Developments in Strategic and Public Management

Studies in the US and Europe

Paul Joyce, Marc Holzer, J. Bryson

• Publisher: Palgrave Macmillan
• Year: 2014
• ISBN:
  9781137336972
• Topic: Business
• Subtopic: Management
• Index: Business

Through contemporary case studies of strategic management at work in the US and Europe, this collection shows that it can no longer be seen as a discipline for long term decisions but has become a central feature of the public sector. Individual chapters offer insights into strategic management capabilities at the national and sub-national level.

1

Introduction

Paul Joyce, John M. Bryson and Marc Holzer

Introduction

The public sector’s need for strategic thinking and for strategic capabilities is increasingly taken for granted. They are both increasingly seen as essential. Importantly, the rise of strategic management in the public sector over the last two decades has accompanied changing ideas over the same period about how governments work and their desired attributes. However, much remains to be done to embed effective strategic management in government, much remains to be done to incorporate it into democratic governance, and there is little doubt that its efficacy will be put to a very severe test by the multiple challenges facing US and European society in the next decade.

Academic research and study of strategic management in the public sector is now building on the foundations laid in the 1980s and 1990s. There are now very fruitful lines of academic enquiry beginning to open up. They promise a much better theoretical modelling of how strategic management works in the public sector. To identify just a few, there are, first, studies of practical experiences of creating and implementing strategic plans in the public sector, and in specific parts of the public sector, which should be useful in trying to identify varieties of strategic management practice in different contexts. Secondly, there are some studies exploring the challenges and difficulties of strategic management in practice, its imperfections, studies which are useful for developing a realistic appreciation of strategic management practices, and which may end up underlining the way in which strategies are part designed and part emergent. Thirdly, there are enquiries into the theoretical concept of public value which was first launched in the 1990s (Moore, 1995) and, in recent years, has been given a lot of attention. Fourthly, there is a move towards understanding the strategic aspects of networks, both at national and local levels of public services.

In this chapter, we provide a short outline discussion of strategic management concepts relevant to the public sector and we introduce the studies in this book. Before that, in the next section, we consider in more detail the nature of the importance of strategic management in the public sector.

The nature of the importance of strategic management in government and the wider public sector

One thing that has become increasingly clear is that strategic management in the public sector has not been an isolated or stand-alone development. This is apparent, in part, from the studies showing the importance of integrating strategic planning with management systems for performance reporting and budgetary decision-making (Poister and Streib, 2005; Poister 2010). Furthermore, there have been ideas that strategic management can play a significant part in integrating public management changes and reforms into a coherent transition in the nature of government towards what might be called post-bureaucratic government (OECD, 2000). These reforms of government have been allied to a fundamental rethinking of the capabilities needed by government and of the requirements for modernizing public governance, still within democratic frameworks.

Governments are expected to use a wider range of methods – not just laws and regulation. In part, the growing use of the phrase ‘public governance’ instead of ‘government’ can be taken as an indication of a new view that governments should catalyse partnership working to solve societal problems (Osborne and Gaebler, 1992). In terms of their attributes, governments now need to be not only as free as possible of corruption and to be efficient organizers of public service delivery but also we expect they should be strategic and enabling, even empowering the public. These new expectations take us way beyond the ideas popular in the 1980s of improving public management – ‘managerialism’ – which was focused on making management better and the delivery of public services more efficient. Consequently, we are no longer simply addressing strategic management as a management tool. We are addressing the evolution of the public sector, an evolution which is bound to have implications for others besides managers, notably politicians and the public too. And the application of strategic management is no longer constrained to single organizations, or single services; partnerships and networks are promoted widely as new forms of organization for use by government. So, the studies set out in this book will not only deal with managers but also with politicians and the public and not only with single public sector organizations but also with networks and partners.

The significance of strategic management in the public sector can be understood not only in relation to the evolution, and rethinking, of government. The changing context of government in Europe and the US is also a factor in determining its significance. And after 2006, this context has been to a large degree dominated by economic difficulties and tax revenue shocks. Obviously, over the last decade, both the United States of America and Europe faced global economic challenges as a result of the emergence of China, India and other countries. Governments on both sides of the Atlantic had to think about how their countries should and could respond to the economic challenges of the new global competition while at the same time having to cope with problems created by the financial crisis of 2007–2009.

The crisis itself was not anticipated by politicians and civil servants. When it happened, governments were immediately confronted by problems on all fronts. Their economies went into reverse after 2007 (with falls in real GDP per capita); and unemployment began to rise. As a consequence of the crisis, tax revenues fell dramatically in 2009, which led to discussions about austerity policies for the public sector. In the US, for example, tax revenues in current values fell by nearly 20 per cent in 2009 compared to 2008; in Spain, the corresponding figure was 21 per cent; bad, but not as bad, were countries like the UK and France where tax revenues fell by nearly 13 per cent and nearly 11 per cent, respectively (http://databank.worldbank.org/data/home.aspx). The crisis, originating in the financial sector, was often blamed, with hindsight, on poor government regulation of the financial sector. Whoever was to blame for the crisis – the private sector or government – there was an expectation that governments would take a lead on trying to solve it. Arguably, part of the cost to society of government handling the financial crisis, and trying to reduce its negative consequences for families and businesses, was a big increase in central government debts after 2006. As a percentage of GDP, the central government debt of the US went from about 45 per cent in 2006 to 79 per cent in 2011; the UK’s went from 46 per cent in 2006 to nearly 100 per cent of GDP in 2011; France’s debt increased from 68 per cent to 94 per cent; and Germany’s went from 44 per cent to 55 per cent of GDP (www.databank.worldbank.org).

As well as the economic problems, there were continuing concerns about the natural environment, and calls for governments at all levels to put in place ‘green’ strategies. In the four or five years following the onset of the crisis, these environmental concerns remained urgent and important, notwithstanding the effects of austerity policies on the public sector and poor economic growth in the private sector.

This is to mention just some of the matters that were preoccupying politicians in the last decade. Life was not getting simpler for governments and public sector organizations. It would be complacent to assume things would be easier for them in the next five to ten years. Arguably, all these difficult challenges could have done a lot to make the case for strategic management in the public sector – and for the modernization of public governance. At the very least, these events, which for many came out of the blue, could have sent a message to the top politicians and civil servants that there had to be more looking ahead, assessment of risks, and more need for strategic thinking, acting and learning. In the light of this recent government experience of being unprepared for the 2007–2009 financial crisis it is understandable that Bryson (2010) has suggested that strategic planning in practice will need to be better at anticipating surprises and preparing for them.

It has recently been suggested that strategic thinking and action will increase in the future (Bryson, 2010). How might academic research support such a development? What are the priorities for academic research as we look ahead? We will mention just two here. First, strategic learning will be necessary as a complement to using strategic management for better anticipation of the future. Therefore, strategic management could and should be an important means of learning. More studies of strategic learning in the public sector are needed. Secondly, we need more studies of public participation in strategy formulation by government. Pressures to make strategic planning more inclusive may increase. This would move communities and societies beyond representative democracy so that there is also democracy based on debate, on dialogue and on interaction. If this seems very idealistic and ambitious, then it should be noted that a long-term strategy for the European Union, published in 2010 and known as Europe 2020, which was summed up as a strategy for smart, sustainable and inclusive growth, was intended to be based on a partnership approach. The implementation of the strategy called for European Union institutions to engage social partners, stakeholders and civil society. It was envisaged that in each country the national, regional and local governments would be getting social partners and representatives of civil society to take part in formulating programmes of reform undertaken as part of the Europe 2020 strategy. There is no doubt that this was a very bold feature of the implementation plan for Europe 2020; but, if successful, this could strengthen ownership of the reform programmes by society generally through adopting a partnership approach at all levels of European government. If successful, it would also represent a step change in public governance capabilities in Europe.

Basic concepts and issues of strategic management in the public sector

Early contributions to the theory of strategic planning and management, which were influential in shaping contemporary thinking, included books that provided guidance on strategic decision-making to practitioners in leadership roles (Bryson, 1988; Nutt and Backoff, 1992). Alongside them were more conceptual books based on case study analysis (Heymann, 1987; Moore, 1995). The conceptual books by Heymann and Moore emphasized politics, democracy, and the need to develop plans which delivered outcomes of value to politicians and the public.

Heymann and Moore both developed a very simple conceptual model for strategic management in government. It involved using strategic plans to get coherence between the desired strategic goals, the capacity of the organization and the external support required. The concept of public value, implicit in Heymann’s model as socially desirable goals, was articulated and elaborated by Moore and has since grown to be an important concept in the academic world of the public sector. At its simplest, it suggests that the value of government action and results is judged in terms of the values of politicians and the public. Strategic actions in the public sector need to be selected and implemented that are valued in this way and balanced against an acceptable cost of delivering the public benefit represented by the public value – in the same way that private sector strategic management theorists emphasized that competitive advantage in the private sector ultimately depended on businesses delivering value to customers at an appropriate cost.

None of these early contributions were content to take the models that had been developed by management theorists concerned with the private sector (e.g., Ansoff, 1968; Porter, 1980) and simply assume that they fitted the reality of the public sector perfectly. They all assumed that it was necessary in academic theorizing to get as close as possible to the reality of the public sector world. For example, guidance to public sector practitioners on strategic decision-making encouraged them to think about strategic issues that might prove difficult to address, to analyse and manage stakeholders, and to think about managing conflict to a degree that was rarely to be found in the private sector books on strategic management (Bryson, 1988, Nutt and Backoff, 1992). The present book aims to continue this tradition of always keeping in mind the importance of concepts, empirical study and theory being related as closely as possible to the realities of the public sector.

We can suggest here some basic issues to be considered in providing an initial orientation to the academic study of strategic management in the public sector: the integration of strategic management with democratic institutions; the identity of strategic leaders in the public sector; the method of introducing strategic management; the constraints on strategic management (e.g., legal frameworks, overlapping mandates, and professional cultures); networks and multiorganizational strategic management; philosophically sound ideas about looking ahead; and ideas about how to evaluate strategies and strategic plans. We will give the first of these a slightly more extended consideration given its special importance in distinguishing the public and private sectors.

The integration of strategic management with democratic institutions

One of the biggest questions about strategic management in the public sector concerns how it is integrated with democratic institutions and democratic processes. Consider the relevant processes in parliamentary democracies with elections for the public to decide who will form the government and rival political parties contesting elections. They have established habits of democratic practice and policymaking. We can illustrate this by quoting Oliver Letwin, who outlined policymaking as he had experienced it, when recently giving evidence as a Minister of State in the UK’s Cabinet Office to a House of Commons Select Committee (PASC, 2012: Ev 58):

Both of the political parties in the coalition did a lot of thinking about what they wanted to put on their list, so to speak, before the election, and, as luck would have it, both had come up with broadly similar priorities ... In the course of forming the coalition ... we spent a considerable amount of energy ... agreeing what things were that we were trying to achieve. Then we tried to make sure policies we set out in the coalition programme for Government were ones we thought would achieve those aims ... Whether you are successful or not will depend on whether, as a matter of fact, when implemented those policies achieve those aims ... as the two parties went into an election having chosen the things that they would emphasize, and as the election produced a certain set of results, I think one can fairly say that they have been subject to a very considerable – in fact, the toughest – democratic test.

But, what is the nature of democratic accountability in the public sector when strategic management is strong and working effectively? We note here that it could be useful to differentiate different types of accountability. Some might be ‘vertical’ accountability to elected politicians (and above them to citizens); and some might be ‘horizontal’ accountability to organizations (which probably means accountability to organizational leaders) or to citizens broadly (which is more of a grass-roots accountability). Of course, there are issues around whether representative democracy is a sufficient form of democracy and whether those elected to represent citizens do ensure that governments are acting in line with what people want and are not out of touch with the public. There could be, for example, situations in which well-organized, technocratic, strategic management systems were definitely intended to be working for the public, but it was not clear that either the experts or the politicians knew well enough what the public needed, or wanted, and it was doubtful if the public knew much about what was in the strategic plans. Paternalistic strategic planning may be well meant, but it cannot be guaranteed that it is democratic in the sense of accountability nor in the sense of there being continuity between the views and wishes of the public and the priorities of the elected politicians.

In fact, strategic planning that is designed to be inclusive could have a positive impact on democracy. There have been examples of local community planning by local government which has consulted and engaged with the public to arrive at clearer ideas of priorities than might have been possible on the basis of representative democracy alone. Nevertheless, it has to be admitted that academic researchers have made little progress to date in identifying the conditions in which inclusive forms of strategic planning and management produce the positive outcome of reinforcing democracy.

We finish this brief discussion of democracy with an overlooked argument about why formal strategic plans matter. It has become common to say that the process of planning is what matters, and not the actual strategic plan. Some thought suggests that this is problematic from the point of view of democracy and public governance. Of course, we can emphasize the developments of public governance as comprising the development of strat...

Table of contents

• Cover
• Title
• 1  Introduction
• Part I  Strategic Management Processes and Integration with Management Systems
• Part II  Strategic Management – Innovation and Reform
• Part III  City Governments
• Part IV  Networks and Strategic Management
• Part V  A Synthesis
• Index