Management of
Strategic Performance Measurement Systems
in a Highly Volatile Environment
Master Thesis
MSc. Business Studies – Strategy Track Prepared by V. Fatih PEKKAYA (11425946) Supervised by Dr Jeroen KRAAIJENBRINK
Submitted on January 30th, 2018 (version 1.0)
Keywords: Strategic Performance Measurement Systems, SPMS, volatility, complexity, dynamic
Abstract
Regarding strategic performance measurement systems (SPMS), a number of frameworks have been proposed by scholars. Some of them focused on the only measurement, and some of them were a supporting tool to implement and manage strategic vision of the organisation. Recent studies also proposed a dynamism in SPMS to keep the system up to date. All of the frameworks have (dis)advantages, and there is no one-fits-all solution. This research has questioned the link between environmental volatility and its effect on SPMS through individual interviews with strategic planning specialists. In addition, the study has contributed to understanding how managers/companies can make SPMS suitable for their organisations which are operating in highly volatile, complex and dynamic environments. Eventually, the paper has argued that the strategic planning and corresponding SPMS framework need to be reviewed periodically but do not require constant and unexpected modification due to environmental volatility. The culture within the organisation, management approach to the SPMS and effectiveness of processes are the dynamic capabilities within the organisation in order to orchestrate the company resources as a source of SPMS success.
Statement of Originality
This document is written by Student V. Fatih PEKKAYA, who declares to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it. The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
Acknowledgments
This master thesis would not have been completed without the help of many people. First of all, all respondents who took time out of their schedule to share their ideas with me. And special thanks to those who spent their private time for the interviews after working hours even at midnight. Secondly, I would like to sincerely thank my supervisor, Dr Jeroen Kraaijenbrink, for his guidance during the writing of this thesis.
Another special thanks to my fellow student, Eduardas Sackis. We have started together, worked together and shared a lot.
Last but not least, exceptional thanks to my wife Berna, my family and my friends for supporting me throughout the master program and the writing of my thesis. Their support helped me to stay motivated. I believe that I could not have made it without your being.
Table of Contents
Abstract ... 1
Acknowledgments ... 3
Table of Contents ... 4
I. Introduction ... 6
II. Literature Review ... 10
a. Classification of literature on performance measures ... 10
b. Brief Review of Performance Measurement Frameworks in Literature ... 11
c. Process to Implement/Update Performance Measurement System ... 19
d. Dynamism ... 23
e. “Dynamism” in Strategic Performance Measurement Literature ... 24
III. Research Method ... 28
a. Research Approach and Design ... 28
b. Description of Samples ... 28
c. Data Collection ... 29
d. Data Analysis ... 31
IV. Findings ... 33
a. Information Driven by the Data Set ... 33
b. Verification of Research Question ... 37
c. Revisit the Research Question ... 41
V. Discussions, Limitations ... 44
VI. Conclusion... 46
Appendices ... 48
a. References ... 48
b. Web References ... 50
List of Tables and Figures
Table 1 – Selected Performance Measurement Frameworks ... 12
Table 2 - Sampling Success Rates ... 29
Table 3 - Sampling Details ... 30
Table 4 - Interview Details ... 31
Table 5 - Number of Years Covered in Strategic Plan ... 35
Table 6 - Number of Metrics and Distribution ... 35
Table 7 - Volatility Effect on SPMS ... 38
Table 8 - Thematic Analysis of SPMS Success Factors ... 42
Figure 1 - The Sink and Tuttle Framework ... 12
Figure 2 - The Performance Pyramid ... 13
Figure 3 - Performance Measurement Questionnaire ... 14
Figure 4 – The Balanced Scorecard Framework ... 15
Figure 5 - Integrated Performance Measurement System ... 16
Figure 6 - Integrated Dynamic Performance Measurement System ... 17
Figure 7 - EFQM Model ... 18
Figure 8 - The Five Facets of the Performance Prism ... 19
Figure 9 – BSC, Four Processes to Manage Strategy ... 20
Figure 10 - BSC Closed-loop Management System ... 21
Figure 11 - Phases of developing a performance measurement system (Bourne et al.) ... 22
Figure 12 - Framework of Factors Affecting the Evolution of PMS ... 22
Figure 13 - The Diagrammatic Overview of The Themes ... 32
Figure 14 - FX Rate Change Chart (TRL vs EUR & TRL vs USD) ... 37
I. Introduction
Robert S. Kaplan (a Harvard Business School accounting professor) and David P. Norton (a consultant) have started their well-known Harvard Business Review paper about the balanced scorecard in 1992 with a motto “What you measure is what you get”. Performance is a notion that permeates contemporary societies and is used to assess the quality of individual and collective efforts (Corvellec, 1997). Successfully implemented strategic performance management system (SPMS) provides managers with a potentially effective mechanism for enhancing strategic alignment, by enabling the translation of strategy into a set of financial and non-financial measures (Kolehmainen, 2010). It is also a powerful tool with the conjunction with other mechanisms like rituals, routines, reward and recognition systems but cannot guarantee the business performance (Micheli and Manzoni, 2010). Micheli and Manzoni also argued that “organisations should regard their SPMS as a means of fostering alignment to an existing strategy and also supporting empowerment and the continuous adaptation of strategy and tactics”. On the other hand, selection of right measurement, fitness to the intended strategy and the rest of the organisation, measurability and flexibility are always a challenge for the companies which have to be competitive in a highly complex and dynamic environment.
Literature of strategic performance measurement systems goes back to late 1980s. The first application of traditional performance measurements is a financial figure based on profit, return on investment, return on sales and productivity etc. Against the limitation of traditional performance measures, researchers proposed non-financial measures to implement effective SPMS. Digalwar and Sangwan (2011) classified the performance measures broadly into three categories; traditional performance measures, non-traditional performance measures and integrated frameworks which are the combination of traditional and non-traditional performance measures. A number of alternative approaches have been developed to facilitate the process of performance measurement
systems. Some of the well-known methods included Performance Measurement Questionnaire (PMQ) (Dixon et al, 1990), Strategic Measurement and Reporting Technique (SMART) (Cross and Lynch, 1989), Balanced Score Card (BSC) (Kaplan and Norton, 1992) and the Performance Prism (Neely et al, 2001). These systems were designed to provide management and operators with up-to-date information needed for process improvements at any given time, but there is no one-fits-all solution. All frameworks have strengths and but also weaknesses.
Whether the organisation implements a particular framework or not, organisations designed their measurement systems to ensure that the system reflects their current environment and intended strategies. However, a strategy does not always realise as it was intended, especially in a complex, dynamic and rapidly changing environment. With the outcome of the emergent strategies (Mintzberg, 1978) and autonomous strategy making process (Burgelman, 1991); organisations are requiring constant modification of strategies and operations to reflect these changing circumstances (Kennerley and Neelys, 2003).
Volatility and dynamism are also essential concepts for strategy literature. They may force organisations to revisit and change their strategy unexpectedly and irregularly. These unplanned changes may also affect the management of SPMS of the company.
In terms of dynamic performance management systems, a number of supporting frameworks have been proposed by scholars. Bourne et al. (2000), argued that the specific processes were required to align the performance measurement system continuously with strategy, and they developed three-phased performance implementation structure and four updating processes. Bititci et al. (2000), developed a model for integrated and dynamic measurement systems which were IT-based management tool as a self-auditing. Their case study focused on active monitoring including external and internal controls and Plan-Do-Check-Act cycle. Another significant research has been
performed by Kolehmainen (2010). She argued that individual-level SPMS management with empowering middle management and room for subjective judgement (in individual level) with building trust in the superior-subordinate relationship were essential to enhance strategy alignment, while simultaneously allowing for sufficient dynamism and flexibility to cope with the dynamic business environment. Kennerley and Neely (2003) questioned the factors which were affecting the requirement to change the measurement system and how organisations manage their measurement systems.
In a highly turbulent business environment, organisational performance is negatively moderated by the level of environmental dynamism (Bisbe and Malague, 2012, Homburg et al.,1999) and these changes have been generally structural rather than transient in nature (Melnyk et al., 2014). Therefore, firms that are operating in a rapidly changing environment should form strategic flexibility for sustainable competitive advantage (Cingoz and Akdogan, 2013). Srimai et al (2010), argued that the PMS has evolved from the 1980s in four major paths; from operations to strategic, measurement to management, static to dynamic and economic-profit to stakeholder focus. Finally, Henri (2010) examined the manufacturing companies at his paper and suggested that organizations do not seem to revise their PMS to a great extent even if the current business operating in a changing environment.
All proposed papers about dynamic SPMS provided guidelines for implementing and keeping SPMS up to date in changing market conditions and linked the environmental dynamism effect to the SPMS. Scholars claimed that organisations need more dynamic SPM systems in order to deal with the negative effect of the dynamism on strategy and performance of the organisations. However, some of the recent studies defended that organisations do not need to revise their SPMS as a respond to the changing environment. Obviously, none of these researchers clearly identified overall fitness of SPMS to the organisations in a dynamic environment and this concept still needs
more attention and research.
Therefore, the thesis aimed to explore “How can managers/companies make SPMS suitable for their organisations which are operating in highly volatile, complex and dynamic environments?”. In order to answer the research question, qualitative research has been preferred. The research data has been collected through twelve one-to-one semi-structured interviews with strategic planning experts working in medium and large-sized organisations from various industries which have formal strategic management processes, using any metric measurement system and operating in a dynamic and volatile environment. The organisations have been selected from Turkey and the Netherlands.
The result of the study suggests that strategic planning and corresponding SPMS frameworks do not require constant modification in spite of environmental volatility; contradictory to the extant understanding. This research also contributes to the increasing understanding of the success factors of SPMS managed by participant managers. Leading practices have been grouped into three major components as a culture within the organisation, management approach and effectiveness of the process. Therefore, dynamism on capabilities and 'orchestration' of company resources could be the source of SPMS success in the volatile environment.
II. Literature Review
Implementing an appropriate performance measurement system will ensure that actions are aligned with strategies and objectives (Cross and Lynch, 1991). Many organisations have spent considerable time and resources to implement an effective performance measurement system which fits best into their own organisation (Kennerly & Neely, 2003). Performance measurement literature proposed various approaches, methods and frameworks for the organisations. Nudurupati et al. (2010) stated that the performance measurement revolution started in the late 1970s with the dissatisfaction of traditional backwards-looking accounting systems. On the other hand, some literature accepted that the revolution started after the late 1980s (Digalwar and Sangwan, 2011, Srimai et al., 2010). The literature in this field is still emerging.
a. Classification of literature on performance measures
Digalwar and Sangwan (2011) classified the performance measures broadly into three categories; traditional performance measures, non-traditional performance measures and integrated frameworks. They argued that first phase of performance measurement literature went through the 1980s. In this phase, the emphasis was on traditional financial measures such as profit, return on investment, return on sales and productivity. In the late 1980s, as a result of changes in the world market conditions and competition, companies shifted their strategic priorities to quality, flexibility, short lead time and dependable delivery. They implemented new technologies and philosophies of manufacturing management such as computer integrated manufacturing (CIM), flexible manufacturing systems (FMS), just in time (JIT), total quality management (TQM), total productive maintenance (TPM), supply chain management (SCM). The traditional performance measures did not meet the requirements of the organisations after implementation of these changes and researchers developed non-traditional performance measures which were generally cost-based
and time-based to overcome the limitations associated with traditional performance measures (Digalwar and Sangwan, 2011). Although, advantages of non-traditional cost-based and time-based performance measure, they neglected other operational performance measures such as quality, flexibility, delivery etc. (White, 1996; Ghalayini and Noble, 1996; Digalwar, 2006). To overcome this difficulty, researchers developed performance measures as an integration of the traditional and non-traditional performance measures.
b. Brief Review of Performance Measurement Frameworks in Literature
In terms of strategic performance measurement, various frameworks have been introduced by researchers and organisations. This section provides a brief review of selected frameworks (Table 1), but all frameworks in this context are not limited to following selected ones.
Framework/ Model
Name Reference Year Explanation
Sink and Tuttle Sink and Tuttle 1989
The model claimed that the performance of an organisational system was a complex
interrelationship between the seven criteria The Performance Pyramid Cross and Lynch 1989 The pyramid was developed to integrate both
financial and non-financial performance indicators.
The Performance
Measurement Questionnaire Dixon et al 1990
The framework was developed in order to assess the existing performance measurement used in the organisation and compare it with the long-term importance of improvement.
The Balanced Scorecard Kaplan and Norton 1992
A framework was developed to provide information to the managers from the four perspectives of the company; financial, customer, internal, innovation and learning perspectives. Over time, the model has been improved to be used as a strategic tool for management to the formulation, implementation and measurement of strategy.
Integrated Performance Measurement System
Bititci, Carrie and
McDevitt 1997
An integrated model was designed as a closed loop control system to measure the process of
performance management at different levels. Integrated Dynamic
Performance Measurement System
Ghalayini and Noble 1996 An integrated model was designed for the measurement of three specific main areas.
EFQM Business Excellence Model
The European Foundation for Quality Management
1999
A self-assessment framework, which intended to give feedback on the practices and performance of
the company by using five enablers and four results criteria.
The Performance Prism Neely et al 2001
The framework which focuses on stakeholders instead of considering only shareholders or customers. Another differentiation of the model is the focal point on capabilities of the organisation to reach targeted strategy.
Table 1 – Selected Performance Measurement Frameworks
The Sink and Tuttle Framework (1989)
One of the first approaches to performance measurement was published by Sink and Tuttle (1989). The model claims that the performance of an organisational system is a complex interrelationship between the seven criteria; effectiveness, efficiency, quality, productivity, quality of work life, innovation and profitability or budget ability. The first three performance criterion in place is a prerequisite for a productive organisation. Quality of worklife and innovation are the moderators. These seven performance criteria keep their importance even though much has changed in the industry since this model was first introduced. A major objection to Sink and Tuttle’s model was the lack of knowledge management, environmental focus, need for flexibility and customer perspective which were not considered by the seven criteria (Tangen 2004, Digalwar and Sangwan, 2011).
Figure 1 - The Sink and Tuttle Framework (Source: Tangen, 2004)
The Performance Pyramid (SMART System) (1989)
The strategic measurement analysis and reporting technique (SMART) system also known as performance pyramid was developed by Cross and Lynch (1989) in Wang Laboratories, Inc. as a result of dissatisfaction with traditional performance measures and requirement of the integration for both financial and non-financial performance indicators (Cross and Lynch, 1989). The SMART system was represented by a four-level pyramid of objectives and measures as shown in Figure #5.
Figure 2 - The Performance Pyramid
On the other hand, as a disadvantage, the SMART system did not provide any mechanism to identify key performance indicators for quality, cycle time, cost and delivery. Also, the SMART system did not explicitly integrate the concept of continuous improvement (Ghalayini and Noble, 1996; Ghalayini et al. 1997; Bourne et al., 2000).
Performance Measurement Questionnaire (PMQ) (1990)
The Performance Measurement Questionnaire was developed by Dixon et al. (1990), with the purpose of assessing the existing performance measurement used in an organisation/company. The PMQ framework consists of two main parts,
▪ to evaluate the particular improvement areas and the current performance improvement that is already used in the company,
▪ to evaluate the particular long-term importance of improvement that will be achieved by the company.
As stated in Figure #2, Dixon et al. (1990) exemplified three categories; quality, labour efficiency and machine efficiency under improvement areas.
Figure 3 - Performance Measurement Questionnaire
The PMQ had the weakness of being relatively light on management time during the audit phase and lacking of the management involvement in the audit processes (Bourne & Neely, 2003). In addition, the PMQ did not pay attention to the continuous improvement concept (Ghalayini & Noble, 1996) and could not be considered as a comprehensive and integrated measurement system (Digalwar and Sangwan, 2011).
The Balanced Scorecard (BSC) (1992)
Maybe the most popular, widely used and recognised framework is the balanced scorecards (BSC). BSC was developed by Kaplan and Norton in 1992. It is such a measurement system which included financial measures that tell the results of actions already taken. It complements the financial measures with three main other groups; operational measures on customer satisfaction, internal processes and the organisation’s innovation and improvement activities. Using the leverage of these four categories, the BSC allows the managers to look at the business from four essential perspectives: Customer perspective, internal perspective, innovation and learning perspective and financial perspective. It provides an answer to four fundamental questions:
▪ How do the customers see us? ▪ What must we excel at?
▪ Can we continue to improve and create value? ▪ How do we look to shareholders?
Figure 4 – The Balanced Scorecard Framework
BSC limits the number of measures to avoid information overload; it also prevents sub-optimisation by forcing senior managers to consider all operational measures at the same time (Digalwar and Sangwan, 2011). This linkage ensures that “employees at lower levels in the organisation have clear targets for actions, decisions, and improvement activities that will contribute to the company’s overall mission” (Kaplan and Norton, 1992). BSC also has an advantage regarding the integration of organisation vision with actions; providing data of all key indicators at discrete time intervals and facilitating strategic review that permits formulation of plans to achieve organisational goals (Susilawati et al., 2013). Kaplan and Norton (1992) also emphasised the design of BSC as “The scorecard puts strategy and vision, not control, at the center”. On the other hand, it has a weakness to measure the long-term vision and fails to identify the performance measurement specific level such as employees, suppliers and stakeholders (Susilawati et al., 2013, Krause 2003, Neely et al. 2001). Krause (2003) also argued that there was no clear provision for very long-term measures.
Integrated Performance Measurement System (IPMS) (1997)
The Integrated Performance Measurement System (IPMS) was developed by Bititci et al. in 1997. The IPMS model was designed as “a closed loop control system to measure the process of performance management” (Susilawati et al. 2013). The IPMS framework consists of four levels: corporate, business units, business processes and activities (Bititci et al., 1997). At each level of the structure five key factors are considered; stakeholders, control criteria, external measures, improvement objectives and internal measures.
Figure 5 - Integrated Performance Measurement System
This framework has the strength to involve the continuous improvement. However, it is not clearly defined to measure in a logical order and manage the connection between measures (Suwignjo et al., 2000). In addition, the framework fails to provide a structured process that specifies objectives and timelines for development and implementation (Pun and White, 2005).
Integrated Dynamic Performance Measurement System (IDPMS)
The IDPMS was developed by Ghalayini et al. (1997) based on the integration of three main areas of measurements as management, process improvement teams, and the factory shop floor. This framework has the capability to measure general and definite areas of success, utilisation of
improvement and performance measurement reporting (Ghalayini et al., 1997). However, this framework does not have the capacity to evaluate overall performance score in the company (Susilawati et al., 2013).
Figure 6 - Integrated Dynamic Performance Measurement System
EFQM business excellence model (EFQM) (1999)
The business excellence model of European Foundation for Quality Management (EFQM) was developed in 1999. It originally emanated from the total quality movement and has heavily focused on continuous improvement (Digalwar and Sangwan, 2011).
Basically, the EFQM framework based on nine criteria, five of which were ‘enablers’ (leadership, people, policy and strategy, partnership and resources, and processes) and other four criteria were ‘results’ (people results, customer results, society results, and key performance results) as shown in Figure #3.
Process Improvement Teams The Factory Shop Flor
Figure 7 - EFQM Model
The EFQM model was a self-assessment framework, which intended to give feedback on the practices and performance of the company. There were some critics in the literature about the EFQM. Ahmed (2002) stated that the framework did not explicitly link business strategy and operations. Furthermore, the model has lacks of attention to flexible factors such as the implementation that might be different between company’s type and the company maturity (Mi Dahlgaard-Park, 2008).
The Performance Prism (2001)
“Performance Prism, with its comprehensive stakeholder (e.g., investors, customers, employees, regulators and suppliers) orientation, encourages executives to consider the wants and needs of all the organisation's stakeholders, rather than a subset, as well as the associated strategies, processes and capabilities” (Neely et al, 2001). Authors argued that the performance prism framework was designed to assist performance measurement selection as a vital to pick the right measures. The strength of this conceptual framework is that it first questions the company’s existing strategy before the process of selecting measures is started. In this way, the framework ensures a strong foundation for the performance measures (Digalwar and Sangwan, 2011). Susilawati et al. (2013) also stated that the performance prism has a comprehensive external organisation view such as stakeholder satisfaction and contribution but less attention to measuring the actual process.
Figure 8 - The Five Facets of the Performance Prism
As a summary, it has to be noted that these frameworks were focused on “what is measured”. They have been designed from different starting points to meet particular requirements. Apparently, there is no one-fits-all solution, and every scholar might propose a new framework which focused on certain areas and uses different varieties of the measures. In this perspective, selection of correct framework and the implementation of the measurement system are critical to the success of the framework. Micheli and Manzoni (2010) emphasised the importance of the SPMS as a powerful tool and reminded that it could not guarantee the business performance. Integration with other mechanisms, systems and routines within the organisation is essential. Therefore, the author will review the implementation and renewal process of SPMS in the next section.
c. Process to Implement/Update Performance Measurement System
In this section, several proposed processes for the implementation and update of the strategic performance measurement systems will be reviewed. Even though some of the frameworks have been initially developed as a measurement tool, they could be used as a strategic tool to implement, monitor and update strategy processes. The execution of this cycle is critical to the success and continuity of the existing systems of the organisations. It is noted that used terminology may change at each framework as explained in this section of research, but all of them have same basic cycle steps; deploy, monitor, receive feedback and update.
Balanced Scorecard (BSC)
In 1996, Kaplan and Norton explained how one company builds a strategic management system with using a balanced scorecard. They argued that the BSC contributes to link long-term strategic objectives with short-term actions with using four management processes.
Figure 9 – BSC, Four Processes to Manage Strategy
▪ Translating the vision: By relying on measurement, BSC forces managers to come to an agreement on the metrics they will use to operationalise their vision.
▪ Communicating and linking: First step is based on the distribution and communication of strategy to the whole organisation chart of the organisation. Therefore, the strategy will be visible to everyone, every individual at the top and low level. As a next step, the high-level scorecard will be cascaded down to the individual level. As a result, overarching strategic objectives and measures are translated into objectives and measures at each level of the organisation.
▪ Business planning: BSC proposes and forces organisations to integrate strategic planning and budgeting functions to ensure that sufficient financial budget reserved for the strategic goals. After defining performance measures at all levels, companies identify the most influential “drivers” of the desired outcomes and set milestones.
▪ Feedback and learning: By supplying mechanism for strategic feedback and review, all information can be fed into the scorecard and enable strategic refinement continual. As illustrated in Figure 9, the four processes of the BSC to manage strategy are a spiral process
and improve itself at each iteration.
In 2008, Kaplan and Norton proposed five stage closed-loop management system to link strategy and operations. Basically, the system suggests;
▪ development of a strategy statement and then translating it into the specific objectives and initiatives of a strategic plan
▪ mapping out the operational plans and resources needed to achieve its objectives by using the strategic plan as a guide
▪ continually monitoring and learning from internal results and external data on competitors and the business environment to see if the strategy is succeeding
▪ periodic reassessment of the strategy, and updating it if the assumptions underlying it are obsolete or faulty
Figure 10 - BSC Closed-loop Management System
This system sustains the continuous improvement process by iterating the steps, distinguishing the long-term strategic plans from short-term operating plans and presenting the explicit connections between steps and products.
Performance Measurement Systems by Bourne et al. (2000)
Bourne et al. (2000), addressed the issues about designing, implementing, using and continuously updating performance measurement systems in manufacturing companies. They argued that
specific processes were required to align the performance measurement system with strategy continually and proposed a model by challenging the assumptions and the strategy itself. As illustrated in Figure #11, the development of performance measurement systems was divided into three main phases. The fourth phase, a reflection phase uses the outcomes of the measurement system and challenges the strategy to improve itself.
Figure 11 - Phases of developing a performance measurement system (Bourne et al.)
Evolution of Performance Measurement Systems by Kennerley and Neely (2003)
Another framework was proposed by Kennerley and Neely in 2003. They targeted to develop a systematic process to ensure that existing performance measurement systems were continuously reflecting the changing environment and strategy together.
They identified four capabilities in evolutionary cycle; process (existence of process for reviewing, modifying and deploying measures), people (availability of the required skills to use, reflect on, modify and deploy measures), systems (the availability of flexible systems that enable the collection, analysis and reporting of appropriate data) and finally culture (existence of measurement culture within the organisation). Their research concluded that a well-designed measurement system would be accompanied by an explicitly designed evolutionary cycle with clear triggers and capabilities (process, people, system and culture).
To briefly sum up, various recent SPMSs have been developed with the functionality of implementation and update process as well. At that point, it is necessary to question the effectiveness of these frameworks in a volatile environment.
d. Dynamism
Before proceeding into the dynamism in strategic performance measurement systems, it is necessary to understand what is volatility and dynamism, and why these are essential for this context. Oxford dictionary describes the volatility as “liability to change rapidly and unpredictably,
especially for the worse”. Therefore, in a volatile environment in terms of industry and/or country,
organisations may be affected by rapid and unpredictable changes. In addition to the obvious volatility in the global political and economic environment, each industry needs to deal with turbulence in other environmental areas because the impact may not be limited to the same industry (Camillus and Datta, 1991). Even though the term recalls negative meaning, it may also have a positive effect. In finance, the beta value is used as “a measure of the volatility, or systematic risk,
of a security or a portfolio in comparison to the market as a whole” (Investopedia). Organisations
operating in the volatile environment cannot stay stable, and they have to respond to the change reactively or proactively. For that reason, the organisations need to manage the dynamism for the
continuity of the organisation. Oxford dictionary describes the dynamism as “the quality of being
characterised by vigorous activity and progress”. Basically, each organisation has to solve this
issue by itself according to characteristics of the company. In this research, volatility and dynamism are essential since they may force organisations to revisit and change their strategy spontaneously and/or irregularly. These unplanned changes may also affect the management of strategic performance measurement systems, and this research questions how company management solves this issue.
e. “Dynamism” in Strategic Performance Measurement Literature
According to the literature, in a dynamic environment, firms do revise their strategies, yet often the performance measurement system is not changed (Melnyk et al., 2014). Recent years, a number of approaches and frameworks were proposed by scholars who focused on the dynamism of measurement systems to manage performance management in a highly dynamic environment. Bourne et al. (2000), suggested a framework with two primary functions. In the first function, they were questioning the distinction between the implementation phases of performance measurement system as design, implementation and use. Secondly, they argued that the specific processes were required to align the performance measurement system with strategy continuously. Using literature, they proposed to use four updating processes;
▪ The performance measurement system should include an effective mechanism for reviewing and revising the targets and standards (Ghalayini and Noble, 1996).
▪ The performance measurement system should include a process for developing individual measures as performance and circumstances change (Maskell, 1989; Dixon et al., 1990; McMann and Nanni, 1994).
▪ The performance measurement system should include a process for periodically reviewing and revising the complete set of measures in use. This should be done to coincide with changes in either the competitive environment or strategic direction, (Wisner and Fawcett,
1991; Dixon et al., 1990; Lingle and Schiemann, 1996)
▪ The performance measurement system should be used to challenge the strategic assumptions.
Bititci et al. (2000), developed a model for integrated and dynamic measurement system which was IT-based management tool as an actively monitoring self-auditing tool. They used Plan-Do-Check-Act cycle for the maintenance of processes including internal & external monitoring triggers. Kennerley and Neely (2003) questioned the factors affecting the requirement to change the measurement system and how organisations manage their measurement systems. They identified, four capabilities in evolutionary cycle; process, people, systems and finally culture (existence of measurement culture within the organisation). They also proposed a cycle-framework as Use-Reflect-Modify-Deploy to manage the evolution of SPMS.
Kolehmainen (2009) performed in-depth case study within telecommunication company to understand features of dynamic SPMS. She argued that companies should seek a balance between empowerment and alignment. In the deep analysis, she discussed the dynamism in SPMS could be maintained by the empowerment of managers and use of flexible individual-level measures. In addition, room for subjective judgement (in individual level) with building trust in the superior-subordinate relationship is essential to enhance strategy alignment, while simultaneously allowing for sufficient dynamism and flexibility to cope with the dynamic business environment. Her argumentation is important in term of using individual-level target setting and subjectivity in the evaluation process instead of high-level reactions to the change.
Melnyk et al. (2014) emphasised that performance measurement and management was productive when it fitted with elements such as business strategy, organisational culture and external environment. They also gave a reference to Harrington et al. (2011) and argued that business environment has become highly turbulent and these changes have been generally structural rather
than transient in nature.
In 2012, Bisbe and Malague performed the research on Spanish companies and argued a positive association between SPMS and organisational performance that was mediated by the comprehensiveness of the strategic decision arrays. In addition, they also found that this mediation was negatively moderated by the level of environmental dynamism. Similarly, Homburg et al (1999) performed an empirical study to test whether market dynamism, a key facet of environmental uncertainty, is a moderator of the consensus–performance relationship. They argued that market-related dynamism negatively influences the strategy and performance of the organisation. Therefore, firms which are operating in a dynamic and rapidly changing environment should form strategic flexibility for sustainable competitive advantage (Cingoz and Akdogan, 2013). Srimai et al (2010), in their narrative review of the literature on transitionary paths of performance measurement systems from the 1980s up to present, they argued that the PMS has evolved in four major paths; from operations to strategic, measurement to management, static to dynamic and economic-profit to stakeholder focus. They highlighted that “…the change from a static to a dynamic mode of performance measurement reflects the need to respond to change in the external environment, particularly when the existing performance measurement innovations are not sufficient...”
In addition to the previous studies on the dynamism of SPMs, Henri (2010) examined on the manufacturing companies at his paper and suggested three exciting conclusions.
▪ Manufacturing organizations do not seem to revise their PMS to a great extent even if the current business operating in changing environment.
▪ Although periodic revisions of KPIs are useful, these revisions may not necessarily be appropriate at all times. It is directly depending on the degree of external and internal changes.
have dynamic PMS even though they are not required.
All mentioned proposals above have a solid theoretical structure, provide a sort of guideline to implementing SPMS and keeping SPMS up to date in changing market conditions and link the environmental dynamism effect to the SPMS. Scholars claimed that organisations need more dynamic SPM systems in order to deal with the negative effect of the dynamism on the strategy and performance of the organisations. Contrary, some of the resent studies defended that organisations do not need to revise their SPMS as a respond to the changing environment. Apparently, these are not enough to explain overall fitness and evaluation of SPMS at the organisations operating in a dynamic environment. The literature in this context still needs more attention and research. Therefore, the research question of this paper was raised as “How can managers/companies make SPMS suitable for their organisations which are operating in highly volatile, complex and dynamic environments?”. Consequently, the research question is seeking for alternative or modified approaches which are adapted and used by the organisation to survive in the volatile business environment and leading practices used by the organisations.
III. Research Method
This chapter considers the research approach, design, data characteristics and data collection. After defining the method used for this research, the chapter concludes with the key information for the collected data and performed data analysis.
a. Research Approach and Design
As mentioned several times throughout the course of this paper, the objective of the research is to explore the leading practices and approaches which are used by the organisations to manage the challenges in SPMS process caused by the volatile, complex and dynamic environments. Therefore, in line with the interpretivist assumption, the research is seeking to uncover the experiences of strategic planning department specialists, managers and directors from various industries to contribute to the context.
In this interpretive research, multiple case studies were performed with the selected organisations in order to observe their approaches and solutions. Multiple case study method was selected for this research in order to get a better understanding and identify consistencies and variation within the phenomenon. A case study was designed to investigate and gather real life context using multiple open-ended questions.
b. Description of Samples
The unit of analysis was the strategic planning experts working in medium and large-sized organisations from various industries which have formal strategic management processes, use formal measurement system and operate in a dynamic and volatile environment. The selected organisations have been searched and limited to Turkey and the Netherlands. Turkey was selected in addition to the Netherlands for two reasons; it has very high socio-economic volatility and she
is the home country of the author. Thus, he already knows the market and the organisations. Additionally, such a chosen sample from similar volatility context allowed generalising the leading practices for the companies facing identical volatility problems and made the findings more reliable.
c. Data Collection
The samples have been selected from Turkey and the Netherlands. Since the organisation charts, the employee titles and the used SPMS are not public information on a company website; author searched the potential interviewees one-by-one using social media according to their job titles and company names rather than random sampling. 18 contacts from Turkey and 18 contacts from the Netherlands have been identified. Various ways (e-mail, InMail (LinkedIn internal e-mail system) and personal network) have been used to reach them. 24 (67%) of them rejected or did not respond to the request, whereas 12 (33%) of them responded positively.
Country Respond Sample
Size % Note
Turkey Positive Response 10 56% Not responding 6 33%
Rejected 2 11% Confidentiality, busy schedule The Netherlands Positive Response 2 11%
Not responding 12 67%
Rejected 4 22% Busy schedule, HQ manages SPMS Total Positive Response 12 33%
Not responding 18 50%
Rejected 6 17%
Table 2 - Sampling Success Rates
Attendees have been working at strategic planning and business development related departments with specialist, executive, manager or director titles. In order to keep the anonymity of the companies, all attendees were mentioned as attendant, manager, interviewee or specialist within
the context of this paper. 50% of the interviews have been performed at group/holding company level and 50% of them at the individual company level. 9 of them have been using the balanced scorecard, and the others have been using various KPI metric systems. All these relevant samplings and similar volatility context made the findings more reliable and allowed to generalise leading practices for the companies facing similar volatility problems.
The empirical data has been collected through one-to-one semi-structured meetings. 75% of the interviews have been performed as an online meeting due to geographical constraints of the participants. The interviews have started with structured and general questions about the organisation, the SPMS and the metrics used in the company to understand general structure. The second phase of the interviews has been proceeded with an open-end question to find out how the organisation manages the dynamism of the SPMS process. Only one participant has preferred to respond the questions by himself and sent his answers via an e-mail instead of an interview. Interviews have been performed between October 23rd and December 13th, 2017 and average interview duration was 40 minutes.
Sample Country Company /
Group Industry
Company #1 Turkey Group Construction. Energy Company #2 Turkey Group Multiple
Company #3 Turkey Group Multiple Company #4 Turkey Company Energy Company #5 Turkey Company Retail Company #6 Turkey Company Technology Company #7 Turkey Group Multiple Company #8 Turkey Company Retail Company #9 Turkey Company Technology Company #10 Turkey Company Technology Company #11 The Netherlands Group Multiple Company #12 The Netherlands Group Multiple
d. Data Analysis
As mentioned in data collection section, interviews were composed of two parts and questions were organised in a structured way. 6 out of 12 meetings have been recorded in line with participants’ permission and transcripted afterwards. For both recorded and unrecorded interviews, participants’ answers have been summarised in a question form. The sample question form has been enclosed in the appendices part of the thesis. Mother-tongue has been preferred by the author for the Turkish participants in order to let them express themselves in a better way. Summary of interview methods, duration and interview language have been listed in table 4.
Sample Meeting Type Duration Recording Interview Lang. Company #1 Face-to-face Meeting 40 min No Turkish Company #2 Video Call 40 min Yes Turkish Company #3 Voice Call 30 min No Turkish Company #4 Video Call 50 min Yes Turkish Company #5 Video Call 45 min Yes Turkish Company #6 Video Call 30 min Yes Turkish Company #7 Video Call 45 min No Turkish Company #8 Voice Call 30 min No Turkish Company #9 Video Call 40 min Yes Turkish Company #10 Video Call 40 min No Turkish Company #11 Face-to-face Meeting 45 min Yes English
Company #12 E-mail - - English
Table 4 - Interview Details
The same questions have been asked to all participants in same order. Therefore, themes related to the first phase were relatively more straightforward to define. For the second section and the sub-themes of the first section, the author used inductive selection technique to identify sub-themes and codes. Considering the number of interviews, the structure of interviews and text size, the analysis has been performed manually by the author.
planning, the frequency for the plan review, type of SPMS and the selection criteria of SPMS have been questioned. The findings have been grouped under the theme “SPMS”.
Bourgeois (1985) investigated the relationship between top management perceptions of uncertainty, corporate goal structures, and industry volatility in explaining economic performance in 20 firms. His study confirmed the relationship between the match of true environmental volatility to managers' perceived environmental uncertainty and the higher the economic performance of a firm. Thus, in the second section, perceived volatility of the strategic planning managers over the industry has been asked. These might be the potential sources of the unexpected strategic plan changes and have been grouped under the theme “Volatility”.
Finally, the root causes of SPMS suitability and success have been questioned with open-ended questions. Answers have been analysed using inductive reasoning and grouped under the sub-themes as culture, management and process. Consequently, the diagrammatic overview of the themes has been presented in Figure #13.
IV. Findings
This chapter was started with the analysis of information gathered from the interviews to understand how the organisations implement and manage their SPMS process. This information was critical to understand the organisation, what kind of SPMS they were using, the frequency of updating their strategy and SPMS etc. The chapter continued with the analysis of perceived volatility of the managers and tried to uncover the root causes under this perception. Finally, the research question was revisited, and the relation analysis of perceived volatility and the change in SPMS was performed. In the last section of the chapter, valuable practices mentioned by the interviewees were noted.
a. Information Driven by the Data Set
As mentioned in the research method chapter, the question set for interviews has been prepared in two sections. In the first section, questions were related to the SPMS of the organisation and their perceptions related to the volatility of their business environment. The following part gave detailed information gathered from the data set of the first section.
SPMS Used by the Organisations
SPMS is a generic terminology and organisations may use different versions of SPMS frameworks in line with their company culture and their requirements. 9 out of 12 interviewees stated that they have been using the BSC methodology, 2 out of 12 have been using balanced KPI metrics and one of them has been using scorecard (not weighted/balanced) method. The results showed that BSC is still a very popular and widely used framework by the participant organisations.
Interviewees responded the questions related to the selection process of the SPMS similarly. Being a leading practice, fitness to the company requirements and being a professional approach to performance management were the popular answers. The most popular answer was the past
experience of the managers; namely, managers already used, managed and experienced the BSC at their former company and preferred to use the same system in the present organisation as well. Participants also noted that they implemented the SPMS with some modifications to adapt their organisations. One of the managers stated that;
“It takes time, and we are learning. We implement this framework with the support of the consultants, and we faced some problems in the first year. Like a learning curve; people are learning this system and we are learning to manage better.” (Interview #6)
One of the organisation had totally different experience and decided to leave the BSC framework. They were monitoring only very critical KPI metrics.
“We were using balanced scorecard, but we stopped using it because;
- There were too much metrics, and we could not actively follow them. Some of them
became obsolete in time.
- It needed too much effort to keep the metrics and review process alive
- Shareholders generally looked at particular basic financial metrics.” (Interview #3) Another key point identified during the interviews was about the frequency of strategic planning activity in the organisation and the number of years covered in their strategic plans. 11 out of 12 participants stated that they performed strategic planning process on a yearly basis. Two of them clearly mentioned that strategy formulation process was quite different and had a distinct periodic cycle. However, they all analysed the market, competitors, threats, opportunities and other factors on a yearly basis. The results of the analysis were assessed at the workshops, and strategic plans might have been updated in line with the results of the workshops. One participant stated that they did not have precise strategic planning cycle and the plans might have been updated whenever it needed. To summarise, the strategic plans of the participant organisations were reviewed yearly, but there was no unity for the number of years covered by their strategic plans. As shown in Table #5, the majority of participants documented their strategic plans for three years.
Number of Years Covered by Strategic Plans Number of Observations 5 years 4 3 years 7 1 year 1
Table 5 - Number of Years Covered in Strategic Plan
The last acquired information from the interviews regarding SPMS characteristics was about the number of metrics monitored at the highest level and their distribution. As shown Table #6, there was no harmony regarding a number of metrics. It was critical to note that a number of metrics might not be a good indicator since one of the participants clearly stated that they were using index metrics; namely, one metric at the top level was the consolidation of several sub-metrics. Thus, stand-alone analysis of a number of metrics might cause misinterpretation. On the other hand, the research demonstrated that financial metrics still has the highest priority. 6 participants stated that their SPMSs were configured to focus on the financial metrics even though 5 of them using the BSC.
Number of Metrics/KPI
Number of
Observations Distribution of Metrics
Number of Observations
Up to 10 3 Financial Focus
(more than 50% financial metrics) 6
11 to 19 3
20 and more 3 Balanced Distribution 3
Table 6 - Number of Metrics and Distribution
One of the managers highlighted the importance of the purpose of KPI as a tool. She said that;
“We use the KPIs as a supplementary for our execution and monitoring activity. If we only use KPIs as a measurement and monitoring system, we may miss some critical issues. Therefore, we are working very close to the teams in addition to KPI monitoring system.” (Interview #10)
Perceived Volatility
Bourgeois (1985) remarked in his paper that the environmental volatility identified by other scholars with two attributes;
▪ dynamism, or degree of change or variability
▪ complexity, or number and diversity of environmental factors interacting with an organisation
He also explained the relations between true environmental volatility and managers' perceived environmental uncertainty and connected the results to the economic performance of the organisation. He categorised external components into five main groups (customer, supplier, competitor, socio-political and technological) and calculated the volatility for his research.
Similar to the Bourgeois research, in the first section of the question set, strategic planning managers’ perceived volatility (1 to 10) and the causes of the volatility have been questioned. Participants scored their perceived volatility between 3 (min) and 9 (max). The average perceived volatility rating was 7 and median was 8. These results also verified the sampling requirement regarding high volatility.
In addition to the volatility rating, various answers have been collected about the root cause of volatility from the perspective of the participants. “Being in a regulated environment”, “socio-political issues”, “FX rate risk” and “high competition, substitute product risk” were the largely mentioned causes of volatility. Furthermore, there were also interesting answers like “frequently changing CEO”, “trends, fashion” and “seasonal effects, climate”.
Figure 14 - FX Rate Change Chart (TRL vs EUR & TRL vs USD)
(Source: Turkish Republic Garanti Bank (Turkey) – 04.01.2018 – Orange: TRL vs EUR – Blue: TRL vs USD)
From the perspective of the Turkish participants, it was clear to understand the FX rate risk as a cause of volatility. In last five years, EUR rate increased 95%, and USD rate increased 114% against Turkish Lira. Therefore, it causes volatility and creates profitability issues for the Turkish companies. Therefore, difficulty in prediction process and volatility, make the long-term planning unreliable and also negatively affect the strategic planning.
On the other hand, one of the participants gave an impressive comment regarding their perceived volatility score.
“Even though we are working in a high volatility environment, I would like to score it as 6. Because all of my competitors suffer from similar volatility problems. If I can manage it wisely, volatility may become an opportunity. People may take similar decisions and make similar mistakes because of similar education. Therefore, it is difficult to take diverse actions. Maybe we need to diversify our investments on market.” (Interview #2) b. Verification of Research Question
The purpose of this research was to explore “the relationship between volatility effect on SPMS” and “understand how managers/companies make SPMS suitable for their organisations which are operating in highly volatile, complex and dynamic environments”. In order to understand this relation, managers’ perceived volatility have been asked. Then, the frequency of review/update requirement of their strategic plan and also SPMS has been questioned. In line with the literature
review, organisations might need to change/update their strategic plans and their SPMS due to the rapidly changing environment. Another approach of the scholars was the use of the dynamic SPMS to keep the system effective in a changing environment.
According to the results of the interview analysis, majority of the participants perceived their environment as a highly volatile, but they did not need to review/update their strategic plans and SPMS unexpectedly before the scheduled cycle time (Table 7 and Figure 15).
Sample Perceived
Volatility Score
Effect on SPMS
Perceived Success Rate of SPMS
Company #1 8 Very Low 8
Company #2 6 Very Low 8
Company #3 9 High 7
Company #4 8 Medium 8
Company #5 7.5 Very Low 8
Company #6 4 Very Low 8
Company #7 8 Very Low 8
Company #8 8 Low 4
Company #9 9 Medium 6.5
Company #10 8.5 Very Low 8
Company #11 5 Very Low 9
Company #12 3 Low 5
Table 7 - Volatility Effect on SPMS
Figure 15 - Volatility Effect on SPMS
(size of the bubbles represents the managers’ perceived success rate of their SPMS and the number on the bubbles show the number of the company)
The managers shared their perspective on strategy, volatility and SPMS as follows.
“I would like to say that in the volatile market the strategy possibly does not change. Our ultimate strategy is still about how to win over competitions, how to make sure that you manage your healthy business. The tactics or some of this component can be quite different in the short term.” (Interview #11)
“The strategy is a long-term period that is very almost generic, and it does not change easily. Tactical action, tactical movements are also a bit stable. If there's something happened operationally, the operating manager has to manage or deal with these issues. So, they are not affecting the main strategy or the top strategy” (Interview #11)
“Strategic planning is not a kind of process you periodically identify and implement. These are long-term plans and you cannot identify them on a yearly basis. So, every year we just review our sub priorities and fine tune them.” (Interview #5)
“We do not need to review our strategy during the year. We update our strategy after the yearly review period. Actually, update on plans is limited because we already have a 3-year strategy. Yearly cycle lets us review and fine tune it.” (Interview #6)
“Volatility is high, but its effect on our strategy is low. The strategy does not change frequently, and it is long-term perspective. Financial targets might be reviewed and changed quarterly based, but we like to keep targets same on our side and motivate the teams to reach targets. Of course, some metrics on our side change over time but you may accept that as an improvement over time or change according to needs.” (Interview #10) “The strategic plan should not change in a year, but tactics may change. We have to be careful about the terminological usage of strategy and tactics.” (Interview #2)
Common idea focused on that strategy is a long-term process and should be reviewed periodically but in general at the scheduled time. They might react to emerging situations, but the effect of emerging cases and volatility on existing strategy and SPMS were limited. Of course, there was no ultimate consensus on this idea. There were managers with diversified opinions.
“SPMS structure and target values are rigid and not changed during the year. But I think it should be. Sometimes, in the second quarter, it was obvious that the targets could not
be reached (for example, lower snowfall mean dam will collect less water in the summertime and planned electricity production would drop down). At that point, target values have to be reviewed, and necessary updates have to be performed.” (Interview #1) “Strategy for next three years is defined and reviewed at each year. In general, it is not necessary to revisit the strategy and metric structure during the year. In case of necessity, it is possible to evaluate the strategy and metrics any time. However, they are rarely updated within the year. I think it has to be changed if necessary. Keeping initial target values may cause motivation problems. If people foresee that they cannot reach the target value, they do not work hard to try.” (Interview #7)
Therefore, the approaches shared by the strategic planning specialists were analysed and grouped under three major titles according to the effect of dynamism;
▪ Full Dynamism: Organisation does not have a specific schedule for strategic planning cycle but re-evaluates environmental changes in short intervals. She often defines her reactions and movement in frequently. She also identified a very limited number of financial based metrics to monitor and report (Observed at company #3).
▪ Relatively Stable System: Organisations have a strategic planning methodology and perform planning for a period of 3 to 5 years. They revisit their strategy every year and update SPMS KPIs and metrics (up to 10%) and then prepare their scorecard for the next year (yearly basis). Effect of volatility on their planning is very low and they do not need to modify any value during the year even though any KPI will not meet the target (Observed at companies #1, #2, #5, #6, #7, #10, #11).
▪ Limited Modification: Almost same to “Relatively Stable” approach but target value may change during the year according to the change in forecasts (Observed at companies #4, #8, #9, #12).
It is necessary to note that this paper questioned the volatility effect on SPMS management and the analysis was performed from that perspective. Management may take tactical decisions during the year and some of the KPIs could be changed or become obsolete. These kinds of changes have been ignored during this analysis.
c. Revisit the Research Question
The research findings demonstrated that organisations did not always need dynamic SPMS and did not need to revisit their strategy frequently in the volatile environment. The analysis identified three major approaches which were internalized by the organisations as detailed in the previous section of the paper; full dynamism, relatively stable system and limited modification. In this perspective, the research also focused on “how” question and asked the organisations leading practices and source of their success to survive in the highly volatile environment. Some of the answers were overlapped with each other whereas some of them not. All of the given answers were analysed using inductive selection methods to identify themes and codes. As a result of the analysis, given feedbacks were grouped into three main themes and listed in Table #8.
Themes Codes
Culture Integration: Integrating yourself into the overall system of the organisation not only
using KPI metrics
Adaptation: Knowing the dynamics of the volatile environment and adopting the
organisation, process and routines to the volatility of the environment. Using it as an opportunity in competition
Implementing a Culture: Implementing a culture of strategic planning and
measurable/concrete metric management system from top to bottom of the organisation
Management Commitment: As always, top management commitment is crucial to the success of
the strategic planning and the performance of the SPMS
Oversight: Management periodic review of SPMS outputs and the performance of
the strategic plan.
Joint Venture: The research findings also proved that the being in a joint venture
with another company or investment fund has a positive effect on the
implementation, usage and the performance of SPMS. Participants claimed that the joint company structures seek for more professional and healthy management tools.
Process Trust: Trust to the system is also critical to the success of the SPMS. Therefore, it
needs to be designed wisely, and trust should be earned
Participation: In general perspective, the strategy is determined at the top level
and spread to lower level. However, the research also showed that the
organisations should leverage the participation approach and higher/medium level managers involve to the strategy process and also SPMS management process
Limiting Number of KPI: Considering the only number of KPI is not correct, since
some of the organisations are using index KPI which covers a number of sub-KPIs. However, it is clear that organisations should select their KPIs and target values wisely. Each additional KPI needs more effort to define, manage, calculate and report.
Triggers & Action Plans: One of the managers explained that they defined triggers
and action plans for potential changes. Therefore, they improved their readiness for potential changes and decreased the negative effects of environmental volatility.
The link between Top and Bottom: All defined individual KPI have to be linked to
and support the SPMS KPIs at the top level. Therefore, even at the individual level, team members know the strategy and their contribution to achieve it.
Sustainability: SPMS framework should support not only today's targets but also
tomorrows desired strategic position since strategy is long-term planning
Table 8 - Thematic Analysis of SPMS Success Factors
Consequently, the participant managers emphasized that the success of the SPMS in the highly volatile environment was directly related to the management of the SPMS, adaptation to the environment and the configuration of internal resources. The organisations have to review the SPMS periodically, but they do not need to update them frequently. Reactions to the changing circumstances could be managed at lower levels.
“We can formulate the strategy and prepare a strategic plan by ourselves. However, we want to implement a culture of strategic planning and measurable/concrete metric management system.“ (Interview #2)
“We have very well-designed triggers for potential threats and their corresponding action plans.” (Interview #4)
“If there's something happen operationally, the operating manager has to manage or deal with these issues, so they are not affecting to your main strategy or the top strategy.“ (Interview #11)
“We know the reality of volatility in our industry and country. Therefore, we do not take a decision and do not change the priorities immediately. We prefer to observe and then take action. If you just focus on today, your decisions will be more reactive. On the other hand, if the change is related to the industry dynamics, you have to have an ability to react faster than your competitor. Therefore, we design our strategy and metric system to minimize the effect of the volatility. For the residual risk and the change, we may update
