STRATEGY, PROCESS MANAGEMENT AND PERFORMANCE
MEASUREMENT IN ORGANISATIONS UNDER A SHARED EPIST EMIC
FRAME.
Guillermo Granados, M.Sc., M.B.A., Ph.D.
The Business Performance Institute
guillermo.granados@competitividad.org
ABSTRACT
Business Strategy, Business Process Management and Business Performance Management are an unrelated triad in
organisational science. They have been conceptualised and have evolved based on practitioner’s perspective or on
empirical research (Mintzberg 2008) (Van de Ven 1992) (Lewin and Volverda 1999) with evolving epistemic frames
still not fully related to an organisational perspective. This paper presents the basis and application of a common
conceptual framework for those disciplines. This is based on a previous development built from a formal system of
events (Granados 2007) built over Resource Based View of the Firm epistemic principles.
This conceptual framework is called Process Scorecard, and works as an organisational blueprint. It provides
compatibility among strategy, operational and measurement approaches (Granados 2007). The ontological approach
considers evolution and generation as a core characteristic of processes.
This approach has been utilised in practice in organisations in Mexico and South America. A guide for technology
management deployment has been built for Mexico’s National Technology Award
KEYWORDS
Innovation Management; Technology Management; Strategy, Technology and Innovation; Resource Based
Capabilities; Business Process Management, Business Performance Management,
STRATEGY, PROCESS MANAGEMENT AND PERFORMANCE
MEASUREMENT IN ORGANISATIONS UNDER A SHARED EPI STEMIC
FRAME.
INTRODUCTION
Strategy, Process Management and Performance Measurement: Three perspectives of an
organisation.
For the last two decades, scholar and practitioner focus on strategy has been growing and evolving. The attractiveness
of the managerial market as a target for strategic models and counselling has made the adaptive perspective dominant.
In this perspective, the success of a firm is mostly determined by actions, decisions and policies that are designed,
performed and directed for a set of individuals deliberately empowered for this purpose, called “board of directors”
(Lewin and Volverda 1990).
Also, Business Process Management has been an important topic on the late half of the last century: Tools and
techniques such as Statistical Process Control, Process Mapping, Value Stream Mapping; Methodologies and frames
as Business Process Reengineering, Six Sigma, Quality Tools; Company-wide management disciplines and models
such as Malcolm Baldridge Quality Criteria for Performance Excellence share in common that a relevant factor for
achieving a sustained competitiveness, thus, succeeding in an organisation is the effectiveness of relevant repetitive
actions within the organisation.
Business Performance Measurement is driven by financial disciplines and approaches to strategy alignment
(Alexander 2007). Those systems either measure activities and promote Activity Based Costing (Cokins 2009), or
strategy measurement (Kaplan and Norton 2006). The Balanced Scorecard is built on Resource Based View epistemic
principles.
However, there is a lack of integration between those disciplines, First, Strategy approaches can derive on a generic
“good for everyone” strategy of obvious improvement intentions, without a systematic tool for deploying it to
operations (Rumelt 2011), if “strategic thoughts” cannot be deployed is an operational underperformance, not a poor
strategical expresion. It seems that a if “it is a good thought for the organisation, it is good strategy and should be
executed” fallacy is common among strategyists. Second, Process Management approaches are focused on control
and repeteability of activities as the main cause of good performance. This implies activities as the substance of an
event –instead of intentionalities- leading to a single or simple time flow analysis. Reengineering approaches promote
a radical redesign, however, on a complex multi-process organisation, intentionality and value-added activity is not
necessarily easily deducted. Third, performance management is driven by intuition, when it is not about financial
ratios. Indicators of performance are designed individually, intuitively and with a focus on expressing events in the
past, not with a cause-efect relationship. Kaplan and Norton (2006) suggest to measure “strategy”, not its effects.
The result is a set of indicators “real vs. planned” that assume plans are correct and every problem comes from
execution, not from planning.
In practice, Strategy, Process Management and Performance Measurement seems to be independent approaches to
business competitiveness. Organisations are aware of the relevance of those practices and allocate resources to each
one separately, quite often in un-related positions.
Strategy, Process Management and Performance Measurement: What do they share?
Process Scorecard is based on a four category ontology: Events, Nouns, Adverbs and Adjectives. Events are the only
substantial category and refer to organisational events. Selected axiomatic principles for organisational events are
(Granados 2007):
a) An event is a planned action of which its execution intends an anticipated outcome.
b) An event is essential for its effect. That is, the effect is produced mostly because of the performance of the
event. Thus, the event and its effect define jointly a substantial entity.
c) There is a temporary frame in which an event is bounded, i.e. it has a noticeable start and end.
d) There is a temporary frame in which an event can be decomposed in events. The event is exhaustively
decomposed if the essence of its decomposition set explains the essence of the original event.
e) When an event is decomposed, there is a time interval in which every member of its decomposition set event
is bounded.
f) When interest of acts is to predict future performances for a repetitive act, those acts are grouped in a class
formed by every repetition. The class is called a process.
g) When interest of an act is to control its performance –unique or sporadic-, a class of a single element is
formed and called a project.
The first two principles synthesize substantive properties. The latter two propose a relativistic perspective for process
and project depending on the analysis intended on the events.
This ontology is the basis for a common frame for strategy, process management and performance measurement. The
aim and scope of these disciplines is re-bounded.


Process Management is a perspective with the aim of predicting relevant characteristics of an event based on
its adaptation from previous performances –either learning, evolution of change-. The core process is the
class defined by organisational activities within a planning cycle of an organisation, since a comparison
among occurrences of this event is relevant. This is called the organisational process. Events –projects and
processes are derived through a formal set of rules applied to the organisational process.
Strategy perspective is a set of activities, policies and principles that intentionally direct an organisation to
where it could not otherwise reach. Multi-annual planning draws a competitiveness trajectory, the
comparison among planning cycles is analysed from a project perspective for several occurrences of the

organisational process. Hence, annual planning –or strategic planning- is done in comparable terms of the
organisational project.
Performance management is the interpretation based mainly of an array of statistically related variables.
Adaptative projects (or “strategies” in terms of Kaplan and Norton) measurement is important for project
tracking, however their effects should be expressed in terms of the impact of the “strategies”, not in terms of
their execution.
Applications of Process Scorecard.
L O GI C A L TR E E : A N E X C L U S I V E A N D E X H A U S TI V E R E P R E S E N T A T I O N O F AC TI V I T I E S .
Process Management has been traditionally involved with representing flows of activities (events), states or a “black
box” that produces outputs from inputs. (Van de Ven 1992). Representing an activity as a flow of activities implies a
construction, definition or representation of an activity by sub-activities. There is a lack of ontological approaches to
business activities in business literature (Higginbotham et. al 2000) that formalizes this construction, definition or
representation. I developed a definition approach in order to: Define same properties for the sub-activities and the
activities, and ruling activities decomposition to be exhaustive and exclusive (Granados 2007).
The logical tree is a graphical representation of an organization in which processes are generated from generative
rules. An example is shown in figure 1.
Fig. 1 Logical Tree diagram. Source: BPI Archives modified for this purpose
The intention of a logical tree diagram, as of a grammar, is not to express every activity of an organisation, but to
structure them intentionality. Defining substance of events based on intentionality of acts allow evolution of its
composing activities without affecting its essence.
C E N T R A L I S E D S T O C H A S T I C P E R F O R M A N C E M E AS U R E M E N T
Since the substance of events is based on their intentionality, and their grammatical expansion defines the
organizational process (the organization within a planning cycle), thus, measurement of events is an expression of
attributes of their intentionalities. Also, since processes are defined as repetitive events, their measurement forms a
stochastic variable. Figure 2 represents an expansion of a –almost unnoticeable- box located at the end of the arrow of
figure 1.
Figure 2. Low-level processes inside logical tree. Source: BPI Archives modified for this purpose
Figure 3 shows and enhanced figure of the green braces arrowed on figure 2. Similar properties are in each process of
this structure. The other braces contains low-level processes. Variables on figure 3 are stochastic variables.
Figure 3. Process based scorecard Source: BPI Archives modified for this purpose
Conclussion
Process Scorecard construction is based on:
a) The existence of similar properties of an event, either if it is the organisation, an area, sub-process or project
b) If an organisation is a process (A) and also is a set of processes (B), there must be a formal systematic
approach to generate B from A. Generative grammar has been used as the central generative function.
This formal systematic approach provides a structured epistheme that is a basis for organisational entities’
categorisation. This is an a priori approach with inter-judge validation. Empirical evidence will be available as a
consequence of the implementation on this frame. Several organisations in Mexico and Ecuador are currently
organising its activities with this frame.
On the philosophical side, the formal system constructed is only expansive, based on a unique chain of thought in
which events theory of definition has been deployed. Experimentation with different generative functions or
definitions may lead to different business configurations.
Business Performance is is explained as stochastic relations, however, most of the software is unable to handle
stochastic relations as an indicator. Maybe the most available solution is the design of innovation indexes based on
those relations.
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