how governments aim for their strategic goals. There is a need to take into account the type of economic system, structure of government and nature of the civil society

1. Strategy formation and policy
making in government

2. I am Jan-Erik Johanson
I will walk you through the ideas of public strategic
management.
You can reach me at Jan-Erik.Johanson@tuni.fi
Welcome to the
show!
2

3. Strategy formation and policy making in government.
Palgrave (Johanson 2019)
This book describes the options offered by strategic management in
guiding public organizations. The book is based on the idea that
planning is only one option in orienting public organizations and applies
resource-based and network studies. The book also addresses the
strategic distinction between politics and administration, and illustrates
the connection between goal setting and performance of public
organizations.
Ebook: 978-3-030-03439-9
DOI:10.1007/978-3-030-03439-9
Hardcover ISBN:978-3-030-03438-2

4. 4

5. Strategy formation as common sense
Strategic design
Future oriented, planning based
Internal strategic scanning
Inward-oriented, resource-based
Strategic governance
Directed to external environment,
Network-based

6. Macrostrategies in government
Strategic planning & evaluation, administrative reform, regulation

7. Case. What is the aim? Who is the happiest?
(Case 3.4) (United Nations happiness report 2018)
◉ Three ways to happiness:
◉ The pleasure principle. Immediate gratification of desires,
◉ Eudemonic: the possibility to follow one’s own virtues and to use them
for the benefit of others.
◉ The principle of engagement: the sentiment of ’flow’ makes you forget
time and place.
◉ Happiest countries: Switzerland, Norway, Denmark, Finland. Small
democratic countries with variety of public services
◉ The contagion of happiness: Immigrants achieve happiness levels of the
host countries, but retain a footprint of the country of the origin
◉ Threats to happiness in industrialized countries: Obesity, substance
abuse, depression
I am an anarchist
Don't know what I want
But I know how to get it

8. Society and it’s parts
◉ Antiholistic notion of society: the economy, polity and civil society
(Polanyi 1944).
◉ Three parts are subsets of society.
○ The economy is concerned with the production and distribution of goods;
○ polity deals with democratic governance;
○ within civil society, kin relationships and religious organisations are
concerned with particular norms and obligations in the reproduction of
society
◉ A view based on social meanings would illustrate the polity, the
economy and civil society as overlapping areas (Lange et al. 2015).

9. Parts of the society
Economy
Coordinated market economies (CME)
Liberal market economies (LME)
And
Mixed market economies (MME)
Polity
Patronage
Managerial
Corporatist
Autonomous
Civil society
Bonding
bridging

10. Case: Implementation of strategic government programme in
Finland (Johanson et al. 2017) (Case 3.1)
1.4.2015 31.5.2019
1.1.2016 1.1.2017 1.1.2018 1.1.2019
GOVERNMENT
PROGRAMME
IMPLEMENTATION
PLAN
5.11.2015
GOVERNMENT CRISIS
SOCIAL AND HEALTH REFORM
11.6.2016
CONSERVATIVE PARTY
CHANGE OF CHAIRMANGOVERNMENT NEGOTIATIONS
1.7.2015
GREEK DEBT CRISIS
10.6.2017
TRUE FINN'S
CHANGE OF CHAIRMAN
SPLIT OF THE PARTY
PLANNED REGIONAL ELECTIONS
29.6.2017
CONSTITUTIONAL LAW COMMITTEE
DAMNING REPORTON THE BILL
TO EXPAND PATIENTS'
CHOICE OF CARE PROVIDER
19.4.2019
PARLIAMENTARY ELECTIONS
29.2.2016
COMPETITIVENESS AGREEMENT
WITH SOCIAL PARTNERS
INCREASE OF ASYLUM SEEKERS

11. Parts of the
society
• Economy: strategic coordination (CME) vs.
reliance on market exchange (LME), and
impure forms, e.g. MME.
• Polity: Closed vs. open bureaucracies,
separation between political and
bureaucratic careers
• Civil society: Intra-group relationships
(Bonding), inter-group relationships
(Bridging)
Patronage
Corporatist
Managerial
Autonomous
Bonding
Bridging
Coordinated market
economy (CME)
Liberal market
economy (LME)
…
Mixed market
Economy
(MME)
Polity
Economy Civil society

12. Economy
The economy is concerned
with the production and
distribution of goods
Market-based economies are
different in strategy- relevant
ways
There are qualitatively
different types of market
economies

13. Economy
The macro economic view in strategic management
Alfred Chandler (1990) Scale and scope:The
dynamics of industrial capitalism
◉ Integrated management hierarchy as a root for
growth ”managerial capitalism”
◉ USA market competition and fordist mass
production
◉ GERMANY fordist mass production and
management hierarchy, but more cooperation
among rivals ”co-operative managerial
capitalism”
◉ UK The integration of ownership and control
”Personal capitalism”
Michael Porter (1990) Competitive advantage
of nations
◉ Nations are succesful in the same industries for
long periods of time
◉ The success is based on the development of
institutional competences, technology and skils
”intangible capital”
◉ International trade only emphasises the
differences in initial productive orientations
◉ The nature of financial markets explains
technological change (stock based/bank based)

14. Later macro-economic view. Varieties of capitalism view
(see Jackson & Deeg 2006 for a review)
◉ Firm-centric analysis: to develop,
produce and distribute goods and
services profitably, a firm must
effectively coordinate with a range of
actors e.g. investors, employees,
unions, the state, suppliers, buyers.
◉ LME: securing markets (distant state),
◉ CME: protecting of collective goods
(enabling state),
◉ MME: public regulation and
coordination (encompassing state)
◉ There are two ideal-typical forms of capitalism
– Liberal market economies (LME)
– Coordinated market economies (CME)
Both of these forms of capitalism include a set of
‘complementary’ institutions that form the basis of a
country’s economic competitiveness and lead to good
economic outcomes
◉ And third impure form Mixed market economy
(MME) which combines aspects of LME and
CME
○ Fragmentation of organisations, politicization of
interest groups and strong production and
regulation aspect of the state, welfare model is
not clear

15. Three directions of liberalisation (Thelen 2012)
Equality
Organisation of labour markets
And organization of employersUnorganized Organized
LessMore
Liberal market economy (LME)
e.g. USA, UK
Coordinated market economy
(CME) Germany
Dualisation
Nordic coordinated market economy
Sweden, Norway, Denmark, Finland
Embedded flexibility

16. Three directions to liberalisation (Thelen 2012)
Deregulation
Removing the possibilities for mutual
coordination among employees and
employers
Establishing markets to replace
coordination
Dualisation
Separation of job markets to centre -
periphery stucture
Preservation of previous practices
within the centre
Decrease of benefits within periphery
i,e, in temporary and in atypical work
Embedded flexibility
Social policy enables unemployed to
regain employment
Comprehensive and continuous
education
Before: Wage moderation and full
employment
Now: development of human capital
and adaptation to the demands of
macro-economy

17. Polity
◉ Polity is the space for politics and public
administration
◉ polity deals with democratic governance, but a
view from public administration does not
assume democracy -> governance suffices?
◉ Strategic state that works as a catalyst to guide
social learning while allowing the economy and
society to occupy their own terrains as
independently as possible (Paquet 1996)
◉ Difference in countries’ government spending,
29 % of GDP in Ireland, 57 % in Finland in 2015.
The prime representatives of LME and CME
economies lie somewhere between these
extremes, at 38 percent in the USA and 44
percent in Germany (OECD 2017)

18. Poli-concepts
◉ Trying without separation of poli-concepts
“One could say that Politik constitutes the
realisation of Politik in the sense of policy, with
the help of Politik in the sense of politics on the
basis of Politik in the sense of polity”
…concepts like administration, planning, and
public affairs are primarily related to the concept
policy. But when political thinking involves
concepts like power, authority, conflict and
participation one would seem to dealing with
stronger politics orientation (Heidenheimer 1986).
Polity: Community, city-state, nation
state, empire
Politics: power struggle among actors
within polity
Policy: planned formation of social
domains e.g. industrial policy, health
policy, education policy

19. Strategy is often
considered opportunistic
in politics literature
(König & Wenzelburger 2014)
‘Throwing good money after bad’ (increasing resources after
losses to avoid suffering),
‘Pass the buck’ (place responsibility for a decision on someone
else),
‘Jump on the bandwagon’ (deflect blame by supporting a
popular alternative),
‘Circle the wagons’ (diffuse blame by spreading it to as many
policymakers as possible),
‘Find a scapegoat’ (look for someone else to blame),
‘Stop me before I kill again’ (e.g., put a collective cap on
spending to prevent spending increases in individual ministries
or offices),
‘Blame the predecessor’ (See to that prior rulers get some of the
responsibility) (Weaver 1986).
BLAME AVOIDANCE AND
CREDIT-SEEKING

20. Development of bureaucracy
The clergy was intially a good choice for administration, education & independent means
The laymen were more dependent on their position, securing of continuity is important
Professional administrators gain job security for obedience and expertise (Ertman 1997)

21. Demarcation between politics
and administration in research
(Aberbach et al 1981)
1. The dichotomy between politics and
administration, late 19th Century, Wilson)
2. Interests/facts (Beginning of the 20th
Century, Simon)
3. Energy/Balance (1960s)
4. Hybridisation (1980s onwards)

22. Types of bureaucracy
(Dahlström & Lapuente 2017)
Distinction between bureaucrat’s and politician’s careers is
the key source of government success in terms of efficiency,
lack of corruption and reform capacity.
Patronage: open recruitment, integration of political and
bureaucratic careers
Corporatist: closed recruitment, integration of political and
bureaucratic careers
Managerial: open recruitment, separated career paths for
politicians and bureaucrats
Autonomous: closed recruitment, separated career paths for
politicians and bureaucrats

23. Concequences
(Dahlström & Lapuente 2017)
◉ Not a problem between open and closed bureaucracy, but with the
mixture of political and administrative careers. If mixed, no one is able
to ’speak truth to power’
◉ Not a problem of bureaucracy, but of overly restrictive bureaucratic
rules
◉ Professionalism is important, but professionals need not be insiders
◉ The key is to combine flexibility with professionalism
◉ Bureaucrats can be recruited and promoted similar to private
employees and be rewarded according to professional criteria

24. Civil society
◉ Kin relationships and religious organisations are concerned with particular norms and
obligations in the reproduction of society (Polanyi 1944)
◉ Citizen and voluntary activity accounts some 4.5 per cent of the GDP (Salamon 2016)
◉ Social services, education and healthcare more than half of the production
◉ Government funding (32%), service charges (43%) and philantropic giving (25%)
◉ USA: Decrease of government spending in the 1980s onwards, commercial activity to
fund primary voluntary goals
◉ Europe: Increase of unemployment in the 1980s onwards, government funding and
emphasis on decreasing the unemployment

25. Micro aspects of social capital (Woolcock 1998)
“Bonding” The quality of connections within
community
Bad Good
“Bridging” the quality of
connections to other communities
Good Anomie Social opportunities
Bad “Amoral
individualism”
“Amoral familialism”
Bridging and bonding social capital

26. Why social capital is important in governance?
(a) Reduction of transaction costs: Through trust and
norms of reciprocity transactions could be reduced.
Collective norms help to come to a common
understanding.
(b) Facilitation of the dissemination of knowledge and
innovations: The spread of knowledge could be easier
inside a community but also in a society where
individuals are widely linked together.
(c) Promotion of cooperative and / or socially-minded
behaviour: The application of social capital ideas could
soften the self-interest and produce norms that
support collective action.
(d) Benefits for individuals and social spill-over: Well-
connected individuals are more likely to be ‘hired,
housed, healthy and happy’ it can also have social
spill-over effects to society i.e. for the health and
welfare system.
(e) Less capital intensive interventions: The integration
of social capital could, lead to a more efficient
allocation of the budget. The state could provide
frameworks and an enabling environment for social
capital to flourish
.

27. Macro Strategy modes
Strategic design:
Strategic planning and
evaluation
Physical, macroeconomic,
development, , socio-environmental,
operational system (Archibugi 2008)
Internal strategic
scanning: Administrative
reform
Self-referential actions
e.g. NPA, NPM, PVM, NPS, NPG
Strategic governance:
Regulation in governance
Government: stick, carrot and sermon
Economy/civil society: Self-regulation,
co-regulation

28. Physical planning (International guidelines on urban and territorial planning, UN 2015)
Levels
◉ Supranational (e.g climate
change)
◉ National
◉ City-region or metropolitan
◉ City and municipality
◉ Neigbourhood
Features
◉ Enforceable legal framework
◉ Sound & Flexible urban design
◉ Affordable & effective financial
planning

29. Macroeconomic planning
◉ Central planning of national resources in former
socialist countries and centralized planning ideas in
the west (e.g. PBPS systems)
◉ Control and forecasting of national resources for war
effort and recovery from the II world war (system of
national accounts)
◉ Legislation enforcing the formulation of strategies and
performance evaluation (e,g. GPRA)
29

30. Development planning
World bank and IMF founded at the Bretton Woods conference in 1944
◉ The World Bank Group works
with developing countries to
◉ reduce poverty and increase
prosperity.
◉ Provide financing, policy advice,
technical assistance to
governments
◉ strengthening the private sector in
developing countries.
◉ International Monetary Fund
◉ serves to stabilize the international
monetary system and acts as a
◉ monitor of the world’s currencies.
◉ keeps track of the economy globally and in
member countries,
◉ lends to countries with balance of payments
difficulties,
◉ gives practical help to members.
◉ Countries must first join the IMF to be
eligible to join the World Bank Group.

31. Socio-environmental planning
◉ Education, health and
social policy areas,
environmental
protection
◉ Bottom-up flavour in
encouraging
community action
Operational system planning
◉ Management
techniques aimed at
directing and evaluating
government
programmes and public
expenditure
31

32. Case: one child policy in China (Case 3.3)
◉ Designing the size of the population.
◉ Fear of population growth and its strain on the
economy
Has lead to
◉ Overpresentation of men in the population
◉ Growth in the proportion of the elderly
◉ Strain on the pension system
◉ Stress on the social care

33. Administrative reform strategies (Table 3.1)
Administrative
reform strategy
New Public
Administration
(NPA)
New Public
Management
(NPM)
Public Value
Management
(PVM)
New Public
Service
(NPS)
New Public
Governance
(NPG)
Vision of public
good
Social equity in
less bureaucratic
administration
The bankruptcy of
bureaucracy
Guidance for
public
executives,
reaction to the
weakness of the
NPM
Democratic
ideal as
antithesis to the
economic
approaches of
the NPM
Integration of
policymaking
and service
delivery
Nature of the
state
Unitary Disaggregated Pluralistic Pluralistic Pluralistic
Role of public
administration
Public
administration as
part of
policymaking
Guiding service
inputs and
outputs in
particular
Creating public
value to satisfy
citizens and
politicians
Servicing
through
negotiation and
brokering
Collaborating
with other
suppliers and
users
Means Managing
boundary
exchanges
Market
contracting,
internal
government
contracts
Providing
service,
establishing
legitimacy,
evaluating public
value
Building
coalitions
among public
and private
organisations
and non-profits
Trust and
informal,
relational
contracting
Adapted from Pyun & Gamassou 2018, pp. 255-258.

34. New regulative order (Levi-Faur 2013)
• Bureaucratic regulation is
separated from service delivery.
• Regulation is separated from
policymaking.
• Regulation is a separate stage in
policymaking.
• Formal rules and contracts
replace discretion and informal
relationships.

35. Government
regulation
Hard regulation:
Stick
Soft regulation:
Carrot and sermon
Community self-
regulation: Trust and
norms of reciprocity,
standard-setting
Economic self-
regulation: E.g.
Corporate social
responsibility,
industry standard-
setting
Private co-regulation
• Civil society - economy.
• Stakeholder cooperation
Public co-regulation
• Economy - government cooperation
• Taking into account the business interests
Public co-management of
common pool resources
• Government – civil society hybrid
• E.g. Management of fisheries and forestries (Ostrom)
Joint co-regulation
• Government, economy and civil society intersection
• Standards, certification, partnerships
Overlapping regulation (See Steurer 2013)
Polity
Economy Civil society

36. Putting macro
strategies in context
The relationships between government and
economy can be distant (LME) or enabling
(CME)
The relationship between polity and civil society
can be supportive or contradictory
Strategy modes define the means by which
these relationships are handled
In macro level strategic design implies planning
and evaluation
Strategic scanning implies administrative reform
and
Strategic governance implies regulation
36
Integrated careers
Separated careers
Bonding
Bridging
Coordinated market economy (CME)
Liberal market economy (LME)
Polity
Economy Civil society
Distant
Enabling
Supportive
Contradictory
Strategic design
Internal strategic scanning
Strategic governance

37. Choice of regulation by scale of action (Table 3.2)
Constitutional Collective
Locus:
System
Designing
institutions
Policy
management
Locus:
Organisation
Designing
network
structures
Network
management
◉ Think of the differences
between
○ following a rule,
○ defining a rule for action,
○ making a rule to define all
other rules
Adapted from Hill & Hupe 2002, p. 183 Hill & Hupe 2006, p. 562, based on Ostrom.