Aligning Manufacturing Strategy and Business- Level

Aligning Manufacturing Strategy and Business-Level Competitive Strategy in New CompetitiveEnvironments: The Case for Strategic Resonance

Steve Brown and Kate BlackmonUniversity of Exeter; Said Business School, Oxford

abstract In this paper we make the case for strategic resonance in the strategy makingprocess within dynamic and highly volatile market conditions. We discuss howmanagers are faced with competing paradigms of resource-driven versus market-ledapproaches to strategy but we suggest that both paradigms have flaws and may causestrategic dissonance to occur. Moreover, we offer additional insights into why strategicdissonance can occur within the strategy process of the firm. We suggest that a keyomission often lies in the neglect of operations managers’ potentially importantcontributions 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 strategyprocess, content and implementation determine how manufacturing resources andcapabilities 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 newprocess 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 andWheelwright (1984), and Hill (1985), over 250 conceptual and empirical papers

Journal of Management Studies 42:4 June 20050022-2380

© Blackwell Publishing Ltd 2005. Published by Blackwell Publishing, 9600 Garsington Road, Oxford, OX4 2DQ,UK and 350 Main Street, Malden, MA 02148, USA.

Address for reprints: Steve Brown, School of Business and Economics, University of Exeter, StreathamCourt, Rennes Drive, Exeter EX4 4PU, UK ([email protected]).

on manufacturing strategy have been published in over 30 major journals (Dan-gayach and Deshmukh, 2001). Manufacturing strategy frameworks have identifiedkey manufacturing decisions and highlighted the need for consistency among deci-sions that affect business-level strategy, competitive priorities and manufacturingstrategy and infrastructure (Fine and Hax, 1985; Hayes and Wheelwright, 1984;Hill, 1985, 1995; Schroeder et al., 1986; Skinner, 1969), as well as manufacturingstrategy, manufacturing capabilities, marketing-manufacturing congruence, andtheir effects on manufacturing performance (Bozarth and Edwards, 1997).

Recently, however, concerns have been raised about the current manufacturingstrategy paradigm. Inevitably, core manufacturing strategy concepts such as man-ufacturing capabilities, market requirements, and tradeoffs between competitivepriorities have been criticized. For example, Spring and Boaden (1997) have arguedthat 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 themanufacturing literature (e.g. Hill, 1985). Similarly, the tradeoff view has beenchallenged 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 cohesivetheory-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’scontent has been especially identified as a barrier to advancement (e.g. Hayes andPisano, 1994; Kim and Arnold, 1996; Mills et al., 1995) as it creates competitionbetween 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 providingSkinner’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 havecaused 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 toperformance (Skinner, 1969). As a result, we argue that a new framework is neededto realign manufacturing strategy with strategic management, and we present sucha framework, which we describe as strategic resonance.

This paper is organized as follows. We first briefly discuss the market-led andresource-driven approaches to strategy and use them to identify two importantproblems with the manufacturing strategy paradigm. We then introduce the strate-

gic resonance framework for aligning manufacturing strategy and business-level com-

794 S. Brown and K. Blackmon

© Blackwell Publishing Ltd 2005

petitive strategy, and develop several research propositions from the framework.We conclude by highlighting relevant issues and opportunities for research andmanagement.

LITERATURE REVIEW: IDENTIFICATION OF KEY CONCEPTS

Strategy matters because of its role in the direction taken by the firm. A firm’sstrategic posture represents the way that a business positions itself relative to itscompetitors (Hofer and Schendel, 1989). A firm must be poised and ready to meetfuture market opportunities (Brown, 1996). Without a strategy, firms’ short-termdecisions 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), andthus cannot be reliably sustained or repeated.

Business strategies are the decisions at the strategic business unit (SBU) level thatdetermine how the SBU will support organizational goals. A business strategydefines 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 anorganization 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). Becausethe 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 alternateviews of how to achieve strategic fit. The market-led view proposes that firms gaincompetitive 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 determinewhich 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 industrystructure 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 andtranslated into functional-level strategies through a top-down process.

Alternately, the resource-based view of competitive advantage suggests that the firmshould assemble and deploy appropriate resources that provide opportunities for

The Case for Strategic Resonance 795


sustainable competitive advantage in its chosen markets to maximize returns(Barney, 1986; Dierickx and Cool, 1989; Reed and DeFillippi, 1990). Competitiveadvantage is thus created not by the privileged end-product market position, butby distinctive, valuable firm-level resources that competitors are unable to repro-duce (Makhija, 2003). Firms therefore sustain competitive advantage throughdeveloping and guarding capabilities and competencies (Hayes, 1985; Prahaladand Hamel, 1990; Stalk and Evans, 1992).

Over time, the concept of distinctive competencies (Selznick, 1957) has evolved intocore competences (Prahalad and Hamel, 1990), dynamic core competences (Leiet al., 1996a), and dynamic capabilities (e.g. Eisenhardt and Martin, 2000; Teeceet 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 andMcMahan, 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 shouldbe consistent with business-level strategies (Kotha and Orne, 1989; McDougall etal., 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-qualifyingand order-winning criteria win orders from customers (Hill, 1995). Trying to meetinconsistent 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 otherhand, 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 describewhat a manufacturing operation can do better than its competitors (Hayes andPisano, 1996) and are fundamental proficiencies in manufacturing (Swink andHegarty, 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 environmentwhen business and manufacturing strategies are linked (Corbett and Van Wassen-hove, 1993; Garvin, 1993; Schendel and Hofer, 1979; Ward and Duray, 2000),



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 andVan Wassenhove (1993), and the American Production and Inventory ControlSociety (APICS) (Industry Week, 1998).

Aligning manufacturing and business-level strategy requires an understandingbetween 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 ofmanufacturing capabilities that can support the firm’s strategic direction, and inturn better business performance (e.g. Cleveland et al., 1989; Gupta and Lonial,1998; Richardson et al., 1985, Schroeder et al., 1986; Swamidass, 1986; Vickeryet al., 1993; Ward and Duray, 1995). However, not only has the manufacturingfunction been neglected as a strategic element of the planning process (Skinner,1969), the linkage between manufacturing and strategic planning has been elusiveand ill-defined (Williams et al., 1995).

Strategic Fit Versus Strategic Flexibility

Both the market-led and the resource-based view highlight shortcomings in themanufacturing strategy paradigm. First, market-led approaches to achievingstrategic fit were developed in stable and predictable competitive environmentswhere the Structure-Conduct-Performance (S-C-P) approach (Thomas andPollock, 1999) achieved adequate performance. Today’s external environments,however, are increasingly dynamic and characterized by change in products andmarkets (Dess and Davis, 1984; Hamel, 2002; Miller and Friesen, 1983; Pine etal., 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 thefirm (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 environmentis 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 sometimesunclear 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 chosenmarkets, and between the firm’s strategic intent (Hamel and Prahalad, 1989) andits operational capabilities. Firms must therefore abandon strategic fit for strategic

flexibility (Hitt et al., 1998; Sanchez, 1995), in order to support rapid response tochanging customer requirements.



The resource-based view does emphasize the importance of resources and capa-bilities when sustainable competitive advantage is increasingly based on dynamicflexibility in building and maintaining those core or dynamic capabilities that aresuperior to competitors. Inevitably, however, competitive advantage still ultimatelyrests in meeting the needs of customers, and thus market requirements play animportant role; therefore, adopting only a resource-driven approach to strategy isinadequate (Verdin and Williamson, 1994).

Maintaining strategic fit in dynamic environments creates particular problemsfor manufacturing strategy (Brown, 2001). Because manufacturing strategy doesnot directly interact with the competitive environment (Ward and Duray, 2000),manufacturing’s internal and external context has changed, yet manufacturingthus has not responded to major changes in the firm’s competitive environment.Manufacturing strategy has not been aligned with business-level strategy to supportcompetitive advantage, isolating manufacturing from the firm’s strategy processand thus from market requirements (Lazonick, 1990; Lazonick and West, 1995).This has helped to fuel a growing gap between the strategic decision-makingprocesses and the manufacturing organization. Further, the manufacturing strat-egy paradigm has remained constant, allowing manufacturing strategy’s contentto 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 capabilitiescan 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 asmass customization (Kotha, 1995; Pine et al., 1993), agile manufacturing (Kidd,1994), flexible specialization (Piore and Sabel, 1984), lean production (Womack etal., 1990), and strategic manufacturing (Brown, 2000; Hill, 1995) demandincreased manufacturing flexibility and a more dynamic approach.



Table I. Traditional strategy context versus today

Traditional Today

Rate of change Static DynamicEnvironment Stable Turbulent and volatileProduction context Mass production Responsive and customizedStructure Enterprise-specific NetworkTransformation Physical assets Information and knowledgeStrategy process Top-down Strategic resonance

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 stillnot clear how to link functional strategy effectively with business-level strategy(Henderson and Mitchell, 1997; Spina, 1998). Neither approach provides specificguidance about resolving the differences between business and functional strate-gies even though this guidance is necessary to know when and how to deployapproaches such as lean production, mass customization, and agile manufactur-ing (Brown, 2001). Similarly, whilst manufacturing strategy traditionally concernedthe 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. Formerlyexternal groups such as suppliers and customers have become integrated into thefirm, so that action takes place within the context of economic networks ratherthan individual firms (e.g. Hax and Wilde, 2001). Supply chain activities includepartner selection (Dacin et al., 1997), as well as co-operative strategies such as jointventures and strategic alliances that provide access to knowledge (Hitt et al., 1997;Osborn and Hagedoorn, 1997; Singh, 1995). Competitive advantage thus involvesthe firm’s network of partners, including strategic alliances, and joint ventures, aswell as traditional supply networks. Manufacturing strategy must also pay atten-tion to the horizontal alliances and mergers/acquisitions affecting relationshipswithin the firm’s economic network.

We propose that not enough attention has been paid to how business-level andmanufacturing strategies can be aligned into a unified framework to maximize thefirm’s potential for success. Because manufacturing strategy has not evolved alongwith 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 andthe resource-based views through identifying key organizational and environmen-tal factors that affect the alignment between manufacturing and business-levelstrategy, 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 nextsection can be used to reconcile the split between manufacturing strategy and thestrategy mainstream.

FRAMEWORK AND PROPOSITIONS

The critical implication of the previous section is that manufacturing strategy mustmatch manufacturing capabilities with market requirements. Three key objectivesfor the manufacturing strategy process thus become:



(1) Manufacturing strategy must be aligned with business-level competitivestrategy to support the goals of the strategic business unit (SBU) (e.g. Hayesand Wheelwright, 1984; Skinner, 1969).

(2) Manufacturing strategy must be aligned with other functional strategies atthe 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 todynamic strategic flexibility. Aligning manufacturing strategy with a dynamic andflexible competitive strategy will lead to closer links between manufacturing andcompetitive strategy. We call the outcome of this strategic alignment ‘strategic resonance’. In turn, the ‘strategic resonance’ between market requirements asinterpreted through the market-led approach and manufacturing capabilities asinterpreted through the resource-driven approach will enhance performance.

Aligning manufacturing and business-level competitive strategy will create ablueprint for aligning market requirements and manufacturing capabilities forcompetitive advantage, strategic resonance. Strategic resonance dynamically linksbusiness-level strategy and manufacturing capabilities, market requirements, andthe firm’s supply network.

Simultaneously linking market requirements and manufacturing capabilitiesthrough market-led and resource-driven approaches leads the firm’s capabilitiesand environment to ‘resonate’. Strategic resonance will be achieved when firms align manufacturing strategy with business-level strategy to support strategicflexibility through integrating market-led and resource-driven approaches.This prevents the firm from being excellent in the wrong things: it also preventsthe firm from chasing after businesses and markets in which it cannot hope tocompete. The strategy process becomes ongoing and changing, adapting to ensurethat 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 manufacturingflexibility 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 limitedrange of products.

We argue that three core areas contribute to strategic resonance between manufacturing and business strategy, and discuss these areas in detail below. Theseareas are:



(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 thestrategic process.

(3) Increasing the involvement and influence of manufacturing executives in thestrategic process.

Identifying Manufacturing Capabilities

Manufacturing managers face a competitive environment that includes rapid tech-nological change, global competitors, and demanding customers (Pagell andKrause, 1999). They must invest appropriately in product and process capabilitiesthat fit both current and known market requirements as well as future and unpre-dictable market requirements; that is, they must support dynamic flexibility as wellas strategic fit. The manufacturing strategy paradigm emphasizes the role of man-ufacturing managers in identifying the generic manufacturing capabilities (e.g. costand quality) that match market requirements and then determining the specificproduct 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 thatdynamically align with their market requirements will achieve closer strategicalignment 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-integratedmanufacture (CIM) and advanced manufacturing technology (AMT) can createand enhance existing capabilities in terms of variety of configurations, levels ofcustomization, improved speed and reliability of delivery and better levels ofquality. 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 otherelectronic component applications. This investment in turn provides strategicoptions based on economies of scope, rather than economies of scale.

Manufacturing capabilities created by process technology provide opportunitiesto exploit market capabilities that the firm may have not sought to date and tosafeguard against attacking markets in which the firm has no such capabilities.Investment in process technology can hence present strategic opportunities for thefirm (Bessant et al., 2001). Process technology is thus a key strategic factor within



manufacturing firms (Beach et al., 2000; Meredith and Vineyard, 1993; Nicholsand 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 modesof manufacturing provide plant-level capabilities but demand closer links betweenmanufacturing and business-level strategy.

Based on the importance of process capabilities, we propose that:

Proposition 1a: Firms that have clearly-defined process capabilities will achievecloser strategic alignment than firms that do not.

However, as Bessant (1993) observes, many firms with good strategic intentionshave failed because they did not understand both the opportunities and threatsposed 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 processtechnology. However, the strategic options allowed by AMT help the firmrecoup its investment. . . . The fragmentation of markets, the development ofnew market segments or niches, as well as faster design . . . all contribute to theneed for strategic flexibility. Thus, flexible manufacturing technologies providea 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 processtechnology can lead to both under-investment (Hutchison and Holland, 1982;Kulatilaka, 1984; Monohan and Smunt, 1984; Starr and Biloski, 1984; Willis andSullivan, 1984) and over-investment. Underinvestment has led to a technology‘competitiveness gap’ (Challis and Samson, 1996). Over-investment can be just asharmful, 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 andCorse, 1995) linked to innovation and rapid new product commercialization areincreasingly important (Brown and Eisenhardt, 1995). Manufacturing plays a critical role in product commercialization (e.g. product development cycles in the



automobile industry). Therefore, we argue that capabilities related to products areimportant and this leads to the proposition that:

Proposition 1b: Firms that have clearly-defined product capabilities will achievecloser strategic alignment than firms that do not.

Increasing Senior Manager Awareness of Manufacturing Capabilities

Integrating both market-led and resource-driven perspectives in manufacturingand business-level strategy will require a major change in the strategic process fromcurrent approaches to make sure that the appropriate content is addressed. Theresource-driven strategy relies on strategic decision-makers within the firm beingfully 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 manufacturingresources and capabilities.

However, the roots of current strategy processes lie in mass production envi-ronments, and were developed in relatively stable and predictable competitiveenvironments that encouraged a top-down strategic approach where strategy wasdeveloped by senior managers and then passed down to be implemented by lowerlevels (Ansoff, 1965; Chandler, 1962). Most firms still manage the strategy processin this way – depending too much on the elite strategy-making group at the topof the organizational hierarchy (Goold and Campbell, 1988, 1991). Although thestrategy process in some firms involves multiple functional areas and hierarchicalareas 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 subsidiarydivisions 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 tocreate a fit between business-level and functional strategies. As a result, senior exec-utives view accumulated operations capabilities as of secondary importance tostrategic business decisions. We suggest that the top down paradigm has profoundlyaffected the strategic formulation and implementation process. In particular, thetop-down approach minimizes the contribution of manufacturing to strategicprocess 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).



(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, asexpressed in the following proposition:

Proposition 2: Firms where senior managers either have technical backgrounds,or plant-level manufacturing experience, or other characteristics that make themaware 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 strategicresonance. Involving the manufacturing manager in strategic decision-making hasbeen positively related to firm performance (Swamidass and Newell, 1987). Suchinvolvement 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 secureresources and helps to steer the decision-making process (Hill, 1995; Papke-Shieldsand Malhotra, 2001). Thus, effective manufacturing leadership leads to greateralignment between business and manufacturing strategies (Gupta and Lonial,1998; Papke-Shields and Malhotra, 2001).

However, manufacturing has often been relegated to a technical specialismwhere manufacturing managers are ‘more closely linked with shop-floor workersbelow than with general managers above’ (Lazonick, 1991, p. 49), without involve-ment in wider, strategic issues. fuelling a growing gap between decision-makingprocesses and the manufacturing organization, isolating manufacturing from thefirm’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, unrelatedto the strategy process (Lazonick, 1990; Prais, 1981). World-class manufacturingcapabilities depend, to some degree at least, upon fusing manufacturing capabil-ities and strategic processes into an integrated approach (Kochan et al., 1997). This



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 overand involvement in the strategic planning process will achieve closer strategicalignment 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 touchwith the strategy mainstream in both theory and practice. The market-led viewpoints out the difficulty that dynamic environments create for strategic fit betweenmarket requirements and manufacturing capabilities, whilst the resource-basedview highlights the need for dynamic flexibility and dynamic capabilities in suchenvironments. 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 facedwith 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 isdynamic rather than static, requiring market-led and resource-driven approachesto be undertaken simultaneously. Moreover, it explicitly links manufacturing capa-bilities and competitive strategy throughout the strategy process. We argue thatfirms can align market requirements and manufacturing capabilities, and hencebusiness-level strategy and manufacturing strategy, through rethinking manufac-turing strategy. We propose a framework for achieving such alignment, which willresult in what we describe as strategic resonance. This will require firms to: (1)invest in manufacturing capabilities, including clearly defined process and productcapabilities; (2) invest in technical expertise at senior management level; and (3)increase the influence of manufacturing managers over the strategy process. Basedon the framework, we developed a set of propositions that should be investigatedin future manufacturing strategy research.



We argue that the strategic resonance framework has important implications forboth theory-building and theory-testing. First, we have included concepts fromstrategic management, which should add to the repertoire of concepts availablein manufacturing strategy. Strategic management has highlighted the need todevelop strategy in the context of unstable and unpredictable environments, andthus the need to move beyond market-led approaches to strategy. This paper showsa way of incorporating new resource-driven approaches with the existing market-led approach to create competitive advantage. This could be incorporated as newways 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 testingof detailed hypotheses. It is easy to formulate new concepts and theories from anarmchair perspective, but it is plant-level research that will support or weakenthem. We believe that our propositions are testable, through in-depth and detailedcase 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, andof the findings of case study research, over a wider population of manufacturingorganizations. The design of such research should include both senior executivesinvolved 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 strategyprocess 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 approachenforces the idea of different realms of strategy – each, potentially, with its ownagenda – 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 ofperfect fit between them; (3) it also assumes that business strategy-level managersactually 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 ownershipof the planning process and the subsequent strategic plan. This means that thepotential to operationalize the strategy may be threatened. The net result is that



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 createdin both strategy formulation and implementation. The key common strategiccontent areas between manufacturing and strategy mainstream will include, butnot be limited to: amounts of capacity required by the organization to achieve itsaims; the range and locations of facilities; technology investment to supportprocess and product developments; the degree, extent and structure of strategicbuyer-supplier relationships as part of the organization’s ‘extended enterprise’network; the extent and nature of alliances with other competitors; the rate of newproduct 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 belinked to business-level strategy to achieve strategic resonance.

In the current era of hypercompetition (D’Aveni, 1994) with greater reliance onthe firm’s ability to accrue and protect capabilities, firms need to find and exploittheir strategic resonance – between markets and the firm; within the firm itself;and between senior level strategists and plant-level operations capabilities. Thereinlies the problem because, as we have noted, those who are in a position to makestrategic decisions may know little about the strategic opportunities and strategicpower that reside within the firm’s manufacturing operations’ resources and capa-bilities. As a result, there is no strategic resonance between strategy and operationsand consequently, senior level strategists articulate a mission and a strategy thathas no chance of being realized. It will not be realized because either the firmdoes not know what the capabilities are in the first place, or the firm simply doesnot possess the necessary operations know-how and capability or the firm seemsincapable of seeking partnerships with other firms that do.

CONCLUSIONS AND SUGGESTIONS FOR FUTURE RESEARCH

There are several important conclusions that manufacturing strategy researchersshould 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 wasidentified (Brown, 1996). This gap in the literature is true both in mainstream strat-egy (where manufacturing strategy remains an undeveloped theme and is lost inits critical importance to resource-led and competence based literature) as well aswithin 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





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 outputsas 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 bemanufacturing to world class standards

Technology investment to Understanding the required process choice, FMS andsupport process and product other advanced manufacturing technologies to supportdevelopments 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 ofof strategic buyer-supplier inventory and product delivery. Benchmarking relationships as part of the inventory carrying and inventory turns againstorganization’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 marketactivities requirements Measured in terms of sales per

employee, speed of response to customer order andcost

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 ofenhanced 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 andof 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

production has often been explained in terms of changes within manufacturingprocesses, this transition has not been developed in terms of the fundamentalimpact upon the strategic decision process within firms. Strategic resonance is dif-ficult to achieve in the internal strategy process of the firm whose processes oftenremain rooted in hierarchical settings fraught with conflicting demands betweentop levels (strategic) and lower levels (operations) of management. The growth oflarge, multi-divisional enterprises, particularly within the United States during theemergence of mass production, brought with it the creation of increased levels ofhierarchy within the firm. The exclusion of operations personnel from the strate-gic direction of the firm had enormous impact because now, in contrast to craftenterprises, there could be conflict and tension between conflicting goals withinthe firm resulting in strategic dissonance.

However, whilst achieving strategic resonance is a profoundly difficult task, itwill be a necessary requirement in the continuing highly competitive arena.

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Documents

Aligning Manufacturing Strategy and Business- Level