Strategy in a Public Sector Context

Strategy

How would you define strategy?

Strategic Planning

• Involves managers in thinking systematically about the future of the organisation and the environment in which it operates.

• Promotes learning and discussion about what is important, what the priorities should be, what will work and what will not work.

• Builds consensus around and commitment to strategic initiatives.

• Communicates direction, overall strategy, priorities and plans to broader constituents inside and outside the organisation.

Strategic Planning Questions

• What is the organisation’s value proposition or mission statement?

• What are the organisations long term goals?

• What are the current and anticipated external factors that must be taken into account?

• What are the organisations internal resources, competencies, strengths and weaknesses?

• What alternative strategies are available?

• How will they be evaluated?

Integrated Management Cycle

Strategic Planning

Budgeting• Capital• Operating

Operations /Budget Implementation

Monitoring/Reporting

Integrated Management Cycle

Operational management

Recording performance information and impacts

Formulation of strategy and policy objectives.

Fiscal strategy.

Accountability

Ex post provision and review of actual performance information and impacts

Planning initiatives

Specify ex ante expectations, performance measures and budgets.

Ministers

Ministers & government agencies

Government agencies

Ministers central agencies, auditors, parliament and the public

What is Meant by Strategic Planning?

Selecting and prioritising outcomes [what does the Government want to achieve?]

Choosing interventions [what is government going to do to achieve the desired outcomes?]

How will that be accomplished?

Through a range of different interventions:

•Outputs

•Regulations

•Taxation

•Transfers

•Ownership

The Government’s Strategic Priorities

What are the Governments strategic priorities and what implications do they have for your organisation?

The Government has a comprehensive policy agenda, which will guide Budget priorities over the parliamentary term. Our main priorities are:

1)Responsibly managing the Government’s finances.

2)Building a more productive and competitive economy.

3)Delivering better public services within tight financial constraints.

4)Rebuilding Christchurch, our second-biggest city.

Budget Policy Statement 2013http://www.treasury.govt.nz/budget/2013/bps/bps13.pdf

The NZ Government’s Strategic Priorities

1. a reduction in long term welfare dependency

2. more young children, and particularly Maori and Pacific children, in early childhood education

3. immunisation rates for children to increase

4. a reduction in the number of assaults on children

5. more young people to come through the education system with a solid base of skills

The NZ Government’s Strategic Priorities

6. a more skilled workforce

7. a reduction in the crime rate – including violent and youth crime

8. a reduction in the rate of re-offending

9. a one-stop online shop for all government advice and support that businesses need

10. transactions with government completed easily in a digital environment

(http://www.beehive.govt.nz/release/govt-sharpens-focus-public-sector-results)

The NZ Government’s Strategic Priorities

The Government’s Strategic Priorities?

The Government has an overriding objective to grow the New Zealand economy so that New Zealanders can enjoy greater prosperity, security, and opportunity.

http://www.statistics.govt.nz/about_us/our-publications/statement-of-intent/statement-of-intent-2011-2014.aspx

The Government’s Strategic Priorities?The Government’s focus for the criminal justice system is to improve public safety and reduce offending and victimisation. The Government has also placed emphasis on the rights of victims and on improving the experiences of children who come into contact with the justice system.

http://www.justice.govt.nz/publications/global-publications/s/statement-of-intent-20112014/publication

To develop that proposition we must first of all be clear about:

1.what is the fundamental and unique purpose of the organisation;

2.what are the core values that the organisation will commit to in order to achieve that purpose.

Note the answers to these questions should be simple, sustainable over a number of years and avoid the danger of platitudinous statements

Output Stakeholder Value Propositions

What do we mean by “stakeholder”?

What is a “value proposition”?

Output Stakeholder Value Propositions

“a person, a group of people or an institution that has an investment, share or interest in an organisation who may significantly influence the success of the organisation”

(Marr, 2009)

In effect, those persons, groups and institutions that comprise the authorising and co-producing environment.

Key Stakeholders

Output Stakeholders = those who receive benefits (outputs) of an organisation’s activities

for example:

clients/customers

citizens

other agencies

ministers

Key Stakeholders

Input Stakeholders = those who contribute (provide inputs) to the activities of the organisation

for example:

employees

government

other organisations

clients/customers/citizens

Key Stakeholders

note:

stakeholders may be both contributors and beneficiaries

both input and output stakeholders are reflected in the organisation’s value chain.

Key Stakeholders

“A stakeholder value proposition is a declaration of the way an organisation proposes to use its resources and competences to deliver a particular combination of values to its key output stakeholders.”

(Marr, 2009)

Output Stakeholder Value Propositions

Such a proposition is about choice and trade-offs”

who are those key stakeholders, and who are not?

what are the values to be delivered, and what are not?

Answering these questions is often difficult in the context of the conflicting expectations and objectives faced by public sector organisations.

Output Stakeholder Value Propositions

Output Stakeholder Value Propositions

The New Zealand Department of Corrections

Improving public safety by ensuring sentence compliance and reducing re-offending through capable staff and effective partnerships.

The New Zealand Treasury

Our core job is to help the Government improve New Zealand's overall economic performance, and increase the living standards of New Zealanders, through the provision of high-quality advice and services.

Our advice contributes to improved performance by making challenging issues more tractable to effective government decision-making. The Treasury supports effective delivery of services by the State sector through its policy advice, and delivers some services directly where it is best placed to do so.

Output Stakeholder Value Propositions

Child, Youth and Family Services

We are committed to providing excellent service for families, the children and young people that we work with.

When children need secure, loving, long-term homes, we'll work with family and whanau, caregivers, and adoptive parents to find them one.

When young people offend, we want them to get back on track and make good decisions in the future. We'll organise a conference for the young person, their family and the victim of their offending to meet and talk about the impact of their actions. We'll then help them get back on track for a successful future.

We partner up with hundreds of social services providers to get the message to communities - together we can help all our children be safe, strong and thrive!

Air New ZealandWe will strive to be number one in every market we serve by creating a workplace where teams are committed to our customers in a distinctively New Zealand way, resulting in superior industry returns.

Output Stakeholder Value Propositions

Strategy

Select a public sector organisation:

•what is its strategy (value proposition)?

•how does that link to the Government’s strategy

•how is the organisation’s strategy being implemented?

•how is it being monitored?

Strategic Management

• Resource Dependence Theory• Miles and Snow’s Typology• Porter’s Value Chain• Minzberg’s Four Ps

Resource Dependence Theory

An organisation is heavily influenced by its environment as a result of its need for resources such as raw materials, labour, capital, equipment, knowledge and outlets for its goods and services.

Resources that are controlled by the environment and therefore provide power for the environment to make demands of the organisation.

Alternate Strategies

Prospector – the organisation actively seeks out opportunities for providing existing services and innovations in the types of services that are provided.

Defender – the organisation concentrates its efforts on procedures rather than products, and seeks to maintain a stable portfolio of services that are delivered reliably and at low cost.

Reactor – the organisation has no real strategy of its own, but instead takes its cue from powerful actors in its environment such as higher levels of government or regulatory agencies.

Miles and Snow (1978)

Porter’s Generic Value Chain

Value Chains:

• focus on the end user of the value delivered (be they customers, clients and/or offenders)

• include value inputs from third party providers and suppliers with whom the organisation contracts or purchases services

• expand to include other organisations in a sector value chain

• disaggregate to lower level components, i.e. contributing activities

Value Chains:

• explain how an organisation’s resources and activities contribute towards its strategic objectives or targeted outcomes.

Public Prisons’ Value Chain

COURTS COURTS

PAROLE BOARD

REINTEGRATIVE PROGRAMMES

REHABILITATIVE PROGRAMMES

CUSTODIAL SUPERVISION

INDUCTION & SENTENCE PLANNING

PRE-SENTENCE

ASSESSMENT

Motivational ProgrammesRehabilitative ProgrammesEducational ProgrammesEmployment Skills TrainingOffender Employment

Reintegrative ProgrammesRelease to WorkPre-release reporting to NZ Parole BoardHome Detention Reporting to NZ parole Board

Convicted of an Offence Commencing Sentence Serving Sentence Preparing for Release Released

Support in the Community

COMMUNITY PROBATIONS

SERVICE

COMMUNITY PROBATIONS

SERVICE

Maximum Security MenMedium Security MenMinimum Security MenWomen

•economies of scale,

•learning,

•capacity utilisation,

•linkages between activities,

•relationships between organisational units,

•the degree of vertical integration.

•organisational strategy, and

•institutional factors such as legal frameworks and the role

of professional groups.

Value Drivers

Strategic Management

• Strategy as Plan• Strategy as Pattern• Strategy as Position• Strategy as Perspective

Mintzberg (1987)

Strategy as Plan

By this definition strategy has two essential characteristics:•it is made in advance to the actions to which it applies, and•it is developed consciously and purposefully.

Strategy as Pattern

Strategy can also take the form of a pattern or consistent stream of actions, whether or not they are intended. In this way strategy becomes emergent rather than deliberate and hierarchically implemented.

“ …plans may go unrealised while patterns may appear without preconception”

Strategy as Plan and Pattern

“In practice, of course, all strategy making walks on two feet, one deliberate the other emergent. For just as purely deliberate strategy precludes learning, so purely emergent strategy making precludes control. Pushed to the limit, neither approach makes much sense.”(Mintzberg, 1987)

Strategy as Position

Strategy as position represents a means of locating an organisation in, or matching it with, its external environment. In this sense strategic planning seeks to identify the area, or niche, in which the organisation should function. It also serves to define those areas where action is not appropriate.

Strategy as Perspective

Strategy as perspective reflects the world view or inherent assumptions inherent within a given strategy. This suggests that above all, strategy is a concept – all strategies are abstractions that exist only in the minds of interested parties. It is a shared concept informed by the culture and ideology of those involved.

Simons (1994)

Strategy as Perspective

Strategy as Pattern

Strategy as Plan

Strategy as Position

Diagnostic Control Systems

Diagnostic control systems are designed to motivate, monitor and reward the achievement of specified goals. They represent the formal information systems that managers use to monitor organisational performance and correct deviations from preset standards.

Diagnostic Control Systems

Such systems require, or assume:•the ability to measure the output of a process,•the existence of predetermined standards against which actual results can be compared, and• the ability to correct deviation from standards.

They utilise ‘single-loop’ learning.

Interactive Control Systems

Interactive control systems are used to support search and learning, allowing new strategies to emerge as participants throughout the organisation respond to perceived opportunities and threats. They are used to guide bottom-up, emergent strategy and utilise ‘double-loop’ learning.

Interactive Control Systems

Such systems require:•information generated by the system is an important and recurring agenda addressed at the highest levels of management;•frequent and regular attention from operating managers at all levels of the organisation;•data generated by the system are discussed in face-to-face meetings of superiors, subordinates and peers;•the system is a catalyst for the continual challenge and debate of underlying data, assumptions and action plans.

Boundary Systems

Boundary systems are used to establish limits, based on defined business risks, to opportunity seeking behaviour.

Such systems allow managers to delegate decision making and thereby allow the organisation to achieve flexibility and creativity.

Boundary SystemsBusiness conduct boundaries impose codes of behaviour through:•society’s laws,•organisational belief systems, and•codes of behaviour promulgated by industry and professional associations. Strategic boundaries focus on opportunity seeking behaviour – •services that the organisation should not provide, or •areas or groups in society to whom it should not provide services, or•activities in which it should not engage.

Belief Systems

Belief systems represent an explicit set of organisational definitions that senior managers communicate formally and reinforce systematically to provide basic values, purpose and direction for the organisation.

Such systems are used to inspire and direct the search for new opportunities to motivate and facilitate higher performance.

Belief Systems

When problems in implementing strategy arise a belief system helps participants to determine the types of problems to tackle and the solutions to search for.

More importantly, in the absence of problems, belief systems motivate individuals to search for new ways of creating value.

Simons (1994)

Strategy as Perspective

Strategy as Pattern

Strategy as Plan

Strategy as Position

Summary

All public sector organisations must respond to the strategic challenges associated with increasing demand for outputs and reducing funding (at least in real terms).

However, a consistent and integrated strategic framework is still elusive. Strategy in a public sector environment often involves the pursuit of unclear and/or conflicting goals.

Strategic choice and implementation requires clarity in respect of the ‘value drivers’ for each organisation.

Strategy

For your public sector organisation can you give an example of:

•a diagnostic control?

•an interactive control?

•a boundary system?

•a belief system?