![Page 1: Strategic Management in Public Organizations By David …reinventgov.com/.../04/Strategic_Management_in_Public_Organizatio… · Strategic Management in Public Organizations By David](https://reader034.vdocuments.site/reader034/viewer/2022051321/5b342d437f8b9aec518bd3e9/html5/thumbnails/1.jpg)
StrategicManagementinPublicOrganizations
ByDavidOsborne
September2009
Manypublicorganizationsdostrategicplanning,buttheprocessoften
hastwomajorflaws.Itdevelopsastrategicplanthatisseparatefromthe
budget,anditfailstohelptheorganizationlearnwhichstrategiesandprograms
arenotworkingandmakethenecessaryadjustments.
Ingovernment,therealplanisthebudget.Toooften,organizations
developstrategicplansthatlayoutwheretheorganizationneedstogo,butthe
budgetdoesnotfollow.Strategicplanningisaboutrethinkinganorganization’s
strategies;donewell,itcanleadtoquantumleapsinstrategyandeffectiveness.
Buttraditionalbudgetingisincremental;itfundssomeversionofwhatwas
donelastyearandtheyearbeforethat.Becauseitisdifficulttogetnew
strategiesintobudgets,particularlyintimesoffiscalconstraint,muchofthe
strategicplanisneverputintoaction.
Whenstrategiesarefunded,toooftennoonecheckstoseewhetherthey
areproducingtheresultsintended.Hencetheorganizationremainsstuckwith
thestrategiesithasfunded,untilthenextroundofstrategicplanning.
Theseproblemsaresolvable.Publicorganizationscanlinkstrategic
planningwithbudgetingthroughaprocesscalledBudgetingforOutcomes,then
buildaperformancemanagementsystemtoassessresultsandmake
![Page 2: Strategic Management in Public Organizations By David …reinventgov.com/.../04/Strategic_Management_in_Public_Organizatio… · Strategic Management in Public Organizations By David](https://reader034.vdocuments.site/reader034/viewer/2022051321/5b342d437f8b9aec518bd3e9/html5/thumbnails/2.jpg)
2
corrections.Dozensofpublicorganizationshavedoneoneortheother,orboth.
Thoughspecificimplementationmethodswilldifferindifferingcircumstances,
thefollowingsteps,inroughlythisorder,wouldhelpmorepublicorganizations
dothesame.
1. Clarifymissionandvalues.
Tobeeffective,anorganizationshouldbeabletoarticulateitsmission
(ormissions)andvalueswithbriefstatementsthateveryoneinthe
organizationknows.Someorganizationsalreadyhavesuchstatements.Ifyour
organizationdoesn’t,orifyourleadersfeelthattheirexistingmissionand
valuesstatementsareeitherinadequateorunknowntomostemployees,you
shoulddraftormodifythem.
Slightmodificationscanbedonequickly,bytheorganization’shigh‐level
leaders.Iftheyneedtodraftnewstatementsorsubstantiallymodifyoldones,
theyshouldinvolvemanypeopleintheorganization,togettheirthoughtsand
achievebuy‐inthroughouttheranks.Suchstatementsareuselessunlessthe
employeesinternalizethemandactonthem.Missionandvaluesstatements
shouldbedesignedtolastforasignificantperiodoftime;theyarenot
somethingtobedoneeveryyearortwo.(Formoreoncraftingmission
statements,seeDavidOsborneandPeterPlastrik,TheReinventor’sFieldbook
(SanFrancisco:Jossey‐Bass,2000),pp.596‐599.)
![Page 3: Strategic Management in Public Organizations By David …reinventgov.com/.../04/Strategic_Management_in_Public_Organizatio… · Strategic Management in Public Organizations By David](https://reader034.vdocuments.site/reader034/viewer/2022051321/5b342d437f8b9aec518bd3e9/html5/thumbnails/3.jpg)
3
2. Articulateavisionofwhattheleadershipwantstocreate.
Intheirbook,TheLeadershipChallenge,JamesM.KouzesandBarryZ.
Posnerdefineavisionas"anidealanduniqueimageofthefutureforthe
commongood."
A vision is a mental picture of what tomorrow will look like. It expresses our highest standards and values. It sets us apart and makes us feel special. ... And if it's to be attractive to more than an insignificant few, it must appeal to all of those who have a stake in it.i
Thisisawonderfuldefinition.Butifvisioningisaboutnothingmore
thanastatement,ithaslittlevalue.Visioningneedstobeinformedbycareful
analysisandtoinvolvekeystakeholders,inspiringthemandwinningtheir
allegiance.Itshouldgivesomeindicationofhowtheycanrealizethevision—
whatprioritiestheymustpursue—thusactingasaspringboardforoutcome
goalsandstrategies.Tohavepower,inotherwords,visioningmustleadto
otherthings.
Whenvisioningworks,however,fewifanyforcesareaspowerful.A
visioningprocesscan:
• helpleadersstepoutsidetheboxoftheircurrentmindsetandthinkanewabouttheirorganization’sorcommunity'scondition,potential,andstrategicpriorities;
• helpbothleadersandcommunitymembersinternalizeanew
understandingofthechallengestheyface,anewvision,andanewpathtoachievethatvision‐‐anew"roadmap;"
• helpleadersfromdifferentpoliticalparties,institutions,andsectors
agreeonacommonvisionandgoals;
• actas"magnetsforcollaboration,"inspiringthousandsofpeopletoworktogethertoachieveacommonpurpose;
![Page 4: Strategic Management in Public Organizations By David …reinventgov.com/.../04/Strategic_Management_in_Public_Organizatio… · Strategic Management in Public Organizations By David](https://reader034.vdocuments.site/reader034/viewer/2022051321/5b342d437f8b9aec518bd3e9/html5/thumbnails/4.jpg)
4
• simplifythousandsofdecisionsandcutthroughmonthsofneedlessdiscussionbyprovidingaguidethatcanhelppeoplefigureoutwhattodoandwhatnolongerneedsdoing;and
• createanewvocabularythatcanreshapepublicperceptions.Formoredetailabouthowtocreatevisioningprocessesthatdothese
things,see“EffectiveVisioning,”byDavidOsborne.ii
3. Analyzetheorganization’smandates,strengths,weaknesses,
opportunities,andchallenges.
Thisanalysisofbothinternalandexternalconditions,oftencalleda
“SWOC”analysis(forstrengths,weaknesses,opportunities,andchallenges),can
beconductedbyateamofinternaland/orexternalconsultants,using
interviews,reviewsofdocuments,employeesurveys,customersurveys,and
otherformsofresearch.Theteamshouldgatherdatafromstaff,stakeholders
andcustomers—notjustatheadquarters,butinthefieldaswell.Theresearch
shouldincludeacarefulreviewofallorganizationalmandates,whetherfrom
thecourts,thelegislativebody,orthecharterorconstitution.
4. Analyzethegapbetweenwheretheorganizationistodayandthevision,
toidentifystrategicissuesitfaces.
Basedontheanalysisdoneinstep3,theteamwouldidentifykeyissues
thattheorganizationmustresolveifitistoachieveitsvision.Onceitsanalysis
iscomplete,theteamwouldgatherdecisionmakersforaretreat,atwhichit
wouldpresentthedatagatheredinstep3andthestrategicissuesithasframed.
![Page 5: Strategic Management in Public Organizations By David …reinventgov.com/.../04/Strategic_Management_in_Public_Organizatio… · Strategic Management in Public Organizations By David](https://reader034.vdocuments.site/reader034/viewer/2022051321/5b342d437f8b9aec518bd3e9/html5/thumbnails/5.jpg)
5
Decisionswouldbemadeaboutwhichkeystrategicissuestheorganization
mustaddress.Thenthediscussionwouldturntostep4.
Whyaretreat?Becauseinmostgovernments,noonehasenoughpower
toachieveanythingbysimplyorderingthatitbedone.Powerissodiffusethat
leadersmustspendagreatdealoftimeconvincingotherstobuyintotheir
vision,goals,andstrategies.Onequickwaytodosoisataretreatwhereallthe
keydecisionmakersgather.
5. Identify510outcomegoals.
Thesearetheresultsmostimportantfortheorganizationtoproduce.As
examples,foranorganizationwhosemissionistoensurethatallcitizenshave
adequatehousing,outcomegoalsmightinclude:
• reducedhomelessness,
• increasedhomeownership,
• increaseddevelopmentinpoorcommunities,
• greatercustomersatisfaction,and/or
• increasedorganizationalcost‐effectiveness.
Attheretreatdescribedabove,leaderswouldchoosethesegoals,
throughafacilitatedprocess.Theywouldthenchoosethreeindicatorswith
whichtomeasureprogressoneachgoal.Thiswouldgivetheorganizationan
overallscorecard,tomeasureitssuccess.
![Page 6: Strategic Management in Public Organizations By David …reinventgov.com/.../04/Strategic_Management_in_Public_Organizatio… · Strategic Management in Public Organizations By David](https://reader034.vdocuments.site/reader034/viewer/2022051321/5b342d437f8b9aec518bd3e9/html5/thumbnails/6.jpg)
6
Eachstrategicissuetheorganizationmustaddressshouldfallwithinone
oftheoutcomegoals.Iftheydonot,thegroupshouldconsideraddingan
outcomegoalthatwouldcovertheissueinquestion.
6. Developstrategiestoachievetheoutcomegoalsandaddressthe
strategicissues.
Everyorganizationhasasetofstrategies,someofwhichareexplicit,
othersofwhichmaybeimplicit.Butthemosteffectiveapproachisnottostart
byreviewingexistingstrategies.Instead,theprocessshouldbeginwithan
analysisofwhatfactorshavethemostimpactonthedesiredoutcomes(and,
therefore,whatfactorswouldclosethegapbetweentheorganization’svision
andwhereitistoday).
Todothiswork,leadersshouldchartera“resultsteam”foreach
outcomegoal:asmallgroup(5‐8)ofstrategicthinkers,madeupofinternaland
externalconsultants,policy,research,andbudgetstaff,andprogramstaff.
Theseteamswouldbeginbyusingfairlyintensiveresearchtodefinethefactors
thatmostimpacttheirdesiredoutcome.Thentheywoulddevelopacause‐and‐
effectmapofthosefactors,tounderstandtheirinterrelationships.Asan
illustration,thisisacause‐and‐effectmapofthestrategiesthatimpacthealthin
onestate:iii
![Page 7: Strategic Management in Public Organizations By David …reinventgov.com/.../04/Strategic_Management_in_Public_Organizatio… · Strategic Management in Public Organizations By David](https://reader034.vdocuments.site/reader034/viewer/2022051321/5b342d437f8b9aec518bd3e9/html5/thumbnails/7.jpg)
7
Thesecause‐and‐effectmapshelpidentifywhatfactorshavethemost
powertoachievethedesiredoutcome.Withthatinformation,resultsteamscan
thendiscusswhatstrategiesmightbemosteffective—notonlytoachievethe
outcomegoals,buttoresolverelatedstrategicissues.Somefactorsmaybeout
oftheorganization’sreach;hencetheywouldnotleadtostrategies.Butinmost
cases,theorganizationwilldiscoverthatitcanimpactmostoftheoutcome
goals,whetherdirectlyorindirectly.Withthisfreshlookatthequestion,the
teamwouldcomeupwithasetofstrategiesitbelievestheorganizationshould
pursue.
![Page 8: Strategic Management in Public Organizations By David …reinventgov.com/.../04/Strategic_Management_in_Public_Organizatio… · Strategic Management in Public Organizations By David](https://reader034.vdocuments.site/reader034/viewer/2022051321/5b342d437f8b9aec518bd3e9/html5/thumbnails/8.jpg)
8
Theteamwouldthencomparethemtothestrategiesalreadyinplace.
(Someexistingstrategieswouldbeencompassedbyoneprogram;othersmight
involvemultipleprograms.)Atthispoint,theycouldmapthepossible
strategiesalongwithexistingstrategies,toseehowtheyinteractwithone
another.(Strategiesmeanttoresolvethestrategicissuesshouldfallwithinone
oftheoutcomegoals;ifoneortwodonot,theycanbemappedhere,alongwith
therest.)Thisexercise,againbackedbyresearch,willhelptheteam
understandwhichstrategieshavethemostpower,whichmaynothaveenough
powertobeworthfunding,andwheretherearestillgapsthatmayrequire
strategiestheyhavenotconceivedofyet.(Formoreonstrategymapping,see
VisibleThinking,byBryson,Ackermann,Eden,andFinn.iv)
Theresultsteamswouldpresenttheirrecommendationsabout
strategiestotheleadershipatanotherretreat.TheywouldrefreshtheSWOC
analysispresentedearlier,thenaddwhattheirresearchandanalysishas
suggestedaboutthosestrategiestheorganizationshouldcontinuefunding,
thoseitshouldeliminate,andnewstrategiesitshouldadopt.Oncethese
decisionshavebeenmade,theleadershipshouldadoptthreeintermediate
outcomeindicatorswithwhichtomeasureprogressoneachstrategy.
7. Developabudgettofundthedesiredstrategies.
Theleadershipwouldthenmoveintothebudgetdevelopmentprocess,
usingBudgetingforOutcomes,amethodologypioneeredbythePublic
StrategiesGroupintheU.S.(www.psg.us).Theywouldstartbysettingan
![Page 9: Strategic Management in Public Organizations By David …reinventgov.com/.../04/Strategic_Management_in_Public_Organizatio… · Strategic Management in Public Organizations By David](https://reader034.vdocuments.site/reader034/viewer/2022051321/5b342d437f8b9aec518bd3e9/html5/thumbnails/9.jpg)
9
overallspendingtargetforthenextyear.Theywoulddividethistotalamong
theoutcomegoals,andwithineachgoaltheymightchoosetoassignadollar
figureforeachstrategy.(Thesedollarfiguresforoutcomegoalsandstrategies
canbemodifiedlaterintheprocessiftheyturnouttobeinadequate.)
Theresultsteamswouldthendevelopdocumentscalled“Requestsfor
Results”—oneforeachoutcomegoal.Thesewouldtaketheplaceofthe
traditionalbudgetinstructions.Theywoulddefinethedesiredoutcome,
presentthethreeindicatorsthatwouldbeusedtomeasureit,thendefinethe
strategiestobepursued,theindicatorsusedtomeasurethem,andhowmuch
moneywouldbeavailableforeachoutcomegoaland,perhaps,eachstrategy.In
additiontothestrategiestheyhadchosenearlier,theycouldalsodefinemore
genericcriteria,suchas,“Wewouldliketoseecollaborativeinitiativesbetween
differentprogramsandoffices,”or,“Wewouldliketoseeoffersthatleverage
privatesectoractivityandresourcesaswellaspublic.”Thiswouldencourage
programmanagerstogetoutoftheirsilosandlookforpartnerswhocouldhelp
maketheirprogramsmoreeffective.
TheRequestsforResultswouldgoouttoallmanagers,contractors,and
otherrecipientsoffunds,asaninvitationtosubmitinnovativerequestsfor
funding.(Insubsequentyears,theorganizationcouldconsiderlettingother
organizations,suchasnon‐governmentalorganizationsandevenfor‐profit
businesses,submitoffers.Bydoingso,itwouldsharpenthecompetitionand
heightentheinnovation.)Anymanager,contractor,orotherentityfundedby
theorganizationwouldbeabletoprepare“offers”forfunding.Theseoffers
![Page 10: Strategic Management in Public Organizations By David …reinventgov.com/.../04/Strategic_Management_in_Public_Organizatio… · Strategic Management in Public Organizations By David](https://reader034.vdocuments.site/reader034/viewer/2022051321/5b342d437f8b9aec518bd3e9/html5/thumbnails/10.jpg)
10
woulddefinetheprogramtobefunded,theprice,theresultsitwouldproduce,
anddatafromthepast(orfromanother,similarprogram)thatsupportedits
assertionaboutresults.(FormoredetailaboutthisBudgetingforOutcomes
process,seeDavidOsborneandPeterHutchinson,ThePriceofGovernment
(NewYork:BasicBooks,2004.))
Theorganizationwouldbewisetouseinternaland/orexternal
consultantstotrainprogrammanagersabouttheofferprocessandtohelp
themlookforinnovationsthatcouldmaketheirprogramsmorecost‐effective.
Whentheofferscamein,theresultsteamswouldanalyzethemandgroupthem
intothreecategories:mostcost‐effective,leastcost‐effective,andthoseinthe
middle.Withineachgroup,theywouldrankoffersfrommostcost‐effectiveto
leastcost‐effective,untiltheyhadallprogramsranked.Theywould“buy”from
thetopofthelistuntilthemoneyranout,thendrawaline.
Atthispointtheywouldsendtheirrankingsouttoallthosewhohad
madeoffers,alongwithanyspecificfeedbacktheyhad.Forinstance,theymight
askformoreinformationordataaboutresults.Theymightsuggestthatsome
managersinvestigateparticularinnovations.Theymightaskstillothersto
explorecollaborationswithotherofferers.Finally,theymightasksometo
“scale”theiroffers—indicatingwhatresultstheycouldproducewithmore
moneyorlessmoney.
Seeingtheiroffersrankedbelowthelineorneartheline—andthusat
risk,incaseoffersbelowthelinewereimprovedenoughtoleapfrogtheirs—
thosemakingofferswouldgetseriousaboutinnovation.Toensurethattheir
![Page 11: Strategic Management in Public Organizations By David …reinventgov.com/.../04/Strategic_Management_in_Public_Organizatio… · Strategic Management in Public Organizations By David](https://reader034.vdocuments.site/reader034/viewer/2022051321/5b342d437f8b9aec518bd3e9/html5/thumbnails/11.jpg)
11
programssurvived,theywouldbemotivatedtosearchforbestpracticesthat
couldmakethemmorecost‐effective.
Whenthefinalofferscamein,theresultsteamswouldengagein
dialoguewithsomeofferers,lookingformoreinformation,specific
improvementsinoffers,andsoon.Themoreinteraction,themorecreativeand
effectivetheofferswouldbecome.Oncetheofferswerefinal,theteamswould
againrankthem,buyfromthetop,anddrawaline.Theywouldforwardtheir
rankingstotheleadership,whichwouldusetherecommendationstoput
togethertheirbudget,makinganychangestheythoughtnecessary.
8. Developeffectiveimplementationprocessestooperationalizethe
strategies.
Oncethestrategiesandprogramshavebeendefinedandbudgeted,the
challengewouldbetoimplementthemsuccessfully.Inalargeorganization,
operationalagenciesmightneedhelpwiththis.Successfulimplementation
wouldnodoubtrequireinternalchangeswithinsomeprograms,agencies,and
departments.
Consultants,whetherinternalorexternal,couldhelpprogramoffices
understandtheirnewenvironmentandidentifytheoutcomesandstrategies
theyarenowresponsiblefordelivering.Theycouldgatherinformationabout
strengths,weaknesses,opportunitiesandchallengesinimplementation,
identifykeyissues,andfacilitateretreatstohelpprogramleadersmake
decisionsabouthowtohandlethosekeyissues.Thiswould,inasense,bea
![Page 12: Strategic Management in Public Organizations By David …reinventgov.com/.../04/Strategic_Management_in_Public_Organizatio… · Strategic Management in Public Organizations By David](https://reader034.vdocuments.site/reader034/viewer/2022051321/5b342d437f8b9aec518bd3e9/html5/thumbnails/12.jpg)
12
newroundofstrategicplanningwithin(and,insomecases,across)the
organizationalsilos,tooperationalizethenewoutcomegoalsandstrategies.
Thisstepwouldnotbenecessaryinallorganizations.
9. Developaperformancemanagementsystemtolearnfromexperience
andcontinuouslyimproveresults.
Thechallengewouldnowbetomonitorandlearnfromresults,sothe
organizationcouldcontinuouslyimproveitsstrategies,programs,andwork
processes.Todothis,itsleadersshouldcreateatleastfivemajorpiecesofa
performancemanagementsystem.
First,theleadershoulddevelop2‐3yearperformanceagreementswith
hisorherkeyexecutives,spellingouttheresultsdesired,therewardstobe
earned,andthesupporttobeprovidedandmanagementflexibilitiestobe
grantedtomaketheresultspossible.Theseagreementsshouldbenegotiated
betweentheleaderandtheexecutive(typicallyadepartmentheadoragency
director).Theywouldensureclarityaboutthemostimportantresultstobe
achieved,incentivesfortheexecutivetoachievethem,andthemanagement
powersheorshewouldneedtomakethenecessarychanges.Typical
flexibilitiesinsuchagreementsincludefreedomfromlimitsonthenumberof
employees,authoritytowaivecertainpersonnelandprocurementrules,
freedomtomovemoneybetweencertainaccountswithoutaskingpermission,
andauthoritytokeepsomepercentageofmoneynotspentinafiscalyearand
![Page 13: Strategic Management in Public Organizations By David …reinventgov.com/.../04/Strategic_Management_in_Public_Organizatio… · Strategic Management in Public Organizations By David](https://reader034.vdocuments.site/reader034/viewer/2022051321/5b342d437f8b9aec518bd3e9/html5/thumbnails/13.jpg)
13
useitinthenextyear.(Formoreaboutsuch“flexibleperformanceagreements,
seeTheReinventor’sFieldbook,byDavidOsborneandPeterPlastrik.v)
Second,theleadershouldmeeteverymonthoreveryquarterwitheach
oftheseexecutives,toassessprogressinachievingperformancegoals,discuss
whichstrategiesareworking,whicharenot,andwhy,andmakechanges
necessarytoensuresuccess.(Forshorthand,letuscallthisa“Stat”process,
sinceithasbeencalled“CompStat”inAmericanpolicedepartments,whereit
originated,“CitiStat”incities,and“StateStat”instates.)Otherexecutivesdoing
relatedworkshouldbepresentatthesesessions,sothatproblemscouldbe
solved.Forinstance,whenanagencyheadsays,“Wecan’tachievethoseresults
becausetheprocurementrulesmakeitimpossibletohiretheright
contractors,”theprocurementchiefshouldbeintheroomandreadytowork
outasolution.(FormoreaboutStatsystems,seeThePriceofGovernment.vi)
Third,theorganizationshouldnegotiateperformancecontractswithall
itscontractors,spellingouttheresultsexpected,howtheywillbemeasured,
andtherewardsifgoalsareexceededandsanctionsifresultsarepoor—
includinglossofthecontractifperformancefallsbelowasetlevel.Quarterly
reviewscouldbedonewithcontractorsaswell.
Fourth,theorganizationshoulddevelopbalancedscorecardsof
performancegoalsforeachprogram,office,workteamandotherfundedentity
(suchascontractorsandlowerlevelgovernments),throughoutthe
organization.Balancedscorecardsincludeindicatorsthatreflectatleastfour
factors:successatachievingmissiongoals,customersatisfaction,employee
![Page 14: Strategic Management in Public Organizations By David …reinventgov.com/.../04/Strategic_Management_in_Public_Organizatio… · Strategic Management in Public Organizations By David](https://reader034.vdocuments.site/reader034/viewer/2022051321/5b342d437f8b9aec518bd3e9/html5/thumbnails/14.jpg)
14
engagement,andsoundfinancialmanagement.Asitdoesthis,theorganization
shouldrollouttheStatprocessateverylevel,notjustattheverytop.
Resultsteammembersandinternalconsultantsshouldbeheavily
involvedintheseStatmeetings.Astheylearnedmoreandmoreaboutwhat
works,whatdoesn’t,andwhy,theywouldbecomemoreintelligentbuyersin
subsequentroundsofBudgetingforOutcomes.Meanwhile,thebudgetoffice
shouldbereorganizedaroundtheoutcomegoals,sothatseveralbudgetoffice
staffbecomepermanentmembersofeachresultsteam.Thiswouldhelpthe
budgetofficebecomebetterpurchasersofresultseveryyear.
Finally,whenthesesystemsareinplaceandpeoplethroughoutthe
organizationarerelativelycomfortablethattheyhaveusable,valuable
performancegoals,indicators,anddata,leadersshoulddevelopasystemof
incentivestorewardexecutives,divisions,offices,andworkteamsforachieving
theirgoals.Theentireperformanceevaluationprocessshouldberedesigned,
tofocusonachievementofobjectiveperformancegoalslaidoutinbalanced
scorecards,notonsubjectiveratingsofperformancebysupervisors.(Formore
onincentivesandobjectiveperformanceevaluation,seeTheReinventor’s
Fieldbook,chapters6and7.vii)
Itwillbeobviousbynowthateffectivestrategicandperformance
managementrequiresagreatdealofwork.Butitisexactlytheworknecessary
tomakedramaticimprovementsincost‐effectiveness.Theinvestments
demanded—oftime,people,andmoney—yieldenormousreturns.
![Page 15: Strategic Management in Public Organizations By David …reinventgov.com/.../04/Strategic_Management_in_Public_Organizatio… · Strategic Management in Public Organizations By David](https://reader034.vdocuments.site/reader034/viewer/2022051321/5b342d437f8b9aec518bd3e9/html5/thumbnails/15.jpg)
15
Organizationsusingstrategicandperformancemanagementsystemslikethese
haveachieved5‐8percentannualgainsinproductivity,yearafteryear.
Becausestrategicandperformancemanagementaresolaborintensive,
however,itisimportantnottorepeatthebasicprocessestoooften.Budgeting
forOutcomesonlyneedstobedoneeverytwoyears:abiennialbudgetcycle
worksbest,andevenifanorganizationhastouseanannualcycle,itmightbe
wisetoonlydothefullBFOprocesseverytwoyears.Similarly,thefullstrategic
planningprocesswouldnotbenecessaryineveryroundofbudgeting;itshould
perhapsbeusedonceeveryfouryears.
Tosumup,onecouldlookatthisstrategicmanagementsystemasa
three‐leggedstool.Astrategicplanhelpsanorganizationunderstandwhereit
needstogoandthestrategiesnecessarytogetthere;astrategicbudgeting
systemlinesthemoneyupbehindthoseoutcomegoalsandstrategies;anda
performancemanagementsystemmeasuresprogress,helpseveryonelearn
whatadjustmentstheyneedtomakealongtheway,andensuresthattheymake
thoseadjustments.Allofthesearevaluableactivities.Butwithoutallthree
legs,noonewouldwanttositonthestool.
iJamesM.KouzesandBarryZ.Posner,TheLeadershipChallenge(SanFranciscoJossey‐Bass,1995),p.111.iiDavidOsborne,“EffectiveVisioning,”September2009,availableatwww.psg.us.iiiDavidOsborneandPeterHutchinson,ThePriceofGovernment(NewYork:BasicBooks,2004),p.78.ivJohnM.Bryson,FranAckerman,ColinEden,andCharlesB.Finn,VisibleThinking(Chichester,England:JohnWileyandSons,2004.vDavidOsborneandPeterPlastrik,TheReinventor’sFieldbook(SanFrancisco:Jossey‐Bass,2000),pp.124‐148.viOsborneandHutchinson,op.cit.,pp.163‐174.viiOsborneandPlastrik,op.cit.