Public Management and Administration - Owen E.hughes

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Strategic Management 135 concerned with the higher levels of the organization than business strategic planning and in allocating responsibility even among differing parts of the business. The strategic plan is specified in much more detail than in the first form of strategic planning. Both business and corporate strategic planning have their limitations. Ansoff argues that early experience with strategic planning ‘encountered three serious problems: “paralysis by analysis”, that is, when plans produced little result; “organizational resistance” to the introduction of strategic planning, and ejection of strategic planning if the support of top management was withdrawn or relaxed’ (1988, p. 166). The problems led to the third form of strategic planning: strategic management. In the 1980s, strategic planning started to be replaced by ‘strategic management’, a more refined form that incorporates the strategic planning function, but extends it much further. The difference between them is that ‘strategic planning is focused on making optimal strategy decisions, while strategic management is focused on producing strategic results: new markets, new products and/or new technologies’ (Ansoff, 1988, p. 235). Strategic management, therefore, is more comprehensive; rather than merely drawing up a plan it aims at integrating planning with all the other parts of the organization. Hax and Majluf argue (1996, p. 419) that: Strategic management is a way of conducting the firm that has as an ultimate objective the development of corporate values, managerial capabilities, organizational responsibilities, and administrative systems that link strategic and operational decision making, at all hierarchical levels, and across all businesses and functional lines of authority in a firm. Institutions that have reached this stage of management development have eliminated the conflicts between long-term development and short-term profitability. Strategies and operations are not in conflict with one another, but they are inherently coupled in the definition of the managerial tasks at each level in the organization. This form of conducting a firm is deeply anchored in managerial style, beliefs, values, ethics, and accepted forms of behaviour in the organization, which makes strategic thinking congruent with the organizational culture. Strategic management aims to extend the strategic vision throughout all units of organization, encompassing every administrative system. Instead of being mechanistic, it ‘recognises the central role played by individuals and groups and the influence of corporate culture’ (Toft, 1989, pp. 6–7). Also, prior to the mission statement, there should be a permanent vision of the firm articulated by the Chief Executive Officer. This corporate philosophy ‘has to provide a unifying theme and a vital challenge to all organizational units, communicate a sense of achievable ideals, serve as a source of inspiration for confronting daily activities, and become a contagious, motivating, and guiding force congruent with the corporate ethic and values’ (Hax and Majluf, 1996, p. 255). There are two main points in this. First, there needs to be greater integration between planning, management control and the organizational structure; greater integration between the communication and information system; and
136 Public Management and Administration with the motivational and reward systems (Hax and Majluf, 1984, pp. 76–7). Planning should not be regarded as a separate activity, relying on a separate planning department, but as a responsibility of management and not to be isolated from the organization. Secondly, the organization needs to pay attention to its ‘culture’. Plans still exist in strategic management, but more attention is paid to implementation because of the human factors present in the organizational culture and affecting its management. It is easy to see that strategic management fits the private sector and, if implemented well, would provide a company with an information base to make decisions that would not necessarily arise from normal operations. It can help an organization to step back from the normal management process or the day-to-day and ask fundamental questions about the existence and future of the organization. Strategy in the public sector Public organizations do have long-term existences and problems in deciding focus. They could conceivably benefit from a strategic approach, although some modification of the private sector perspective may be necessary. There was always some kind of planning in the public sector and the methods used have fairly closely followed the five stages of planning set out earlier for the private sector. Budgeting and financial control started very early in the public sector. This planning stage could be argued to be the quintessence of organizations in the traditional model of administration, where the main planning aim is simply to spend the budget allocation. Long-range planning was also used in the same way as in the private sector and with the same problems of forecasting. Strategic planning in the public sector is a phenomenon of the early 1980s, significantly later than its development in the private sector. Strategic management was also adopted but, again, followed the private sector with a gap of some years. Since 1993 the United States federal government has established strategic planning as a universal requirement for its agencies (Joyce, 2000). However, strategic planning and strategic management are private sector concepts and it cannot be taken for granted that the ideas will work in the public sector. 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 factors, to client and constituent interests’ (McCaffery, 1989, p. 207). Nutt and Backoff argue that strategic managers in the public sector ‘should be wary of using private sector approaches that assume clear goals, profit or economic purposes, unlimited authority to act, secret development, limited responsibility for actions, and oversight through market mechanisms that signal financial results’ and in public organizations ‘many of these assumptions are not valid’ (1992, p. 23). Early formulations of strategy in the public sector tended to commit all these sins, but
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Public Management and Administratio
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Also by Owen E. Hughes AUSTRALIAN P
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© Owen E. Hughes 1994, 1998, 2003
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Preface Over the past 20 years the
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viii Preface the Colorado link such
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3 Public Management Introduction Th
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11 Managing External Constituencies
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12 Public Management in Developing
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13 Accountability Introduction The
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14 Conclusion: A New Paradigm for P
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284 References Borins, Sandford (19
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286 References Glor, Eleanor D. (20
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288 References Jordan, Grant (1997)
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290 References Monroe, Kristen Renw
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292 References Putt, Allen C. and S
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294 References Wilson, Graham K. (1
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296 Index bureaucracy 1-5, 9, 15-43
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298 Index information and communica
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300 Index ‘one best way’ thinki
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302 Index Ritter, G. 85, 86 role of
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