Journal of Management Studies 42:4 June 2005

Aligning Manufacturing Strategy and Business-
Level Competitive...
794                               S. Brown and K. Blackmon
on manufacturing strategy have been published in over 30 major ...
The Case for Strategic Resonance                              795
petitive strategy, and develop several research proposit...
796                               S. Brown and K. Blackmon
sustainable competitive advantage in its chosen markets to maxi...
The Case for Strategic Resonance                             797
manufacturing strategy should be involved in business str...
798                               S. Brown and K. Blackmon
Table I. Traditional strategy context versus today

The Case for Strategic Resonance                              799
   Despite the acknowledged importance of both external ...
800                               S. Brown and K. Blackmon
   (1) Manufacturing strategy must be aligned with business-lev...
The Case for Strategic Resonance                             801
  (1) Identifying and developing manufacturing capabiliti...
802                               S. Brown and K. Blackmon
manufacturing firms (Beach et al., 2000; Meredith and Vineyard, ...
The Case for Strategic Resonance                              803
automobile industry). Therefore, we argue that capabilit...
804                               S. Brown and K. Blackmon
   (2) Demoting manufacturing to a technical specialism (Hayes ...
The Case for Strategic Resonance                              805
seems to be at the core of Dell’s success within the PC ...
806                               S. Brown and K. Blackmon
   We argue that the strategic resonance framework has importan...
The Case for Strategic Resonance                              807
strategic dissonance takes place. Each problem needs to ...
808                                 S. Brown and K. Blackmon
Table II. Specific links between business and manufacturing st...
The Case for Strategic Resonance                                         809
production has often been explained in terms ...
810                                 S. Brown and K. Blackmon
Brown, S. (2000). Manufacturing the Future – Strategic Resona...
The Case for Strategic Resonance                                         811
Goold, M. and Campbell, A. (1991). ‘From corp...
812                                S. Brown and K. Blackmon
Johnson, G., Melin, L. and Whittington, R. (2003). ‘Guest Edit...
The Case for Strategic Resonance                                           813
Mills, J., Platts, K. and Gregory, M. (1995...
814                                S. Brown and K. Blackmon
Schroeder, R. G., Anderson, J. C. and Cleveland, G. (1986). ‘T...
The Case for Strategic Resonance                                        815
Vickery, S. K., Droge, C. and Markland, R. E. ...
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  1. 1. Journal of Management Studies 42:4 June 2005 0022-2380 Aligning Manufacturing Strategy and Business- Level Competitive Strategy in New Competitive Environments: The Case for Strategic Resonance Steve Brown and Kate Blackmon University of Exeter; Said Business School, Oxford abstract In this paper we make the case for strategic resonance in the strategy making process within dynamic and highly volatile market conditions. We discuss how managers are faced with competing paradigms of resource-driven versus market-led approaches to strategy but we suggest that both paradigms have flaws and may cause strategic dissonance to occur. Moreover, we offer additional insights into why strategic dissonance can occur within the strategy process of the firm. We suggest that a key omission often lies in the neglect of operations managers’ potentially important contributions to the strategy mainstream process. INTRODUCTION Manufacturing strategy contributes substantially not only to manufacturing per- formance (Anderson et al., 1991; Meredith and Vineyard, 1993) but also to busi- ness strategy, as measured by business unit performance on market share, growth, and profits (Ramanujam and Venkatraman, 1987). Manufacturing strategy process, content and implementation determine how manufacturing resources and capabilities are deployed (Hayes and Wheelwright, 1984) to complement the busi- ness strategy (Swamidass and Newell, 1987) and – if properly utilized – provide a ‘competitive weapon’ in the firm’s strategic planning (Skinner, 1969). Manufac- turing strategy hence influences the success of strategic initiatives including new process technologies (Beach et al., 2000; Gagnon, 1999; Honeycutt et al., 1993; Schroeder et al., 1995; Wathen, 1995), new products (Spring and Dalrymple, 2000; Voss et al., 1996), and human resources (Bates et al., 1995; Youndt et al., 1996). Since the seminal contributions of Skinner (1969, 1974, 1985), Hayes and Wheelwright (1984), and Hill (1985), over 250 conceptual and empirical papers Address for reprints: Steve Brown, School of Business and Economics, University of Exeter, Streatham Court, Rennes Drive, Exeter EX4 4PU, UK ( © Blackwell Publishing Ltd 2005. Published by Blackwell Publishing, 9600 Garsington Road, Oxford, OX4 2DQ , UK and 350 Main Street, Malden, MA 02148, USA.
  2. 2. 794 S. Brown and K. Blackmon on manufacturing strategy have been published in over 30 major journals (Dan- gayach and Deshmukh, 2001). Manufacturing strategy frameworks have identified key manufacturing decisions and highlighted the need for consistency among deci- sions that affect business-level strategy, competitive priorities and manufacturing strategy and infrastructure (Fine and Hax, 1985; Hayes and Wheelwright, 1984; Hill, 1985, 1995; Schroeder et al., 1986; Skinner, 1969), as well as manufacturing strategy, manufacturing capabilities, marketing-manufacturing congruence, and their effects on manufacturing performance (Bozarth and Edwards, 1997). Recently, however, concerns have been raised about the current manufacturing strategy paradigm. Inevitably, core manufacturing strategy concepts such as man- ufacturing capabilities, market requirements, and tradeoffs between competitive priorities have been criticized. For example, Spring and Boaden (1997) have argued that the firm wins orders in the marketplace as a result of a number of factors, and not just via the firm’s products per se, as had been indicated in some of the manufacturing literature (e.g. Hill, 1985). Similarly, the tradeoff view has been challenged by Japanese approaches to manufacturing, world-class manufacturing (Schonberger, 1990), and empirical findings (e.g. Meredith et al., 1994). More fundamentally, however, whether the existing manufacturing strategy par- adigm is still useful has been questioned (e.g. Drucker, 1990). Leong et al. (1990) suggest that the current manufacturing strategy paradigm lacks: (1) a cohesive theory-based effort by manufacturing strategy researchers; (2) sufficient survey- based empirical work; and (3) proper integration with concepts and theories devel- oped in other disciplines. The lack of consensus about manufacturing strategy’s content has been especially identified as a barrier to advancement (e.g. Hayes and Pisano, 1994; Kim and Arnold, 1996; Mills et al., 1995) as it creates competition between alternate manufacturing strategy paradigms (Voss, 1995). Thus, manu- facturing strategy still needs a coherent theory (Swink and Way, 1995). Is manufacturing strategy passé (Clark, 1996) or does its importance need to be regained (Pilkington, 1998)? In this paper, we argue that, despite providing Skinner’s (1969) missing link between business-level strategy and manufacturing, manufacturing has increasingly lost touch with the mainstream corporate and busi- ness strategy literature (Ward et al., 1996). Environmental and other changes have caused manufacturing strategy to drift away from the strategy mainstream, par- ticularly the market-led and resource-driven approaches to strategy. However, manufacturing must be aligned with corporate strategy in order to contribute to performance (Skinner, 1969). As a result, we argue that a new framework is needed to realign manufacturing strategy with strategic management, and we present such a framework, which we describe as strategic resonance. This paper is organized as follows. We first briefly discuss the market-led and resource-driven approaches to strategy and use them to identify two important problems with the manufacturing strategy paradigm. We then introduce the strate- gic resonance framework for aligning manufacturing strategy and business-level com- © Blackwell Publishing Ltd 2005
  3. 3. The Case for Strategic Resonance 795 petitive strategy, and develop several research propositions from the framework. We conclude by highlighting relevant issues and opportunities for research and management. LITERATURE REVIEW: IDENTIFICATION OF KEY CONCEPTS Strategy matters because of its role in the direction taken by the firm. A firm’s strategic posture represents the way that a business positions itself relative to its competitors (Hofer and Schendel, 1989). A firm must be poised and ready to meet future market opportunities (Brown, 1996). Without a strategy, firms’ short-term decisions will conflict with their long-term goals (St John and Young, 1992). If so, strategic successes are as likely to be due to chance as to plan (Kay, 1993), and thus cannot be reliably sustained or repeated. Business strategies are the decisions at the strategic business unit (SBU) level that determine how the SBU will support organizational goals. A business strategy defines the SBU’s competitive direction, its scope, and how it will seek competi- tive advantage (Garvin, 1993). The strategic fit between the internal aspects of an organization and the external environment (Andrews, 1971; Chandler, 1962; Johnson and Scholes, 2002; Miles and Snow, 1994; Schendel and Hofer, 1979) determines competitive advantage (Covin and Slevin, 1989; Ginsberg and Venka- traman, 1985; Miles and Snow, 1994; Venkatraman and Prescott, 1990). Because the firm’s external environment consists of forces outside the firm’s control, it pro- vides an important source of organizational contingencies (Lawrence and Lorsch, 1969; Thompson, 1967). The Market-Led and Resource-Driven Approaches to Strategy The market-based and the resource-based views of the firm provide alternate views of how to achieve strategic fit. The market-led view proposes that firms gain competitive advantage through identifying external opportunities in new and exist- ing markets or market niches and then aligning the firm with these opportunities. This view has pervaded over time (e.g. Bain, 1956, 1968; Mason, 1939; Porter, 1980, 1985). In this approach competitive changes within markets determine which markets the firm should enter, stay in, or exit (Boeker et al., 1997; Haspes- lagh, 1982; Hax and Majluf, 1983, 1988, 1991). Consequently, strategic frame- works such as Porter’s (1980) five forces model can be used to analyse industry structure and identify a market position that provides competitive advantage (Huff, 1982), exemplified in Porter’s (1980) generic strategies of cost-differentiation-focus. Under this approach, competitive strategies are devised by senior executives and translated into functional-level strategies through a top-down process. Alternately, the resource-based view of competitive advantage suggests that the firm should assemble and deploy appropriate resources that provide opportunities for © Blackwell Publishing Ltd 2005
  4. 4. 796 S. Brown and K. Blackmon sustainable competitive advantage in its chosen markets to maximize returns (Barney, 1986; Dierickx and Cool, 1989; Reed and DeFillippi, 1990). Competitive advantage is thus created not by the privileged end-product market position, but by distinctive, valuable firm-level resources that competitors are unable to repro- duce (Makhija, 2003). Firms therefore sustain competitive advantage through developing and guarding capabilities and competencies (Hayes, 1985; Prahalad and Hamel, 1990; Stalk and Evans, 1992). Over time, the concept of distinctive competencies (Selznick, 1957) has evolved into core competences (Prahalad and Hamel, 1990), dynamic core competences (Lei et al., 1996a), and dynamic capabilities (e.g. Eisenhardt and Martin, 2000; Teece et al., 1997). An example is human and intellectual capital (Barney, 1991; Casta- nias and Helfat, 2001; Kor and Mahoney, 2004; Lockett and Thompson, 2004; Reich, 1991; Rugman and Verbecke, 2004; Ulrich and Lake, 1990; Wright and McMahan, 1992; Wright et al., 1994, 2001); that is, people’s information, knowl- edge, and ideas (Pfeffer, 1994), which help to create dynamic flexibility (Hitt et al., 1998) and strategic competence (Barney, 1986; Bates et al., 1995; Jayaram et al., 1999). The Link Between Manufacturing Strategies and Business-Level Competitive Strategy In both the market-led and the resource-based views, functional strategies should be consistent with business-level strategies (Kotha and Orne, 1989; McDougall et al., 1992; Swamidass and Newell, 1987). Manufacturing strategy is linked to busi- ness strategy through market requirements (Hill, 1985). Market requirements are criti- cal to manufacturing strategy (Pagell and Krause, 1999) because order-qualifying and order-winning criteria win orders from customers (Hill, 1995). Trying to meet inconsistent market requirements for a set of products can adversely affect man- ufacturing performance (Hayes and Wheelwright, 1984; Hill, 1995; Schmenner, 1983), compared with the ‘focused factory’ (Skinner, 1974, p. 116). On the other hand, aligning market requirements with manufacturing capabilities through man- ufacturing strategy creates competitive advantage (e.g. Corbett and Van Wassen- hove, 1994; Hayes and Pisano, 1994; Slack, 1991). Manufacturing capabilities describe what a manufacturing operation can do better than its competitors (Hayes and Pisano, 1996) and are fundamental proficiencies in manufacturing (Swink and Hegarty, 1998), and ultimately production competences (Cleveland et al., 1989; Vickery et al., 1993). Generic manufacturing capabilities include cost, quality, delivery, flexibility, and (potentially) innovation (e.g. Fine and Hax, 1985; Van Dierdonck and Miller, 1980; Wheelwright, 1984). Since manufacturing strategy becomes aligned to the external environment when business and manufacturing strategies are linked (Corbett and Van Wassen- hove, 1993; Garvin, 1993; Schendel and Hofer, 1979; Ward and Duray, 2000), © Blackwell Publishing Ltd 2005
  5. 5. The Case for Strategic Resonance 797 manufacturing strategy should be involved in business strategy formulation and imple- mentation (e.g. Kim and Lee, 1993; McDougall et al., 1992; Stobaugh and Telesio, 1983; Swamidass and Newell, 1987). The need for linking business and manufac- turing strategies is as crucial today as in Skinner’s day, according to Corbett and Van Wassenhove (1993), and the American Production and Inventory Control Society (APICS) (Industry Week, 1998). Aligning manufacturing and business-level strategy requires an understanding between top managers and manufacturing managers on: (1) business- and manu- facturing-level goals; and (2) how manufacturing can support the strategic direc- tion of the firm. Alignment will support the development and deployment of manufacturing capabilities that can support the firm’s strategic direction, and in turn better business performance (e.g. Cleveland et al., 1989; Gupta and Lonial, 1998; Richardson et al., 1985, Schroeder et al., 1986; Swamidass, 1986; Vickery et al., 1993; Ward and Duray, 1995). However, not only has the manufacturing function been neglected as a strategic element of the planning process (Skinner, 1969), the linkage between manufacturing and strategic planning has been elusive and ill-defined (Williams et al., 1995). Strategic Fit Versus Strategic Flexibility Both the market-led and the resource-based view highlight shortcomings in the manufacturing strategy paradigm. First, market-led approaches to achieving strategic fit were developed in stable and predictable competitive environments where the Structure-Conduct-Performance (S-C-P) approach (Thomas and Pollock, 1999) achieved adequate performance. Today’s external environments, however, are increasingly dynamic and characterized by change in products and markets (Dess and Davis, 1984; Hamel, 2002; Miller and Friesen, 1983; Pine et al., 1993). Rapidly-escalating competition demanding ever-increasing flexibility, delivery speed, and innovation, at the extreme becoming hypercompetitive envi- ronments (D’Aveni, 1994). This in turn affects the internal environment of the firm (Pagell and Krause, 1999). We illustrate the key changes to the business envi- ronment in Table I. Second, strategic fit is no longer adequate when the competitive environment is dynamic and unpredictable, global, and driven by technology and information. Strategic fit is static in nature (Miller and Friesen, 1983; Rajagopalan and Spre- itzer, 1997; Venkatraman, 1989; Zajac and Shortell, 1989) and it is sometimes unclear about what constitutes ‘fit’ (Zajac et al., 2000). A strategy that is only market-led will lead to ‘strategic dissonance’ between the firm and its chosen markets, and between the firm’s strategic intent (Hamel and Prahalad, 1989) and its operational capabilities. Firms must therefore abandon strategic fit for strategic flexibility (Hitt et al., 1998; Sanchez, 1995), in order to support rapid response to changing customer requirements. © Blackwell Publishing Ltd 2005
  6. 6. 798 S. Brown and K. Blackmon Table I. Traditional strategy context versus today Traditional Today Rate of change Static Dynamic Environment Stable Turbulent and volatile Production context Mass production Responsive and customized Structure Enterprise-specific Network Transformation Physical assets Information and knowledge Strategy process Top-down Strategic resonance The resource-based view does emphasize the importance of resources and capa- bilities when sustainable competitive advantage is increasingly based on dynamic flexibility in building and maintaining those core or dynamic capabilities that are superior to competitors. Inevitably, however, competitive advantage still ultimately rests in meeting the needs of customers, and thus market requirements play an important role; therefore, adopting only a resource-driven approach to strategy is inadequate (Verdin and Williamson, 1994). Maintaining strategic fit in dynamic environments creates particular problems for manufacturing strategy (Brown, 2001). Because manufacturing strategy does not directly interact with the competitive environment (Ward and Duray, 2000), manufacturing’s internal and external context has changed, yet manufacturing thus has not responded to major changes in the firm’s competitive environment. Manufacturing strategy has not been aligned with business-level strategy to support competitive advantage, isolating manufacturing from the firm’s strategy process and thus from market requirements (Lazonick, 1990; Lazonick and West, 1995). This has helped to fuel a growing gap between the strategic decision-making processes and the manufacturing organization. Further, the manufacturing strat- egy paradigm has remained constant, allowing manufacturing strategy’s content to drift away from the strategy mainstream, thus widening the gap between manu- facturing and business-level strategy. Clearly what is needed is an approach to manufacturing strategy that simulta- neously considers how both market requirements and manufacturing capabilities can be matched to competitive strategy in a dynamic and unpredictable competi- tive environment to sustain competitive performance. As Hayes and Pisano (1994) indicate, this is where the role of strategy can be pivotal. Dynamic environments (Gerwin, 1993; Swamidass and Newell, 1987) and new production modes such as mass customization (Kotha, 1995; Pine et al., 1993), agile manufacturing (Kidd, 1994), flexible specialization (Piore and Sabel, 1984), lean production (Womack et al., 1990), and strategic manufacturing (Brown, 2000; Hill, 1995) demand increased manufacturing flexibility and a more dynamic approach. © Blackwell Publishing Ltd 2005
  7. 7. The Case for Strategic Resonance 799 Despite the acknowledged importance of both external and internal environ- ments and hence both market-led and resource-based approaches (Hoskisson et al., 1999; McGahan and Porter, 1997; Rumelt et al., 1994), however, it is still not clear how to link functional strategy effectively with business-level strategy (Henderson and Mitchell, 1997; Spina, 1998). Neither approach provides specific guidance about resolving the differences between business and functional strate- gies even though this guidance is necessary to know when and how to deploy approaches such as lean production, mass customization, and agile manufactur- ing (Brown, 2001). Similarly, whilst manufacturing strategy traditionally concerned the internal operations of a single plant site or, at most, the value chain of a ver- tically-integrated company, some firms now attempt to manage external relation- ships across the entire transformation process from supply to customer. Formerly external groups such as suppliers and customers have become integrated into the firm, so that action takes place within the context of economic networks rather than individual firms (e.g. Hax and Wilde, 2001). Supply chain activities include partner selection (Dacin et al., 1997), as well as co-operative strategies such as joint ventures and strategic alliances that provide access to knowledge (Hitt et al., 1997; Osborn and Hagedoorn, 1997; Singh, 1995). Competitive advantage thus involves the firm’s network of partners, including strategic alliances, and joint ventures, as well as traditional supply networks. Manufacturing strategy must also pay atten- tion to the horizontal alliances and mergers/acquisitions affecting relationships within the firm’s economic network. We propose that not enough attention has been paid to how business-level and manufacturing strategies can be aligned into a unified framework to maximize the firm’s potential for success. Because manufacturing strategy has not evolved along with the strategy mainstream, applying the new concepts and approaches devel- oped in mainstream strategy described above can narrow this gap. Aligning man- ufacturing and business-level strategy must incorporate both the market-led and the resource-based views through identifying key organizational and environmen- tal factors that affect the alignment between manufacturing and business-level strategy, and hence the degree of strategic fit between the firm and its competi- tive environment, which should then influence subsequent organizational perfor- mance. We propose that the strategic resonance framework introduced in the next section can be used to reconcile the split between manufacturing strategy and the strategy mainstream. FRAMEWORK AND PROPOSITIONS The critical implication of the previous section is that manufacturing strategy must match manufacturing capabilities with market requirements. Three key objectives for the manufacturing strategy process thus become: © Blackwell Publishing Ltd 2005
  8. 8. 800 S. Brown and K. Blackmon (1) Manufacturing strategy must be aligned with business-level competitive strategy to support the goals of the strategic business unit (SBU) (e.g. Hayes and Wheelwright, 1984; Skinner, 1969). (2) Manufacturing strategy must be aligned with other functional strategies at the SBU level particularly marketing and human resources strategies (e.g. Berry et al., 1995; Deane et al., 1991; Menda and Dilts, 1997). (3) Manufacturing strategy must lead to internal consistency within the manu- facturing function (e.g. Hill, 1980, 1995). Strategic Resonance Aligning competitive strategy with the competitive environment will lead to dynamic strategic flexibility. Aligning manufacturing strategy with a dynamic and flexible competitive strategy will lead to closer links between manufacturing and competitive strategy. We call the outcome of this strategic alignment ‘strategic resonance’. In turn, the ‘strategic resonance’ between market requirements as interpreted through the market-led approach and manufacturing capabilities as interpreted through the resource-driven approach will enhance performance. Aligning manufacturing and business-level competitive strategy will create a blueprint for aligning market requirements and manufacturing capabilities for competitive advantage, strategic resonance. Strategic resonance dynamically links business-level strategy and manufacturing capabilities, market requirements, and the firm’s supply network. Simultaneously linking market requirements and manufacturing capabilities through market-led and resource-driven approaches leads the firm’s capabilities and environment to ‘resonate’. Strategic resonance will be achieved when firms align manufacturing strategy with business-level strategy to support strategic flexibility through integrating market-led and resource-driven approaches. This prevents the firm from being excellent in the wrong things: it also prevents the firm from chasing after businesses and markets in which it cannot hope to compete. The strategy process becomes ongoing and changing, adapting to ensure that customer requirements and organization-wide capabilities continue to resonate. Because of this integration of both market-led and resource-driven approaches, strategic resonance in turn will lead to higher performance than manufacturing flexibility alone, although it also supports goals of the right markets, customers, products, and responsiveness (e.g. Upton, 1994), but focuses on mainly on devel- oping the ability to switch between products, rather than to be locked into a limited range of products. We argue that three core areas contribute to strategic resonance between manufacturing and business strategy, and discuss these areas in detail below. These areas are: © Blackwell Publishing Ltd 2005
  9. 9. The Case for Strategic Resonance 801 (1) Identifying and developing manufacturing capabilities, especially core capa- bilities related to people, processes, products, and networks. (2) Increasing senior executive awareness of manufacturing capabilities in the strategic process. (3) Increasing the involvement and influence of manufacturing executives in the strategic process. Identifying Manufacturing Capabilities Manufacturing managers face a competitive environment that includes rapid tech- nological change, global competitors, and demanding customers (Pagell and Krause, 1999). They must invest appropriately in product and process capabilities that fit both current and known market requirements as well as future and unpre- dictable market requirements; that is, they must support dynamic flexibility as well as strategic fit. The manufacturing strategy paradigm emphasizes the role of man- ufacturing managers in identifying the generic manufacturing capabilities (e.g. cost and quality) that match market requirements and then determining the specific product and process capabilities that are required to support these generic capa- bilities. This leads to our first proposition: Proposition 1: Firms that have invested in manufacturing capabilities that dynamically align with their market requirements will achieve closer strategic alignment than firms that do not. We briefly explain below how such product and process capabilities might be devel- oped, and develop two sub-propositions from this discussion. Process capabilities. Investments in process technology such as computer-integrated manufacture (CIM) and advanced manufacturing technology (AMT) can create and enhance existing capabilities in terms of variety of configurations, levels of customization, improved speed and reliability of delivery and better levels of quality. For example, AMT investments can enable the firm to provide a range of products or components based on group technology or shared design charac- teristics. For example, Motorola’s original AMT investments in the flexible man- ufacture of components for cellular telephones were successfully applied to other electronic component applications. This investment in turn provides strategic options based on economies of scope, rather than economies of scale. Manufacturing capabilities created by process technology provide opportunities to exploit market capabilities that the firm may have not sought to date and to safeguard against attacking markets in which the firm has no such capabilities. Investment in process technology can hence present strategic opportunities for the firm (Bessant et al., 2001). Process technology is thus a key strategic factor within © Blackwell Publishing Ltd 2005
  10. 10. 802 S. Brown and K. Blackmon manufacturing firms (Beach et al., 2000; Meredith and Vineyard, 1993; Nichols and Jones, 1994; Schroeder et al., 1995; Wathen, 1995), because the manufactur- ing-specific capabilities (Adler and Ferdows, 1990; Bahrami and Evans, 1987; Bessant, 1993; Twiss and Goodridge, 1989) created by process technology are criti- cal for the firm/plant to be more competitive in the market. Further, new modes of manufacturing provide plant-level capabilities but demand closer links between manufacturing and business-level strategy. Based on the importance of process capabilities, we propose that: Proposition 1a: Firms that have clearly-defined process capabilities will achieve closer strategic alignment than firms that do not. However, as Bessant (1993) observes, many firms with good strategic intentions have failed because they did not understand both the opportunities and threats posed by process capabilities. Lei et al. (1996b, p. 510) point out potential draw- backs of such investment: In most cases, AMT investments are irreversible because they are highly spe- cialized, durable, and dependent on the firm’s specific operating routines, infor- mation flows and knowledge surrounding both product design and process technology. However, the strategic options allowed by AMT help the firm recoup its investment. . . . The fragmentation of markets, the development of new market segments or niches, as well as faster design . . . all contribute to the need for strategic flexibility. Thus, flexible manufacturing technologies provide a strategic real option . . . in which high levels of economies of scope and a ‘design for response’ capability position the firm to enter a broader range of dif- ferent markets at its own discretion. Failing to take on board wider strategic considerations prior to investing in process technology can lead to both under-investment (Hutchison and Holland, 1982; Kulatilaka, 1984; Monohan and Smunt, 1984; Starr and Biloski, 1984; Willis and Sullivan, 1984) and over-investment. Underinvestment has led to a technology ‘competitiveness gap’ (Challis and Samson, 1996). Over-investment can be just as harmful, as Keller (1993) noted in her assessment of General Motors vast expen- diture on automation. Product capabilities. As well as process capabilities, product capabilities for design- ing new products and moving them to the marketplace rapidly (Dougherty and Corse, 1995) linked to innovation and rapid new product commercialization are increasingly important (Brown and Eisenhardt, 1995). Manufacturing plays a critical role in product commercialization (e.g. product development cycles in the © Blackwell Publishing Ltd 2005
  11. 11. The Case for Strategic Resonance 803 automobile industry). Therefore, we argue that capabilities related to products are important and this leads to the proposition that: Proposition 1b: Firms that have clearly-defined product capabilities will achieve closer strategic alignment than firms that do not. Increasing Senior Manager Awareness of Manufacturing Capabilities Integrating both market-led and resource-driven perspectives in manufacturing and business-level strategy will require a major change in the strategic process from current approaches to make sure that the appropriate content is addressed. The resource-driven strategy relies on strategic decision-makers within the firm being fully aware of, and making the best possible use of, the firm’s capabilities. There- fore, for alignment, the manufacturing perspective must be incorporated in busi- ness strategy formulation (Hill, 1995; Leong et al., 1990; Swamidass and Newell, 1987) so that business-level strategies recognize and invest in manufacturing resources and capabilities. However, the roots of current strategy processes lie in mass production envi- ronments, and were developed in relatively stable and predictable competitive environments that encouraged a top-down strategic approach where strategy was developed by senior managers and then passed down to be implemented by lower levels (Ansoff, 1965; Chandler, 1962). Most firms still manage the strategy process in this way – depending too much on the elite strategy-making group at the top of the organizational hierarchy (Goold and Campbell, 1988, 1991). Although the strategy process in some firms involves multiple functional areas and hierarchical areas of the firm (Hax and Majluf, 1991), even in multidivisional firms, the cor- porate ‘parent’ typically has the final say in devising strategy for the subsidiary divisions and plants within the firm (Goold and Campbell, 1988). Such top-down strategic decision-making processes ignore manufacturing capa- bilities because they encourage the separation of strategy into corporate, business, and functional strategies, and assume that corporate decisions are sufficient to create a fit between business-level and functional strategies. As a result, senior exec- utives view accumulated operations capabilities as of secondary importance to strategic business decisions. We suggest that the top down paradigm has profoundly affected the strategic formulation and implementation process. In particular, the top-down approach minimizes the contribution of manufacturing to strategic process through: (1) Not involving manufacturing managers at senior levels of the firm (Brown, 1998; Chandler, 1962, 1992; Kenney and Florida, 1993; Lazonick, 1991; Womack et al., 1990). © Blackwell Publishing Ltd 2005
  12. 12. 804 S. Brown and K. Blackmon (2) Demoting manufacturing to a technical specialism (Hayes and Wheelwright, 1984). (3) Employing manufacturing merely to implement strategies devised by others (Hayes and Wheelwright, 1984; Lazonick, 1991; Skinner, 1969). (4) Creating differences in timing between strategic and manufacturing plan- ning cycles and time horizons (Lazonick, 1990). As a result, we expect that there will be differences between firms with senior ex- ecutives who are sympathetic to manufacturing, versus those who do not, as expressed in the following proposition: Proposition 2: Firms where senior managers either have technical backgrounds, or plant-level manufacturing experience, or other characteristics that make them aware of manufacturing capabilities will help to create closer strategic align- ment than firms that do not. The Role of Manufacturing Executives in Achieving Strategic Resonance Senior level managers need not be engineers or technicians to achieve strategic resonance. Involving the manufacturing manager in strategic decision-making has been positively related to firm performance (Swamidass and Newell, 1987). Such involvement improves understanding of the strategic direction of the firm, require- ments for manufacturing, and understanding of business objectives (King and Teo, 1997). In addition, such influence improves manufacturing’s abilities to secure resources and helps to steer the decision-making process (Hill, 1995; Papke-Shields and Malhotra, 2001). Thus, effective manufacturing leadership leads to greater alignment between business and manufacturing strategies (Gupta and Lonial, 1998; Papke-Shields and Malhotra, 2001). However, manufacturing has often been relegated to a technical specialism where manufacturing managers are ‘more closely linked with shop-floor workers below than with general managers above’ (Lazonick, 1991, p. 49), without involve- ment in wider, strategic issues. fuelling a growing gap between decision-making processes and the manufacturing organization, isolating manufacturing from the firm’s strategy process and thus from market requirements (Lazonick, 1990; Lazon- ick and West, 1995). Leading Japanese and German manufacturing have been able to include man- ufacturing capabilities successfully within the wider remit of strategy (Harding, 1995; Prais, 1981) without relegating manufacturing to a mere function, unrelated to the strategy process (Lazonick, 1990; Prais, 1981). World-class manufacturing capabilities depend, to some degree at least, upon fusing manufacturing capabil- ities and strategic processes into an integrated approach (Kochan et al., 1997). This © Blackwell Publishing Ltd 2005
  13. 13. The Case for Strategic Resonance 805 seems to be at the core of Dell’s success within the PC industry (Dell and Fredman, 1999; Magretta, 1998). Thus, whilst Proposition 2 addressed the role of senior-level executives, a par- allel proposition for manufacturing managers, addresses the role of manufactur- ing executives: Proposition 3: Firms where manufacturing executives must have influence over and involvement in the strategic planning process will achieve closer strategic alignment than firms that do not. DISCUSSION If manufacturing strategy is not to become (or remain) passé, it must regain its rel- evance. Manufacturing strategy’s relevance was lost, we argue, when it lost touch with the strategy mainstream in both theory and practice. The market-led view points out the difficulty that dynamic environments create for strategic fit between market requirements and manufacturing capabilities, whilst the resource-based view highlights the need for dynamic flexibility and dynamic capabilities in such environments. Critically, however, neither view suggests a way to integrate func- tional strategies with business-level strategies under such conditions, either generi- cally or in the particular case of manufacturing strategy. Formulating and implementing strategy can be massively complex and pro- foundly difficult ( Johnson et al., 2003; Salvato, 2003; Samra-Fredericks, 2003; Whittington, 1993), because there is no fixed or standard approach to formulat- ing strategy (Gilbert et al., 1988; Mintzberg and Waters, 1985; Pearce and Robinson, 1982; Starbuck, 1993; Wood and LaForge, 1979). Managers are faced with conflicting prescriptions, including logical incrementalism (Quinn, 1978), strategic stretch (Hamel and Prahalad, 1993, 1994), and strategic leap (Harrigan, 1986). Strategic resonance provides an improvement on strategic fit because it is dynamic rather than static, requiring market-led and resource-driven approaches to be undertaken simultaneously. Moreover, it explicitly links manufacturing capa- bilities and competitive strategy throughout the strategy process. We argue that firms can align market requirements and manufacturing capabilities, and hence business-level strategy and manufacturing strategy, through rethinking manufac- turing strategy. We propose a framework for achieving such alignment, which will result in what we describe as strategic resonance. This will require firms to: (1) invest in manufacturing capabilities, including clearly defined process and product capabilities; (2) invest in technical expertise at senior management level; and (3) increase the influence of manufacturing managers over the strategy process. Based on the framework, we developed a set of propositions that should be investigated in future manufacturing strategy research. © Blackwell Publishing Ltd 2005
  14. 14. 806 S. Brown and K. Blackmon We argue that the strategic resonance framework has important implications for both theory-building and theory-testing. First, we have included concepts from strategic management, which should add to the repertoire of concepts available in manufacturing strategy. Strategic management has highlighted the need to develop strategy in the context of unstable and unpredictable environments, and thus the need to move beyond market-led approaches to strategy. This paper shows a way of incorporating new resource-driven approaches with the existing market- led approach to create competitive advantage. This could be incorporated as new ways of operationalizing business-level strategy (beyond cost-differentiation-focus) and specific as well as generic manufacturing capabilities. Second, we hope that our propositions will inspire the formulation and testing of detailed hypotheses. It is easy to formulate new concepts and theories from an armchair perspective, but it is plant-level research that will support or weaken them. We believe that our propositions are testable, through in-depth and detailed case studies with detailed consideration of the strategy process and content, fol- lowed by confirmatory research with a wider sample. First, because of the com- plexity of the links between capabilities and performance, even at the SBU level, case study research would allow researchers to engage with this complexity. Second, survey-based research would allow verification of these propositions, and of the findings of case study research, over a wider population of manufacturing organizations. The design of such research should include both senior executives involved in the strategic planning process, manufacturing executives, and plant- level managers. IMPLICATIONS FOR MANAGERS Achieving strategic resonance will require both senior executives and manufac- turing executives to participate in changing the strategic decision-making process. Strategic resonance will depend upon changes to three key areas: the strategy process itself, the content of the strategy, and the ability to operationalize the strat- egy. Top-down approaches to strategy – where, as have noted manufacturing per- sonnel may be excluded – pose four barriers to such change: (1) this approach enforces the idea of different realms of strategy – each, potentially, with its own agenda – within the levels of the firm; (2) it assumes that senior-level strategic deci- sions will, somehow, line up with manufacturing strategies to make some sort of perfect fit between them; (3) it also assumes that business strategy-level managers actually know something about manufacturing capabilities and are able to lever- age these capabilities as part of the strategic plan; and (4) it encourages a hierar- chical, top-down approach where, as a result, there may be little or no ownership of the planning process and the subsequent strategic plan. This means that the potential to operationalize the strategy may be threatened. The net result is that © Blackwell Publishing Ltd 2005
  15. 15. The Case for Strategic Resonance 807 strategic dissonance takes place. Each problem needs to be addressed if strategic res- onance is to exist within strategic formulation and implementation. The clear challenge for managers is to ensure that strategic resonance is created in both strategy formulation and implementation. The key common strategic content areas between manufacturing and strategy mainstream will include, but not be limited to: amounts of capacity required by the organization to achieve its aims; the range and locations of facilities; technology investment to support process and product developments; the degree, extent and structure of strategic buyer-supplier relationships as part of the organization’s ‘extended enterprise’ network; the extent and nature of alliances with other competitors; the rate of new product introductions; ensuring that skill levels are in place to accommodate flexibility of volume, variety and other changes. Table II suggests some areas where manufacturing decisions will need to be linked to business-level strategy to achieve strategic resonance. In the current era of hypercompetition (D’Aveni, 1994) with greater reliance on the firm’s ability to accrue and protect capabilities, firms need to find and exploit their strategic resonance – between markets and the firm; within the firm itself; and between senior level strategists and plant-level operations capabilities. Therein lies the problem because, as we have noted, those who are in a position to make strategic decisions may know little about the strategic opportunities and strategic power that reside within the firm’s manufacturing operations’ resources and capa- bilities. As a result, there is no strategic resonance between strategy and operations and consequently, senior level strategists articulate a mission and a strategy that has no chance of being realized. It will not be realized because either the firm does not know what the capabilities are in the first place, or the firm simply does not possess the necessary operations know-how and capability or the firm seems incapable of seeking partnerships with other firms that do. CONCLUSIONS AND SUGGESTIONS FOR FUTURE RESEARCH There are several important conclusions that manufacturing strategy researchers should draw from this research. Whilst it has been argued by others that manu- facturing strategy is the ‘missing link’ in corporate strategy (Hill, 1995; Skinner, 1969), the gap between the two has widened, rather than narrowed since it was identified (Brown, 1996). This gap in the literature is true both in mainstream strat- egy (where manufacturing strategy remains an undeveloped theme and is lost in its critical importance to resource-led and competence based literature) as well as within manufacturing strategy where the root cause of exclusion of manufactur- ing personnel in the main stream strategy process has not been developed. The reasons for this gap, we suggest, have not been explored sufficiently to date. We suggest the key issue is that, although the change from craft to mass © Blackwell Publishing Ltd 2005
  16. 16. 808 S. Brown and K. Blackmon Table II. Specific links between business and manufacturing strategies (adapted from Brown, 2000) Overall strategic factors Operations strategy Amounts of capacity required Ensuring that volume – through variety and variability by the organization to achieve of products – can be achieved. Capacity includes its aims flexibility and range of volumes and not just output from a singe product. Measured in maximum outputs as well as various configurations of product mixes The range and locations of Targeting strategic locations – close to the market; facilities near to labour and other vital inputs to manufacturing. Measured in terms of how quickly a new plant can be manufacturing to world class standards Technology investment to Understanding the required process choice, FMS and support process and product other advanced manufacturing technologies to support developments the firm in the market. Avoiding technological myopia in the selection and acquisition of new technologies. Measured in terms of rapid changeovers, flexibility, quality and cost The degree, extent and structure Understanding market requirements in terms of of strategic buyer-supplier inventory and product delivery. Benchmarking relationships as part of the inventory carrying and inventory turns against organization’s ‘extended competitors. Measured in terms of cycle times enterprise’ network hours of inventory Organizational structure – to Reengineering in the core sense – i.e. focus in reflect what it ‘does best’, often operations will enable the plant to be more agile and entailing outsourcing of other to respond more rapidly and intelligently to market activities requirements Measured in terms of sales per employee, speed of response to customer order and cost The rate of new product Ensuring that operations are involved in new product introduction development – in particular by close liaison with suppliers. Measured in terms of speed to market – and success – of new products The extent and nature of Finding other firms whose operations are alliances with other competitors complementary and add value to the firm’s own capabilities. Ensuring that strategic resonance occurs between firms’ operations. Measured in terms of enhanced quality, delivery and cost parameters Ensuring that skill levels are in Ongoing training and empowerment of staff to place to accommodate flexibility enable them to manage key areas of technology and of volume, variety and other quality. Measured in terms of suggestions per changes employee, percentage of personnel involved in CI groups and other parameters of quality and cost © Blackwell Publishing Ltd 2005
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