How do top management teams in regulated industries evolve their strategies in response to signals from performance measures?

A conceptual framework was derived by exploring how strategy change and top management team literatures inform the performance measurement field. It began to explain the role top management teams play using signals from their performance measures to evolve strategy. Adopting a Realist perspective, case study research was undertaken to seek out the approaches taken by managers in four organisations operating in UK regulated industry. Using the strategy chart tool developed by Mills et al (1998) in a retrospective manner and mapping changes in performance measures over the same time period, the research identified events in which changes in strategy and performance measures were linked. These event data sets were triangulated by interviewing managers about the roles they played and specifically the actions and factors to which they paid attention during the events. The findings were used to test and develop the conceptual framework. This resulted in an empirical framework that verifies existing theory that performance evaluation is a process of learning and inducing change. It confirms that this can be achieved whilst balancing alignment of the measures to implement strategy and adapting them to formulate strategy (Bourne et al 2000, Gimbert et al 2010, Kolehmainen 2010, Martinez et al 2010, Micheli and Manzoni 2010, Micheli et al 2011). Furthermore it develops theoretical understanding through the conduct of case studies into the role and key features of a performance measurement system which both supports the implementation and the formulation of strategy (Gimbert et al 2010, Micheli and Manzoni 2010) and finally the case studies provide rich description of what strategists actually do in crafting strategy as called for by those writing in the strategy-as-practice field (Whittington et al 2006). The framework may also benefit practitioners since it describes the factors to which top management teams may pay attention in using performance measures to develop business strategy in regulated industries.