Administration & Society43(1) 87 –123© 2011 SAGE Publica.docx

Administration & Society
43(1) 87 –123
© 2011 SAGE Publications
DOI: 10.1177/0095399710386315
http://aas.sagepub.com
XXX10.1177/0095399710386315Ugboro et al.Administration &
Society
© 2011 SAGE Publications
1North Carolina A&T State University, Greensboro
2South Carolina State University, Orangeburg
Corresponding Author:
Isaiah O. Ugboro, School of Business and Economics, North
Carolina A&T State University,
Greensboro, NC 27411
Email: [email protected]
Strategic Planning
As an Effective Tool of
Strategic Management
in Public Sector
Organizations: Evidence
From Public Transit
Organizations
Isaiah O. Ugboro1, Kofi Obeng1, and Ora Spann2
Abstract

This study determines the effectiveness of strategic planning as
an effective
tool of strategic management in public transit agencies. It finds
that an
effective strategic planning requires top managers’ active roles
in defining
the strategic direction of the organization and creating an
environment that
recognizes strategic planning as a tool of strategic management.
Also, it
requires good working relationships between the strategic
planning staff,
unit or division managers, and the top management team; the
location of the
strategic planning staff close to top management; integration of
unit or divi-
sion plans into an organization-wide strategic plan; and a
planning process
that is not too rigid or mechanical. Finally, the article finds that
the strategic
planning process of an organization must be responsive to
environmental
changes and challenges.
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88 Administration & Society 43(1)
Keywords
strategic planning, strategic planning effectiveness, public
sector, public

transit organizations, top management roles, organizational
direction, strategic
planning processes
Introduction
Even though strategic planning has been used in various public
sector agen-
cies for more than 20 years, not much is known about its
effectiveness
(Poister & Streib, 2004). A review of the extant literature by
Vinzant and
Vinzant (1996) concludes that public organizations are not good
candidates
for strategic planning because of the difficulty in designing and
implementing
it in such environments (Backoff, Wechsler, & Crew, 1993;
Streib, 1992). Its
use in the private sector, however, has received the attention
and increased
interests of public sector organizations. In 1993, for example,
the federal
government passed the Government Performance and Results
Act (GPRA).
The Act required federal agencies to develop strategic plans that
are tied to
budgets and other organizational performance measures.
Following the lead
of the federal government, many states passed legislations and
Executive
Orders that imposed similar results-oriented measures on state
agencies
(Aristigueta, 1999; Broom, 1995; Melkers & Willoughby,
1998). In addition,
today, the environments in which public transit agencies operate
are becoming

increasingly complex and challenging. Among the challenges is
the need to
attract talented professionals to the industry to meet the
demands of expand-
ing service mix and an ageing workforce. Similarly, rapid
technological
developments and the demand for safer and more responsive
transportation
systems call for effective strategic planning systems to
formulate proactive
responses to these changes. As Roney (2003), Akhter (2003),
Brews and
Purohit (2007), Obeng and Ugboro (2008) and others argue, it is
in these
rapidly changing environments that strategic planning is
particularly needed.
The question facing many managers, however, is how to design
and imple-
ment a strategic planning system with the dimensions or
characteristics that
are essential to its effectiveness as a tool of strategic
management. In other
words, how can it be done well, particularly in a changing
environment?
To provide answers to this question, this study uses a two-step
approach.
First, it examines the strategic planning systems of public
transit agencies
that have adopted strategic management and identifies their
organizational
contextual, design, process, and top management leadership and
commitment

Ugboro et al. 89
dimensions. Second, it examines the relationships between these
dimensions
and measures of strategic planning effectiveness from the
perceptions of
those charged with strategic planning and management
responsibilities in the
transit agencies that participated in this study. The study uses a
multidimen-
sional conceptualization of strategic planning and qualitative
measures of its
effectiveness that is focused on a strategic planning system’s
capabilities.
This multidimensional conceptualization of strategic planning
and its effec-
tiveness better represents strategic planning’s functions, intent,
or objectives
(Kabir, 2007; King, 1983; Poister & Streib, 2005; Venkatraman
& Ramanujam,
1987).
The value of this research is that it provides guidance to
individual transit
agency managers looking for ways to design effective strategic
planning sys-
tems and processes as tools of strategic management. It
provides tools for
strategic management and ways to evaluate and improve
strategic planning
systems’ designs and processes in public sector organizations.
In doing so,

this research departs from previous studies that measure the
effectiveness of
strategic planning, indirectly, by using organizational, financial,
and other
operational performance variables and contributes to the
literature on strate-
gic planning as an effective tool of strategic management.
Literature Review
Strategic planning is defined as the process by which
organizations determine
and establish long-term directions and formulate and implement
strategies to
accomplish long-term objectives while taking into account
relevant internal
and external environmental variables (Hax & Majluf, 1990). The
process
involves a series of organizational activities that begin with the
definition of
organizational mission, development of strategic objectives,
crafting of strat-
egies, and ends with the development of detailed action plans to
ensure that
the strategies are implemented to achieve organizational
objectives. Included
in this process are the identification of future opportunities to
be exploited,
threats that must be avoided or neutralized, evaluation of
organizational
strengths and weaknesses, and the creation of control systems to
ensure that
the organization remains on course to achieve its intended
objectives.
In addition to strategic planning design and processes, a strong
commit-

ment of top-level leadership is an essential element of a
successful strategic
planning and execution because it signals the commitment of
the organization
to strategic planning (Ramanujam & Venkatraman, 1987). In
addition, strate-
gic management theory holds that the chief executive officer
(CEO) or the top
management team (TMT), as it is called in organizations where
a team of few
top-level executives instead of a single individual carries out
the responsibilities
of the CEO and is responsible for the overall direction,
performance, and
effectiveness of the organization (Cannella & Monroe, 1997;
Child, 1972;
Hax & Majluf, 1984). Therefore, the CEO or TMT is
responsible for formulat-
ing strategic directions and initiatives for the organization
(Vinzant & Vinzant,
1996). As a result, a large number of CEOs and TMTs have
assumed respon-
sibilities for developing organizational vision, mission,
strategic plans and
creating organizational environments and structures capable of
effectively
executing the strategies developed through the strategic

planning process.
A number of empirical studies have found support for the
critical role of the
CEO and other top-level managers in successful strategic
planning and imple-
mentation (Gerbing, Hamilton, & Freeman, 1994; Hrebiniak &
Joyce, 1984;
Ugboro, 1991).
In some organizations, the CEO or TMT assumes this
responsibility alone.
However, in large organizations that operate in complex and
rapidly chang-
ing competitive environments, the responsibilities of setting
organizational
direction and crafting a strategic plan are decentralized and
shared with lower
level management, especially those who have the responsibility
of imple-
menting the strategic plans (Finkelstein & Hambrick, 1996;
Ireland & Hitt,
1999). Such involvement of lower level managers has been
found to increase
their commitment and satisfaction with the strategic planning
process because
among other reasons, it facilitates an organization-wide
understanding of the
strategic planning procedures and processes (Kim, 2002). Even
when top-
level managers retain overall authority and responsibility for
strategic plan-
ning, the authority to make unit strategic choices should be
delegated to
lower level or unit managers (Dean & Sharfman, 1996; Miles,
1982).

For more than three decades, two sides have evolved in the
debate about
strategic planning as an effective tool of strategic management.
On one side
are its advocates, including Berry and Wechsler (1995), Gerbing
et al. (1994),
and Ansoff (1991). They contend that there are organizational
benefits to be
derived from strategic planning, including enhancement of
organizational
processes, increases in morale, motivation, employees’
commitment to an
organization, a general understanding of the goals of the
organization, and
improved financial performance. Miller and Cardinal (1994)
found that in
private sector organizations, strategic planning results in
superior financial
performance measured in sales, net income, return on
investment, and equity.
They also found the relationship between strategic planning and
performance
stronger when informant data were used and when planning was
measured as
all strategic planning. Pearce, Robbins, and Robinson (1987),
for example,
found a strong correlation between strategic planning and
profitability even
Ugboro et al. 91

in firms facing and competing in turbulent environments. Brews
and Purohit
(2007) and Brews and Hunt (1999) note that although earlier
studies gave
ambiguous results, recent studies find consistent positive
relationships
between performance and strategic planning once proper
construct measure-
ments are used with appropriate controls.
On the opposite side are researchers including Miller and
Cardinal
(1994) and Mintzberg (1990). The most vocal is Mintzberg, who
argued
that strategic planning has not been successful in the private
sector because
in an uncertain environment it inhibits an organization’s ability
to engage in
creative thinking critical to innovative ideas necessary to deal
with environ-
mental surprises. In his view, strategic planning does not allow
manage-
ment to take note of other possible approaches to problems.
Similar
arguments are offered by Miller and Cardinal (1994), who note
that strate-
gic planning is rigid and drives out important innovations that
are not a part
of the plan.
In many public sector organizations, the adoption of strategic
planning is
often motivated by the need and desire to set policy and define
program
direction, emulate good business practices, respond to

constituents’ demand
and pressures to reduce expenditure, and as a symbol of
personal leadership
(Berry & Wechsler, 1995). As an operational management tool,
“it can help
facilitate communication and participation, accommodate
divergent inter-
ests and values, foster wise and reasonably analytical decision
making, and
promote successful implementation” (Bryson, 1995). As a
strategic manage-
ment tool, strategic planning can be effective in matching
public organiza-
tions’ strategies with rapidly changing environmental needs
(Nutt & Backoff,
1992, 1995). Other motivations include the need to resolve
competing
agency resource allocation priorities, to develop resource
acquisition strat-
egy (Stone & Brush, 1996), and the need to tie performance to
resource
allocation (Long & Franklin, 2004) especially in response to the
GPRA and
state legislations requiring strategic plans tied to budgets and
organizational
performance measures (Melkers & Willoughby, 1998; Poister &
Streib,
2005). In a national survey of state agencies that have adopted
strategic
planning conducted by Berry and Wechsler (1995), 96% of the
respondents
cited the need to set program direction as an important reason
for adopting
it. This was followed by the need to emulate good business
practices (76%).
Sixty-five percent cited pressures to reduce expenditure, 60%

cited the need
to resolve agency resource allocation priorities, whereas 53%
cited a symbol
of leadership as an important reason for adopting strategic
planning. Less
than 50% of the respondents ranked the rest of the reasons
mentioned above
as important.
Conceptual Model
Throughout the strategic planning literature, a lively debate has
ensued
regarding whether strategic planning and its effectiveness are
multivariable
or single-variable constructs. Boyd and Reuning-Elliot (1998)
found a one-
dimensional construct of strategic planning based on seven-item
indicators
suggesting that a single-item indicator of strategic planning is
inappropriate.
They found support for their results in 17 of the 28 articles they
reviewed.
Based on their findings, they cautioned against using a single
indicator (e.g. a
single item statement) to assess strategic planning because of
potential mea-
surement errors. Partially consistent with these findings are

those of Brews
and Purohit (2007), who found that strategic planning is a
multidimensional
construct consisting of multiple item statements.
Earlier, Ramanujam and Venkatraman (1987) and Ugboro
(1984) also found
strategic planning and strategic planning effectiveness to be
multidimen-
sional constructs. Supporting their findings, McLarney’s (1997)
reviewed
232 strategic planning articles and found that only 80 used one
indicator of
effectiveness, mostly profit, and she bemoaned the lack of
nonfinancial mea-
sures of effectiveness in these studies. Obeng and Ugboro
(2008) used a mul-
tidimensional construct of strategic planning effectiveness
based on strategic
planning’s capability that was derived from Ramanujam and
Venkatraman
(1987). This capability is the ability to identify strengths,
weaknesses, exter-
nal opportunities and threats, ability to formulate plans, and
implement them.
Following these authors, we conceptualize strategic planning
and strategic
planning effectiveness as multidimensional constructs where
effectiveness is
in terms of capability, and we define the dimensions of the
strategic planning
construct as design, process, top management involvement, and
organiza-
tional contextual environments.
The organizational contextual dimension of strategic planning is

the set of
factors within the organization’s environment that affect
strategic planning,
including organizational complexity, availability of adequate
resources, man-
agerial support, commitment, and attitude of managers toward
strategic plan-
ning. In Yasai-Ardekani and Haug (1997), the characteristics of
organizational
context are competitive pressures, organizational complexity
(e.g., size,
diversification, and divisions), inflexibility of core technology,
and strategic
orientation. They argued that as complexity increases in
organizations, there
is a need to coordinate and control strategic planning activities
and product
development efforts. In such complex organizations too, they
argued, there
would be a need for specialized planning departments, a
considerable amount
of organizational resources devoted to the strategic planning
effort, and
Ugboro et al. 93
strategic planning would assume a higher level of sophistication
in terms of
methodology and tools. An effective integration and
coordination of these

contextual elements or conditions are necessary for an effective
strategic
planning process. Therefore, if strategic planning is to be
successfully car-
ried out in organizations with any degree of complexity, it must
take into
account the relevant organizational contextual characteristics or
dimensions
that are critical to strategic planning effectiveness. Thus, we
hypothesized the
following:
Hypothesis 1: The organizational contextual dimension of
strate-
gic planning is positively related to perceived strategic planning
effectiveness.
The design dimension is the degree of external and internal
orientation of
the strategic planning system, extent of its functional coverage,
coordination,
quantitative, and qualitative emphases. It is also concerned with
process
formality, size of effort, process sophistication, and the
planning horizon
(Yasai-Ardekani & Haug, 2007), coordination of the actions of
unit and
top managers, and development and combination of action plans
into an
organization-wide strategic plan. Phillips and Appiah-Adu
(1998) identify
four other key design elements. They are formalization (degree
of manual
usage, unit plans, and defined planning horizon), sophistication
(use of writ-
ten annual plans, goal setting, long-range and action plans, and

use of ana-
lytical techniques), thoroughness (allotting proper time to plan,
utilization of
motivation factors, supportiveness of organization), and
participation
(amount of involvement, extent of influence on decisions or
choices). The
design of strategic planning systems requires integrating its
components and
processes at all levels of the organization and establishing good
working
relationships between those involved in strategic planning. For
example, it
requires that strategic planners (in organizations where they are
so desig-
nated), unit managers, and top managers must work well
together; they must
commit to accepting strategic planning as a primary and shared
responsibil-
ity and be involved in it. This involvement and commitment is
particularly
important because, for the most part, these are the people
responsible for the
implementation and control of the strategic plans. In addition,
in event of
executive turnover, the ongoing commitment of the strategic
planners, unit
managers, and top managers to strategic planning could offset
the loss of top
leadership commitment (Bryson, 1988, 1995). Increasingly, as
Kooten (1991)
notes, in some organizations the responsibility for strategic
management is
shifting to line (unit) managers. The same is true of strategic
planning and

its implementation responsibilities. However, top managers
retain control
of organizational resources and the power to influence the
success of strate-
gic decisions (Dean & Sharfman, 1996).
There are other managerial and organizational reasons why the
collabo-
rated efforts of top-, middle-, and lower level management are
essential to
effective strategic planning. First, they give the top
management team an
opportunity to articulate and communicate the strategic
direction and objec-
tives of the organization. Second, they allow strategic planners
and unit man-
agers to understand the goals of top management and to work to
accomplish
them. Third, they offer top management an opportunity to
provide “direction
and control over the work of managers and employees” (Poister
& Streib,
2004, p. 6). Fourth, they allow top management to be close to
strategic
planners and unit managers to appreciate the difficulties and
organizational
constraints they may face in terms of resources needed to
implement and

accomplish the objectives of the strategic plan.
In organizations where strategic planners, unit managers, and
top manag-
ers work in isolation, it is possible to find them pursuing
divergent objectives
from what are specified in the strategic plan. The continuing
and open com-
munication that this collaboration calls for is likely to have
positive effects on
job satisfaction, improved overall participation in the strategic
planning pro-
cess, and work environments (Kim, 2002). An understanding of
the strategic
direction of the organization that may result from continuing
and open com-
munication throughout the organization could also allay the
fears of employ-
ees who may resist the changes brought by the strategic plan
and prevent
possible labor–management conflicts.
An important aspect of design is the development of action
plans for vari-
ous units of the organization and different services and
combining them into
a systemwide plan for the organization to follow and use.
Hendrick (2000)
and Poister and Van Slyke (2002) found that organizations with
major divi-
sions require them to develop their own action plans, paying
attention to
overall enterprise objectives. Action plans provide directions
for what is to be
done, such as programs to be implemented and the information
needed to

evaluate program outcomes (Blair, 1998). Combining the
various unit action
plans into a systemwide plan results in a strategic plan that
includes all of the
projects in the various action plans. This strategic plan becomes
a reference
document for all employees who have strategic planning
responsibilities.
Action plans “ensure that the organizational strategic plan
drives decisions
at all levels” (Poister & Streib, 2005). To develop them,
management may
create strategic planning teams in the various units (or
divisions) of the orga-
nization and charge them with the responsibility of developing
action plans
Ugboro et al. 95
for their units. An organization-wide strategic planning staff
also may be
created to coordinate the various unit action plans, check them
for consisten-
cies, align them with organizational strategic vision and
mission, eliminate
redundancies, and integrate them to form the strategic plan for
the entire
organization. This bottom–up approach has been found in the
practice of stra-

tegic planning in a number of federal agencies (Franklin, 2001).
According to
Franklin, it is a preferred approach because it allows each unit
to establish its
strategic goals, align those goals, and integrate them at the
organization level.
A well-designed strategic planning system will be responsive to
organiza-
tional objectives and improve organizational performance.
Therefore, the fol-
lowing is hypothesized:
Hypothesis 2: The design of strategic planning is positively
related to
perceived strategic planning effectiveness.
The process dimension is the communication and coordination
of the plan-
ning efforts, especially the role of a dedicated planning staff
and the guidance
and direction provided by general management. It ranges from
virtually infor-
mal to highly formal, comprehensive, and complex (G. A.
Steiner & Miner,
1986). A coherent strategic planning process has been credited
with providing
organizations with a clearer sense of strategic mission, vision,
sharper focus
on what is strategically important, and an improved
understanding of a rapidly
changing environment. It also helps address and provide
answers to the ques-
tions of where an organization is and where it should be, and
the appropriate
and effective organizational responses to external and internal
environmental

changes. Where it is linked to resource allocation and
performance measure-
ment, it can be a powerful tool for effective strategic
management of an
organization. Hill, Martin, and Harris (2000), Miller and
Cardinal (1994), and
Andersen (2004) found that strategic planning processes had
positive and
statistically significant relationships with economic
performance in different
industries, despite Mintzberg’s (1994) assertion to the contrary.
Andersen
added that this relationship is stronger in dynamic industries.
Therefore, we
have the following hypothesis:
Hypothesis 3: Strategic planning process is positively related to
per-
ceived strategic planning effectiveness.
Phillips and Appiah-Adu (1998) identified two aspects of
management
role, quantity and quality. Quality is influence over choices and
decisions and
quantity is how much the top management is involved in
decisions. According
to them, top management role is the involvement and

commitment of top
management to strategic planning efforts, including the amount
of time spent
on the strategic planning process, the amount of resources
allocated to strate-
gic planning, acceptance of strategic planning as direct and
personal respon-
sibility, and the creation of an environment that supports and
promotes
strategic planning throughout the organization. Top
management involvement
also “assures control over the organization’s central direction as
strategic
decisions assume greater importance in conditions of high
competitive pres-
sures” (Yasai-Ardekani & Haug, 1997, p. 733). Wooldridge and
Floyd (1990)
report positive relationships between involvement of midlevel
management in
strategic planning and performance, and Andersen (2004) found
participation
of managers in strategic decisions was not consistently
associated with higher
economic performance. Despite these contrasting results, top
management
involvement in the “strategy process . . . enhances the process
facets of stra-
tegic planning” (Gerbing et al., 1994, p. 880). And as Hrebiniak
and Joyce
(1984) note, when top management is involved in the strategic
planning pro-
cess, it enhances the attainment of the outcomes set out by the
organization.
In addition, top management involvement makes employees
perceive the
strategic planning process as participative, and that could

increase the levels
of employees’ job satisfaction (Kim, 2002). Above all, top
management
development of formal statements about the types of services to
be provided
allows organizations to focus their limited resources on specific
services and
avoid those that may not be important to the organization’s
stakeholders.
From these results, the following is hypothesized:
Hypothesis 4: Top management leadership roles are positively
related
to perceived strategic planning effectiveness.
Method
To test these hypotheses, the approach in this article initially is
to randomly
select public transit systems in the United States, identify those
with strategic
planning experience through brief interviews and survey their
top-level man-
agers with strategic planning responsibilities. The selection
started with an
Internet search of the names and addresses of public transit
systems in the
United States. From this search, we identified 190
geographically dispersed
transit systems, their addresses, and contact persons and placed
phone calls
to them. These calls explained the purpose of the study and
asked if the tran-
sit system had an employee or a unit in charge of strategic
planning. If the
answer was a yes, we asked to speak to that person and

requested his or her
Ugboro et al. 97
participation in the study. Transit systems that did not have
strategic planning
departments or that were not involved in strategic planning were
removed
from the sample. From these telephone calls, a list of 150
potential partici-
pants was developed. A survey instrument was then developed
to collect the
data that were analyzed by factor analysis and structural
equation models.
Below are detailed discussions of the scales used in the
questionnaire and the
analytical techniques used.
Measurement Scales
Strategic planning effectiveness. Miller and Cardinal (1994) use
profit as the
measure of organizational performance. On the other hand,
Andersen (2004)
uses self-assessed indicators of economic profitability and sales
growth as
measures of economic performance. Such measures, however,
cannot be
used in public sector organizations where performance is best
measured in

terms of inputs, outputs, outcomes based on quality and
effectiveness, and
resource acquisition. According to Rodriguez and Bijotat
(2003), Kopczynski
and Lombardo (1999), and Lu (1998), the preference among
public sector
bureaucrats is the use of inputs and outputs as measures of
strategic planning
performance because data on them are easier to collect than
outcomes data.
In this article, performance is in terms of perceived strategic
planning effec-
tiveness. Item statements were developed for perceived strategic
planning
effectiveness based on strategic planning’s capability and were
included in
the questionnaire (G. S. Steiner, 1979).
Dimensions. Using the strategic planning dimensions in the
previous section
as the bases to assess existing strategic planning systems of
public transit
agencies, item statements were developed for each dimension
and used in a
questionnaire for the study. Using the perception of strategic
planning effec-
tiveness introduces problems of bias in that the respondents may
provide data
that justify their use of strategic planning. But as Miller and
Cardinal (1994)
note, the responses of informants may reflect the true effects of
strategic plan-
ning. Most of the statements were adapted from the works of
Andersen (2004)
and G. S. Steiner (1979) and can be found in the appendix
tables. For strategic

planning design, the scale consists of seven items, which
include “Our strate-
gic planners work well with top management,” “Our strategic
planners work
well with unit managers,” and “Detailed action plans are
developed to support
each transportation delivery strategy.”
Five item statements measure the role of top management and
include “The
top management of our organization has developed a climate in
the organiza-
tion that supports our strategic planning efforts” and “Our top
management
team has established clearly defined and quantifiable goals for
our strategic
planning system.” Strategic planning process is measured by a
14-item scale
that includes such statements as “Top management spends
appropriate amount
of time on strategic planning,” “Our strategic planning
procedures are well
understood throughout our transit system,” and “Clear strategic
assumptions
are formulated for unit managers who have formal
responsibilities for strate-
gic planning.”

The contextual dimension of strategic planning is measured by a
seven-
item scale. Two of them are “Top management has accepted the
idea of stra-
tegic planning as its major responsibility” and “Our strategic
planning system
fits the management style of our organization.” Finally, a 16-
item scale is
used to measure perceived strategic planning effectiveness,
some of which
are “The strategic planning process helps us to properly
appraise our strengths,”
“Strategic planning helps us appraise our weaknesses,” and
“Strategic plan-
ning efforts help us to adequately respond to our customers’
demands.”
Respondents to the questionnaire used a 5-point (0 to 4) Likert-
type scale to
express their agreements or disagreements with these
statements. Details of
this scale are 0 = not applicable, 1 = strongly disagree, 2 =
disagree, 3 =
agree, and 4 = strongly agree.
The questionnaire also included requests for information about
the
respondents and their employment organizations.1 It also sought
information
about modes operated, vehicle miles of service, passengers
carried, vehicles
hours, operating cost, and length of organizational involvement
in strategic
planning. Those about the respondents included their positions
in their orga-
nizations, titles, direct involvement in strategic planning, and

strategic plan-
ning responsibilities. Copies of the questionnaires were printed
and mailed
with prepaid return postage to the selected participants to
complete and
return to the research team. To increase the response rate, the
mailings were
followed by reminder postcards and telephone calls asking those
who had
not yet responded to do so. In the end, 54 transit systems
completed and
returned their questionnaires—a 36% participation rate.2
Because the focus
of this study is on top-level managers who have strategic
planning responsi-
bilities, the population is much smaller compared to the general
employee
population. Traditionally, this group has a much lower response
rate because
of their often crowded work schedules; a response rate of 10%
to 12% has
been considered typical and adequate in studies that target
middle- and top-
level managers (Hambrick et al., 1993, p. 407). Therefore, our
response rate
of 36% is higher and better than what is generally expected
from this
population.
Table 1 shows descriptive statistics about the transit agencies
surveyed
and the positions of the respondents in these agencies, whereas
Table 2

Ugboro et al. 99
provides reliability tests of the scales used. These tests are
based on
Cronbach’s alpha, which is “an index . . . associated with the
variation
accounted for by the true score of what is being measured”
(Santos, 1999). A
value of Cronbach’s alpha close to or greater than .70 is
considered reliable
(Nunnaly, 1978). In the table, except the scale for strategic
planning process,
whose Cronbach’s alpha is .6767, all the alphas are greater than
.7, showing
that repeated use of the scales will give consistent results.
Analytical Techniques
Factor analysis. Ideally, each scale should represent a
dimension of the stra-
tegic planning construct or the construct of perceived strategic
planning
effectiveness. Unfortunately, this is not usually the case and we
argue that
Table 1. Characteristics of Firms and Respondents
Variable M SD
% Operating buses 1.0000 0
% Operating light rail 0.2619 0.4450
% Operating rapid 0.1667 0.3772

% Operating demand responsive 0.8095 0.3974
% Operating commuter 0.1429 0.3542
Years involved in strategic planning 6.1548 2.9826
Direct involvement in strategic planning 0.9524 0.2155
Strategic planning responsibilities 0.8333 0.3772
Average modes operated 2.2381 0.6555
% General manager/CEO 21.95
% Directors 39.03
% Divisional managers 19.51
% Planners 19.51
Table 2. Reliability of Scales
Dimensions
Standardized
Cronbach’s α
No. of item
statements in scale
Strategic planning design .8393 7
Top management role .7720 5
Strategic planning process .8865 14
Contextual .6767 7
Perceptions of strategic planning effectiveness .9429 16
whether or not a scale represents a single dimension of strategic
planning is

an empirical question which we answer using maximum
likelihood factor
analysis methods with orthogonal varimax rotation of the
factors identified.
This method permits tests of hypotheses regarding the number
of relevant
factors underlying each dimension. Appendix Tables A1 to A5
show the
results of the factor analysis and their goodness-of-fit statistics.
These statis-
tics show that the models fit the data very well. In Table A1,
there are four
factors of strategic planning performance, which are responding
to customer
demand, proper appraisal of strengths and weaknesses, ability to
foresee
future opportunities, and ability to anticipate human capital
needs. Table A2
shows two distinct factors critical to the design of strategic
planning, which
are the abilities of strategic planners to work well with top
management and
unit managers, developing detailed action plans to support each
service, and
consolidating them into a systemwide strategic plan. Table A3
shows a unique
factor for top management role most closely associated with top
manage-
ment developing an organizational climate that supports
strategic plan-
ning and a formal statement about the types of services to be
provided to
customers.
With regard to strategic planning process, Table A4 shows that
four fac-

tors underlie it. The first is organization-wide understanding of
established
procedures in the organization for the strategic planning
process, whereas
the second is the mechanistic nature of strategic planning
processes in some
transit agencies. The third and fourth are, respectively, the
constraints put on
unit managers by top management that prevent unit managers
from doing
their work well enough for strategic planning to be effective,
and the strate-
gic planning process being more than just a lip service. Besides
these results,
Table A5 shows a one-factor solution for the organizational
contextual dimen-
sion of strategic planning, which is the fit between strategic
planning and
management style.
The estimated factor scores and the corresponding standardized
values of
their item statements were multiplied and summed for each
factor to create
new variables. By this approach, the ith value of the jth new
variable (X
ij
) can
be written as X
ij
= ∑
i
w

ij
y
ij
, where w
ij
and y
ij
are, respectively, the factor score
and the standardized value of the ith item statement of the jth
factor. Table 3
is a matrix of zero-order correlations between these variables.3
The asterisks
show those correlations that are statistically significant at the
.05 level or less.
For each dimension, we find no relationship between its new
variables, which
is expected because they are orthogonal to each other. However,
there are
T
a
b
le
3

.
C
o
rr
el
at
io
ns
B
et
w
ee
n
M
ea
su
re
s
M
ea
su
re
s
D

im
en
si
o
ns
1
2
3
4
5
6
7
8
9
10
11
12
C
o
nt
ex
tu
al
1

.
C
o
nt
ex
tu
al
1.
00
D
es
ig
n
2
.
G
o
o
d
w
o
rk
in
g

re
la
ti
o
ns
hi
ps
b
et
w
ee
n
pl
an
ne
rs
a
nd
m
an
ag
er
s
.2
3

1.
00
3
.
Ex
is
te
nc
e
o
f
ac
ti
o
n
an
d
sy
st
em
w
id
e

pl
an
s
.5
0*
.0
5
1.
00
Pr
o
ce
ss
4
.
U
nd
er
st
an
di
ng
s

tr
at
eg
ic
pl
an
ni
ng
p
ro
ce
du
re
s
.5
8*
.3
8*
.5
6*
1.
00

5
.
M
ec
ha
ni
st
ic
p
ro
ce
ss
.1
7
.0
8
.0
3
−.
05
1.
00

6
.
C
o
ns
tr
ai
nt
s
pu
t
o
n
un
it
m
an
ag
er
s
by
t
o
p

m
an
ag
em
en
t
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9*
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3*
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8*
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1.
00
7
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o

ce
ss
m
o
re
t
ha
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lip
se
rv
ic
e
.4
7*
−.
13
.2
3
−.
11
.0
0

.0
7
1.
00
To
p
m
an
ag
em
en
t
ro
le
8
. T
o
p
m
an
ag
em
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t
.6
6*
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7*
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rc
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ra
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fe
ct
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s
9
.
D
em
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d
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0*

.0
3
.4
0*
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0*
−.
04
.1
3
.3
1*
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9*
1.
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10
. A
pp
ra
is
al
.3

0*
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.0
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.0
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pp
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rt
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c
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9*
.0

2
−.
00
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.
H
um
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c
a p
it
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ds
.2
9*
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0
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03
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00
*p
<
.0
5.
101

positive and statistically significant correlations between some
of the new
variables.
Structural equations. Although correlations provide useful
information they
cannot be used to test the hypotheses because they show only
bivariate rela-
tionships. In addition, the latent and constructed (manifest)
variables have
errors and we want to estimate the relationships between their
error-free values.
To address this problem, we use structural equations to jointly
estimate the
relationships in Figure 1 with some modifications. The ellipses
in this figure
are the latent variables and the boxes are the manifest
variables.4 Also, an
arrow leading to an ellipse shows a structural equation whereas
that leading
to a box shows a measurement equation. Thus there are six
latent variables,
namely, perceived strategic planning effectiveness (A),
organizational con-
textual environment (C), strategic planning design (D), strategic
planning
process (P), and top management role (T), all of which define
the strategic
planning construct (S). The corresponding manifest variables

are shown
numbered in this figure. Fitting this model involves estimating
12 measure-
ment equations, 2 structural equations, and 14 error variances
(ε) and covari-
ance (not shown) between some of the variables.5
1
1
2
3
4
1
Context
Design
Process
Strategic
planning
2
3
4
Strategic
planning

effectiveness
2
1
1
Top
management
role
Figure 1. Complete model
Ugboro et al. 103
Equation 1 shows the set of measurement equations in Figure 1.
x
i
= b
i
y + e
i
for y = C,D,D,P,P,P,P,T,A,A,A,A; i = 1,2,3, ... 12, (1)
where the variables are already defined, the βs are coefficients,

x is the set
of 12 manifest variables constructed as described in the factor
analysis sec-
tion and ε is the error variance term.6 Note again in this
equation that there are
as many measurement equations for each construct as there are
factors. The
structural equations showing the relationships between the
latent variables
are below.
S = α
c
c + α
D
D + α
P
P + α
T
T + e
s
, (2)
A = θ(S) + e
A
, (3)
where α and θ are coefficients to be estimated. These 14
equations, their
error variances, and the covariance between some pairs of
manifest variables
form a system that can be estimated jointly.

Initial attempts to estimate equations (1) to (3) did not yield a
converged
solution with desirable fit statistics. In addition, we found
linear depen-
dence between some of the coefficients. Further analysis
showed that the
convergence problem was due to the inclusion of the constructs,
top man-
agement leadership role and strategic planning, in the set of
equations to be
estimated. To overcome this problem, we estimated two models.
The first
is the structural equation below and equation (1) minus the top
manage-
ment role.
A = θ
C
C + θ
D
D + θ
P
P + e
A
(4)
Cov(P,C) = h, Cov(P,D) = m, Cov(C,D) = l.
Based on the information in Table 3, the last line of this
equation assumes
covariance between strategic planning design, strategic planning

process,
and the contextual dimension of strategic planning to be
estimated as η, µ, λ,
respectively. The second is equation (1), with only the construct
of top man-
agement leadership role on the right-hand side and the structural
equation
below.
A = θ
T
T + e
A
. (5)
The estimation of the structural and manifest equations was
accomplished
using the CALIS (Covariance Analysis of Linear Structural
equations) pro-
gram in SAS.
Tests of Hypothesis
Model 1
Table 4 shows generalized least squares estimation results of
fitting the
first model to a covariance matrix instead of a correlation

matrix because
it gives accurate measures of the standard errors. Convergence
was achieved
in 19 iterations and the fit statistics are as follows: goodness-of-
fit index
(GFI) of .8618, a chi-square value of 40.2812 with a probability
of .2121,
and a root mean square residual (RMR) of .0298.7 From the
results, a sta-
tistically significant and positive coefficient of .7774 is found
for the con-
textual dimension of strategic planning in the structural
equation and this
supports the first hypothesis. However, the coefficient of
strategic planning
design in the structural equation is .0022 and not statistically
significant,
showing that there is no relationship between strategic planning
design
and perceived strategic planning effectiveness. This latter
finding does not
support the second hypothesis. Finally, the coefficient of
strategic planning
process in the structural equation is .3103 and it is statistically
significant
at the .05 level or less. This shows a positive relationship
between strategic
planning process and its perceived effectiveness and supports
the third
hypothesis.
Model 2
The results of the second model fitted by maximum likelihood
methods to a
covariance matrix are shown in Table 5. Convergence was
achieved in seven

iterations and the model’s fit statistics are a GFI of 0.9784, a
chi-square value
of 3.0490 with a probability of .3841, and a RMR value of
0.0075. The
results show that all the coefficients in the structural and
measurement equa-
tions are positive and statistically significant at the probability
level of .05 or
less. More specifically, the coefficient of top management role
in the
structural equation is .9477 and it is statistically significant at
the .01 level
of probability. These positive coefficients support the fourth
hypothesis.
Therefore, top management role in strategic planning is
positively related to
perceived effectiveness of strategic planning.
T
a
b
le
4
.
M
o
de

l 1
: P
ro
ce
ss
, D
es
ig
n,
C
o
nt
ex
tu
al
v
s.
P
er
ce
iv
ed
S
tr

at
eg
ic
P
la
nn
in
g
Ef
fe
ct
iv
en
es
s
A
rr
o
w
t
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A
rr

o
w
f
ro
m
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o
ef
fic
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nt
SE
t
va
lu
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ar
ia
nc
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t
va

lu
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2
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ua
ti
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on
te
xt
ua
l
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92

91
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6
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ra
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05
32
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0
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o
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d
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r
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p
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A
ct
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M
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C
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Pr
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ng
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s
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Pe
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89
O
pp
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St
ru
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91
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6
0.
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C
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02
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2
Fi
t
st
at
is
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cs
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o
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dn
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s-
o
f-

fit
in
de
x
0.
86
18
χ2
40
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81
2
p
<
χ2
0.
21
21
105

Discussion
The question we sought to answer is what are the characteristics
of an effec-
tive strategic planning system in transit agencies? The answers
to this ques-
tion can be gleaned from the results of this study. The results
show that
indeed there are positive associations between the dimensions
of strategic
planning and perceived strategic planning effectiveness. Using
the results,
the underlying factors of the dimensions that are positively
associated with
perceived strategic planning effectiveness can be considered as
the charac-
teristics of an effective strategic planning system.8 Based on
this premise,
we discuss the characteristics of effective strategic planning.
Table 5. Model 2: Top Management Role vs. Perceived
Strategic Planning
Effectiveness
Arrow to Arrow from Coefficient SE t value
Variance of
exogenous

variable SE t value R2
Measurement
equations
Top management
role
Top management Top
management
role
1.0085 0.0678 14.8817 1.00
Perceived
strategic
planning
effectiveness
Demand Effectiveness 0.9973 0.0428 23.3266 0.0882 0.0224
3.94 0.91
Appraisal Effectiveness 0.9614 0.0512 18.7901 0.1526 0.0336
4.54 0.85
Opportunistic Effectiveness 0.9401 0.0558 16.8454 0.1898
0.0405 4.69 0.81
Human Effectiveness 0.9387 0.0561 16.7286 0.1923 0.0409
4.70 0.81
Structural
equation
Perceived

strategic
planning
effectiveness
Top
management
role
0.9477 0.0576 16.4547 0.0337 0.0147 2.29 0.96
Fit statistics
Goodness-of-fit
index
0.9784
χ2 3.0490
p > χ2 0.3841
Ugboro et al. 107
Organizational Contextual Environment
The contextual dimension of strategic planning can be described
as the fit
between strategic planning and management style and it has
positive coeffi-
cients of .9937 (t = 11.1784) and .7774 (t = 26.5424),
respectively, in the
measurement and structural equations, each of which is

statistically signifi-
cant at the .01 level. These results show that the effect of the fit
of strategic
planning to management style on perceived strategic planning
effectiveness
is .7695 (i.e., .9937 × .7774 = .7695). According to these
results, strategic
planning must be consistent with the management style of the
top executive
team and the reality of an organization’s decision-making
process. This
ensures that it would be implemented and would receive the
support of top
management, particularly in situations where the top
management has spent
an appropriate amount of time on the strategic planning process.
Ensuring
that this fit indeed occurs would require top management
involvement in the
development of the plan. It would also involve continuous
consultations and
accommodations between those charged with developing the
strategic plan
and top management to ensure that the provisions in the plan are
consistent
with the vision of top management.
Strategic Planning Design
From the factor analysis results, there are two measures of
strategic plan-
ning design and they are the abilities of strategic planners, unit
managers,
and top-level managers to work well together, developing action
plans
and combining them into a strategic plan. The combined effect
of these

two measures on perceived strategic planning effectiveness is
positive
(.0022) and statistically nonsignificant (t = 0.0265). This
finding suggests
no relationship between strategic planning design and its
perceived effec-
tiveness.
Strategic Planning Process
From the results, the characteristics of the strategic planning
process are
organization-wide understanding of established procedures for
strategic plan-
ning, the mechanistic nature of the process, the constraints put
on unit manag-
ers that prevent them from doing their work well, and the
strategic planning
process being more than a lip service. Together, these aspects of
the process
are related to perceived strategic planning effectiveness, as we
found. This is
because their coefficients in the measurement equations are
positive and their
latent variable has a positive coefficient (.3103) that is
statistically significant
(t = 4.3202) in the structural equation. In addition, their effects
on perceived

strategic planning effectiveness are, respectively, .3027, .2730,
.2657, and
.3090, which are calculated by multiplying the coefficient of
each of them
by .3103. From these effects, to be effective, strategic planning
must be given
more than a lip service. Thus, merely talking about it is not
enough; there
must be an organization-wide commitment to the strategic
planning process.
This commitment can be demonstrated by such actions as the
creation of a
strategic planning department with an adequate number of
planning staff to
facilitate and coordinate strategic planning activities throughout
the organiza-
tion. The commitments and support of the CEO and members of
the orga-
nization’s leadership, including middle-level managers, are also
needed.
Furthermore, the amount of time the CEO and other senior-level
line and staff
managers devote to strategic planning activities could signal to
employees the
level of an organization’s commitment to strategic planning
(Ramanujam &
Venkatraman, 1987). Another indication of an organization’s
commitment to
strategic planning is the existence of organizational reward
systems that rec-
ognize individual and group contributions to the organization’s
strategic plan-
ning efforts. Yet another is making unit managers’ annual
performance
evaluations inclusive of their abilities to develop and implement
credible and

responsive action plans for their units.
For organization-wide understanding of established procedures
of strate-
gic planning as the results call for, employees must know the
approaches and
methods used to address different issues involved in preparing
strategic
plans. In short, they must know what to do to accomplish the
goals of the
strategic plan. To facilitate this understanding, strategic
planning procedures
must be in a clearly written document that is available to all
employees.
When necessary, organizations should provide employees some
training on
the use of these procedures to eliminate confusions about
interpretations and
their contents.
Contrary to expectations, not surprising though, we find from
our results
that effective strategic planning systems in public transit
organizations tend
to be mechanistic. Being so, they are rigid, and pay too much
attention to
putting numbers in boxes or tables. This finding is not
surprising because in
many public sector organizations the emphasis seems to be on
faithfulness
to established organizational bureaucracy. Therefore, though
effective stra-
tegic planning requires an adaptive and flexible organizational
culture,

Ugboro et al. 109
public transit agencies are likely to have strategic planning
systems that are
rigid and mechanistic. Alternatively, this result may reflect lack
of a clear
distinction between strategic and transportation planning in
many public
transit agencies. As a result, some of the study’s participants
may have con-
fused them despite our effort to distinguish them in our
instructions. It may
also reflect the condition commonly found in transit agencies,
which is the
domination of the planning staff by disciplines that rely on
mostly fixed and
highly specified algorithms in their daily work assignments.
A finding we consider quite surprising, however, is that an
effective stra-
tegic plan is positively affected by top management constraints
on unit man-
agers. This is because such constraints are often expected to
limit and stifle
the creativity of unit managers, particularly in the strategy
formulation stage
of strategic planning. The positive relationship, however, may
reflect the
active involvement of top management in the strategic planning
process by
clearly defining the mission and strategic objectives of the

organization and
by making sure that unit or division action plans are in
alignment with the
overall strategic direction of the organization. In addition, top
management
constraints on unit or division managers may not be absolute
because as
noted by Dean and Sharfman (1996) and Miles (1982), even
where there are
constraints unit or division managers still maintain some control
over strate-
gic choices. Therefore, in the transit agencies that participated
in this study,
we presume that the constraints imposed on unit or division
managers are
management controls to ensure that they are in alignment with
organizational
strategic direction and priorities.
Top Management Leadership Role
With a positive coefficient of .9477 that is statistically
significant (t = 16.4547)
in the structural equation, top management leadership role is
related to per-
ceived strategic planning effectiveness according to our results.
A major
responsibility of top management is to provide strategic
direction for the
organization. No management process gives top management the
opportu-
nity to provide strategic direction more than the strategic
planning process.
This is because it gives top management the opportunity to
provide strategic
leadership in terms of answers to those rhetoric questions of
who we are,

who do we want to be, who should we be, where are we, where
do we want
to go, and how do we get there. The results of the factor
analysis show that
this top management leadership role is in the form of
developing formal
statements about what types of services to provide customers,
creating an
organizational climate supportive of strategic planning and
establishing
clearly defined goals for organizations. These results show that
top manage-
ment must play “a strong strategic leadership role in creating an
organiza-
tional vision and managing the changes that result from the
process”
(Vinzant & Vinzant, 1996, p. 203; see also Ireland & Hitt, 1999;
Ugboro,
1984, 1991).
Conclusion
The results discussed above suggest certain principles to be
followed for
strategic planning to be effective in public transit systems.
Among them,
one specifies that top management must play active roles by
taking own-

ership of the strategic planning process. This means accepting
strategic
planning as its primary responsibility and not one to be
delegated to
lower level managers. An effective strategic planning also
requires the
general manager to clearly define organizational mission and
strategic
objectives to serve as the foundation of the organization-wide
strategic
plan. This should be followed by the creation of an
organizational culture
and climate that allow top management, unit managers, and
strategic
planners to work well together to develop a realistic and
responsive stra-
tegic plan.
To ensure that strategic planning is adopted, implemented and
effective,
it must fit the management style of the organization. Absence of
this fit
could affect strategic planning and plan implementation. In
addition, transit
agencies must create action-planning teams in the various units
and each
team must prepare an action plan for its unit. To accomplish
this task, the
top management must provide the teams with resources to do
their work.
A similar team must also be established at the organizational
level, and it
should be well staffed and placed close to top leadership for it
to be visible.
This team should be given the responsibility to coordinate
strategic plan-

ning activities within the organization and it should be
responsible for
combining the action plans from various units into an
organization-wide
strategic plan. It must be emphasized that the role of the
planning staff at
the organizational level is to facilitate and coordinate the
strategic planning
process whereas division or unit manager are responsible for
developing
the actual plans.
Ugboro et al. 111
Another important principle is that organizations must develop
proce-
dures for strategic planning and clearly communicate these
procedures to
employees, especially those who are charged with the
responsibility for stra-
tegic planning and implementation. This should be followed by
training
employees in how to implement these procedures during the
strategic plan-
ning process. For strategic planning to be effective, the
procedures must be
flexible to allow for deviations or adaptation to different
organizational
environment, where necessary. Any attempt to make the process
mechanical

where the emphasis is on number crunching and process will
render the
resulting strategic plan nonresponsive to environmental
changes. It should
be emphasized that a primary function of strategic planning is
to enable an
organization to foresee areas of future opportunities and threats
and develop
appropriate organizational strategic responses.
Consistent with making strategic planning flexible, top
management must
minimize the number of constraints it places on unit managers.
When possible,
constraints should be limited to organization’s mission
definition and strategic
objectives to serve as guidelines for the overall strategic plan.
In addition, effec-
tive strategic planning must include a realistic appraisal of an
organization’s
strengths and weaknesses relative to its mission and strategic
objectives, and the
organization must develop a reward system that recognizes
individual and group
contributions to effective strategic planning. Furthermore,
strategic planning
must receive more than a lip service, and sufficient material and
human resources
must be allocated to the strategic planning process and
implementation.
Limitations
The findings of this study have two limitations. First, the
sample size of 54
transit systems limits the generalization of the results to all U.S.
transit systems.

Second, the focus is on identifying the characteristics of
strategic planning
systems that lead to improvements in transit systems’ abilities
to respond to
customer demands, appraise their own strengths and
weaknesses, foresee
future opportunities, and anticipate human capital needs. The
measure of
improvements is effectiveness of strategic planning as perceived
by top-level
managers with strategic planning responsibilities. This self-
report may have
introduced bias into the results especially where strategic
planning is a top–
down approach. Despite these limitations the results are worthy
of testing in
future research to permit their generalization.
A
p
p
e
n
d
ix
T
a

b
le
A
1
. P
er
ce
iv
ed
S
tr
at
eg
ic
P
la
nn
in
g
Ef
fe
ct
iv
en

es
s
Pe
rc
ei
ve
d
st
ra
te
gi
c
pl
an
ni
ng
e
ffe
ct
iv
en
es
s
M

(
SD
)
Fa
ct
o
r
1
Fa
ct
o
r
2
Fa
ct
o
r
3
Fa
ct
o
r
4
1
.

St
ra
te
gi
c
pl
an
ni
ng
e
ff o
rt
s
he
lp
u
s
de
ve
lo
p
a
cl
ea

r
m
is
si
o
n
st
at
em
en
t
fo
r
o
ur
o
rg
an
iz
at
io
n.
2.
87

81
(
0.
95
38
)
0.
48
55
0.
34
85
0.
19
13
0.
20
90
2
.
St
ra
te
gi

c
pl
an
ni
ng
e
ff o
rt
s
he
lp
u
s
fo
re
se
e
ar
ea
s
o
f
m
aj

o
r
fu
tu
re
t
ra
ns
po
rt
at
io
n
o
pp
o
rt
un
it
ie
s.
2.
92
68
(

0.
90
53
)
0.
18
59
0.
22
92
0.
92
86
0.
22
49
3
.
St
ra
te
gi
c
pl

an
ni
ng
p
ro
ce
ss
h
el
ps
u
s
fo
re
se
e
m
aj
o
r
fu
tu
re
t

hr
ea
ts
.
2.
78
05
(
0.
88
07
)
0.
46
65
0.
41
10
0.
50
95
0.
20
70

4
.
St
ra
te
gi
c
pl
an
ni
ng
e
ffo
rt
s
en
ab
le
u
s
to
pr
o

pe
rl
y
ap
pr
ai
se
o
ur
s
tr
en
gt
hs
.
2.
90
24
(
0.
76
83
)
0.

22
62
0.
89
80
0.
27
98
0.
25
31
5
.
St
ra
te
gi
c
pl
an
ni
ng
p
ro

ce
ss
h
el
ps
u
s
to
pr
o
pe
rl
y
ap
pr
ai
se
o
ur
w
ea
kn
es

se
s.
2.
75
61
(
0.
76
75
)
0.
43
96
0.
73
17
0.
10
87
0.
24
53
6
.

St
ra
te
gi
c
pl
an
ni
ng
e
ffo
rt
s
he
lp
u
s
cl
ar
ify
o
ur
pr

io
ri
ti
es
.
3.
21
95
(
0.
79
10
)
0.
53
13
0.
47
98
0.
25
84
0.
28

07
7
.
St
ra
te
gi
c
pl
an
ni
ng
a
ct
iv
it
ie
s
he
lp
u
s
to

de
ve
lo
p
us
ef
ul
lo
ng
-r
an
ge
o
bj
ec
ti
ve
s.
3.
09
76
(
0.
86

04
)
0.
55
76
0.
42
05
0.
32
09
0.
25
37
8
.
St
ra
te
gi
c
pl
an
ni

ng
h
el
ps
u
s
de
ve
lo
p
us
ef
ul
lo
ng
-r
an
ge
t
ra
ns
po
rt

at
io
n
pr
o
gr
am
s
tr
at
eg
ie
s.
3.
09
76
(
0.
91
67
)
0.
42
92

0.
42
47
0.
27
79
0.
38
17
9
.
St
ra
te
gi
c
pl
an
ni
ng
e
ffo
rt

s
he
lp
u
s
to
d
ev
el
o
p
an
d
im
pl
em
en
t
cr
ed
ib
le
m
ed
iu

m
a
nd
lo
ng
-
te
rm
t
ra
ns
po
rt
at
io
n
go
al
s.
3.
04
88
(

0.
89
31
)
0.
51
55
0.
37
14
0.
23
77
0.
43
43
10
.
St
ra
te
gi
c
pl

an
ni
ng
e
ff o
rt
s
he
lp
u
s
to
p
re
ve
nt
an
d
av
o
id
u
np

le
as
an
t
su
rp
ri
se
s.
2.
43
90
(
0.
77
62
)
0.
55
53
0.
37
90
0.

37
48
0.
18
89
11
.
St
ra
te
gi
c
pl
an
ni
ng
e
ffo
rt
s
he
lp
u
s

to
an
ti
ci
pa
te
t
he
f
ut
ur
e
tr
an
sp
o
rt
at
io
n
ne
ed
s

o
f
o
ur
c
us
to
m
er
s.
2.
75
61
(
0.
91
60
)
0.
50
03
0.
14
44

0.
69
19
0.
10
38
(c
on
tin
ue
d)
112
Pe
rc
ei
ve
d
st
ra
te

gi
c
pl
an
ni
ng
e
ffe
ct
iv
en
es
s
M
(
SD
)
Fa
ct
o
r
1
Fa
ct

o
r
2
Fa
ct
o
r
3
Fa
ct
o
r
4
12
.
St
ra
te
gi
c
pl
an
ni
ng
e

ffo
rt
s
he
lp
u
s
to
ad
eq
ua
te
ly
r
es
po
nd
t
o
o
ur
c
us

to
m
er
s’
de
m
an
d.
2.
78
05
(
0.
82
20
)
0.
80
85
0.
24
04
0.

44
42
0.
14
20
13
.
O
ur
s
tr
at
eg
ic
p
la
nn
in
g
ef
fo
rt
h
el

ps
u
s
to
an
ti
ci
pa
te
t
he
f
ut
ur
e
hu
m
an
c
ap
it
al
n
ee

ds
o
f
o
ur
o
rg
an
iz
at
io
n.
2.
56
10
(
1.
05
00
)
0.
09
35
0.

27
78
0.
10
41
0.
92
70
14
.
O
ur
s
tr
at
eg
ic
p
la
n
in
cl
ud
es

a
p
la
n
to
ad
eq
ua
te
ly
m
ee
t
o
ur
fu
tu
re
h
um
an
c
ap

it
al
ne
ed
s.
2.
41
46
(
1.
04
82
)
0.
20
16
0.
10
53
0.
20
85
0.

76
84
15
.
St
ra
te
gi
c
pl
an
ni
ng
e
ffo
rt
s
he
lp
u
s
to
de

si
gn
a
pp
ro
pr
ia
te
t
ec
hn
o
lo
gi
es
in
to
o
ur
tr
an
sp
o

rt
at
io
n
sy
st
em
a
nd
s
er
vi
ce
s.
2.
75
61
(
0.
96
90
)
0.
48

82
0.
26
39
0.
08
65
0.
52
52
16
.
St
ra
te
gi
c
pl
an
s
er
ve
s
as

t
he
b
as
is
fo
r
re
so
ur
ce
a
llo
ca
ti
o
n
an
d
de
ci
si
o
n

m
ak
in
g.
2.
90
24
(
0.
80
02
)
0.
40
85
0.
52
82
0.
46
22
0.
24
02

Te
st
s:
si
gn
ifi
ca
nc
e
te
st
s
o
f
fa
ct
o
rs
df
χ
2
p
>
χ2
H

0:
F
o
ur
f
ac
to
rs
a
re
s
uf
fic
ie
nt
62
77
.2
58
3
0.
09
17
H

A
: M
o
re
f
ac
to
rs
a
re
n
ee
de
d
χ2
w
it
ho
ut
B
ar
tl
et
t’s

c
o
rr
ec
ti
o
n
91
.1
55
0
A
ka
ik
e’
s
in
fo
rm
at
io
n
cr
it

er
io
n
−2
4.
84
50
Sc
hw
ar
z’
s
B
ay
es
ia
n
cr
it
er
io
n
−1

31
.0
86
5
T u
ck
er
a
nd
L
ew
is
’s
r
el
ia
bi
lit
y
co
ef
fic
ie

nt
0.
93
24
N
o
te
: S
ca
le
: 0
=
n
ot
a
pp
lic
ab
le
; 1
=
s
tr

on
gl
y
di
sa
gr
ee
; 2
=
d
is
ag
re
e;
3
=
a
gr
ee
; a
nd
4
=
s

tr
on
gl
y
ag
re
e.
T
a
b
le
A
1
.
(c
o
n
ti
n
u
e
d
)
113

Table A2. Strategic Planning System Design
Hypothesis χ2 p > χ2
H0: Two factors are sufficient 15.1130 0.0870
HA: More factors are needed
Tucker Lewis’s reliability coefficient 0.8881
Akaike’s information criterion 0.5448
χ2 without Bartlett’s correction 16.5448
Item statements M SE Factor 1a Factor 2a
1. Our strategic planners are located close
to the management team of our transit
system.
2.7619 1.3400 0.7083 0.1814
2. Our strategic planners work well with
our unit managers.
2.5952 1.1699 0.7907 0.2763
3. Our strategic planners work well with
our top managers.
2.7143 1.2550 0.9602 0.2335

4. Our strategic planning committee or
team structure is just right for us.
2.4048 0.9892 0.2831 0.4692
5. Each functional unit is expected to do
its own strategic planning with minimal
systemwide direction or coordination.
1.7857 1.1161 0.3008 0.3871
6. Detailed action plans are developed
to support each major transportation
delivery strategy.
2.3571 1.1438 0.1695 0.8635
7. The various strategic planning activities
are consolidated into a written
systemwide plan.
2.4048 1.2506 0.1571 0.8602
a. Rotated factor pattern shown. Scale: 0 = not applicable; 1 =
strongly disagree; 2 = disagree;
3 = agree; and 4 = strongly agree.
Table A3. Top Management Role
H0: One factor is sufficient 8.2363 0.1437
Akaike’s information criterion −1.2296

(continued)
Ugboro et al. 115
Item statement M SD
Factor
pattern
1. The top management of our organization has
developed a climate in the organization that
supports our strategic planning efforts.
2.9524 0.8821 0.7506
2. The top management team of our organization
has developed a formal statement of what type of
services we want to provide our customers.
3.0952 0.7590 0.8409
3. Our top management team has established clearly
defined and quantified goals for our transit system.
2.7619 0.9055 0.6081
4. Attempts are made to use the results of our
strategic plans to judge managerial performance.

2.2857 1.0426 0.3580
5. Unit managers fully participate in the strategic
planning process in our organization.
2.5952 0.9892 0.5816
Note: Scale: 0 = not applicable; 1 = strongly disagree; 2 =
disagree; 3 = agree; and 4 = strongly
agree.
Table A3. (continued)
Table A4. Strategic Planning Process
H0: Four factors are sufficient 43.2624 0.3750
Tucker Lewis’s reliability
coefficient
0.9850
Item statements M SD Factor 1 Factor 2 Factor 3 Factor 4
1. Top management
spends an appropriate
amount of time on
strategic planning
2.6226 0.6571 0.5435 0.2843 0.0720 0.3982

2. Strategic planning in
our organization is
given more than a lip
service.
2.8113 0.6521 0.2368 −0.0421 0.0081 0.9706
3. Many managers in
our organization do
not really accept or
believe in strategic
planning
2.1887 0.8100 0.0155 0.3900 0.1400 0.0077
(continued)
4. Our strategic planning
system proceeds
on the bases of an
acceptable set of
procedures.
2.3585 0.8791 0.5315 0.1584 0.1542 0.3454

procedures are
well understood
throughout our transit
systems.
2.2453 0.9386 0.9881 0.0459 0.0516 −0.0006
process pays too
much attention to just
putting numbers in
boxes.
1.8302 0.7528 0.2006 0.9684 0.1414 0.0444
7. Our strategic
planning process is
too mechanical, too
routine, and too rigid.
1.7925 0.7431 0.2173 0.8350 0.2940 0.1003
8. New ideas are
generally welcomed
during our strategic
planning process.
3.0000 0.6794 0.3762 0.1361 0.2546 0.4487
9. Many unit managers
are not willing
to accept our
weaknesses when
devising our strategic
plans.

2.1308 0.8779 0.0626 0.2939 0.5783 0.1076
10. Unit managers get
sufficient guidance
from top management
for effective strategic
planning.
2.3774 0.9850 0.4561 0.0287 0.5750 0.3717
11. Unit managers are
too restrained by
top management for
effective strategic
planning
1.9057 0.9254 0.1565 0.3464 0.7725 −0.0606
(continued)
Ugboro et al. 117
12. The ability of unit
managers to do

effective strategic
planning is taken into
consideration when
they are evaluated
annually for overall job
performance.
2.1887 1.0752 0.4235 0.1817 0.4260 0.0956
13. Clear strategic
planning assumptions
are formulated to unit
managers who have
formal responsibility
for strategic planning.
2.3208 0.9359 0.5665 0.1860 0.3270 0.2635
process is such
that the final plans
and objectives are
accepted by those
responsible for their
implementation and
attainment.
2.5094 0.9927 0.7588 0.1012 0.2317 0.3406
disagree; 3 = agree; and 4 = strongly agree.

Table A5. Contextual Dimension
H0: One factor is sufficient 18.4572 0.1867
Item statement M SD Factor pattern
1. Top management has accepted the
idea that strategic planning is its major
responsibility.
3.0189 0.8433 0.4314
(continued)
Acknowledgment
We acknowledge the financial support of the Urban Transit
Institute at North Carolina
A&T State University for the research that led to this study. The
views herein are those
of the authors only.

Declaration of Conflicting Interests
The authors declared no conflicts of interests with respect to the
authorship and/or
publication of this article.
Funding
The authors received no financial support for the research
and/or authorship of this
article.
Notes
1. No socioeconomic data about the respondents were collected.
2. This rate is based on the 150 to whom questionnaires were
sent and not the 190
originally selected.
3. In the discussion following, we use factors and dimensions
interchangeably.
2. Our strategic planning fits the management
style of our transit system.
2.8491 0.7441 0.8879
3. Our strategic planning system fits the
reality of our decision-making process.
2.6981 0.6957 0.7202
4. Top management spends appropriate
amount of time on strategic planning.

2.6226 0.6571 0.7324
5. There is too much foot-dragging about
strategic planning in our organization.
2.3774 0.6571 −0.2468
6. Unit managers generally spend an
appropriate amount of time with other
unit managers and/or staff in developing
our strategic plans.
2.1698 0.9754 0.4829
7. The work requirement to complete our
strategic plans is acceptable to our unit
managers and staff.
2.3585 1.0936 0.3624
disagree; 3 = agree; and 4 = strongly agree.
Item statement M SD Factor pattern
Ugboro et al. 119

4. The latent variables are the strategic planning effectiveness
and strategic planning
constructs and the manifest variables are those constructed from
the factor analysis.
5. One of these structural equations is multivariate, with four
independent variables
relating contextual environment, strategic planning process,
strategic planning
design and top management role to strategic planning, and the
other relating stra-
tegic planning to its effectiveness. The 14 error variances are
for the 12 measure-
ment equations and two structural equations.
6. These equations do not show covariance between the
variables.
7. The covariance among the exogenous variables near the
bottom of the table shows
there is a positive and statistically significant relationship
between strategic plan-
ning process and the contextual dimension of strategic planning
because the esti-
mated coefficient between them is .9711. Positive and
statistically significant
coefficients of .8704 and .8834, respectively, are found between
strategic planning
process and strategic planning design, and between the
contextual dimension of
strategic planning and strategic planning design.
8. We did not find any variable with a negative and statistically
significant coefficient
in this study.

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Bios
Isaiah O. Ugboro is a professor of organization theory and
strategic management in
the School of Business and Economics at North Carolina A&T
State University. His
research has focused on Strategy formulation, implementation,
evaluation, and con-
trol. In the past 10 years, he has researched, presented, and
published several articles
on Total Quality Management and the role of top management
leadership in public
transit organizations, motivation and impediments to
collaboration among public
transit organizations, organizational consequences of
outsourcing/contracting and
restructuring in public transit organizations; organization,
structure, roles and charac-
teristics of board of directors of public transit organizations and
the measurement of
public transit systems’ performance and the impact of board
activities on organiza-
tional performance. He has served in leadership positions in
several professional
organizations, published several articles in refereed journals,

and presented more
than 40 papers in various professional and academic
conferences.
Kofi Obeng holds a PhD degree with concentration in
transportation planning from
the University of Pennsylvania, Philadelphia. Currently, he is a
professor of transpor-
tation in the Department of Marketing, Transportation and
Supply Chain in the School
of Business and Economics at North Carolina A&T State
University, Greensboro. His
research interests cover a wide area of transportation, including
public transit manage-
ment, subsidies, cost, productivity, and performance and traffic
safety. Prof. Obeng is
widely published.
Ora Spann holds a PhD degree from the Ohio State University,
Columbus, Ohio. She
is a professor of management in the Department of Business
Administration at South
Carolina State University, Orangeburg. Her research interests
are in the areas of
NAFTA, strategic planning, workplace issues, and HR
Development.
CHAPTER EIGHT

Establishing an Effective
Organizational Vision
for the Future
You must give birth to your images. They are the future waiting
to be bam.
-Rainer Maria Rilke, poet
T
he purpose of Step 8 in the strategic planning process is to
develop a clear
and succinct description of what the organization (collaboration
or com-
munity) should look like as it successfully implements its
strategies,
achieves its full potential, and creates significant and lasting
public value. This
description is the organization's vision of success. Typically,
this vision of
success is more important as a guide to implementing strategy
than it is to
formulating it. For that reason, the step is listed as optional in
Figure 2.1, and
it comes after strategy and plan review and adoption. However,
Figure 2.1 also
indicates that under the right circumstances, visioning might
occur at many
places through a strategic planning process (see also Figure
2.4).
Although many-perhaps most-public and nonprofit
organizations have
developed clear and useful mission statements in recent years,
fewer have a

clear, succinct, and useful vision of success. Part of the reason
is that a fully
developed vision, though it includes mission, goes well beyond
mission. A
mission outlines the organizational purpose; a vision goes on to
describe how
the organization should look when it is working extremely well
in relation to
its environment and key stakeholders. Developing this
description is more
time-consuming than formulating a mission statement
(Angelica, 2001; Senge,
2006) . It is also more difficult, particularly because most
organizations are
coalitional (Bolman & Deal, 2008; Pfeffer, 2010), and thus the
vision must
usually be a treaty negotiated among rival coalitions.
Other difficulties may hamper construction of a vision of
success. People
may be afraid of how others will respond to their vision.
Professionals are
271
2 72 STRATEGIC PLANNING FOR PUBUC AND NONPROFIT
ORGANIZATIONS
highly vested in their jobs, and to have one's vision of excellent
organizational
performance criticized or rejected can be trying (Rughase,
2007). People may
be afraid of that part of themselves that can envision and pursue
excellence.

First of all, we can be disappointed in our pursuit, which can be
painful. Our
own competence can be called into question. And second, being
true to the
vision can be a very demanding discipline, hard work that we
may not be
willing to shoulder all the time.
Key decision makers must be courageous in order to construct a
compelling
vision of success. They must imagine and listen to their best
selves in order
to envision success for the organization as a whole. And they
must be disci-
plined enough to affirm the vision in the present, to work hard
through con-
flicts and difficulties to make the vision real in the here and
now (Collins &
Porras, 1997). As novelist Richard Powers (2001, p. 130) says,
"The mind is
the first virtual reality .... It gets to say what the world isn't
yet." But saying
yes to the vision is only a step-albeit an important one-in the
persistent
stream of action required to realize the vision.
It may not be possible, therefore, to create an effective and
compelling vision
of success for the organization. The good news, however, is that
although a
vision of success may be very helpful, it may not be necessary
in order to improve
organizational performance. Agreement on strategy is more
important than
agreement on vision or goals (Bourgeois, 1980; Mintzberg,
Ahlstrand, & Lampe!,

2009). Simply finding a way to frame and deal with a few of the
strategic issues
the organization faces often markedly improves organizational
effectiveness.
DESIRED IMMEDIATE OUTCOMES AND
LONGER-TERM BENEFITS
Even though it may not be necessary to have a vision of success
in order to
improve organizational effectiveness, it is hard to imagine a
truly high-performing
organization that does not have at least an implicit and widely
shared concep-
tion of what success looks like and how it might be achieved
(see, for example,
Collins & Porras, 1997; Rainey & Steinbauer, 1999; Light,
1998, 2005; Goodsell,
2010). Indeed, it is hard to imagine an organization surviving in
the long run
without some sort of vision to inspire it-hence the merit of
filmmaker Fedr:.:rico
Fellini's comment, "The visionary is the only realist." Recall as
well the famous
admonition in Proverbs 29:18: "Where there is no vision, the
people perish."
Thus a vision of success might be advantageous.
Assuming key decision makers wish to promote superior
performanc:e, the
following immediate outcomes might be sought in this step.
First, if i!t is to
provide suitable guidance and motivation, the vision should
probably detail
the following attributes of the organization:

ESTABUSHING AN EFFECTIVE ORGANIZATIONAL VISION
FOR THE FUTURE 2 73
• Mission
• Basic philosophy, core values, and cultural features
• Goals, if they are established
• Basic strategies
• Performance criteria (such as those related to critical success
factors)
• Important decision-making rules
• Ethical standards expected of all employees
The vision should emphasize purposes, behavior, performance
criteria, deci-
sion rules, and standards that serve the public and create public
value rather
than serve the organization alone. The guidance offered should
be specific
and reasonable. The vision should include a promise that the
organization
will support its members' pursuit of the vision. Further, the
vision should
clarify the organization's direction and purpose; be relatively
future oriented;
reflect high ideals and challenging ambitions; and capture the
organization's
uniqueness and distinctive competence as well as desirable
features of its

history, culture, and values (Shamir, Arthur, & House, 1994;
Weiss & Piderit,
1999; Kouzes & Posner, 2008). The vision should also be
relatively short and
inspiring.
Second, the vision should be widely circulated among
organizational
members and other key stakeholders after appropriate
consultations, reviews,
and sign-offs. A vision of success can have little effect if
organizational
members are kept in the dark about it.
Third, the vision should be used to inform major and minor
organizational
decisions and actions. Preparing the vision will have been a
waste of time if
it has no behavioral effect. If, however, copies of the vision are
always handy
at formal meetings of key decision makers and prominently
displayed on the
organization's Website, and performance measurement systems
are explicitly
attuned to the vision, then the vision can be expected to affect
organizational
performance.
At least a dozen longer-term (and overlapping) desired
outcomes can flow
froM a clear, succinct, inspiring, and widely shared vision of
success. First, a
fully developed vision of success provides a capsule future-
oriented theory of
the organization; that is, its theory of what it should do and how
it should do

it to achieve success by altering the world in some important
way (Bryson,
Gibbons, & Shaye, 2001). The vision helps organizational
members and key
stakeholders imagine and create sustainable new circumstances
by understand-
ing the requirements for success-that is, why and how things
should be done.
Knowing the basic theory allows organizational members to act
effectively
without having everything spelled out in detail and without
needing rules
2 7 4 STRATEGIC PLANNING FOR PUBUC AND
NONPROFIT ORGANIZATIONS
written to cover every possible situation. As the great
psychologist Kurt Lewin
observes, "Nothing is as practical as a good theory" (1951, p.
169). Beyond
that, the organization's vision (or capsule theory) of success
articulates the
way in which people can participate in creating a new and more
desirable
order. In a follow-up to his remarkable study (Krieger, 1996) of
some of the
world's great entrepreneurs (Moses, Oedipus, Antigone, and
Augustine, among
others) , Martin Krieger (2000) argues that "redemptive order,
what we might
call theory, allows us to be involved in the world, to have a
sense of what we
are doing here" (p. 263). Such a theory and actions based on it
are designed

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