An integrated method to plan, structure and validate a business strategy using fuzzy DEMATEL and the balanced scorecard

• Published in: Expert systems with applications 2019-05, Vol.122, p.351-368
• Main Authors: Acuña-Carvajal, Felipe, Pinto-Tarazona, Leonardo, López-Ospina, Héctor, Barros-Castro, Ricardo, Quezada, Luis, Palacio, Katherine
• Format: Article
• Language: English
• Subjects: Balanced Scorecard; Business; Decision making; Fuzzy DEMATEL; Fuzzy logic; Linear programming; Multiple criterion; Strategy; Strategy maps; Strategy planning; Strategy structuring; Validation of strategies
• ISSN: 0957-4174; 1873-6793
• DOI: 10.1016/j.eswa.2019.01.030

•Method that supports the overall process of planning, structuring and validating a business strategy.•Integration of qualitative with quantitative tools, making the strategy process robust and holistic.•Tools that consider the subjectivity of the process of construction of strategy maps.•Fuzzy DEMATEL and linear programming to support the design of a strategy map.•Method to explain efficiently, functionally, and easily the route map of a strategy. Strategy literature has mainly focused on conceptual tools to support stages of the planning and structuring of the strategy within the context of a Balanced Scorecard (BSC). Recently, quantitative tools based on multi-criteria decision-making methods (MCDM) have received more attention; however, studies still have limitations. Such is the case of Fuzzy DEMATEL, which has been proposed in the literature, but not integrated within the whole process of strategy formulation. In addition, studies have presented weaknesses by not considering, for instance, the logical structure of a strategy map. Hence, the main objective of this study is to propose the development of a method that supports the overall process of planning, structuring and validating a business unit strategy while overcoming the limitations of previous works, considering the subjectivity of decision-making in the construction of strategy maps. To fulfil these purposes, this study proposes an extension of the work of Lopez-Ospina et al. (2017) entitled “A method for designing strategy maps using DEMATEL and linear programming”, by integrating fuzzy logic and traditional, conceptual and qualitative tools to support the diagnosis and strategy design. The significant contributions of this work is that it overcomes limitations of previous methods by providing: (1) a logic structure of strategy maps; (2) integration of subjectivity within the overall formulation process of the strategy; (3) selection of the most important relationships between strategy objectives to explain efficiently, functionally, and easily the route map of a strategy; and (4) integration of traditional qualitative tools with quantitative tools, making the process robust and holistic. The proposed method was applied to an Official Banking business unit of a Colombian bank, where expert judgment for strategy formulation helps to test the effect of the methodological design.