Title: Defining strategic ive: A methodology suited for public organizations
Authors: Alogan, Güldal Büyükdamgaci1., Yeti?, Nüket
Subject: Strategic Management
Status: full text
Source: Total Quality Management & Business Excellence; Jul 2006, Vol. 17 Issue 6, p669-684
Preparation: Scientific Database Management Journal Articles www.SYSTEM.parsiblog.com
Abstract: In order to manage public organizations strategically, both the strategic management and the total quality management theory indicates a limited number of "strategic ives or goals" to be defined. These ives, which have to be specific but qualitative statements of commitment, constitute the vital foundation for defining strategic targets, hence for action plans, resource allocation plans, and budget preparation. However, defining strategic ives through ad hoc processes usually do not result in an effective set of statements. Through our training and consulting experience, gained in the midst of a wide and strong wave of re-shaping of public institutions in our country, we have come to develop a structured process for defining strategic ives. In this paper, we first review the strategic management literature in general, and with regard to methods for defining "the right" strategic ives. We then introduce a workable process that is participatory, creativity enhancing, and consensus building.
KEY WORDS: Continuous quality improvement, public organizations, strategic management, strategic ives. --Download Article
Introduction: Since the late 1990s, in Turkish public organizations, a movement of rationalization has been underway in significant and growing intensity. In this country, whose population’s average age has been young, tolerance for costly and inadequate services has been diminishing, possibly as a result of global dissemination of information, which helps pull up expectations and desired standards of living to a common minimum accepted as the norm around the world.
In addition to these internal dynamic forces; two significant factors have indicated a definite need for a major change in management of public services. One of these factors is that international financial agencies (e.g. International Monetary Fund, World Bank) have ben pressuring Turkey to shape up the public sector as one of many measures to reduce debt in the aftermath of two very severe economic crises in the country within the last four years. And Turkey has pledged to do this. The second factor has to do with Turkey’s intention of joining the European Union. This brings about added demand on the similar measures for change in public service processes: demands that are impossible to postpone, and demands that are impossible to dilute. Changes that are being referred to here are requirements – such as transparency and accountability of public service operations, budgets being based on performance measurement, strategic management of performance, quality of products and services targeting to match global standards as well as the expectations of citizens – which have all began to dominate the agenda of public service organizations. Some have been finding it difficult to warm to these developments, arguing that these are external impositions. Others have embraced them arguing that these were necessary steps for Turkey to take sooner or later anyhow, and that they were ‘good for us’. The latter group of people set out to do whatever was necessary to realize these goals. In a large proportion (roughly 40%) of Turkey’s public organizations, comprehensive efforts under such headings as Total Quality Management (TQM) or Continuous Quality Improvement (CQI) have been put in place; in some, triggeredby the top management and ‘mandated’ throughout the organizations, and, in others, through ‘invited’ voluntary participation. Certainly, deployment and sustainability of changes have been challenging; continuing support and motivation of leadership are necessary conditions, and these are, at times, hard to come by, especially because of frequent changes in management levels. In the public sector Marmara University College of Engineering was the pioneer in TQM. This College was the first finalist in the European Foundation for Quality Management (EFQM) Award process (2000) in public sector in Turkey, and the first higher education institution in Europe applying for this award (see www.efqm.org; Yetis¸ et al., 2002).
One of the authors of this paper is the Director of TU¨ SSI?DE (Tu¨rkiye Sanayi Sevk ve I?
dare Enstitu¨su¨ – Turkish Institute of Industrial Management), and the other is a senior researcher there. TU¨ SSI?DE was established as a public organization in the 1980s to provide educational, consulting, and research support in management sciences to Turkish enterprises – private or public. And over the last few years, it certainly has been trying to do its share in playing the role of the catalyst in some of the public organizations that are engaged in organizational change efforts mentioned above. One of the four organizations discussed in this paper is TU¨ SSI?DE itself. Aside from the fact that it is one of the public organizations engaged in such a process of change, we included it in the four cases presented here since it is also one about which we have relatively more liberty to discuss some of the specifics of this process, a liberty we do not have about the other three organizations of whose anonymity we wish to protect. Efforts on Continuous Quality Improvement (CQI) have gone into effect in these public organizations at different points in time, and they have been continuing up to the present
time, at varying phases. The model implemented for organizational change is a model inspired by the EFQM (European Foundation for Quality Management) and the Malcolm Baldrige (MB) (www.asq.org) models of excellence. In this framework, work involves modules such as Process Management, Strategic Management, and Human Resources Management. And the purpose is to design and implement self-perpetuating and self-improving systems that will perform these functions in organizations. In this paper, we will focus on the work to be done within the Strategic Management module. More specifically, we shall present a group process technique that we have developed to implement the ‘defining the strategic ives’ step of the strategic management process.
In this paper, the next section contains a brief review of the historical phases the concept of strategic management has gone through, and also of a current understanding that is widely accepted. This review is necessary as the basis for the methodological issues that will be discussed. Secondly, strategic management efforts in general and specifically in the public sector will be reviewed vis-a`-vis strategic ives. The availability of methods in defining strategic ives will be evaluated. Finally, general information on the four organizations in which we are conducting studies – as well as what has
been accomplished and what is planned to be done – will be presented, focusing primarily on defining strategic ives, about which there is not much methodological help in the literature.
Prior to the ‘invention’ of strategic planning around the 1960s, how did organizations react to changes in their environment? Shedding light on the first half of the twentieth century in this regard, business historian Alfred D. Chandler, Jr (1962) probably did the most significant work. Initially studying four major successful American companies, and following that with the investigation of 40 others, Chandler identified a pattern in these companies’ behaviour in the face of discontinuities in the environment. This was a pattern of reactiveness. Firms initially tended to refuse to recognize the changes until after they observed significant impact on their performance. Strategy change followed – certainly too late
by then – resulting in hardly any effectiveness. Then, companies began to look at more radical ways to improve performance, namely at structural changes. Reorganization, however, brought about new ailments, which then had to be remedied. This sequence of strategy-structure changes made companies take a long time (sometimes a decade or more) to adapt to changes.
The reactive strategic disposition may have sufficed when environmental changes were slow. However, following World War II, environmental changes occurred rapidly and competition became a serious threat. Forecasting future changes became a major tool for strategic readiness. Leading companies were engaged in Long Range Planning (Ansoff & McDonnell, 1990: 13; Taylor, 1986), which involved extended-period budgeting, long-term forecasting, and detailed operational analysis. The underlying assumption, of course, was that the future was extrapolatable.
The extrapolatability assumption and anticipatory strategic disposition may have been reasonable during the 1960s and early 1970s when relative calm and stability prevailed, but this belief was strongly shaken by the Oil Crisis of 1974 when a sharp increase in oil prices triggered a series of changes in worldwide economic indicators, resulting in deep recession. This challenge showed that the future may involve potentially opportuneor threatening trends, as well as single breakthrough events, some of which are entirely unpredictable. Even though the term Strategic Planning had been around since the 1960s when the Boston Consulting Group began to popularize it (Business Week, 1984:
62; Cross , 1987; Taylor, 1986), the full-blown era of strategic planning is considered to begin in the early 1970s. By then, successful organizations knew that it was not adequate to be intelligence t enough to anticipate environmental changes and competitors’ moves, and that one had to be an active player to stay afloat. This era drew attention to strategy formation. It produced concepts of corporate and business strategies, strategic business units, and a whole range of new techniques (scenario planning, business portfolio analysis, risk analysis, zero-base budgeting, to name a few) for dealing with competition and uncertainty.
These were the times that produced significant contributions, such as Porter’s
(1980). Being a member of a successful firm’s planning staff was very popular at that
time – until, of course, it became obvious that these planning staff turned into huge
bureaucracies that were out of touch with the operations of their organizations. Plans
seemed to stay ‘on paper’. Many organizations, frustrated by the fact that their huge
investments in strategic planning brought about nothing more than form-filling exercises
and disgruntled managers and employees, regressed back to former modes of planning, i.e.
long-range forecasts and budgeting. Thus, the challenge for the next era was that of
It was not a coincidence that two things came together around the early 1980s when a
recession was in place around the world: (i) planners seeking to resolve issues of
implementation embraced a new understanding of plan-making, namely Strategic Management
(SM); and, (ii) waves of Total Quality Management (TQM) returned to the
West from the Far East, completing a full circle, only this time around catching attention.
Both SM and TQM were developed in order to resolve similar issues. Huge and centralized
planning departments had to be diffused, line managers had to take charge of strategy
for themselves, communication channels throughout the organizations had to be flushed
open, plans had to be simplified and developed through wider participation, employees
had to be informed, consulted, motivated so as to increase the likelihood of implementation.
A rigid, almost entirely analytical, centralized mode of organizational attitude
had to be replaced – a better term is augmented – by a flexible, synthetic, decentralized
mode allowing for a smooth ride in turbulent waters. Planning theoreticians went so far in
this direction as to suggest that organizations make their strategic decisions ‘organically’
With every stage of the historical development in strategic management, we have
learned significant amounts. Each stage was built upon the previous ones and upon what
we had learned from them, just as it should be. Indeed, the current understanding of strategic
management is the most mature ever, although we are sure it will continue to have
even more mature offsprings as we – management scientists and practitioners – continue
to tackle the new challenges, and refer to what we do with yet another new name.
Process of Strategic Management
Strategic management is possibly the most complicated one of the management intervention processes. One can find many sources in the literature on how not to do it (best example: Mintzberg, 1994), but only a few on how to do it well. Major treatises in strategic management (such as Ansoff & McDonnell, 1990; Mintzberg, 1994) provide the contemporary researcher and practitioner, to a large
extent, with an in-depth exploration of the historical journey of the philosophy of strategic management. They are very effective in instilling a broad and deep understanding and erspective into the general map of issues in the field. However, for people who wish to trigger a strategic management process in their organization, they provide little help in terms of what to do tomorrow morning and the next day.
There is also ample literature on various the phases or steps in the process of strategic management, such as strategy formation in specific contexts (Harrigan, 1980), industry and competitor analysis (Porter, 1980), values and ives analyses (Keeney, 1992). Again, however, when it comes to how all these fit together into an integrated process that can be reasonably implemented, one can feel considerable difficulty finding help in the literature. We found Goodstein et al. (1993) to be a life-saver. Although, it primarily addresses strategic planning of the firm, it provides the practitioner with a meaningful, general, road map. The process that they follow can be seen in Figure 1.
The process is required to start off with a ‘Planning to Plan’ step where the stage is prepared for a smooth and effective round of strategic management processes. A planning team is formed, top management commitment is ascertained, time estimates for various steps are made, organizing for these steps are planned and initiated, and the entire organization is informed and motivated for what is to be undertaken. One important point to be stressed here is that the planning team consists of ‘line’ people. As the history of strategicmanagement unmistakably showed, working with a planning ‘staff’, which is isolated from the operations and management of an organization, is a terminal mistake.
Before moving onto the next step in the process, notice that ‘Environmental Monitoring’ and ‘Application Considerations’ are two continuous themes – rather than specific steps – running throughout the entire process. Environmental Monitoring is a ‘capability’
that has to be built in to be continually being aware of what is happening in the environments
that might be of influence. Goodstein et al. (1993) suggests that a Strategic Information
Scanning System (SISS), which was originally designed by Aaker (1983), is
established. SISS manages the environmental information for the organization in a systematic
way. It scans, selects, stores, reports (where appropriate) information from the
macro (political, economical, social, technological) environment, industry environment,
competitive environment, and internal environment. Application Considerations is more
of a form of awareness on the part of the top management and the planning team that
increases the likelihood of their taking necessary steps, from the first day, to recruit as
much participation from all parties as possible. And, as we all know, participation in the
process is the most effective way of inducing in people a willingness for adoption and
Values Scan is the formal analysis of the current values of the planning team, the organization,
the stakeholders, and the desired or preferred values of the organization. Our
values dictate what is preferred mode of action – for us – and what is not: what is good
and what is bad, what is beautiful and what is not. For any organization to become the
organization that is, in its members’ eyes, better, their shared values must be – or
become – conducive for them to make that transformation or leap. Brainstorming those
values, surfacing and challenging them, and finally trying to reach an understanding on
the desired shared values and on how to attain them is an important step in the journey
of strategic development.
The answer to the question ‘why do we exist?’ is the Mission Statement. Goodstein
et al. (1993) dissect the mission statement nicely into four components as can be seen
in Figure 2. While answering this question, we clearly identify our customers,
products/services, methods and preferences, and the reasons for all this so as to delineate
ourselves from others. Too narrow or too broad definitions of mission of an organization may bring about its demise. Defining the mission of an oil company to be in the ‘energy
business’ (just right) as opposed to the ‘natural resources business’ (too broad) can make
all the difference (Goodstein et al., 1993).
Having established the reason for existence, the next task is to answer the question
‘where do we wish to go from here?’ Designing an inspirational and complicated
answer to this question is Strategic Business Modelling. This certainly includes formulating
the vision for the organization that requires high creativity. Strategic Business Modelling
also includes defining its risk attitude, competitive stance, innovativeness, proactive
capability, future lines of business, measures of success or performance indicators, and the
culture and the strategic thrusts that are necessary to reach such a future. Performance Audit is current situational analysis. This is when the organization’s
current success is evaluated through qualitative and quantitative analysis. Typical qualitative
analysis involves ‘SWOT (Strengths-Weaknesses-Opportunities-Threats) Analysis’
which is identifying productive and counter-productive forces from within and from
without, respectively. Quantitative analysis, on the other hand, is collecting and evaluating
data on the current performance indicators.
Performance Audit tells us where we stand. Strategic Business Modelling shows us where we wish to stand. And the difference is the gap that needs to be filled. Through Gap Analysis, we attempt to find out specifically ‘how high we need to jump’ to be on our way to the vision. As can be seen in Figure 1, sometimes gap analysis indicates too large a jump, which may make it necessary for us to re-iterate the strategic business model. Otherwise, Gap Analysis must be followed by analysis of ‘how to close the
gap(s)’, the answer to which is our ‘strategies’. Strategy Formation is not seen in the process flowchart of Goodstein et al. (1993), which is shown in Figure 1. In their treatment of transition from Gap Analysis to Integrating Action Plans, Goodstein et al. (1993) discuss typical strategies for the firm, as probably best described by Porter (1980).
Whenever appropriate and necessary along this process of strategic management, participation of relevant individuals or units is essential. This necessitates effective use of group techniques of various kinds. Goodstein et al. (1992) provide some in their work book. Much more is available in the literature. We will mention some of these as they become relevant in the succeeding sections of this paper. Up to the end of Gap Analysis, the Goodstein et al. model is quite helpful in conducting strategic management studies in public organizations. However, as we reach the question of strategies, the model ceases to be as helpful. Competitive strategies – though not entirely irrelevant for a public organization engaged in TQM – do not constitute the main domain of strategies in our context… Download Article
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