The show represents macro government strategies in orienting public policy between economy government and civil society. The show contains strategic orientations of public agencies in the micro level of government. Both macro and micro strategies represent strategy modes of strategic desgin, internal strategic scanning and strategic governance. The show contains links to references and by clicking the pictures you'll find more usefull and entertaining material. The content is based on the book Strategy formation and policy making in government, published By Palgrave in 2019.

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
2

3. Outline
◉ Introduction
◉ Macrostrategies in government
◉ Microstrategies in public agencies
◉ Strategy and performance
◉ Conclusions

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

5. 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

6. Strategy formation and policy making in government.
Palgrave (Johanson 2019)
This book describes the options offered by strategic management in guiding
public organisations. The book is based on the idea that planning is only one
option in orienting the functioning of public organisations 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 actual performance of government organisations.
Ebook: 978-3-030-03439-9
DOI:10.1007/978-3-030-03439-9
Hardcover ISBN:978-3-030-03438-2

7. Internal
Strategic
Scanning
2Levels of
analysis
Book
content
Strategic
Design
Strategy
in public
agencies
Strategy
in
Government
9
CHAPTERS
Strategic
Governance
3PERSPECTIVES
Strategy &
performance
Frontiers of
strategy

8. Common sense?
Remembering Repeating
It is said you need 10 000 repetitions to
master a skill
Think of some skills: ironmongering, football
and writing
Very little demand for blacksmiths, but still
some for footballers and professional writers
Are you going to be a master blacksmith
football player or bestseller writer only with
repetition?
Repatriation
Think about a shopping list
Is it a correct brand?
Does it say half a dozen or second class
quality?
Do black-eyed beans qualify for black
beans or are they inherently white
beans?
Shopping list is a plan for your future
actions and eventual success
In a typical folkstory the hero embarks into a
journey (Campbell 1949)
There are obstacles and dangers
The hero will survive the threats and returns
to home somewhat changed but mentally
enriched
We are all heros of our own lives!

9. 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

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

11. What is the aim? Case: 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

12. 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).

13. 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

14. 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
CHANGEOF CHAIRMANGOVERNMENT NEGOTIATIONS
1.7.2015
GREEK DEBT CRISIS
10.6.2017
TRUE FINN'S
CHANGEOF 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

15. 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

16. 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

17. 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)

18. 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

19. Differentiated production structures? Patents in CME and
LME economies (Hall & Soscise 2001)
Germany USA
Patent specialization according to technology
Incremental
innovations
Radical
innovations

20. 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

21. 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

22. 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)

23. 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

24. Strategy is often
considered opportunistic
in politics literature
‘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

25. 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)

26. 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)

27. 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

28. 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

29. 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

30. Social Capital discussion (Putnam 1993,2000)
Comparison of North and South
Italy. Hierarchical versus
egalitarian structures of society
Decreasing
voluntary activity in
USA

31. Social capital map of the world

32. 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

33. Comparison of Italian regions

34. Why social capital is important in governance?
(a) Reduction of transaction costs: Through trust,
norms and networks 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 and information
could be easier inside a community but also society
where individuals or organisations are widely linked
and network together.
(c) Promotion of cooperative and / or socially-minded
behaviour: The application of social capital ideas could
soften the narrow self-interest of individuals and
produce norms that support collective action.
(d) Benefits for individuals and social spill-over: The results
from a range of studies suggest that well-connected
individuals are more likely to be ‘hired, housed, healthy and
happy’ it can also have social spill-over effects to society
e.g. the health and welfare system could be relieved.
(e) Less capital intensive interventions: The integration of
social capital could, lead to a more efficent allocation of the
budget. The state could provide frameworks and an
enabling environment for social capital to flourish
(f) People centred perspective: the approach puts people in
the centre. Social capital is all about relationships, co-
operations, links and networks.

35. 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

36. 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

37. 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

38. Macroeconomic planning
◉ Central planning of national resources in former
socialist countries
◉ 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)
38

39. 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.

40. 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
40

41. 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

42. Case: International space
station (Case 3.2)
One of the largest and most complicated technological projects in the
human history
International cooperation in the production of the modules
Independent management of the parts of the station
Limited transportation capacity after the retirement of the space
shuttle fleet in 2011
The aims: scientific research,
Technology development
Industrial applications
And all this despite the possibility of dual application (civil/military)

43. 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.

44. 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.

45. 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

46. 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

47. 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
47
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

48. 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.

49. Microstrategies in public agencies
Strategic design, internal strategic scanning, strategic governance

50. 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)
50

51. 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

52. 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

53. 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

54. Strategic design in public agencies
Politics, processes, performance

55. Internal strategic
scanning
Strategic governance
Strategic design
Programming
Combining Sharing
Strategic design mode (Johanson 2009, Johanson & Vakkuri 2017)
Looking in.
How are we doing?
Looking out.
How to deal with
our partners?
Opportunities and threatsStrenghts and weaknesses
Looking ahead.
How is going to be?
Politics as markets
Organisational
processes
Performance regimes

56. The focus of strategic planning research (Table 5.1) (Wolf & Floyd 2017)
Proximate outcomes Distant outcomes
Internal focus Quality of strategic decision-
making, integration and
coordination, shared
understanding and
commitment, strategic
thinking, planned emergence
Organisational performance,
strategic change and renewal,
realised strategy,
organisational learning,
dynamic capability
External focus Strategy communication,
legitimation
Adaptation, strategic legitimacy

57. Public and private strategic management research (Wolf
& Floyd 2017)
◉ Decrease of strategic planning studies within business firms
◉ Private emphasis on the performance, very little work done in the public sector
◉ Inconclusive evidence for the strategy - performance link
◉ Some indication that in mega-turbulent environments comprehensive long-term
planning pays off in business environment
◉ Past private emphasis on the industry, no equivalent of industry within public sector
◉ Common emphasis on the focus of the features of the environment
◉ Not much emphasis on the strategic inter-organisational networks in business or in
government

58. Politics as markets (See Nutt & Backoff 1992)
Public administration Corporate governance
Environmental
markets
Oversight bodies behave like markets Purchasing behaviour defines markets
Relationships
among key
actors
Collaboration among organisations
offering a given service
Competition among organisations
offering a given service
Source of
finance
Financed through budgets (free
services)
Financed through fees and charges
Political
influence
Buffering to deal with attempts to
influence
Political influence handled as
exceptions
Organisational
processes and
goals
Shifting, complex and difficult to
specify
Clear and agreed upon
Limits on
authority
Implementation contingent on
stakeholders outside of
management’s control
Implementation done by
management, who have the power to
act
Performance
regime and
performance
expectations
Vague and in constant flux Clear and fixed for long periods of
time

59. Organizational processes
Influence of politics
◉ Planning of resources and
bargaining with the goals
◉ Short planning cycles: electoral
term, annual budget cycle
◉ Path dependence of the
institutions: the weight of
previous legislation
Organisational processes
◉ The possibility of agencies to cooperate
with others
◉ The contradiction and cooperation
between professionals and managers
◉ The importance of stakeholder networks in
different levels (community, network,
organisation/participant).

60. Performance regimes
◉ Agencies are a result of political struggle, technical efficiency is not a
good evaluation criteria (Moe 1986)
◉ Agency formation as blame avoidance strategy (Hood 2011)
◉ potential outcomes of strategic management are the development of
enhanced organisational capacities or long-term consequences of
performance (Poister 2010).
◉ a prospecting strategy improves performance and usually produces
better results than defender or reactor strategies (Boyne, Walker 2010).

61. Case: design of entrepreneurial
university (Case 5.2)
University of Warwick was a small and new university
established in 1965, but it has since expanded and gained
academic recognition
In 2013 over 23 000 students, top 60 university in the world (qs
world university ranking)
Entrepreneurial culture, Diversified funding, orientation to
applied research, projects and research centers for external
interaction
Critical incident in 1970: student unrest and discovery of
documents indicating management spying students and faculty
for outsiders. - Beginning of a healthier identity?

62. Case: Value-based healthcare
(Porter & Teisberg 2006) (Case 5.1)
The ultimate goal of healthcare: maximal health outcomes with
the given resources
The measurement problem: concentration of assessing input and
processes, but not health concequences
Assessment should consist of 1) health status, 2) process of
recovery, and 3) sustainability
Implications for strategy: the definition of outcomes not only in
term of profits, more voice to the customers

63. Empirical findings of strategic design
◉ Size matters: larger organisations are more likely to engage in formal planning procedures (Boyne,
Gould-Williams et al. 2004).
◉ A change in an organisation’s mandate encourages strategy formulation (Barzelay, Jacobsen 2009).
◉ strategic management practices are adopted through network connections between agencies and
contacts with private businesses (Berry 1994).
◉ Available resources are an important determinant of strategic management exercises (Boyne &
Walker. 2004),
◉ The bottom-up approach to strategy formation tends to increase consensus regarding goals but
complicate implementation (Kissler, Fore et al. 1998, Wheeland 1993, Hendrick 2003).

64. Design challenges
◉ Strategy as an entity. Separation of strategy from everyday activities. Separate task which
becomes yet another administrative duty.
◉ Enforced strategy. Outside political influence dictates the initiation of strategy formation.
Ritualistic tendencies, box-ticking practices. Limits strategic options of the agency, but might
increase the strategic nature of the government as whole.
◉ Fallacy of performance. A lesson from the private sector is the importance of studying the
interconnections between proximate outcomes of strategy making and their performance
consequences instead of trying to tie performance to the initial stages of strategy formulation.
◉ Double-bind strategies. the combination of ex ante input control and ex post performance
measurement. As a result, strictly restricted actions.

65. Internal strategic scanning in public agencies
Resources, knowledge and capabilities

66. Internal strategic
scanning
Strategic governance
Strategic design
Programming
Combining Sharing
Internal strategic scanning mode (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
Resources
Knowledge
Capabilities

67. Resource-based view (Barney et al. 2011)
Ideas from Edith Penrose: management defines both supply and
demand, Problems of growth are problems of management thinking,
management has an important role in guiding organisations
Resource-based view: learning, the use of human resources,
knowledge creation and culture as valuable aspects of strategy
Internal focus on the resources of the organisation

68. Resource-based view
Basic ingredients of resources
(VRIN/VRIO)
◉ Valuable ’worth something’
◉ Rare ’difficult to find’
◉ Inimitable ’difficult to adapt’
◉ non-substitutable, Organization
can capture them ’unique
qualities, available for use’
Relevance for public agencies
◉ Value is equally relevant in
agencies
◉ The other criteria suppose
competitive environment which
does not portray the pursuit of
public interest
◉ Can be empirically relevant

69. Resources in government agencies (Klein et al. 2010)
◉ Public agencies possess valuable resources (labour. Buildings, ICT)
○ Some of the resources have market value, some do not
◉ The aim is to create value, not so much to capture it
○ The firm tries to capture value, but often needs to produce some value to capture it
◉ Some value capture is needed for survival and solving of conflicts
◉ If value creation (and not competition) is the aim of the public agency there
is a need for autonomy to be able to find ways to create value and
performance based budgeting system to show success in the value creation

70. The resources of public agencies (Ellison 2006, Peters 1995
◉ Getting advantage
○ Specialisation is beneficial for an agency
○ Highly technical duties promote success
○ The existence of dominant profession within
agency gives more voice
○ Performance of highly valued duties in society
provides good platform for getting influence
The knowledge and
capabilities of
administrators: their
expertise, ability to
generate information and
advice

71. Routines and capabilities (Becker 2004)
Routines Capabilities
Collective equivalent of skill
Repetitive actions: behavioural and cognitive
improve coordination and control,
reduce uncertainty,
help settle underlying conflicts,
preserve cognitive capacity
store knowledge and information
Consist of number of routines
ability to acquire, convert, apply and protect
knowledge
altering capabilities might be more difficult
than changing resources

72. Knowledge assets
◉ Tacit and explicit knowledge
○ In knowledge creation the cirulation between explicit and
implicit knowledge is important (Nonaka & Takeuchi 1995)
◉ Exploitation and exploration
○ Use of the existing knowledge is safe and predictable
○ Search for new knowledge demands time and energy,
results are unpredictable (March 1991)

73. Empirical knowledge findings within public agencies
◉ Lively interaction within teams combined with leader dominated
external interaction increases performance (Janhonen & Johanson 2011)
◉ Performance-related pay promotes knowledge sharing (Kim & Lee
2006)
◉ Leadership and management practices influence knowledge sharing
(Dawes & Cresswell 2012)
◉ Formality decreases knowledge sharing, trust increases it (Willem &
Buelens 2007)

74. Absorptive capacity
(Cohen & Levinthal 1990)
ability to grasp new information from outside
The need for agency-specific knowledge
from multiple sources
Enables to mix exploitation and exploration
Can be used for detecting warning signals
from the environment

75. Dynamic capabilities
(Eisenhardt & Martin 2000)
To build, integrate and reconfigure internal and
external competences to respond to a rapidly
changing environment
higher order construct that encompasses bundles
of routines but also the use of different resources
the shifting character of the environment; certain
strategic responses are required when timing is
critical

76. Dynamic capabilities
Processes
identify the threats and opportunities
(sensing)
to make strategic choices (seizing)
reconfigure the organisation’s
resources, structure and capabilities
(transforming)
Knowledge
the adaption of know-how, i.e.
socialisation practices to embody tacit
knowledge
the capacity to learn and to expand
know-how into know-why
Strategic features
dynamic capabilities deal with strategic,
goal-oriented processes
they may include experimental routines
the development of dynamic
capabilities may require the application
of best practices and substitutable
capabilities
Some integrate or reconfigure
resources, others enable organisations
to obtain and release resources

77. Case: Port of Singapore (Gordon et al. 2005) (Case 6.1)
Small country with heterogeneuous population and few natural
resources
The favourable geographical position gives a competitive edge
for the port of Singapore
The availability of financial resources to expand the port
The education of the skilled workforce for the use of design of
the logistics of the port
The combined port operations account for 7 per cent of the GDP
of Singapore

78. Empirical findings of dynamic capabilities with public
agencies
◉ The use of dynamic capabilities by experimentation: labour intensive &
time consuming. Balancing employee initiatives with organisational
guidance and control. (Pablo et al. 2007)
◉ Cross-functional teams support capability building (Daniel, Wilson
2003).
◉ Performance problems and slack resources increase the likelihood of
search for innovations (Salge, Vera 2013).
◉ Dynamic capabilities indirectly influence performance (Piening 2011)

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

80. 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

81. 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

82. 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.

83. 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

84. 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.

85. 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

86. 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

87. Mediation: Client interaction 1: Kindergarden against
shutdown

88. Mediation: Client interaction 2: Prison riot

89. Tertius Gaudens: Dutch auction

90. Divide et Impera: Interaction under supervision:
telescreen

91. 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)

92. 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
and 2) market-based. voluntary basis within firms or in their coordinated efforts
From official to market-based:
government: securing fair competition, granting licenses to operators, and making rules
for the interest of the general public. regulatory agencies to monitor industry.
industry standard setting: voluntary standard setting organisations with wide
representation. The reliance on markets speeds up the standardization process 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

93. Strategy and performance
Strategy modes & economy, efficiency and effectiveness

94. How to deal with the link between strategy and
performance?
Two options:
• Integrating strategic and
performance management.
Performance management is
strategic management on
operational level (Poister 2010).
• Finding multiple points of contact
between strategic management
and performance management
(Johanson & Vakkuri 2017)

95. Strategy and performance

96. Strategy and performance (see Johanson & Vakkuri 2017)
◉ Principle of economy: organising
processes; heuristics and external
interactions simply and economically
(financial sustainability).
◉ Principle of efficiency: buffering goals,
administering fruitful doses of
resources and evaluation of external
interactions (equilibrium).
◉ Principle of effectiveness: long-term
concequences of actions, evaluation of
innovations, role of agencies in the
social integration) (value creation)
◉ Strategic design: goals and division of
labour to maximise the future benefits
(legacy)
◉ Strategic scanning: modes of
operation, resources and innovations
to produce a whole that is more than
sum of its parts (social welfare)
◉ Strategic governance: organize
external relationships to integrate
society as a whole (social capital)

97. Strategywise: Strategic
design
◉ Defining action sequences: A design for the ruler, a
design for the process, a design for the user/customer
◉ Buffering goals: Insulating bureaucracy from the politics
◉ Harvesting legitimacy: acceptance from multiple sources
◉ Legacy: The well-being of future generations

98. Strategywise: Internal strategic scanning
◉ Employing heuristics: negative, i.e. availability, achoring,
representativeness. positive, i.e. speed and accuracy
◉ Administering doses for survival: Combining resources to
advance value. Paradox: Managers must experience
dissatisfaction to consider a major change. resource scarcity
is one of the main impediments to change efforts
◉ Creating innovations: e.g. governance innovations that
establish new forms of civic engagement and democratic
forums, and positional innovations that create new user
groups.
◉ Social welfare: The well-being in society in different
economic and social structures.

99. Strategywise: Strategic
governance
◉ Managing external interactions: With minimal number of ties
maximal number of connections. The centralization and
decentralization of external relationship management
◉ Weighing reciprocities: How reciprocal relationships are?
“Credit slips” and leveraging strategy. Paradox: community
building most often requires reduction of contacts to other
groups.
◉ Integrating communities: Brokering positions shorten the paths
that would otherwise be longer (horizontal and vertical
integration), bottom-up and top-down integration.
◉ Social capital: intertwined society

100. Conclusions
Frontiers of strategy

101. Lessons from the plastic ducks
◉ Any artefact may capture our attention
◉ In favourable conditions sudden happenings
○ can be incorporated in plans,
○ they may prove to be valuable resources to achieve goals,
○ they may serve as a means to communicate new knowledge
to the social surrounding

102. Images of strategic management
◉ The military, business and
political ideas put forward an
image of winning and losing
○ Destruction of the enemy
○ Conquering of the markets
○ Credit-seeking and blame
avoidance
◉ Does not encourage decent
behaviour toward enemies,
rivals or opponents
◉ strategic management ideas
○ consensual and peaceful image of
strategic management within
macro and micro levels of
government can be achieved.
○ cooperation is both possible and
desired aspect in reaching for
public goals
○ the existence of the voices of
dissonance is important part of
functional government

103. Macro and micro strategies
◉ Design, resources and
relationships as a starting point
○ Design of societies, design of
organizations
○ Combining resources through
administrative reform, combining
resources through knowledge and
capabilities
○ Constitutional and collective
regulation in macro and micro
levels
◉ Macro: The structure dictates the strategy
○ We are bound to our national institutions
○ Compatible institutions between politics,
welfare model and economy improve
competitive advantage
◉ Micro: Strategy dictates the structure
○ Public organizations have limited means to
dictate their fate
○ Imposed strategy and external performance
assessment might decrease operational
space, independent strategy formation and
performance incentives might increase it
○ The wave of decentralisation has increased
powers of subnational government and
brought about variety in their composition

104. Macro and micro strategies
Macro/micro
Design of societies, design of
organizations
Macro/micro
Combining resources through
administrative reform,
combining resources through
knowledge and capabilities
Macro/micro
Constitutional and collective
regulation in government and
public agencies
Macro
The structure dictates the
strategy. We are bound to our
national institutions. Compatible
institutions provide competitive
advantage
Micro
Imposed strategy and external
performance assessment might
decrease operational space,
independent strategy formation
and performance incentives
might increase it.
Micro
The wave of decentralisation
has increased powers of
subnational government and
brought about variety in their
composition
104

105. Macro and micro strategies
◉ In one sense there is a
zero-sum game between
macro and micro
strategies. The more
compelling the macro
strategy, the less
manoeuvring space there
is for government
agencies
◉ In another sense macro
and micro strategies deal
with goals in differential
fashion. Macro strategy
relates to a more
abstract notion of
strategy. Micro strategies
concentrate on the more
technical side of the
strategy

106. Questions
◉ How governments
aim for their goals
in different
societies?
◉ What are the
differences in
interaction
between
government,
economy and civil
society?
◉ Can a corrupt
political system
host a fully
functional public
administration?’
and vice versa
◉ how to organize
functioning public
administration?
◉ Can agencies
formulate their
goals in another
way than with
detailed planning?
◉ Is the Weberian
bureaucracy a
blueprint for all
functional
administrative
systems?