HCP Management Consultants and our sister organisation the Strategic Management Institute (SMI) have developed a High Performance Business Management methodology that recognises the imperative for business managers to maintain a focus on both:
- The future: through effective Strategic Management (SM), and
- The now: pursuit of organisational cost management and control (delivered through effective performance management), or Organisational Effectiveness (OE).
Critical to each is an organisation’s ability to transform and grow, aided substantially through the successful application of enabling technology.
Such an imperative we note, remains valid no matter what influences are being exerted from the prevailing economic environment.
Our services model therefore is illustrated as follows, depicted in the form of an atom that is created from the integration and/or interface of core services that are interactive, integrated and aligned across five general areas:
Our service offerings are grounded in Research and Theory (a primary role of the SMI). As a result of our research, we have identified a common theme, structure and methodology that is relevant to both SM and OE. The common denominator is organisational activities and we reflect activity analysis to both OE and SM through our proprietary model of Activity Based Resource Management (ABRM).
Illustrated below, ABRM encompasses a combined approach to the delivery of organisational strategy and organisational efficiency and effectiveness. Used in individual components or as a whole, it has helped us to deliver outstanding results for our clients. Some of these are described in more detail in this website: Case Studies
Diagram below: Activity Based Resource Management
Example: Would you rather know what you spent historically, or (illustrated below):
- what you spent it on (what activities e.g. Design, Printing),
- what resources were deployed in its consumption (e.g. people, machines),
- how effective it was (performance measures e.g. machine utilisation, time in storage),
- what impact it had on profitability (product, customer, market profitability), and
- how it contributed to competitiveness (cost of differentiation, cost of so called ‘value add’ services?)
As illustrated in some of our One Page Summaries, benefits to our clients in the area of operational effectiveness include:
- Cost reduction: Short term Quick Wins in efficiency and effectiveness as well as input to longer term continuous improvement programs, in all industries in both the Public/Private sectors
- Increases in income and competitiveness: Evaluation of product and customer profitability and ‘cost to serve’ of internal functions such as shared service centres and other support areas
- Cost, nature and utilisation of business activities: leading to greater resource/capacity utilisation, cost reductions and improvements in efficiency and effectiveness
- Performance measures that reflect the activities of the business: Enterprise Performance Management and Reporting, and
- Causes of cost: cost drivers i.e. the factors at the base of product/customer/service profitability.
As discussed in our article, Optimising Strategy: A Fully Integrated Strategic Management Framework, benefits to our clients from the application of our fully integrated Strategic Management Framework and associated/pivotal Strategic Architecture include:
- Illustrate and Structure Strategy: The Framework depicts long term strategy (as opposed to a Strategic Plan which is oriented towards the Short Term) and thereby a means of reducing confusion as to its meaning and intent
- Communicates Strategy: provides visibility to the primary content of strategy facilitating ongoing strategic ‘thinking’, strategic renewal and a means to understand and evaluate the impact of any strategic ‘tensions’ that may exist between Inside Out and Outside In strategy theory
- Evaluate Strategy: Useful in both stable and predictable business environments an often overlooked component of strategy is strategy evaluation. Many strategies encompass elements of uncertainty so continual review and testing of assumptions (trends, forecasts etc.) will ensure that exposure to risk is managed most effectively
- Implement Strategy: the Pathway to Implementation, derived from the annual strategic plan provides a proven and robust method of strategy execution.
Activity Based Consulting Methodology, Grounded in Theory
To confirm the academic founding of our methodologies, we refer to the 1996 Harvard Business Review article “What is Strategy”. Written by Michael Porter, the article expresses a fundamental observation that:
“………activities, are the basic units of competitive advantage”
In making this assertion, Porter further observes that although cost management and control (Operational Effectiveness (OE)) and strategy are both essential to superior performance, their differences should not be confused.
Strategy: Porter suggests an organisation will obtain a Sustainable Competitive Advantage by “performing different activities from rivals, or performing similar activities in different ways”. Porter has observed (in his book, Competitive Strategy) that:
“….. activities provide a basis for a company to outperform rivals by establishing a difference that it can preserve. To do so it must deliver greater value to customers or create comparable value at a lower cost, or do both”.
Long term ‘above average’ performance Porter suggests, results from participation in markets that are selected on the basis of one of three defensible market positions, they are:
1. Cost leadership: performing similar activities in different ways e.g. Visy Industries (who make greater use of recycled paper);
2. Differentiation: performing different activities from rivals e.g. Bunnings (reinvented hardware retailing in Australia);
3. Focus: concentration of activities on specific buyer groups, market segments, production lines etc., e.g. Office Works (target small business with a focus solely on retailing office stationery and equipment)
In direct contrast to Porter, an alternative view of strategy emerged in the 1990’s with the elevation of a ‘Resource Based View’ of the firm into a perspective of an organisation’s Core Competences. The core competence view became widely known as a result of Hamel and Prahalads Harvard Business Review articles and their book “Competing for the Future” published in 1994.
Rather than seeking a competitive advantage through an analytical, econonometric view of external markets (as proposed by Porter), Hamel and Prahalad argued that an organisation’s strategy should be based on the firm’s ability to build and or leverage its ‘core competences’ into external markets. Leveraging core competencies they suggested would provide a firm with a unique market position that is difficult for others to emulate.
In contrast to external market positioning proposed by Porter, the Core Competence view focuses on the internal aspects of the organisation itself and the way in which its people, inherent skills and specific capabilities could be deployed to both create and sustain a competitive advantage. The SMI has assessed this contrast and suggests there is no one right way to view either of Hamel’s or Porter’s views and established as a result a Strategic Architecture that facilitates effective Strategic Management, just as readily as OE facilitates greater efficiency and effectiveness.
Operationally: Porter observes that OE is derived from a firm’s ability to: “perform similar activities better than rivals” and that this is different to strategy. To emphasis this point Porter observes:
“Whilst OE includes but is not limited to efficiency, it refers to any number of practices that allow a company to better utilise its inputs by, for example, reducing defects in products or developing better products faster”.
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