Benchmarking Strategic Processes- Valutrics

It is in establishing strategy that an organization creates the distinctions that drive its competitiveness. The process for strategic planning engages an entire organization at all three levels of its functionality; however, what is unique in this planning process is the
set of questions asked and the performance areas that are assessed at each level of the organization. Thus, the benchmarking process will engage strategic planning in different ways at different levels:

• • Enterprise Level: At the highest level of the organization, the process of strategic benchmarking seeks to learn about factors that could influence the trajectory of its profitable growth. This level of investigation seeks to discover disturbances in the environment (such as disruptive technology, political unrest, economic uncertainty, commercial unrest, etc.) that represent a risk of continuity to the sustained performance of the organization (e.g., changes in its critical business assumptions). Such changes could mark an inflection point in the function for diffusion of its products into the commercial market. Anticipation of such change permits greater responsiveness to the market changes.

• • Business Level:At the business level of the organization, management must be aware of the threats and opportunities that are offered by shifts in the competitive markets, and the strategic benchmarking process must provide imaginative studies that support the continuing viability of the organization’s product line strategies. At this level of investigation, the focus is on discovering disturbances in the appropriate competitive dimensions, as defined using Porter’s competition model. Distinctions observed in a study at this level must be addressed by examining how reallocation of the resources and efforts of the organization should be prioritized.

• • Operations Level: At the grassroots of the organization, the strategic choice is focused on choosing the best implementation strategy for realizing the changes that have been identified at the upper levels of the organization. Here concreteness in specification of the change is essential, and the strategic benchmarking studies at the higher level will give way to the operational benchmarking studies that are essential for gaining the detailed knowledge of best practice that is required for designing appropriate process improvements.

How does this operate in the context of an overall strategic planning process? Consider the model that was presented in Strategic Benchmarking.

This model for strategic planning begins by understanding the environment—the activity the enterprise level performs to define the business case and the organization’s purpose. The head-to-head competitor analysis depicted in this flow chart describes the analysis that occurs at the business level of the organization. At this level, it is essential to make detailed observations of the developments of your competitors, related technology fields, and the expectations of your targeted markets in order to determine how to deliver on the expectations of your investors. At the operations level of benchmarking, focus is on developing a creative understanding of how business process change could be implemented in a way that yields an advantage over the way competitors work. Gaining such an incremental advantage at each level of the organization can result in optimizing processes in a way that can be described using a strategy called the Boyd Cycle.

The Boyd Cycle focuses on achieving efficiency over an adversary’s
decision-making process by observing, analyzing, making, and executing choices faster than competitors are able to do so. This is important because the competitor who acts fastest most often wins! How does this work? Business competition takes place under conditions of a real-time competitive rivalry. Thus, success depends on an ability to introduce a series of innovations at a faster rate than your opponent. Faster learning and action means more time for analysis, discovery, and adaptation of this learning. Moving slow means less time, and you become reactive, falling behind the competition.

The Boyd Cycle encourages accelerated competitive activities and
management of their impact through a series of systematic, repeatable processes that moves strategic planning from a once-a-year event into part of an organization’s continuous innovation process. If a rival in a head-to-head competition can consistently operate its strategy cycle faster than others, then it will gain the competitive advantage. This means that it is operating inside the opponent’s decision loop—acting quickly to out-think and outmaneuver the competition. By the time a slower adversary reacts, the faster one is doing something different, and its adversary’s action becomes ineffective as it addresses what was happening in the past
rather than anticipating the future. With each cycle of progress, the
slower party’s action becomes more ineffective by a larger margin.

This rapid action appears ambiguous to an opponent and generates confusion and disorder in its thinking. The aggregate effect of this rapid, incremental improvement is to disorient the planning capability of opponents.
Because strategy is intended to improve our ability to shape and adapt to unfolding events, it is essential that the process for learning from the outside (orientation to the external world) be conducted using efficient observation processes for critical or differentiating events. The secret of moving faster than your opponent lies in the continuous reduction of friction (things that hold back an organization) through simple, reliable administrative structures and the use of flexible tools that can be adapted rapidly in response to changing tactics. Thus, assuring that the principles of a lean organization are applied to the strategic planning process will
provide an advantage in terms of decisions implemented. When this happens, your opponent will not understand what you are doing because they will always be working on a technology generation or product concept that is lagging. The ability to apply the concept of the Boyd Cycle depends on good information about the business—beginning with a sound process for strategic benchmarking converted into operational action through a flexible, real-time planning process.