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CHAPTER STRATEGIC MANAGEMENT IN PUBLIC SECTOR ORGANIZATIONS SU DINH THANH LEARNING OBJECTIVES WHAT IS A ‘STRATEGY’ ■ Plan: Pl some sortt off consciously i l intended i t d d course off action, ti a guideline to deal with a situation ■ Ploy: a specific manoeuvre intended to outwit an opponent or competitor ■ Pattern: a pattern in a stream of actions ■ Position: a means of locating an organization in an ‘environment’ – the mediating force or ‘match’ between organi ation and environment organization en ironment ■ Perspective/paradigm: an ingrained way of perceiving the world (what ‘personality’ personality is to the individual) Source: Henry Mintzberg (1987) STRATEGIC PLANING „ Planning in the public sector and its methods used have fairly closely followed the stages of planning set for the private sector „ Strategic planning in the public sector is a phenomenon of the early 1980s 1980s There are more problems and constraints compared to the private sector and these ‘range from constitutional arrangements to legislative and judicial mandates, to government-wide rules and regulations, to jurisdictional boundaries, to scarce resources, to political climate li t factors, f t t client to li t andd constituent tit t interests… i t t Strategic planning models „M Model d l off Olsen Ol andd Eadie E di (1980) „ Model of Osborne and Gaebler (1992) „ Bryson B model d l (1988) Strategic planning models „ In I the th early l 1980s, 1980 Olsen Ol andd Eadie E di claim l i that th t strategic planning process consists of the following basic components : „ The overall mission and goals which strategies are aimed „ The environmental scan or analysis when formulating the organization’s strategies „ Evaluates the strengths and weaknesses of the organization in terms of a variety of factors „ The Th formulation, f l ti evaluation, l ti andd selection l ti off strategies „ The implementation and control of the strategic plan Strategic planning models „ Osborne Ob andd Gaebler G bl (1992): (1992) analysis of the situation, both internal and external; „ diagnosis, di i or identification id tifi ti off the th key k issues i f i facing the organization; „ definition of the organization organization’ss fundamental mission; „ articulation of the organization organization’ss basic goals; „ creation of a vision: what success looks like; „ development of a strategy to realise the vision and goals; „ development of a timetable for that strategy; „ measurement and evaluation of results „ Strategic planning models „ The Th Bryson B model d l off strategic t t i planning l i (1988): (1988) initiating and agreeing on a strategic planning process; „ identifying organization mandates; „ clarifying organization mission and values; „ assessing the external environment (opportunities and threats); assessing the internal environment (strengths and weaknesses); „ identifying the strategic issues facing an organization; „ formulating strategies to manage the issues; and „ establishing an effective organization vision for the future „ Analysing the internal environment „ There are four main elements to this analysis: Value chain analysis y „ Core competence analysis „ Organizational culture analysis analysis „ Competitor and collaborator analysis „ Analysing the internal environment „ Value V l chain h i analysis l i explores l the h ways in i which hi h the h organization creates value for its stakeholders and distributes this value between them In the pprivate sector,, value normallyy refers to the set of benefits which are required by the firm’s stakeholders In the public sector ‘value added’ has rather more dimensions: „ „ „ „ „ user value; value to wider groups (such as family or friends of service users); political value (support to democratic process, e.g through coplanning of services with users and other stakeholders); sociall value l (creation ( i off social i l cohesion h i or supporting i social i l interaction); environmental value (ensuring sustainability of all service provision) Analysing the internal environment Analysing the internal environment „ Core competence analysis also explores the strategic capabilities of the organization, as does the value chain, but it focuses on the underlying competences which make the organization particularly useful to its customers Analysing the internal environment Analysing the internal environment „ Organizational culture analysis explores the underlying taken-for-granted assumptions and norms in the organization There are two well- established ways of exploring organizational cultures – one is the ‘four cultures’ approach of Charles Handy and the other is the ‘cultural web’ of Johnson and Scholes Analysing the internal environment Analysing the internal environment „ A more action-oriented approach to the understanding and change of organizational culture is given by the ‘cultural web’, which suggests the mapping of six different aspects: „ „ The stories within the organization (Who are the heroes? Who are the villains? What does ‘success’ look like?) The routines and rituals within the organization (How seriously is staff appraisal taken? How fair is the annual promotion round? Whose work gets special mention in the Annual Report or Improvement Plan?) Analysing the internal environment „ Cultural web: „ The symbols of the organization (Whose room has a carpet/bookcase/sofa or has three windows? Do people use first names or family names when talking to each other? How people dress?) „ The power base in the organization (Who has the greatest power in practice? Who controls access to those with power?) „ The structure of the organization (Hierarchical? Many-layered or de-layered?) „ The control system of the organization organization (How does the organization stop things happening – formally and informally? How much initiative and innovation is encouraged?) Analysing the internal environment „ Competitor C i andd collaborator ll b analysis l i allows ll us to build on these analyses of the internal environment „ „ Essentially, E i ll we need d to ask k ‘How ‘H d we compare in i terms of value chain and core competences with those rivals we wish to outdo and those collaborators with whom we wish to work?’ This allows us to a ‘Strengths g and Weaknesses’ analysis of our organization vis-à-vis other organizations in our sector Developing and evaluating strategic options „ Taken together, the analyses of external and internal factors allow a SWOT (strengths, weaknesses, opportunities and threats) analysis to be compiled for the organization „ The SWOT analysis needs to be turned into a series of strategic options for doing things better in the future – building on strengths, reducing weaknesses, seizing opportunities, countering threats Developing and evaluating strategic options „ The evaluation process can use three sets of criteria – feasibility, suitability and acceptability – to test out the strategic options before selecting one of them (Johnson and Scholes, 2002) STRATEGIC MANAGEMENT IN A POLITICAL ENVIRONMENT „ The key differences which spring from the political context in which public sector organizations work include: „ „ „ the role of politicians, who often clash openly on major strategic issues; the interaction between politicians and other stakeholder groups; the pressure for ‘short - termist’ decision making arising from regular elections STRATEGIC MANAGEMENT IN A POLITICAL ENVIRONMENT „ There are many pressure which politicians may be driven to make inconsistent decisions or to reverse strategic decisions already taken: „ „ „ „ „ „ political parties; policy networks; the civil service or managerial g systems; y ; charities or voluntary organizations (at national or local level); community groups; sponsors who provide funding for a party or an individual STRATEGIC MANAGEMENT AND INNOVATION „ There Th are many ways in i which hi h a public bli sector organization can innovate, including: „ „ „ „ „ „ „ new services; i new customers (target groups); new service i production d i processes; new procurement processes; new partnership arrangements with the rest of the public sector, with the voluntary sector and with the private sector; new governance structures and processes; new goals and ambitions for the organization… organization ... early 1980s 1980s There are more problems and constraints compared to the private sector and these ‘range from constitutional arrangements to legislative and judicial mandates, to government-wide... Olsen Ol andd Eadie E di claim l i that th t strategic planning process consists of the following basic components : „ The overall mission and goals which strategies are aimed „ The environmental... h organization creates value for its stakeholders and distributes this value between them In the pprivate sector,, value normallyy refers to the set of benefits which are required by the firm’s