was not going to lose money if the applicant stopped paying. With that in mind, they reassessed the policies around the 5Cs and simplified the rules around all the other 4Cs except for Collateral. This enabled easier and much more accurate automation of the rules, which meant much less manual adjudication. The final outcome was that the financial institution was able to provide mortgage decisions much more quickly and more consistently across its branches.

So there you have it: Rethinking your strategy, revising your policies, and refining your rules can be key to helping you stay competitive.

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Standard citation for this article:

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Gladys S.W. Lam, "Business Rules vs. Business Strategy            " Business Rules Journal, Vol. 21, No. 04, (Apr. 2020)

About our Contributor:

Gladys  S.W. Lam
Gladys S.W. Lam Co-Founder & Principal, Business Rule Solutions, LLC , Publisher, Business Rules Journal and Executive Director, Building Business Capability (BBC)

Gladys S.W. Lam is a world-renowned authority on applied business rule techniques. She is Principal and Co-Founder of Business Rule Solutions, LLC (, the most recognized company world-wide for business rules and decision analysis. BRS provides methodology, publications, consulting services, and training. Ms. Lam is Co-Creator of IPSpeak, the BRS methodology including RuleSpeak®, DecisionSpeak and TableSpeak. She is Co-Founder of, a vertical community for professionals and home of Business Rules Journal. She co-authored Building Business Solutions, an IIBA® sponsored handbook on business analysis with business rules.

Ms. Lam is widely known for her lively, pragmatic style. She speaks internationally at conferences, public seminars and other professional events. She is also Executive Director of Building Business Capability (BBC) Conference, which includes the Business Rules & Decisions Forum and the Business Analysis Forum.

Ms. Lam is a world-renowned expert on business project management, having managed numerous projects that focus on the large-scale capture, analysis and management of business rules. She advises senior management of large companies on organizational issues and on business solutions to business problems. She has extensive experience in related areas, including BPM, structured business strategy, and managing and implementing information systems.

Ms. Lam is most recognized for her ability to identify the source of business issues, and for her effectiveness in developing pragmatic approaches to resolve them. She has gained a world-class reputation for fostering positive professional relationships with principals and support staff in projects. Ms. Lam graduated from the University of British Columbia with a B.S. in Computer Science.

Read All Articles by Gladys S.W. Lam

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