Johanson portrays an image of strategic management as government activity in which public administration plays an important role. Strategic planning and evaluation, administrative reform and government regulation are the most important tool of government in advancing it’s strategic goals. The new public management is not the only option for government reform. The regulation is not only government responsibility. Economy and civil society offer possibilities of self-regulation. Johanson introduces three roles for government agencies in dealing with their external constituencies. As a benevolent mediator, public agencies serve for their clientele on providing services for the citizens. As a business partner, public agency takes part in economic exchange with private enterprise. As a antitrust agent, public agency supervises and disciplines other organisations in it’s environment. The role of the agency is dependent upon the duties of public agency.

1. Strategy formation and policy making
in government – strategic governance

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. The friendly floatees
◉ Some 28 800
plastic ducks fell
overboard from a
container ship in
1991

4. What is the lesson?
◉ Prepare for the unexpected
◉ Be ready to use the unanticipated for your benefit
◉ Prefabricated plans cannot take into account for the
unforeseeable

5. 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

6. 6

7. 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

8. Macrostrategies in government
regulation

9. 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

10. 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).

11. 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

12. 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

13. 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

14. 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)

15. 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

16. 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)

17. 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

18. 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

19. 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)

20. 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

21. 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

22. 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

23. 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

24. 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
.

25. Internal strategic
scanning
Strategic governance
Strategic design
Programming
Combining Sharing
Three strategy modes for public policy (Figure 4.1)
Looking ahead.
How is going to be?
Looking in.
How are we doing?
Looking out.
How to deal with
our partners?
Opportunities and threatsStrenghts and weaknesses

26. 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

27. 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.

28. 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

29. Regulative methods (Baldwin, Cave et al. 2012)
◉command and control,
◉incentive-based regimes,
◉ market-harnessing controls,
◉ disclosure regulations,
◉ direct action and design
solutions,
◉ rights and liabilities,
◉public compensation,
◉and social insurance schemes
◉ legislative backing, imposition of criminal sanctions
◉ E.g. offering a tax reduction on electric cars
◉ providing adequate service to customers
◉ Prohibitions on misleading information
◉ E.g. regulation of construction through building standards
◉ tolerance levels for harmful activities such as pollution
◉ Reduction of individual risk

30. 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
30
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

31. 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.

32. Microstrategies in public agencies
strategic governance

33. The lieutenant of a small Hungarian unit in the Alps sent a reconnaissance
unit into the icy wilderness. It snowed for two days, and the unit did not
return. The lieutenant feared that he had sent his own people to death,
but on the third day the unit came back. How had they made their way?
They said, “we considered ourselves lost and waited for the end. Then one of
us found a map in his pocket. That calmed us down. We lasted the
snowstorm, and with the map we discovered our bearings.”
The lieutenant had a good look at the map. He discovered that it was not a
map of the Alps, but a map of the Pyrenees (Weick 1995, 54)
33

34. Micro Strategy modes
Strategic design
Design for politicians,
organisational processes,
performance regimes
Internal strategic
scanning:
Resources, knowledge and
capabilities
Strategic
governance
Mediator, business partner
and antitrust agent

35. Internal strategic
scanning
Strategic governance
Strategic design
Programming
Combining Sharing
Three strategy modes for public management (Figure 4.1)
Looking ahead.
How is going to be?
Looking in.
How are we doing?
Looking out.
How to deal with
our partners?
Opportunities and threatsStrenghts and weaknesses

36. Strategy triangle elaborated (Table 4.1)
Strategic design Internal strategic
scanning
Strategic governance
The role of strategy Expanding and
organizing duties
(programming)
Novel ways of matching
resources to fulfil duties
(combining)
Sharing duties with external
partners (relating)
Assumption about
the environment
Disturbed-reactive Turbulent fields Turbulent fields, network
order
Primary type of
capital
Financial Human Social
The role of the
public manager
Structural:
Primus inter pares
Craft:
Hatchet man
Institution:
Ambassador
The position of the
professions
Planning aid Matching partner Boundary object
Managerial control Budget Division of labour Contract
Main challenges Unanticipated
situations
Rigid resources,
misinterpretation of
resources
Contracting costs,
Overwhelming external
stakeholders

37. Strategic governance in public agencies
Mediator, business partner and antitrust agent

38. Internal strategic
scanning
Strategic governance
Strategic design
Programming
Combining Sharing
Strategic governance mode (Johanson 2014, Johanson 2009)
Looking ahead.
How is going to be?
Looking in.
How are we doing?
Looking out.
How to deal with
our partners?
Opportunities and threatsStrenghts and weaknesses
Mediator
Business partner
Antitrust agent

39. The triad (Simmel 1950)
Society in a nutshell
• Composed of three elements
• Minority/majority
• mediation/rivalry/coalition
• If one leaves, a pair (dyad) remains
• Addition of new members does not
change the situation
Possible strategies
mediation
Competition ’ tertius gaudens’
’Divide et impera’ divide-and-rule

40. Mediation: Brokerage roles (Fernandez & Gould 1994)
Think these constellations in terms of the actor A. The arrows point to a movement of resources
Information or otherwise. The oval circles denote group membership. There are maximum of three different groups.

41. Competition: Tertius
gaudens (Simmel 1950, Burt 1992)
Think these constellations in terms of actor A.
Structural hole offers two types of benefits
1) access to non-redundant information from
independent sources
2) control benefits for managing the interaction between B and
C.
In restricted relationship both information and control benefits
are lost

42. Divide-and-rule: Coalitions in triads (Caplow 1956)
Type 1 A=B=C
Type 2 A>B, B=C, A<(B+C)
Type 3 A<B, B=C
Type 4 A>(B+C), B=C
Type 5 A>B>C, A<(B+C)
Type 6 A>B>C, A>(B+C)
The power resources of actors
The plus signs denote to the likely alliances in a group. The size of
The actor refers to amount of power resources.

43. Types of public agencies (Dunleavy 1989)
◉ 1) delivery agencies, deliver services
and are labour intensive;
◉ 2) regulatory agencies, regulation of
other agencies or enterprises;
◉ 3) transfer agencies, payment of
government subsidies or entitlements
to individuals or enterprises;
◉ 4) contracts agencies, focus on
developing service and contracting out
to private-sector firms;
◉ 5) control agencies, grant provision to
other public-sector bureaucracies,
and to sub-national government
◉ 6) Taxing agencies, tax collection,
◉ 7) trading agencies, operate
commercially providing services to
other government bodies, full charge
◉ 8) servicing agencies, facilities or
services to other government bodies,
no charge

44. Types of agencies in triadic context
Mediator ”benevolent
mediator”
Delivery agencies,
direct delivery of services, labour
intensive
Transfer agencies,
the payment of government subsidies
to individuals or enterprises;
Taxing agencies,
tax collection
Servicing agencies,
provide services to other
government bodies, no charge
”Tertius gaudens”
business partner
Contracts agencies,
develop service or capital
specifications and then
contracting out to private-sector
firms
Trading agencies,
Operate commercially or quasi-
commercially providing services
to other government bodies, full
charge
Divide et impera
”antitrust agent”
Regulatory agencies
concerned with the regulation of
other agencies or enterprises;
Control agencies
supervise grant provision to other
public-sector bureaucracies, and
to sub-national government in
particular

45. Mediation: Client interaction 1: Kindergarden against
shutdown

46. Mediation: Client interaction 2: Prison riot

47. Tertius Gaudens: Dutch auction

48. Divide et Impera: Interaction under supervision:
telescreen

49. Implications
◉ Network as a result of agency role
◉ Emphasis on the immediate social surrounding
◉ Network rich world might be a relationship
poor world
○ Competition and regulation roles diminish socially
meaningful interaction (but all relationships are
socially embedded)

50. Case: telecommunication standardisation (van de Kaa & Greeven 2017) (Case 7.1)
◉ Standardisation is needed for the telecommunication networks to
communicate with one another
◉ Two basic processes of standardization:
◉ 1) official, through legislative bodies or regulatory government agencies
◉ 2) market-based. voluntary basis within firms or in their coordinated efforts
◉ Market-based:
◉ Government: securing fair competition, granting licenses to operators,
making rules for the interest of the public. Regulatory agencies to monitor
industry.
◉ Industry standard setting: voluntary standard setting organisations with wide
representation. The reliance on markets speeds up the standardization and
the inclusive representation enables consensus over the adoption.
◉ The geographical shift in the development of technology and standard
setting from Europe and North America to Asia