|
The Role of Strategy in Planning for Change (Management Magazine September 1996) |
|
|
The last ten years have
been marked by ever increasing demands for customer focus and competitiveness
on private and public sector organisations.
However, within this complex and dynamic environment, relatively few
organisations have embraced well-established methods for strategy
development. Why is
change necessary?
Change is primarily
being driven by the state of the Australian economy, new community
expectations of both public and private sectors and rapid technological
development. In the mid 80s, the
Hawke Government recognised that public and private sector reform was an
essential step in Australia's economic recovery. This recognition led to the restructuring of the manufacturing
industry, the deregulation of the finance industry and the Wilenski reforms
of the public sector. In 1994, the Karpin
report Enterprising Nation revealed
"Australian management must improve significantly in the next decade if
enterprises expect to even meet today's world best practice standards". The most recent vehicle
for public sector change is the Competition Policy Reform Legislation, which
flows from the Hilmer Report regarding competition in Australia. Changes in community
expectations have blurred the distinction between government and non-government
institutions. The public now expects
improved service, accountability and efficiency from public sector
organisations. At the same time, it
demands that corporations demonstrate responsible policies and practice with
regard to corporate governance, environmental management and the development,
health and safety of their employees. Finally, advancements
in technology provide opportunities for improvements in efficiency,
accountability and service delivery, which few organisations can afford to
ignore. Why is
change so difficult?
Unfortunate but true is
the fact that organisations tend to cling to systems and practices that were
successful for them in their formative years, but are now no longer
appropriate. The environment that
created and nurtured most of our older organisations was breathtakingly
simple compared to that we now face.
They emerged at a time when our population was growing rapidly and our
economy successfully supported by primary production. Under these conditions, an affluent and
acquiescent public accepted the products and services they were given,
industry was either highly protected or tightly regulated and efficiency was
simply not demanded. In larger organisations, tall hierarchical organisations developed in which strategy was determined at the top and divided into tasks to be fed down as management directives. In smaller organisations strategy was either non-existent or resided only in the head of the chief executive officer. This simplistic
approach is no longer appropriate because it ignores the real purpose of
strategy development. That is, to
explain how objectives will be achieved.
Nevertheless, its influence remains and has contributed to a failure
to acquire real skills in strategic management. Karpin recognised this lack of strategic skills as a primary
developmental need for Australian managers. The new
role of strategy
Modem strategy must
empower organisations to constantly balance the needs of their clients,
shareholders [who may be the Government] and the community while obeying the
law and containing their costs within budgetary constraints. Strategy must be
developed both bottom-up and top-down.
Bottom up because service delivery employees know what their customer
wants and how they can provide it.
Top-down, to define the goals and scope of the organisation and to
drive organisational re-design and performance management. The result is an
organisation committed to appropriate activities, staffed by managers and
employees who are empowered to succeed. How to
develop strategy
Strategy development
requires a thorough understanding of the external environment, organisational
competencies and the consistency of corporate values with the broader needs
of the community. 1. Understand the environment
Thorough environmental scanning, scenario planning and the actual presence of stakeholders during planning processes will all improve understanding of the environment. a. Environmental
scanning. The scan examines
community needs, Government and shareholder priorities and a competitor
analysis. It also identifies possible
interdependencies or overlaps with services provided by other government
bodies or affiliated organisations. b. Scenario
planning. Scenario planning can
precede corporate planning to produce long term plans [up to 20 years] that
recognise uncertainty by preparing the organisation for a number of
alternative futures. [Corporate plans can then focus on a more certain five
years out]. c. Involve
external stakeholders The physical presence of external stakeholders
during part of the scenario and corporate planning processes will sharpen
market focus, overcome complacency with the status quo and add a touch of
reality to the final plans. 2. Understand your
organisation
Understanding of organisational
competencies is achieved by involving both senior and operational managers
and in some cases employee representatives in the planning process. In large organisations this is done by the
inclusion of strategic planning after corporate planning and before business
unit or operational plans are developed. a. Design
service delivery strategies. The first task in this process is
to translate desired corporate outcomes into service delivery outcomes and performance
measures for particular business units.
It then evaluates current competencies of the organisation and
identifies the root cause of any organisational barriers to the achievement
of these outcomes. Finally, it designs the
most effective delivery strategy for overcoming barriers. Please note that where major change is
required, this strategy frequently requires organisation redesign and
dramatic changes in operating policies or work processes. b. Tie to resource allocation and
performance management. Once
developed, the strategy is used to allocate accountability and resources
across the organisation. Because
managers [and often employees] from service delivery units have been
involved, they are committed to the strategy and understand what they must do
to implement it. Most importantly,
they use the strategy to define the context within which they can satisfy the
needs of their direct clients. Further, bottom up
operational planning allows them to report any unforeseen challenges,
negotiate changes in resources or accountabilities to overcome them and
ensure that these challenges are considered in the next round of strategic
planning. Similarly, at the
individual level, personal achievement goals set during appraisal are checked
for their congruence with strategy as well as their ability to serve their
direct clients. 3. Identify corporate values
These values may result
in policies and practice that may restrain commercial performance but satisfy
broader and less tangible community needs. a.
Public sector
values Adherence to these
values is critical if the agency is to truly provide public service. They emerge as: ·
The
identification of essential services that cannot [or should not] be delivered
commercially. ·
Decisions
not to compete in industries where the community is better served by the
development of expertise in the private sector. ·
Decisions
to manage rather than meet demand when this is in the community's long-term
interest. b. Private sector values Adherence here commits the firm to being a good corporate citizen. They may include: ·
A
commitment to the protection of the environment. ·
Decisions
to develop the potential of existing staff rather than recruit skilled
outsiders. ·
Decisions
to exceed [as well as comply with] accountability requirements of directors. ·
The
adoption of voluntary codes of behaviour for example, advertising and sales
activities. In both sectors, strategy may recognise that competitiveness cannot be instantly achieved, and allow for a transition period whereby units are gradually exposed to competitive forces. For further assistance visit Change & Perform's Change Management Services or contact the principal Kerry Feldman |
|
|
|
|
|
|
