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The  searches  conducted  yielded  scant  performance  measurement  and  management   literature.    It  appears  that  little  performance  management  system  research  has  been   conducted  related  to  turbulent  environments.    Further,  almost  half  the  literature   within  the  strategic  control  subset  was  the  by-­‐product  of  recommendations  or  the   scoping  study.    This  suggests  that  performance  measurement  and  management   relating  to  strategic  performance  or  strategy  control  is  an  under-­‐researched  area   within  existing  literature.    Given  that  performance  measurement  is  a  subset  of   performance  management,  both  will  be  presented  here  jointly  as  part  of  the   literature  review.  

Edward  A.  Barrows,  Jr.  –  Cranfield  University  –  School  of  Management  –  DBA  Thesis   How  Firms  in  Turbulent  Environments  Measure  Strategic  Performance  

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2.11.3.1.  Performance  Measurement  and  Management  System  Design  

Early  performance  measurement  literature  cited  in  the  introduction  ranges  from   simple  measurement  design  to  comprehensive  performance  management  system   development.      Some  of  this  literature  is  conceptual—in  particular  the  earliest.    The   later  writings  are  more  empirically  based.    Within  this  subset,  all  papers  identified   for  the  study  are  empirical.  

Although  research  on  performance  measurement  and  management  has  been  

ongoing  for  decades,  it  seems  to  have  formally  come  of  age  in  the  early  1990s.  While   not  squarely  situated  within  the  research  questions,  the  paper  by  Burn  (1993)  is   related.    It  discusses  strategic  alignment  of  information  technology  with  business   strategy,  which  constitutes  controlling  in  this  case  a  functional  strategy.    From  cited   literature,  Burn  presents  an  organizational  cultural  assessment  as  a  means  of  

determining  alignment  and  then  tests  the  audit  with  58  managers.    Using  the  results,   he  creates  a  strategic  alignment  model.    The  instrument  and  model  have  potential   applicability  for  empirical  work  related  to  this  study  which  is  why  it  was  included.   The  study  by  Ward  et  al.  (1995)  examines  the  relationship  of  operations  strategy,   environment,  and  performance  in  319  manufacturing  firms.    They  found  that  the   environment  has  a  substantial  impact  on  operations  strategy;  specifically,  good   performers  adopt  different  operations  strategies  in  response  to  environmental   stimuli  compared  with  poor  performers.  This  is  not  surprising  given  the  strategy-­‐ environment  research  reviewed  previously.    As  was  the  case  with  Burn  (1993),  this   study  provides  a  useful  model  with  which  the  researchers’  measure  selected   environmental  variables.  

Hoffer-­‐Gittell  (2000)  examined  the  differences  between  forms  of  employee   coordination  and  control  at  multiple  sites  with  four  separate  airlines  based  in  the   United  States.    In  her  comparative  presentations,  she  concludes  that  different   systems  for  achieving  coordination  and  control  can  lead  to  significantly  different   outcomes.    In  particular,  greater  cross-­‐functional  accountability,  smaller  supervisory   spans  of  control,  greater  selection  for  teamwork,  and  more  active  cross-­‐functional   conflict  resolution  are  associated  with  higher  quality  performance  and  greater   efficiency.    The  study,  though  not  directly  related  to  the  design  of  a  strategic   performance  measurement  system,  strengthens  the  argument  for  the  use  of   informal  versus  formal  forms  of  control  in  rapidly  changing  settings.  

Edward  A.  Barrows,  Jr.  –  Cranfield  University  –  School  of  Management  –  DBA  Thesis   How  Firms  in  Turbulent  Environments  Measure  Strategic  Performance  

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In  an  examination  of  business  performance  measures  and  strategy  in  the  aerospace   industry,  McAdam  and  Bailie  (2002)  provide  confirmation  that  an  appropriate  mix  of   measures  yields  the  best  alignment  with  the  business  strategy.    They  also  note  that   measures  are  perceived  as  more  successful  when  considered  as  strategic  

performance  measures  and  directly  linked  to  improvement  initiatives  explicitly   mentioned  in  strategic  plans.  

Kennerley  and  Neely  (2002,  2003)  provide  the  first  and  only  meaningful  examination   of  performance  measurement  system  evolution,  in  particular,  evolution  as  related  to   changing  business  environments.    From  case  study  analysis,  they  present  the  

elements  of  a  performance  measurement  system:    individual  measures  quantifying   the  efficiency  and  efficacy  of  action,  sets  of  measures  for  organization  as  a  whole,   and  the  supporting  infrastructure  that  enables  data  collection  through  dissemination   (Kennerley  and  Neely,  2002,  p.  1239).    They  note  that  external  or  internal  triggers   can  prompt  change,  but  that  change  is  challenged  by  barriers  such  as  poor  

processes,  deficient  people  skills,  systems  inflexibility,  and  cultural  resistance   (Kennerley  and  Neely,  2002,  p.  1240).    They  extend  their  research  through  the   presentation  of  a  model  that  shows  the  phases  of  performance  measurement   system  evolution  and  demonstrate  through  a  longitudinal  case  how  an  organization   progresses  to  maturity  in  the  use  of  its  performance  management  systems.      

Henri  (2006),  in  a  comprehensive  study  of  383  diversified  using  a  resource-­‐based   approach,  concludes  that  performance  measurement  systems  used  in  an  interactive   (diagnostic)  fashion  contribute  positively  (negatively)  to  the  deployment  of  

capabilities  of  market  orientation,  entrepreneurship,  innovativeness,  and  

organizational  learning.    He  confirms  work  by  Simons  (1990)  on  interactive  controls   and  also  makes  the  case  that  a  performance  management  system  can  potentially  be   a  source  of  competitive  advantage.  

2.11.3.2.  Strategic  Control  

The  first  paper  reviewed  in  the  strategic  control  subset  maintains  the  conceptual   tradition  of  early  strategic  control  writings.    The  paper  by  Schreyogg  and  Steinmann   (1987)  is  an  important  element  of  modern  strategic  control  literature.    The  authors   present  a  strategic  control  model  that  incorporates  three  separate  forms  of  control:     implementation  control,  premise  control,  and  strategic  surveillance.    

Implementation  control  pertains  to  the  monitoring  of  the  actions  or  initiatives   associated  with  the  strategy.    Premise  control  checks  in  an  ongoing  manner  the  

Edward  A.  Barrows,  Jr.  –  Cranfield  University  –  School  of  Management  –  DBA  Thesis   How  Firms  in  Turbulent  Environments  Measure  Strategic  Performance  

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validity  of  the  premises  or  assumptions  on  which  a  strategy  was  based—an  aspect  of   control  typically  not  actively  included  in  most  monitoring  systems.    Strategic  

surveillance  is  a  threat-­‐monitoring  activity  performed  continuously  to  ensure   challenges  to  the  existing  strategy  are  detected  early  and  addressed.  

This  paper  has  implications  for  the  development  of  the  framework  associated  with   this  study.    Existing  strategic  performance  measurement  systems  seem  to  focus   directly  only  on  implementation  control;  they  indirectly  review,  through  

performance  analysis,  premise  control  and  strategic  surveillance.    This  is  where  there   should  be  an  opportunity  to  advance  the  state  of  the  art  regarding  an  integrated   performance  measurement  system  by  structuring  these  activities  within  an  overall   system  of  performance.  

In  the1990s,  Simons  published  research  regarding  the  use  of  management  control   systems  and  business  strategy  (Simons,  1990;  Simons,  1994).    In  his  examination  of   70  top  managers  in  13  firms,  he  identified  a  process  model  that  explains  the  way   leaders  use  management  control  systems  to  control  key  aspects  of  their  strategy.    He   notes  there  are  four  concepts  underlying  the  model:    limited  attention  of  

management,  strategic  uncertainties,  interactive  management  control,  and   organizational  learning  (Simons,  1990,  p.  135).    Simons  does  not  resolve  the  larger   problem  of  a  model  for  strategic  control  but  rather  isolates  key  components  of  a   management  control  system  in  controlling  specific  aspects  of  a  strategy.  

Strategic  control  research  seemed  to  begin  in  earnest  with  two  related  papers   produced  in  1990  and  1991.    The  first  was  a  literature  review  of  strategic  control   literature  that  provided  insights  as  to  how  a  strategic  control  system  might  be   constructed  (Goold  and  Quinn,  1990).    The  authors  consider  establishing  a  strategic   control  system  in  a  high-­‐turbulence  environment  “problematic”  (Goold  and  Quinn,   1990,  p.  55)  and  ask  future  researchers  to  consider  whether  or  not  businesses  that   “face  especially  high  degrees  of  uncertainty,  or  in  which  strategy  needs  to  be  

particularly  flexible,  pay  less  attention  to  strategic  controls”  (Goold  and  Quinn,  1990,   p.  47).    The  second  was  an  article  that  provides  a  description  of  control  and  strategic   control,  and  discusses  aspects  of  a  strategic  control  system  that  are  both  formal  and   informal  (Goold,  1991).      

Fiegener  (1997)  seemed  to  accept  the  challenge  posed  by  Goold  and  Quinn  in  his   article  “The  Control  of  Strategy  in  Dynamic  Versus  Stable  Environments.”  He  

Edward  A.  Barrows,  Jr.  –  Cranfield  University  –  School  of  Management  –  DBA  Thesis   How  Firms  in  Turbulent  Environments  Measure  Strategic  Performance  

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references  Schreyogg  and  Steinmann  (1987),  Goold  and  Quinn  (1990),  Bourgeois  and   Eisenhardt  (1988),  and  Lorange  (1980)  extensively.    The  research  questions  he   addresses  are  the  following:    Do  firms  in  different  environments  design  their  

strategic  controls  differently,  and  are  these  control  processes  differentially  effective   in  different  environments?    Based  on  his  comparative  study  of  44  firms—29  in  the   life  insurance  industry  (stable)  and  25  in  the  software  industry  (dynamic)-­‐-­‐he   concludes  that  firms  facing  different  environmental  contexts  should  design  their   strategy  assessment  (i.e.,  control)  systems  differently.  In  particular,  firms  in   “relatively  stable  environments  should  invest  their  efforts  in  formalizing  strategy   assessment  procedures  whereas  firms  in  dynamic  contexts  would  benefit  from   ensuring  the  greater  involvement  of  line  managers  in  strategic  control  activities”   (Fiegener,  1997,  p.  82).    The  latter  point  of  his  conclusions  is  consistent  with  the   research  conducted  by  Simons  (Simons,  1990;  Simons,  1994).    However,  he  does  not   provide  specificity  on  the  design  components  of  the  systems  described.  

The  final  paper  in  this  subset  is  conceptual  (Davila,  2005)  and  provides  guidance  for   analyzing  the  different  roles  that  formal  management  control  systems  play  in   managing  innovation.    A  model  is  proposed  that  incorporates  three  variables:     components  of  strategy,  organizational  context,  and  the  role  of  a  management   control  system.  The  author  discusses  the  dynamic  nature  of  the  management  control   system  and  notes  that  it  must  change  with  the  strategy  itself.    

2.11.3.3.  Strategy  Implementation  

Currently,  publications  in  popular  business  books  address  the  challenges  associated   with  implementing  strategy  (Kaplan  and  Norton,  2000b;  Bossidy  and  Charan,  2002;   Neely  et  al.,  2002;  Hrebiniak,  2005;  Barrows  and  Neely,  2012).    This  systematic   review  is  concerned  with  this  topic  as  it  relates  to  turbulent  environments.     Interestingly,  from  a  search  standpoint,  only  one  paper  of  significant  quality  was   identified  (Gupta  and  Govindarajan,  1984).  It  examines  managerial  characteristics   and  effectiveness  in  strategy  implementation  at  a  business-­‐unit  level.    The  

researchers  conclude  in  their  analysis  of  58  business  units  that  “greater  

marketing/sales  experience,  greater  willingness  to  take  risks,  and  greater  tolerance   for  ambiguity  contribute  to  effectiveness  in  the  case  of  build  SBUs  [strategic  business   units]  but  hamper  it  in  the  case  of  harvest  SBUs”  (Gupta  and  Govindarajan,  1984,  p.   39).    They  highlight  the  importance  of  the  findings  with  respect  to  the  future  use  of   contingency  theory  in  researching  both  strategic  and  organizational  variables.  

Edward  A.  Barrows,  Jr.  –  Cranfield  University  –  School  of  Management  –  DBA  Thesis   How  Firms  in  Turbulent  Environments  Measure  Strategic  Performance  

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