Strategic management is the effort to capitalize on the strengths of an organization by taking advantage of

favorable conditions inside or outside the organi zation. It involves minimization of cost by making operations
consistent and predictable, and by avoiding challenges to structure and the organizational culture. Thus, it is
the process for implementing a strategic plan that integrates the organization’s goals, policies, and action
sequences into a cohesive whole. That plan, as an expression of strategic choices, is the product of a carefully
elaborated and orchestrated decision-making process. According to Quinn,[1] strategic decisions: Intimately
shape the true goals of the enterprise Help to delineate broad limits of operations Dictate both the resources of
the enterprise that will be accessible for its tasks and the principal pattern in which these resources will be
allocated Determine the effectiveness of the enterprise— whether its major thrusts are in the right directions
given its resource potential—rather than whether individual tasks are performed efficiently Strategic
management has the potential to affect organizational performance, but it is not a guarantee of success or
productivity. It can easily go wrong, lead ing organizations astray. Regardless of its results, stra tegic planning
always involves the consumption of a lot of precious organizational resources that could have been used to
underwrite other important organi zational activities. For example, the time, creativity, and budgets used for
developing strategic plans could have been used to provide employees with cross training or to build team
spirit. Such activities have the potential for improving organizational perfor mance just as strategic planning
does. Yet, when stra tegic planning is done right and the organization is capable of taking advantage of it, it has
much to offer. The complexity and the rapidly changing circum stances under which public administrators must
oper ate make strategic management a necessity. Recent advances in information technology make the
develop ment and use of strategic plans easier than it used to be. Further, legislation resulting from efforts to
increase accountability and performance, such as the Government Performance and Results Act of 1993 in the
United States[2] or Best Value in the United Kingdom,[3,4] made the development of strategic plans, as well as
annual reporting on the effort to implement them, a mandate. The conceptual framework for strategic planning
and management can be a potent tool for administra tors because it facilitates systematic thinking. The
strategic planning phase helps managers to relate assumptions (about the environment, desired results,
availability of resources, and capacity) to a blueprint for action. The enhanced capacity to manage the
organization strategically results from several things. First, the strategic plan provides all members of the
organization with a common frame of reference for taking care of their daily choices among competing options
for action. As such, a good strategic plan can serve as a great coordinating mechanism for all man agement
levels. Asking all employees to rank–order such options according to how they can contribute to the ultimate
organizational objective is important it helps to reduce the odds that the wrong action will occur because on its
face it seemed to serve best the interests of a subunit or a short-time need. In other words, the availability of a
strategic plan can reduce the odds that the organization will miss its target due to suboptimization. Second, the
strategic plan defines necessary feed back and feedback loops as a function of program matic (i.e., the need to
know) rather than ceremonial (i.e., the right to know) considerations. The strategic planning establishes
precontrols over the discretion of lower-level managers by defining important values, desired results, and
relevant considerations. This, in turn, contributes to consistency in the handling of simi lar decisions by
different individuals and the various organizational units, and it increases the predictability of operations. This
article describes the main characteristics of strategic planning and management, and points out how they can
influence and contribute to productivity. The article starts with a discussion of two basic ways of approaching
strategic planning. It goes on to describe State Legis–Trade 1867 © 2008 by Taylor & Francis Group, LLC 1868
Strategic Management and Productivity the various steps of a simple model of strategic plan ning and some of
the necessary conditions for getting the most out of it. MISSION STATEMENTS: TWO APPROACHES TO
STRATEGIC PLANNING A mission is the ultimate goal, philosophy, or purpose of an organization. In the case of
a private organiza tion, the mission provides the answer to such questions as what is our business? or what
beliefs or values should guide us? A company’s mission is defined as the fundamental, unique purpose that
sets a business apart from other firms of its type, and identifies the scope of its operations in product and
market terms.[5] The missions of public agencies, however, justify their right to exist and use public resources.
Sometimes the mission of a public agency is written into the enabling legislation that created the agency, but
often legislation such as GPRA at the federal level or an executive order by a governor at the state level can
mandate the development of a mission statement or articulate it in connection with an effort to review
performance. Governor George H. Ryan Executive Order no. 7 (March 1999) ‘‘Creating the Office of Statewide
Per formance Review’’ for the state of Illinois is one possible example that illustrates this point.[6] State Legis–
Trade According to Byars, without a concrete statement of purpose, it is virtually impossible for any
organization to develop clear objectives.[7] If this assertion of Byars is true, one must wonder whether a public
manager can be successful in an effort to develop a strategic plan and to implement it. After all, in the public
sector, developing a mission statement and deriving clear objectives from it are much more difficult and compli
cated than they are in the private sector. The missions of agencies are sometimes set by vari ous pieces of laws
and court decisions, or within a spe cific law or a court decision. In such cases, managers have little discretion
and agency employees may have little, if any, input, even though they may be the experts whose advice the
agency should seek. In theory, when a mission is not articulated for an agency by outsiders (i.e., the legislature
or the courts), man agers will have more of a say about how to develop it. In the absence of a mission statement
created by legislation or court decision, newly elected officials and appointed administrators have some
flexibility to chart their preferred courses of action and to break away from the priorities and practices of those
who used to be in office. In practice, however, this discre tion may be taxing. When public managers need to
derive a mission statement from multiple sources, they are likely to find the cards are stacked against them.
The guidelines they may be able to derive from various sources may be either too broad, too vague, or incon
sistent with other regulations that govern operations (e.g., the directives of central staff agencies such as the
Office of Management and Budget or the Govern ment Accounting Office). Under these circumstances, they do
not have the convenience of saying ‘‘this mis sion was written into the law (or court order)’’ while having to
come up with excuses for all the things they wanted to include in the mission statement but could not. The
purpose of the mission statement in public agen cies is to allow the formation of a winning coalition to support
acceptance of the strategic plan by stake holders both within and outside the agency. The gen eral language,
which allows members of the coalition to give it different interpretations, is often the only way of making the
mission acceptable to various stake holders. A mission that is too concrete may deprive the coalition from the
support of some important stake holders. Thus, one reason for the difficulty public agen cies have in
enunciating clear objectives is that they need to be derived from a mission statement that was articulated to
serve a political function—to mobilize support for the strategic plan—rather than to facilitate the actual
planning process. Thus, the mission state ment that can bring unity and conformity in the case of a private
organization may bring diversity and create ambiguity in the case of government agencies. In the public sector,
participation in the process of developing a strategic plan and the document that results from it can reduce the
haze and cultivate a com mon understanding of the mission across the board. Although private sector
organizations can secretly assign the development of strategic plans to ad hoc teams or specialized units,
strategic planning in the public sector must be open and involve broad-base participation. Such a planning
process is needed in the public sector for two reasons. First, it may accord the strategic plan its legitimacy.
Second, such an open process is needed for fostering a sense of ownership of the resulting plan by those
whose support and cooperation are critical for its implementation. It is possible to identify two major schools
of think ing about strategic planning and the mission of the organization.[8] One school views the strategic
planning process as an analytical exercise that results in the defi nition of a mission for the organization. Byars,
for example, claimed that an organization’s purpose must be defined at its inception, and then be redefined
regu larly during both difficult and successful times.[7] The second school of thought assumes the pre
existence of a mission. According to this second approach, the purpose of strategic planning is to ident ify the
preferred way of carrying out a given mission, optimizing the use of resources by adopting an out ward
perspective. © 2008 by Taylor & Francis Group, LLC Strategic Management and Productivity 1869 Subscribers to
the first approach assume that those involved in the strategic exercise are empowered to define and redefine
important parameters of the sys tem. The analysis results from concerns about past, present, or future
performances of the organization. The only guideline for developing the plan is that it should lead to a better
future. In 1787, the Founding Fathers in Philadelphia approached their task in this manner. They redefined the
mission of the central government and articulated some important values for the purpose of forming a better
union. The values and the definition of the mission were then used as parameters for devising a mechanism for
carrying out the mission and for preserving the union as they envisioned it. A SIMPLE MODEL OF STRATEGIC
PLANNING Developing the Metaplan The first step in the planning process calls for a general investigation of
the internal and external environments of the agency. The purpose of the investigation is to establish the
boundaries of the relevant environ ments. What issues, considerations, organizations, con straints, groups, or
individuals should be included in the analysis, and what should be left out? What is an adequate timeframe for
making and using projections in the plan? What is within the domain of the agency, and what should be
considered outside it? What forces exist in the agency’s immediate (i.e., operating) envir onment, and what
forces shape this environment by influencing the general environment? Dror stressed the need to establish a
clear frame work for action that is commensurate with the authority and resources of the agency. He used the
term cutoff points, or horizon, to delineate time, terri tory, and spheres of social activity beyond which the
effect of a policy can be ignored.[9] One way of arriving at the cutoff horizon is by ‘‘stakeholder analysis.[10]’’ A
preliminary stakeholder analysis means the identification of coalitions of groups and individuals within and
outside the organi zation who have a stake in the status quo. The anal ysis next requires the identification of
issues that are important in the present and those that will become important within 5 to 10 years. Then the
potential influence and interest of each stakeholder in issues of importance, in the present or in the future, can
be esti mated. Those coalitions, groups, or individuals who do not seem to have a direct or long-term stake in
what the agency is doing, or in issues that are important to the agency, may be excluded from the analysis. The
same is true for issues that are not salient on the agenda of any important group. A cutoff horizon can reduce
the strategic planning effort to a manageable task, but this benefit is not with out risk of ignoring some
important issues, groups, or individuals. Some of the risk results from the fact that groups and individuals may
relate to a given issue in more than one capacity.[10] It is not easy to estimate whether a group or an individual
is consistent in reac tions to a given issue as the capacity of involvement changes. For example, employees of
the state depart ment of education may have different reactions to a new tax to finance education in their
capacities as tax payers, parents of school-age children, or department employees. To reduce the possible
consequences of such an oversight, the organization should reexamine the assumptions and considerations
that were used to frame the boundary of the analysis. Such examinations should be woven into the planning
effort itself as part of the planned iterations. The strategic plan should include set intervals for reevaluation of
said assump tions during the implementation of the strategic plan. Such examinations may coincide with the
development or review of proposed budgets. The purpose of the investigation is to establish the backdrop and
the framework for the strategic planning process. Even though it is usually limited in scope, it should give the
individuals in charge of designing the planning process some insight into the issues that should be dealt with
during the planning effort. In other words, the metaplanning phase is the time when the organization sorts the
wheat from the chaff by determining what constitutes a strategic issue and what does not. The importance of
the investigation for stra tegic issue diagnosis is that it delimits and constrains subsequent information
collection, evaluation, and choice.[11] Bryson suggested that ‘‘identifying strategic issues is the heart of the
strategic planning process.’’ He pointed out that the purpose of this step is to identify the fundamental policy
choices facing the organiza tion.[12] The model presented in this article uses a dif ferent approach to avoid
some of the difficulties that were identified by Bryson. The effort to identify stra tegic issues is an attempt to
define the forces that will shape an agency’s environment and influence its free dom of action. The model
assumes that it is only after a force field analysis has been completed that the agency may be in a position to
identify ‘‘fundamental policy choices.’’ Using this approach, which allows for redefinition of the force field or
any of its elements, the model creates an environment that is conducive to an orderly development of the
strategic planning pro cess. The model makes two important assumptions. First, it assumes that any
disagreement about the forces that is going to affect the agency is going to be less trying for the participants if it
is divorced from State Legis–Trade © 2008 by Taylor & Francis Group, LLC 1870 Strategic Management and
Productivity the effort to select a course of action for dealing with them. Second, the model assumes that
participants in the planning process are more likely to cooperate if the initial working paper, which contains a
tentative, preliminary inventory of critical issues, is produced by the coordinator of the planning process rather
than by one of them. Knowing that the inventory can and is likely to be revised as the planning process pro
gresses, and not having to defend a position that was taken before the beginning of the process, can induce
cooperation. In other words, by developing a working paper before the beginning of the planning process, the
coordinator of the process allows the participants to question and research the issues without attacking or
putting each other on the defensive. The investigation is usually part of the metaplan ning phase because its
results should influence the scope, timetable, and organization of the planning pro cess. To use an analogy, the
investigation during the metaphase of the planning process corresponds to the work of a Grand Jury. In each
case, the products estab lish the case for subsequent action, providing the justi f ication and the framework for
a more comprehensive effort of data collection and analysis. State Legis–Trade The metaplanning effort serves
two purposes. First, it develops a model of the proposed planning process. The model is a logical presentation
to help participants to understand and anticipate the various stages of the process, and to see how each step
of the process will lead to the other, and how and why each step forward requires a review of implications for
earlier work. The second purpose of the metaphase is to estimate the necessary time and resources for
completion of each step, control, and coordination mechanism for facili tating the process (e.g., PERT (Project
Evaluation and Review Technique) diagram), and the apparatus for evaluating the quality of the strategic plan
and the process for its development. In essence, the purpose of the metaphase is to provide the individual in
charge of strategic planning the necessary information to carry out the planning process and to evaluate it.
Taking Stock The second step of the strategic planning process is a comprehensive, indepth collection of data.
With advances in information technology, most of the effort may involve retrieval of information from sources
inside and outside the organization. The convenience and efficiency of this option should always be evalu ated
against the possible error, noise, or built-in bias that are likely to result from the use of data that were initially
collected for other uses. The purpose of this second step is to take a snapshot of the relevant ‘‘reality’’—the
proper context for assessing the existing situation and alternative courses of action. To facilitate this step, the
leader of the plan ning effort should consult with prospective users and participants to define the set of
questions that should guide the collection of data. The questions may be grouped into distinct categories such
as: What are the legal requirements, mandates, or con straints that must be observed by the agency? What
authority does it have? What is the scope of its discretion in exercising this authority? What other bureaus can
influence or be influenced by what the agency is doing? What is the relationship between all of these and the
evolving economic, political, and social trends? What is the relationship between past and present
performance, and the interest of various stake holders? What is the common interest of coalitions, groups, or
individual stakeholders in each policy arena? How strong is the interest of each member of such a coalition in
what the agency is doing (or, in how it does it)? What is the likelihood that any of them may change their stated
position and join another coalition? What may cause such a change? What are the indicators of a popular
desire to see a change in the formal definition of the agency’s mission? What indicates a desire for a change in
the agency’s formal structure or administrative practices as established by the enabling legislation? What
forces are seeking to affect interpretation of the law, informal practices, and the use of discretion? Using
professional standards, what can be said about subcomponents of the agency or elements of the program(s)
under its jurisdiction? What are the horizontal and vertical interdependencies among subunits? What is the
functional nature of these interdependencies,[13] and which ones are critical? Do top administrators, rank-
and-file employees, preliminary service recipients, and other stakeholders recognize and agree on the
existence of interdependencies? What is the reputation of the agency among legis lators? the media? central
staff units that regulate and determine allocation of resources like budgets or personnel? groups other than the
primary stakeholders? What are the expectations and preferences of top agency officials about issues such as
substantive results, use of resources, organizational structure, administrative practices, relationships with
various stakeholders, and new initiatives? What are the possible implications of changes in office and
information technology given current political, social, and economic trends? © 2008 by Taylor & Francis Group,
LLC Strategic Management and Productivity 1871 When it comes to the services the agency provides different
publics, what are (and what should be) the relationships among variables such as capacity, quality, queuing,
equality (equity), automation, staffing levels, client group awareness, multisite operation, use of vendors, and
user fees? Strategic Analysis The third step of the analysis involves a critical review of the answers to all the
questions about the agency, its operations, structure, the way it relates to the external environment in the
present, and the way it should relate in the future. The product of the third step of the strategic planning
process is a list of alleged strengths and weaknesses. A strength is a virtue (e.g., well-trained personnel or
relevant past experience). A strength indicates a capacity to operate without the presence or the prospect of
interference. A weakness is a deficiency. It indicates a threat to organizational capacity or the value of the
goods or services it pro vides, unless there is a change inside or outside the agency. Low morale, burnout, poor
image, inadequate facilities, lack of experience, or insufficient resources are common reasons for weakness in
public agencies. The disclosed strengths of the agency establish the desired direction for developing
alternatives for action. The weaknesses reveal the constraints on action and areas where change is necessary.
The exact definitions of what constitutes a strength or a weakness must be developed during this stage and
requires direct input from top administrators. The reason is that what may constitute a weakness for one may
be a source of strength for another. For example, one chief of police may consider a public image of a trigger-
happy police force as a helping factor due to its contribution to deterrence. Another chief may consider such an
image as an obstacle to effective action because it reduces trust and communication with minority groups.
Alternative Generation The fourth step of the strategic planning process is identification (or generation) and
comparative analysis of alternative courses of action. Using the strengths and weaknesses that were identified
in the previous phase of the planning process as guidelines, the organi zation seeks ideas about what can be
done and what should not be done, and why. To identify as many ideas and alternatives as possible, the
metaplan for the strategic planning process may call for the simul taneous use of several independent efforts.
Some of the techniques for generating ideas through mobi lization of insights and different kinds of knowledge
include the use of expert systems,[14] small (focus) groups,[15,16] brainstorming sessions,[17] use of Delphi or
simulations, consultants, advisory groups, and elec tronic bulletin boards. The are four reasons for the
simultaneous use of several of these techniques. The first reason is to assure that no viable option is ignored.
Different techniques may be more suitable for helping various individuals and groups articulate insights and
desires about the agency and its management or programs. Second, the effort to establish an inventory of
options should facili tate the collection of information and opinions so that the virtues and implications of each
option are not over- or underestimated. Use of different techniques reduces the odds that an important
consideration will be overlooked. The third reason is that simultaneous use of different techniques can speed
up the process and prevent a stalemate. The fourth reason is that by use of alternative techniques and by
involving different groups, the organization increases the odds for over coming cognitive deficiencies, which
can mar the initial identification of strategy and the development of the metaplan.[18,19] The various
alternatives for interpreting the enabling legislation (the mission), the options for orga nizing the agency (the
grand strategy), and possible administrative practices (functional strategies) should than be ranked on the
basis of two considerations: 1) the extent to which they take advantage of agency strengths and avoid its
weakness; and 2) the extent that they are in line with the preferences of important stake holders. Ignoring either
consideration may defeat the whole purpose of developing a strategic plan. Strategic Choices In the fifth step
of the planning process, the organi zation chooses the options for implementation. This includes commitments
to achieve specific annual objec tives and to follow particular functional strategies and policies,
institutionalizing the strategy and establishing of control.[5] In selecting an option for implementation, the
organization determines the following: What is the agency out to achieve? What will be done to achieve it? Who
is responsible for each element of the program? What is the timetable for carrying out the plan? Organizational
Leadership and Support The implementation of any plan requires preparation. The purpose of this sixth step of
the strategic planning process is to tie the necessary preparation to the planning process itself. Lack of
resources or any other State Legis–Trade © 2008 by Taylor & Francis Group, LLC 1872 Strategic Management
and Productivity constraints on making the necessary preparations should be taken into consideration and
influence the development of the plan. Sometimes the preparation for implementing a stra tegic plan may call
for special training,[20] purchasing of new services or equipment, modification of facilities, or rewriting of
manuals. Some of the preparations may require a lead time. The gap between selection of a strategic plan and
the beginning of the implementation process provides a fertile ground for rumors and other activities that may
jeopardize the success of the plan. Therefore, even before preparing to implement the plan, the organization
must embark on a campaign to educate all employees and other stakeholders about the plan and how the
organization is going to prepare for it. Managers should treat the implementation as an introduction of a
planned change. They must be ready to provide leadership and willing to get involved in mobilizing support.
According to Holden, if strategic planning is to be a productive management function, support for it must
exceed the resistance against it.[21] It follows that in the absence of strategic leadership, the creation of an
overall sense of purpose and direc tion that guide integrated strategy formulation and implementation,[22,23]
sufficient level of support within the organization is unlikely and the wisdom of engag ing in strategic plan
should be questioned. Review and Evaluation State Legis–Trade During the seventh step, the organization
establishes milestones, and a framework for monitoring and eval uating the implementation process.
Establishing this framework in advance of implementation prevents the temptation to rationalize (or excuse)
deviations from the plan. It helps the manager to identify such deviations and scrutinize assumptions that were
used for developing the plan. The evaluation framework defines the quantitative and qualitative measures of
input, process, and output of each subsystem of the agency. Classifying an admin istrative subunit as a
revenue, cost, or responsibility center[24] allows the manager to compare expected and actual performance. It
also allows the organization to trace the relative contribution of each subunit to the use or generation of
resources. RESPONSIBILITIES AND ROLES IN STRATEGIC PLANNING AND STRATEGIC MANAGEMENT The
strategic planning process can be a bottom-up or top-down planning process. As a bottom-up process, the
effort begins with investigation of the environment by each subunit. The data from all the units reaches a
central location that uses it to develop a tentative design for the planning process. This design—the
metaplanning phase of the strategic plan ning effort—is then circulated for comments and suggestions before
it is finalized. The final design pro vides each unit of the organization with a timetable, the division of labor, and
the various stages of the process to develop the strategic plan. When the process originates at the top, the
initial study is carried out by a central unit that also develops the first draft of the design for the planning
process. The draft is circulated for comments before it is f inalized. Selection of a top-down or a bottom-up
approach depends on the distribution of strategic planning experience throughout the organization and the
avail ability of resources. Organizations that have gone through the process of strategic planning once may
benefit from an action research approach where the planner and those who will be asked to implement it
collaborate.[25] Action research assumes participation by all employees and thus is less biased by the pers
pective from the top. Such an approach can lead to better definitions of issues and considerations than an
approach that limits participation. However, when prior experience of strategic planning is missing or when the
organization cannot spare the resources to train employees before the beginning of the strategic planning
effort, subunits may spend too much time pondering and wondering what is expected of them or how to do it.
The organization may save time and unnecessary aggravation by using professionals to conduct the initial
survey that establishes the para meters or boundaries of the planning process. The person in charge of the
strategic planning pro cess is a broker of knowledge. This person needs to know something about the agency
and its special cir cumstances. However, the person’s primary expertise should be in strategic planning—the
how and why of going through the various steps of the process. The person in charge of the strategic planning
effort is also a change agent. As such, the person needs to bring to the organization extraordinary leadership
and interpersonal skills. The strategic planning process involves scrutiny of past achievements, reordering of
priorities, possible shifts and changes of structure, and personnel and administrative practices. All these may
threaten employees’ careers, job security, senior ity, authority, or power, and they can generate tension,
particularly in labor relations. As a change agent, the coordinator of the strategic planning effort should be able
to smooth ruffled feathers and reduce the uncertainty. To be successful as a change agent, as a broker of
knowledge, and as coordinator of the planning process, © 2008 by Taylor & Francis Group, LLC Strategic
Management and Productivity 1873 that individual must have the support of top officials and easy access to
the ranking administrator. All agency employees should know that the individual’s authority to request
cooperation or data is derived from the authority of the chief administrator. The administrator should spare no
effort to communicate to the rank and file the importance of the strategic plan ning effort and the commitment
of the organization to see it through. Without clear and strong commitment from the top, employees may not
take the strategic planning effort seriously. This, in turn, may lead to delays or may compromise the quality of
the data being collected by employees for the planning effort. The importance of organizational commitment
can not be emphasized enough: without it, the whole effort does not stand much of a chance. After all, for most
agency employees, participating in and contributing to the planning process is a duty that is added to their
regular responsibilities. Most employees like to be involved, but resent the extra work they need to do just for
the planning effort. Thus, special attention should be given during the design of the strategic plan ning effort to
building good will. In a similar way, the organization should spare no effort when familiarizing employees and
stakeholders with the strategic plan, the rationale behind it, and how its various parts are related. Such efforts
should reduce ambiguity, and counteract the influence of rumors and allegations that may interfere with the
implementation of the plan. The symbolic value of educating employees and the public about the plan will help
the organization to legitimize and secure cooperation for implementing the plan. CONCLUSION Halachmi[8]
questioned whether strategic planning and management are likely to be as useful or feasible in the case of all
public agencies. In one publication,[26] he asserted that well-performing organizations are likely to be able to
take advantage of strategic planning and management, whereas weaker agencies may not. In the early 1990s,
Mintzberg, who wrote extensively on the subject of strategic planning and management, suggested[27] that the
inherent characteristics of plan ning and strategic management may undermine one at the expense of the
other. According to Mintzberg, planning involves analytical and systematic analysis and thinking, whereas
strategic management involves a synthesis, learning and thinking outside the envelope. In his words: ‘‘Strategic
planning is not strategic thinking. Strategic planning often spoils strategic thin king...this confusion lies at the
heart of the issue: the most successful strategies are visions, not plans.’’[27] The implications of the
observations offered by Halachmi and Mintzberg are clear: strategic planning and management may beauseful
tool for all managers, but they may not be suitable for all organizations.