1. Strategic ManagementStrategic Management
- a tool towards goal achievement & service delivery improvement- a tool towards goal achievement & service delivery improvement
Facilitated by André Knipe
+27 (0)11 662 1444
aknipe@sbs.ac.za
1
4. Overview
• The Strategic Management Process: An Overview
• Vision and Mission Statement
• External and Internal Environmental Analysis
• Formulation of Strategic Goals
• Formulating Strategies
• Evaluation and Selection of Strategies
• Implementation of Strategies
• Integration of Strategic Goals and Strategies
• Monitoring and control over strategy implementation
• Drivers of strategy implementation
4
6. From Strategy to Service Delivery
6
Strategic Management
Environmental analysis
•Vision & Mission statements
•Objectives (thrusts)
•Values
•Strategies
•Programmes
Desired Future
Shared Vision
Common focus/synergy
Main objective
Direct all activities and
resources
Change Management
- Organisational Culture
- Transitional Communication
Diversity Management
Project Management
Environmental Forces
A C B
Projects
A = Current situation
B = Desired future/outcome
C = Transition via projects
7. Conversion From Strategy to Implementation
• Typical management dilemma: “We know where we
want to get to but not how to get there”
• The Answer!
7
Institutional
strategy
Prog. I
Prog. 2
Prog. 3
Project 1.1
Project 1.2
Project 1.3
Project 1.4
Act. 1.1.1
Act. 1.1.2
Act. 1.1.3
Act. 1.1.4
Environment - vision - mission
Managing by Projects
Strategic Planning Project Management Performance
Management
8. Course Outcomes
• demonstrate an understanding of the strategic management process by providing an
overview of it;
• contribute to the development of a vision and mission statement for an institution or a unit
within the institution;
• participate in the analysis of the external and internal environmental of an institution;
• contribute to the formulation of strategic goals and objectives for the institution;
• contribute to the formulation of strategies for the institution in terms of service delivery and
development;
• contribute to the evaluation and selection of strategies for the institution;
• contribute to the implementation of the strategies of the institution;
• demonstrate an understanding of the manner in which strategic goals and strategies are
integrated at an institution;
• demonstrate an understanding of the balanced scorecard and the use of it for strategic
management purposes at an institution;
• monitor and control a municipality’s strategy implementation; and
• describe the drivers of strategy implementation at an institution.
8
11. What is strategic thinking?
• This is an ability to visualize the future, critically analyze
operational environment (internal and external) develop a
plan and provide transformational leadership to effectively
implement it and achieve sustainable desired results.
• It means questioning the present, evaluating the past and
informing the future.
• This require vision, critical and lateral thinking, creativity and
innovation.
11
12. Discussion
• Why should public servants be trained to think strategically?
• Are there any disadvantages of strategic thinking in public
service?
12
13. Why the public servant must think
strategically
• Being visionary, aligning operations to vision
• The closing gap between the private and public sector
• The government and its agencies are now a strategic partner in all
businesses (public/ private sector partnership)
• Many emerging trends and protocols
• Uncertainty in the operational environment
• Changing environment
• Good governance – ethics/ integrity/ systems
• The service charter – customer orientation
• Technological change
• Public policy analysis, development and implementation
13
14. Why the public servant must think
strategically
• Operational environment is becoming more and more
challenging
• Performance contracting
• Multiple reporting
• Globalization
• Education and training advancement
• Sustainable competitive advantage
• Assuring continued success
14
15. Learning to think strategically
• Strategic thinking is a powerful skill
• In the past, formulating policy and strategy have been
reserved for top public servants and policy makers
• Any organizational planning programs ultimately succeed or
fail, so strategic thinking at any level is absolutely essential
• Strategic thinkers ask questions like “is my organization and
programme doing the right thing?”
15
16. Kind of questions public officers ask
• Are we serving the right people?
• Are we offering the right services?
• Are we overcoming barriers to services?
• Does the organization staff set a good example for our
clients?
• Are our customers satisfied with the services that we
provide?
• Are we creating support for planning the sector that is being
served?
• Are we learning from the past?
• What changes have we injected?
16
17. Strategic thinking output
• The output can be summarized as;
– Outstanding performance at all levels of public sector and
economy
– Creating a framework and sustaining a rhythm of
consistent superior performance
– Building capacity for development of good governance,
structure, system, process and resources that guarantee
good performance
– Developing individuals capacity to provide highest
standard of results
– Taking care of customers which include citizen and non-
citizens 17
20. A strategy is the process whereby certain
policy, strategies and resources are used to
achieve the main objectives of the
institution.
20
21. PFMA: NEW APPROACH
• Linkage between strategic planning, budgeting &
reporting (annually)
• Focus on outputs and responsibilities (budgeting by
outputs)
21
22. PFMA: NEW APPROACH
• Proper strategic planning (basis for budget
allocation)
• Service standards and costing systems
• Role of programme and project managers
emphasised
22
23. TREASURY REGULATION RE STRATEGIC
PLANNING
• (Part 3, Chapter 5)
• Acc. Officer must prepare strategic plan for Medium-
term Expenditure Framework (MTEF) period
• Forward approved strategic plan to Treasury by 30
June annually
23
24. TREASURY REGULATION RE STRATEGIC
PLANNING
• Strategic Plan must:
– Cover a period of 3 years
– Include programme objectives & outcomes
– Include multi-year projections of revenue and expenditure
– Include key performance measures
– Be updated annually on a rolling basis
– Include requirements of PS Regs
– Form the basis of annual reports
24
25. CONTENT (YEAR 1)
• 1. Introductory information
– Foreword by Minister & DG
– Vision & mission statement
– Historical information
– Dept values (symbols, behaviour, practices that bind
objectives together)
25
27. CONTENT (YEAR 1)
• 4. Capital investment strategy
– Procurement, operation & maintenance, replacement of
assets; costs should be within MTEF allocations
• 5. Service Delivery Improvement Programme
– Linkage with objectives
• 6. Organisational management
– HR, AA, IT, structure, consultants
27
28. CONTENT (YEAR 1)
Programme 1: …………………
Subprogramme …………………..
Outputs Service delivery indicator and target Estimated costs
• Effectiveness
• Quality, quantity and timeline
• Efficiency
• Access
• Sustainability
28
• 7. Planning information
– Example
29. PUBLIC SERVICE REGULATIONS 1999
• (Part III)
• Executive authority establish medium-term
programme that includes:
– Core objectives
– Core and support activities
– Functions internally and contracted out
– Information systems for monitoring
29
30. PUBLIC SERVICE REGULATIONS 1999
• Based on strategic plan, an exec authority shall:
– Determine dept’s organisational structure in terms of core
and support functions
– Grade proposed new jobs
– Define posts
– Utilise human resource plan
30
31. PUBLIC SERVICE REGULATIONS 1999
• To implement the strategic plan, the HOD shall:
– Promote efficient, economic and effective use of
resources & improve functioning of the department
– To that end, apply such working methods as the
reallocation, simplification and/or coordination of work
and the elimination of unnecessary functions
31
32. PUBLIC SERVICE REGULATIONS 1999
• Thorough assessment of the following internal
issues:
– Human resource strategies (e.g. training, AA, redundancy
management)
– Job creation with implementation of certain projects
– Information technology (e.g. upgrades, MIS, etc.)
– Physical assets assessment
Note: Parliament may also request information on specific
issues, which should be included in strategic plan
32
33. LINKING STRATEGIC PLAN WITH OTHER
DOCUMENTS
• Strategic plan not developed in isolation; result of
thorough consultation
• Should link with:
– Estimates of National Expenditure
– Performance contracts between Minister and HOD
– Performance contracts between HOD and senior
management
– Service Delivery Improvement Programme
33
34. Strategic Management - Conceptualisation
• Strategy
– “…is a suitable plan or method for achieving the aims of
the institution, irrespective of change”.
– It is a broad programme
– The essence is adaptability and incrementalism
– Develops from an external or internal trend or force
– Provides a powerful impetus for action
34
35. Strategic Management - Conceptualisation
• Strategic management
– “…is a management application to keep up with the
environment”
– Provides a common sense of direction and purpose
– Creates synergy and co-ordination in the institution
– Optimise the utilisation of company resources
– Minimise crisis management (pro-active planning)
– Ensures an objective and realistic basis for management
decision-making
– Umbrella concept (involves the total management of the
company)
– Different to traditional and long-term planning
35
36. A matter has strategic implications for an
organisation if it…
• Poses a current of future threat or opportunity
• Develops from an external or internal trend
• Can potentially influence the company’s growth, survival and
service
• Can influence the direction in which the matter is moving
36
37. Advantages of applying strategic planning
• Is a tool to adapt to a changing environment
• Provides a framework that guides choices
• Improves institutional performance
• Should be used as a prioritisation system for resource
allocation
• Take control of the future, rather than only reacting to it
37
40. The importance of a strategic response
• Turbulent and uncertain environment
• Structural changes (restructuring, rationalisation, down-
sizing, transformation, etc.)
• Alternative organisational structures (matrix, project,
business units)
• Multiple and interdependent variables to consider
• Needs and expectations of society
• Quality and quantity of service rendering
• Multiple and collaborative skills needed
• Limited resources (funds, staff, equipment, etc.)
40
41. Aligning the environment
41
A = Macro or external environment
B = Market or specific environment
C = Micro or internal environment
Processing
of inputs
- Management
- Technology
- Systems
- Skills
Outputs to the
environment
Feedback
Economic
BC A
Inputs
from the
environment
Political Technology
Social
Organisation
42. Implications of environmental
influences
• a proven need for the strategic management of public
institutions to ensure efficiency, effectiveness and
productivity
• differences between the management environment of public
and private organisations must be accepted as a given and
compensated for
• various restrictions made by the public management
environment require a significantly different set of behaviour
reactions
• Institutions are influenced by various factors over which
there is little or no control
• more effective measurement of output of institutions must
be developed
• managerial processes in organisations must be evaluated to
learn quickly from experience
42
43. Strategic ManagementStrategic Management
- a tool towards goal achievement & service delivery improvement- a tool towards goal achievement & service delivery improvement
Facilitated by André Knipe
+27 (0)11 662 1444
aknipe@sbs.ac.za
43
44. Strategic Planning: Process
44
Obtain institutional mandate
Environmental analysis (Internal
and external)
Vision and mission statements
Strategy formulation
Strategy implementation
Strategy evaluation and control
Strategic planning
Strategic management
45. Activity
• The essential goal is the build the tallest and strongest
tower
• There will be a 15-20 minute planning period, in which no
work can be done
• Teams will have 5-10 minutes to build
45
46. 46
Examine mandate, functions
and programmes against
Govt’s strategic policy and
spending priorities
Monitor and evaluate past
performance
Engage in strategic planning and
budgeting review for next 3 years
•Are objectives & outputs still relevant?
•Have service delivery targets been met?
(Analyse degree of alignment)
High degree of alignment and
service delivery achievement
Low degree of alignment and
service delivery achievement
Amend strategic plan and objectives to
improve service delivery and achieve
better results
Review strategic plan in detail to increase
alignment of key areas, objectives and
service delivery to Govt's priorities and
service objectives
Develop detailed operational plan for
the 1st
year based on service delivery
improvement programme
Develop revised strategic plan. Review
direction, objectives, structure, budget
and service deliverables and targets
Assess costs and resource implications for
implementing the reviewed strategic plan in
preparing the MTEF budget for next 3 years
47. STARTING THE ‘REVOLUTION’
• Before starting its strategic planning, a dept should carefully
examine Govt’s overarching socio-economic policy priorities
and medium-term spending plans; they provide a context for
the strategic plans and their integration into the budget
process
• The pre-planning exercise should examine:
– Govt overarching medium-term policy and expenditure priorities
– Alignment of the dept strategic mission to these overarching priorities
– Relevant and effective contribution of dept output towards Govt’s
socio-economic goals and outcomes
47
48. Step 1: Commitment / Obtain
mandate
• Should address:
– Client needs (categories)
– Services and products required (functional responsibilities)
– Social responsibilities
– Statutory & legal obligations
• Important! Match outputs with customers’ needs
48
49. Step 1: Commitment analysis
• Arrange workshop: set out mandate, functions & duties of
department
• Mandate = Rules & regulations to which department must
adhere; determine character, directs its activities; optimal
utilisation of resources
• Commitment from top management
49
50. Step 2: Environmental / Situational
Analysis
• Scan external and internal environments
• Strategy must balance internal capabilities with its external
environment
• Shared values
50
51. SWOT Analysis
o Is an extremely useful tool for understanding the context of
the dept and assists with decision-making for all sorts of
situations.
o Is an acronym for strengths (what do we need that we have),
opportunities (leverage?), weaknesses (what do we need that
we do not have?), & threats (what can go wrong?).
o Is a subjective assessment of data which is organized by the
SWOT format into a logical order that helps understanding,
discussion and decision-making.
51
52. SWOT Analysis: Template
strengthsstrengths
•Advantages of proposition?
•Capabilities?
•Competitive advantages?
•Resources, Assets, People?
•Experience, knowledge, data?
•Financial reserves, likely returns?
•Marketing - reach, distribution, awareness?
•Innovative aspects?
•Location and geographical?
•Price, value, quality?
•Processes, systems, IT, communications?
•Cultural, attitudinal, behavioural?
•Management cover, succession?
weaknessesweaknesses
•Disadvantages of proposition?
•Gaps in capabilities?
•Reputation, presence and reach?
•Financials?
•Own known vulnerabilities?
•Timescales, deadlines and pressures?
•Cash flow, start-up cash-drain?
•Continuity, supply chain robustness?
•Effects on core activities, distraction?
•Reliability of data, plan predictability?
•Morale, commitment, leadership?
•Processes and systems, etc?
•Management cover, succession?
opportunitiesopportunities
•Govt trends?
•Technology development and innovation?
•Global influences?
•New services?
•Geographical, export, import?
•Information and research?
•Partnerships, agencies, distribution?
•Volumes, production, economies?
threatsthreats
•Political effects? Legislative effects?
•Environmental effects?
•IT developments? New technologies, services,
ideas?
•Vital contracts and partners?
•Sustaining internal capabilities?
•Obstacles faced? Weaknesses?
•Loss of key staff?
•Sustainable financial backing?
•Seasonality, weather effects?
Copyright M.A.R.C. Consulting, 2008 52
53. • A SWOT analysis measures a business unit, a proposition or
idea; a PEST analysis measures a ‘market’ (broader
perspective)
• PEST = Political, Economic, Social and Technology
• It’s helpful to complete a PEST analysis prior to completing a
SWOT analysis
53
SWOT & PEST
55. 55
Situation Analysis
Functional AreaFunctional Area StrengthsStrengths WeaknessesWeaknesses OpportunityOpportunity ThreatsThreats
Financing Treasury
allocated
budget for the
project
Attitude of
sponsors
Budgetary
constraints
Development of
financial
management
and training
Delays in Treasury
transfer of funds
Fluctuating value
of the rand
Managerial General
knowledge, skills
and work
experience
Lack of operational
skills
Lack of technological
guidance e.g. drafting
of business plan
New
management is
prepared for the
challenge
Lack of
exposure/
experience
Political
factors
Political support
and will
Change of
political
leadership,
councillors, MEC
Political
responsibility on
government to
provide…
New political
leadership may not
support the project
Project may be used
as a political
bargaining tool
Resources
Technology
Labour
Competition
56. Force Field Analysis
Forces ForForces For Impact
Value
Forces AgainstForces Against Impact
Value
1. Improved services
delivery
6
1. Resistance to change 5
2. Legislation/policy
imperatives
4
2. Budget constraints 2
3. Image
5
3. Lack of skilled staff 7
4. Management support 3 4. Time constraints 2
Total 18 Total 16
Equilibrium situation
Driving forces
Restraining forces
Quantifying forces for and against the strategy (strategic objective)
57. Force Field Analysis
• Used to get a complete view of the forces for and/or against a
plan (existing strategic plan)
• Helps to plan/reduce the impact of opposing forces and
strengthen/reinforce the supporting forces
• How to do it:
– List all forces for & against change in 2 columns
– Assign a score to each force (from weak (1) to strong (5))
– Illustrate forces in a basic diagramme
• Mindset changes
57
58. Stakeholder analysis
• = Individuals, groups or organisations influenced by
or affect the functioning of the dept. May have
political influence, power over resources, production
levels, work environment or service delivery.
• What to do:
– List all stakeholders; determine their relative importance
(criteria?)
• Important! Match stakeholder and dept perceptions
58
59. Activity
• Conduct an environmental scanning of your
department/directorate
• Now focus on the internal organisation scan of your
department/directorate, and make a list of critical areas
regarding the weaknesses, which influence or may influence
your functional activities.
• Prioritise the weaknesses (only) by applying a weighting
system (e.g. high impact, refer to Force Field Analysis)
59
61. Strategic ManagementStrategic Management
- a tool towards goal achievement & service delivery improvement- a tool towards goal achievement & service delivery improvement
Facilitated by André Knipe
+27 (0)11 662 1444
aknipe@sbs.ac.za
61
62. Strategic Planning: Process
62
Obtain institutional mandate
Environmental analysis (Internal
and external)
Vision and mission statements
Strategy formulation
Strategy implementation
Strategy evaluation and control
Strategic planning
Strategic management
63. Step 3: Vision Formulation
• Proactive dream of the organisation’s perceived place in an
ideal environment
• Gives general direction
• Usually idealistic
• Future oriented
• Provides synergy
• What to do:
– Analyse commitment of organisation
– Review existing vision
– Formulate new vision (...if necessary)
63
64. Vision statements
• An organisation must be clear on the following:
– The business it will be in
– The products or services it will provide
– Its customers
– The geographical area it will serve
– The technology it will apply
– The things it will do to ensure that it remains a going concern
– Its philosophy
– The image it wants to project to interest groups
– Its self-concept
– The quality of the products/services it will deliver
64
65. Statement of Intent
• (Example)
– “We are committed to socio-political change and a
democracy recognising the rights of individuals in our
community
• We are committed to providing … (services and/or
products). Our role in … will be characterised by:
– Empowering ...
– Quality ...
– Enabling …”
65
66. Value System
• Values and principles underpinning the Strategic Plan,
example:
• “We, as staff members of Klerksdorp Municipality, believe in
the following values and will strife to uphold them in all our
activities:
– Integrity
– Service excellence
– Loyalty
– Professionalism
– Creativity, etc.”
66
67. Examples of vision statements
• To be a world-class provider of quality statistics
• To be the best employer
• To be superior in all aspects of insurance service delivery
67
68. Example: Vision
• “A prosperous, unified city of the people, able to provide
equal, cost effective and sustainable, quality service and
alleviating poverty through an integrated and holistic
programme of development providing social and economic
security and safety to all”
– City Council of Klerksdorp
68
69. Examples: Vision
• Dept of Health: “...a caring and humane society in which all
South Africans have access to affordable, good quality health
care.”
• PSC: “The Public Service Commission is an independent and
impartial body created by the Constitution to enhance
excellence in governance within the Public Service by
promoting a professional and ethical environment and adding
value to a public administration that is accountable,
equitable, efficient, effective, corrupt-free and responsive to
needs of the people of South Africa.”
69
70. Examples: Vision
• DoE: “Our vision is of a South Africa in which all our people
have access to lifelong education and training opportunities,
which will in turn contribute towards improving the quality of
life and building a peaceful, prosperous and democratic
society.”
• Dept of Prov and Local Govt: “...to have an effective and
integrated system of government consisting of three spheres
working together to achieve sustainable development and
service delivery.”
70
72. Step 4: Mission Statement
• Statement of intent; reason for existence
• The fundamental, unique purpose that distinguishes the
organisation from any other organisation
• Identifies the scope of operations in terms of products,
services and market
• Can be narrow or broad in scope
72
73. Mission statements
• Formulating a mission statement includes:
– The product/service of the organisation
– The market of the organisation
– The geographical domain
– Main technology used
– The organisation’s quest for survival, growth and
profitability
– The organisation’s philosophy
– The organisation’s public image
– The organisation’s value system
– The organisation’s self-concept
73
74. The essence of a mission
• It ensures unanimity of purpose
• It provides the stimulation for the application of
resources
• It provides a basis for the application of resources
• It establishes an organisational climate
• It gives direction to the staff
• It enables the concretising of goals and strategies into
workable objectives and targets
• It describes the purpose of an organisation
74
75. Making a success of the mission
statement
• Be dedicated and honest in the preparation of the mission
• Choose a model and stay with it
• Do not take short-cuts
75
76. Example: Mission
• “To create an environment conducive to the
provision of excellent municipal services and
encouraging transparency, accountability,
effectiveness and efficiency
• To develop and market a unified city that facilitates
human development, economic growth, prosperity
and to accelerate change and delivery through
integrated development planning and co-operative
governance”
– City Council of Klerksdorp
76
77. Example: Mission
• Dept of Health:
– “...to consolidate and build on the achievements of the past five
years in improving access to health care for all and reducing inequity,
and to focus on working in partnership with other stakeholders to
improve the quality of care of all levels of the health system,
especially preventive and promotional health, and to improve the
overall efficiency of the health care delivery system.”
77
78. Example: Mission
• PSC:
– “The Commission aims to promote the constitutionally enshrined
democratic principles and values in the Public Service by investigating,
monitoring, evaluating, communicating and reporting on the public
administration; through research processes it will ensure the
promoting of excellence in governance and the delivery of affordable
and sustainable quality services”
78
79. Example: Mission
• DoE:
– “To provide leadership in the construction of a South
African education and training system for the 21st
century.”
• Dept of Prov and Local Govt: “...to:
– Develop and promote systems and structures of effective
governance, particularly at the local sphere; and
– Develop and promote a system of integrated government
between the spheres of government.”
79
81. What is the game plan?
• Vision – What is the vision of the organisation? Where will we
be in 5-10 years from today?
• Purpose – Why do we exist? How will we achieve the vision?
81
82. Strategic Analysis
82
Environment
•General environment
•Operating/specific environment
•Competitive positioning
•Directions for development
Organisational
•Structure
•Values
•Culture
•Resources
Strategic History &
Current Strategy
Opportunities
Threats
Strengths
Weaknesses
Stakeholder Analysis
Strategic Vision
Chosen
Strategy
83. Functional Analysis
• Addresses the mandate, functions and activities
• Assist in determining goals and key service deliverables
• Identify activities outside mandate and terminate them
• Identify interdepartmental linkages
• What to do:
– Review current objectives and programme information
– Focus on the future
– Agree on the outcomes
– Prioritise and consider alternatives
83
84. Outcomes - Outputs - Activities =
Budget
• Outcomes:
– Sound financial management systems; transparent budgeting;
effective management of revenue & assets; financial statements
prepared on accrual basis; accountability of public entities…)
• MEC approves (3-year rolling)
• Outputs:
– Questions e.g. how much, quality, when, cost, etc.)
– Acc Officer approves Year 1 Plan
84
85. Goals vs Objectives
• GOALS
– Open-ended statement of what the organisation wishes to
accomplish, with no quantification of what is to be achieved and no
time criteria.
– A long-range statement of intent
– Indicate purpose and direction
• OBJECTIVES
– Narrowly defined area of achievement over the shorter term
– States what is to be accomplished, by when, by whom and should be
quantified (i.e. include performance information)
– Should be concise, relevant, attainable, specific, and not just broad
statements
85
87. Strategic Issues
• Purpose of environmental analysis = identify
strategic issues
• Prioritise issues in terms of importance, urgency,
scope and contribution towards the success of the
dept
• Strategic issues creates climate for changes
• What to do:
– Develop sub-strategies and projects to address issues
87
88. Step 5: Formulating Strategies &
Action Plans
• Review: SWOT provide insight into efficiency of existing
strategies
• Strategy should convert weaknesses into strengths; threats
into challenges
• Identify 5 types:
– Offensive: exploit opportunities from a premise of strength
– Developmental: convert weaknesses into strengths
– Diversification: harness strengths to minimise impact of threats
– Defensive: dept is vulnerable; may require professional help for
business re-engineering
– Combination: harness advantages of each; circumstances will dictate
88
89. Strategic goal formulation
• Include 7 areas:
– Profitability
– Productivity
– Competitive position
– Employee development
– Employee relations
– Technological leadership
– Public responsibility
91
91. Formulating Strategic Objectives
• Break each strategy down into strategic objectives (narrowly
defined area of achievement)
• Objectives should include:
– service delivery indicators;
– indicate what is to be accomplished;
– measures to quantify results
• What to do:
– Identify 5-10 objectives per strategy
– Determine actions with responsibilities and time-scales to achieve
each objective
• How? = WBS
93
92. Balanced scorecard philosophy
• Based on the work of R.S. Kaplan and D.P. Norton as described in
their book The Balanced Scorecard
• Planning always occurs against the backdrop of a preferred or
desired future
– Financial Perspective: The financial results we are aiming for
– Customer Perspective: What the customers expect
– Internal Process Perspective: Processes we need to excel at
– Resource Perspective/Learning and Growth Perspective: What we
need to invest in today to ensure sustainable success in the future
94
93. Schematic view of the balanced
scorecard
Financial perspective goals:
Gross profit margin
Net profit margin
ROI
Customer perspective goals:
Customer satisfaction
Customer retention
Customer profitability
Vision & mission
Internal business process
perspective goals:
% of sales from new
products
New product introduction vs
planned production
Learning & growth
perspective goals:
Employee satisfaction
Employee retention
Skills development
95
97. Customer perspective
• The leading question here is: To achieve our vision/purpose
and to succeed financially, how should we appear to our
customers?
99
99. Internal business process perspective
• The leading question here is: To satisfy our customers and
shareholders, what business processes must be excel at?
101
101. Resource perspective
• The leading question here is: To achieve our purpose,
how will we sustain our ability to change and
improve?
• Kaplan and Norton state: .. Organisational learning and
growth come from three principal sources:
– People (skills/training)
– Technology (systems and information)
– Climate for Action (creating the desired culture).
103
103. Strategy map
• The goal is to focus the entire organisation on its strategy.
The mechanism used to do this is the strategy map approach,
where the strategy is codified and translated into a visible and
descriptive framework. The strategy map should tell the story
of the strategy.
105
106. The map consists of 3 elements
• Goals which are statements about: What needs to be aimed
for on a strategic level? These are shown in circles in the
example.
• Key enablers - Indicators which are prerequisites for achieving
strategic goals, therefore they represent the drivers of
success for a particular strategic goal. The logic in the map
also allows for specific strategic goals (with their sets of
enablers) to be arranged in cause-effect relationships
indicating which other strategic goals they drive. Key enablers
are output oriented; descriptive in nature; NOT an initiative;
NOT a sequential process step. These are shown in boxes in
the example.
• Arrows showing the cause-effect relationships between
strategic goals in a perspective and between perspectives. 108
108. Goal prioritisation
• Focus is the name of the game.
• Use the following criteria to choose between the
different goals:
– Impact on business results
– Driver logic (what causes what)
– Present vulnerabilities
• Choose 2 - 3 goals in all the perspectives
• The concept of 7 plus or minus 2 applies here. Human
beings can only concentrate on 5 to 9 concepts at a
time
110
109. Prioritisation / Evaluation of strategic
goals
Overcome weaknesses
Internal (redirect
resources within the
organisation)
Turnaround or
retrenchment
Divestiture
Liquidation
Vertical integration
Conglomerate
diversification
External (acquisition
or merger for
resources
capability)
Concentrated
growth
Market development
Product
development
Innovation
Horizontal
integration
Concentric
diversification
Joint venture
Strategic alliances
Maximise strengths
111
110. Activity
• Formulate a strategic plan in which you highlight possible
strategies to address the identified (prioritised) internal
weaknesses.
– Develop an overall strategy
– Formulate strategic objectives for each goal (weakness)
– Identify accountability for each objective
– Indicate a time frame and estimated budget per objective
• Remember: The focus is STRATEGIC. Be careful to go operational with
these aspects.
• Prepare for a short presentation tomorrow during which you
will share your completed activities with the group.
112
111. Strategic ManagementStrategic Management
- a tool towards goal achievement & service delivery improvement- a tool towards goal achievement & service delivery improvement
Facilitated by André Knipe
+27 (0)11 662 1444
aknipe@sbs.ac.za
113
112. COMPILING THE STRATEGIC PLAN
• Record all discussions/contributions during planning sessions
- use this information when compiling the plan
• Should be institutionalised through:
– supportive policies
– procedures
– reporting systems (regular
– monitoring of progress)
– reward programmes
– training programmes
– technology
115
113. CONSULTATION & AGREEMENT
• By Treasury prescripts :
– Strategic plan is responsibility of Acc. Officer (Treasury
Regulations 2000) in consultation with relevant exec.
Authority
• What to do:
– Submit to and agree on plan with MEC
– Amend plan according to MTEF allocations
– Publish plan on dates determined
116
114. IMPLEMENTATION
• Staff at all levels MUST contribute
• Following elements should be present:
– Structure:
• Organisational structure should follow strategy
– Leadership:
• Senior management should guide; must have ability, experience &
personality
– Compatible culture:
• Shared values, norms & expectations
117
115. IMPLEMENTATION
• Following elements should be present:
– Team effort:
• Commitment of team; communication; problem-solving; trust; co-
operation; performance evaluation aligned with strategy
– Accountability for implementation:
• Empowerment; delegation; reporting
– Access:
• Plan must be accessible to responsible people
118
116. REVISION
• Plan is a ‘living’ document; must remain dynamic to
adjust to changing environment
• Improve through trial, evaluation and feedback
• Assess performance (KPAs; service standards)
• Revisit at least annually
• Management committees can be mechanism to
review strategic direction and progress
120
117. CASCADING PLANNING
A rolling 3-5 year process
Strategic
planning
Answers:
Where
should we
be going?
Defines:
The vision and
mission
Analyses all the
stakeholder &
environmental factors
influencing operations,
to show threats and
opportunities
Determines real
abilities of dept,
mngt, finance, & HR
Selects strategic
objectives for the
directorate and units
Documents your
strategy
Up to 12 months in time down to one month
Tactical
planning for
a directorate
Answers:
How will we
get there?
Determines the
processes and
tasks to be
done at each
level in the
directorate
Establishes who is
responsible for doing
what at each level
Allocates money,
human, information
resources
Sets quantitative
measurements in each
area: The budget and
other indicators of
performance
Puts the tactical
plan in writing
One month down to one week
Operational
planning
Perform planned actions:
Exercise control
Evaluate progress Take corrective actions
118. DEPARTMENTAL ANNUAL REPORTS
• Information contained should reflect achievements
re objectives set out in strategic plan
• Requirements to assess performance include:
– Credibility of information (auditing, monitoring and
evaluation of reports by independent bodies)
– Information criteria (reflect range of measures e.g. costs,
quality, quantity; verifiable, relevant, comprehensive,
understandable, analysed, explained, etc.)
122
119. Strategic measurement
• The concept here is that we need measures on a
strategic level to guide our understanding of whether or
not we are on course toward implementing our strategy
• This is much like developing a strategic dashboard of
those important indicators that will indicate success
• It is important that we develop a comprehensive
dashboard covering lead and lag elements in our strategy
map, enabling us to get early warning signals if things do
not go as planned.
123
120. Strategic measures should comply
with the following criteria
• Unambiguous
• Comprehensive in covering the domain of the business goal
• Consistent with the logic in the strategy map
• It should be descriptive and you should be able to visually see
the trend as it develops over time (graph over time)
124
121. Strategic measures
• Maximum 3 per strategic goal
• It should include a target
• It should recommend the frequency of measurement
125
122. Questions to consider are
• What will be the one measure, existing or new, that will give
the best indication of performance around this goal?
• What efforts will create the measures? (How will these
measures be embedded in our organisational processes?)
126
124. Develop gap-closing strategic
initiatives
• A strategic initiative is actionable and executable and is aimed
at improving the performance of a particular strategic goal. In
essence these are gap-closing, balancing activities aimed at
rectifying non-optimal or malfunctioning situations.
128
125. Strategic initiatives
• Identify the critical strategic initiatives per goal that
will contribute to the achievement of the goal
• Initiatives should be:
– things we can influence NOW
– actions with a high impact (20%/80% principle)
– executable in a relatively short timeframe (rarely more than a
year)
• Start the initiative development process from the
bottom of the map
129
127. Effective initiatives are actions that
make a difference, actions that create
synergy in a system and do not work
against each other
131
128. The gap between “I know” & “I do”
Many management teams know what they should do
to improve their performance dramatically . (however,
in many cases) the management team ignores, avoids,
delays or simply acts contrary to what they already
know they should do..
-The Performance Paradox,
Academy of Management Executive, August 1998
132
129. • The thinking trap in developing initiatives is that it is based on
our old paradigms, the way we used to do it, and/or my
personal hobby horses and preferences.
• The challenge is to fundamentally rethink the initiatives that
will create a sustainable competitive advantage for the
organisation.
133
130. The process
• Ensuring goal achievement
134
PLANNING
BASE
RESULTS
REQUIRED
HOW? IMPLEMENTA
TION
REVIEW
Environmental
scanning
(internal &
external)
Priority issues
Vision
Mission
Objectives
Strategies
Programmes
Projects
Performance
indicators
Standards
WHERE ARE
WE NOW?
WHERE DO WE
WANT TO BE?
HOW WILL
WE GET
THERE?
WHO MUST DO
WHAT?
HOW ARE
WE DOING?
131. for your attendance of and
participation in this course.
Andre Knipe
011-6621444
aknipe@sbs.ac.za
135
ThankThank
youyou
Editor's Notes
INSTRUCTIONS
Provide equal groups with a box of Tinkertoys®. The goal is to construct a tower that is tall, stable, and can stand alone. To complete this task, you are given a 15-minute planning period in which to discuss, talk, draw and lay out the plans for a tower. Do not begin building your tower. At the end of the planning period, put all of the pieces back into the box and replace the lid.
Following the 15-minute planning period, you will be given a 5-minute period in which your plans must be implemented. There are no mitigating conditions or limitations during the building period. You simply must build a tall, strong tower that can stand on it's own.
The group that builds the tallest, strongest tower (as determined by an independent panel of judges) will win 50 bonus points to be divided among group members. Remember, the tower must stand alone and neither the box nor desks can be used to increase the height of the tower.
DISCUSSION QUESTIONS
What types of competitive, cooperative or collaborative behaviors did you observe?
How did the environment influence the planning process?
What types of environment can be identified and what level of influence did it had?
How important was planning in this exercise?
How important was vision in this exercise?
Which, to your opinion, of good planning or a clear vision, is most important?
