Public Value &Strategic

ManagementJosé Jorge Saavedra

A little bit of history...

Sun Tzu : The Art of War

Carl von Clausewitz: About War; Prussian military philosopher (1780-1831).

Strategy comes from the Greek Strategos which means: “a general group of maneuvers taken to defeat an enemy in battle”

The Themes of Strategic ManagementThe Themes of Strategic Management

Relationship between organizational capacities and Relationship between organizational capacities and the environmentthe environment

What permits a good fit between the organization What permits a good fit between the organization and its environment?and its environment?

Why are some organizations more “successful” Why are some organizations more “successful” than others?than others?

Why do managers have to achieve a more Why do managers have to achieve a more effective fit?effective fit?

SWOT AnalysisSWOT Analysis

Source: Mintzberg et al., 1998. [Learned, Christensen, Andrews y Guth, 1965]

External Analysis

Internal Analysis

Strengths &Weaknesses

Threats & Opportunities

DistinctiveCompetencies

Key SuccessFactors

Creation of Strategy

Mangmt. ValuesSocial Responsibility

Evaluation and Choiceof Strategy

Implementation of Strategy

Definition of Corporative StrategyDefinition of Corporative Strategy

““Corporate Strategy is the stream of decisions in a company Corporate Strategy is the stream of decisions in a company that determines and reveals its objectives, purposes or goals, that determines and reveals its objectives, purposes or goals, produces the principal policies and plans to achieve those produces the principal policies and plans to achieve those goals and defines the type of businesses the company will goals and defines the type of businesses the company will take, the type of economic and human organization that it has take, the type of economic and human organization that it has or pretends to have, and the nature of economic and non-or pretends to have, and the nature of economic and non-economic contribution that it tries to make towards its share-economic contribution that it tries to make towards its share-holders, employees, clients, and communities.”holders, employees, clients, and communities.”

Andrews, 1965Andrews, 1965

Differences between private and Differences between private and public managementpublic management

Relation Between Mission, Values, and ResourcesRelation Between Mission, Values, and Resources

In the private sector there is an automatic relationship between In the private sector there is an automatic relationship between an increase in the achievements of the organizational mission an increase in the achievements of the organizational mission and an increase in usefulness. and an increase in usefulness.

In the public sector, organizations get resources by persuading In the public sector, organizations get resources by persuading the respective authorities about the importance of its objectives the respective authorities about the importance of its objectives and means to receive fiscal appropriation.and means to receive fiscal appropriation.

The mission of public organizations do not depend on The mission of public organizations do not depend on usefulness, but on the creation of value and the support of the usefulness, but on the creation of value and the support of the authorities. authorities.

DIFFERENCE BETWEEN PUBLIC AND PRIVATE SECTORDIFFERENCE BETWEEN PUBLIC AND PRIVATE SECTOR

PRIVATE SECTORPRIVATE SECTORIn the private sector, value-creation is a linear process between In the private sector, value-creation is a linear process between clients and shareholders.clients and shareholders.

Shareholders Organizational Product Client

PUBLIC SECTORPUBLIC SECTORIn the public sector, value is created by serving the public mandate, In the public sector, value is created by serving the public mandate,

the mission of the organization and the aspirations of the citizenry.the mission of the organization and the aspirations of the citizenry.

PRIVATE SECTOR: Social value is aligned with financial PRIVATE SECTOR: Social value is aligned with financial performance and with organizational survival.performance and with organizational survival.

SocialSocialValueValue

Financial Financial Performance & Performance & OrganizationalOrganizational

SurvivalSurvival

Products & Products & ServicesServices

PUBLIC SECTOR : Social value is NOT NECESSARILY aligned with PUBLIC SECTOR : Social value is NOT NECESSARILY aligned with financial performance or organizational survival. financial performance or organizational survival.

Financial Financial Performance & Performance & OrganizationalOrganizational

SurvivalSurvival

ProductsProducts &&

ServicesServices

SocialSocialValueValue

Definition of Corporative Strategy

““Corporate Strategy is the stream of decisions in a Corporate Strategy is the stream of decisions in a company that determines and reveals its objectives, company that determines and reveals its objectives, purposes or goals, produces the principal policies purposes or goals, produces the principal policies and plans to achieve those goals and defines the and plans to achieve those goals and defines the type of businesses the company will take, the type of type of businesses the company will take, the type of economic and human organization that it has or economic and human organization that it has or pretends to have, and the nature of economic and pretends to have, and the nature of economic and non-economic contribution that it tries to make non-economic contribution that it tries to make towards its share-holders, employees, clients, and towards its share-holders, employees, clients, and communities.”communities.”

Andrews, 1965Andrews, 1965

Creating Public Value

““Individuals must be seen as beings Individuals must be seen as beings that if given the chance will actively that if given the chance will actively

participate in shaping their own destiny, participate in shaping their own destiny, not only as passive receptors of not only as passive receptors of

ingenious development programs.”ingenious development programs.”

(Amartya Sen, 1999)(Amartya Sen, 1999)

Four models for decision making in the public sectorFour models for decision making in the public sector

• Rational

• Bureaucratic

• Political

• Cultural

Fuente: Adaptado de Graham T. Allison

The purpose of Social Management is the creation of PUBLIC VALUE by ensuring that public interventions contribute significantly to the following five principles:

1. Reduction of Inequality

2. Reduction of Poverty

3. Strengthening of Democratic States

4. Strengthening Citizenship

5. Promoting Development Effectiveness

Goals and Principles of Social ManagementGoals and Principles of Social Management

The Creation of Public ValueThe Creation of Public Value

• Public value must be perceived by all citizens or society. It must be used or enjoyed collectively.

• By “ public” we do not imply the simple aggregation of individual preferences, but the stream of collective decisions regarding what is valued and what are the priorities for a given community.

The Creation of Public ValueThe Creation of Public Value

• The concept of Public Value helps managers of social development keep focused and gives strategic direction to their actions.

• It can guide their actions with a simple reflection: Is what we are doing valuable and valued by society?

•Processes that build trust, community, citizenship, social capital and a stronger democracy.

•New opportunities for the community and its future generations

•Public accountability that demonstrate the good use of public funds, governance and responsiveness.

Public Value can be created through…Public Value can be created through…

•Pertinent answers to relevant problems of beneficiaries and citizens.

PublicValue

Pol

itica

l

Social

Economic Cultural

Institutional

Environment

Key Questions in Strategic ManagementKey Questions in Strategic Management

1.1. What is our “ Business”?What is our “ Business”?

2.2. Who are our “Clients?Who are our “Clients?

3.3. What is our Value Proposition? How do we get What is our Value Proposition? How do we get support, develop programs and deliver that support, develop programs and deliver that value?value?

Peter F. Drucker

Issues of Strategic ManagementIssues of Strategic Management

1. What is our core “ Business”?1. What is our core “ Business”?

Peter F. Drucker

CORE IDEOLOGY•Purpose•Core Values

ENVISIONED FUTURE•BHAG•Vivid Description

MISION & VISIONMISION & VISION

The Creation of ValueThe Creation of Value

The creation of value does not occur by accident, The creation of value does not occur by accident, nor is it determined by law. It depends on a deep nor is it determined by law. It depends on a deep comprehension of what the population values and comprehension of what the population values and the development of the organizational capacity to the development of the organizational capacity to deliver solutions to these necessities in an effective, deliver solutions to these necessities in an effective, equitable, and sustainable manner.equitable, and sustainable manner.

Issues of Strategic ManagementIssues of Strategic Management

2. Who are our “Clients?2. Who are our “Clients?

Peter F. Drucker

Who is the Client?Who is the Client?

Citizens

Beneficiaries/Users

Subjects

Clients

Issues of Strategic ManagementIssues of Strategic Management

3. What is our Value Proposition? 3. What is our Value Proposition? How do we get support, develop How do we get support, develop programs and deliver that value?programs and deliver that value?

Peter F. Drucker

What is desired

What is possible

V1

E1

V2

E2

Public Value

Exp

ecta

tion

sPobreza en América LatinaThe role of public

interventions

Public Policy, Programs & Projects

Ope

ratio

nal a

nd O

rgan

izat

iona

l Cap

acity

Authority, R

esources & Legitim

acy

PublicValue

Org

aniz

atio

nal M

anag

emen

tPolitical M

anagement

Programmatic Management

Mandate

Mision Vision

Pol

itica

l

Social

Economic Cultural

Institutional

Environment

Program ManagementProgram Management

The objective is to carry out the organizational The objective is to carry out the organizational mission and create public value through a mission and create public value through a package of policies, programs, and pertinent package of policies, programs, and pertinent projects.projects.

To guarantee the pertinence and to strengthen To guarantee the pertinence and to strengthen social inclusion, these programs should be social inclusion, these programs should be formed or constructed in a participatory manner formed or constructed in a participatory manner with the multiple actors involved, to achieve their with the multiple actors involved, to achieve their participation, compromise, and guarantee a participation, compromise, and guarantee a successful implementation.successful implementation.

Political ManagementPolitical Management

The objective of political management is to achieve The objective of political management is to achieve authorization, resources, support, and legitimacy to authorization, resources, support, and legitimacy to implement the organizational mission.implement the organizational mission.

It includes management with politicians, legislators, It includes management with politicians, legislators, bureaucrats that have supervisory power over the bureaucrats that have supervisory power over the organization and decision-making power over financing organization and decision-making power over financing and development of activities. and development of activities.

It also includes organized civil society, social movements, It also includes organized civil society, social movements, NGOs, the media, the private sector and the citizenry. NGOs, the media, the private sector and the citizenry. These are key actors and may have related interests with These are key actors and may have related interests with the operations of the organization.the operations of the organization.

Organizational ManagementOrganizational Management

The objective is to have a strong organization committed with The objective is to have a strong organization committed with the mission and with organizational capacity to carry out the the mission and with organizational capacity to carry out the different activities in an effective, efficient, equitable, ethical different activities in an effective, efficient, equitable, ethical and sustainable fashion. and sustainable fashion.

The organizational capacity refers to the fact that members of The organizational capacity refers to the fact that members of organization are the ones to finally implement the strategy.organization are the ones to finally implement the strategy.

This leads us to think in the skills and capabilities that the This leads us to think in the skills and capabilities that the organization needs and the values that define its culture, as organization needs and the values that define its culture, as well as the organizational structure, process and systems.well as the organizational structure, process and systems.

Public Policy, Programs & Projects

Ope

ratio

nal a

nd O

rgan

izat

iona

l Cap

acity

Authority, R

esources & Legitim

acy

PublicValue

Org

aniz

atio

nal M

anag

emen

tPolitical M

anagement

Programmatic Management

Mandate

Mision Vision

Pol

itica

l

Social

Economic Cultural

Institutional

Environment

Six Challenges for Six Challenges for

Social ManagementSocial Management

The final objective of public organizations is to create public value trough its management, which has to contribute significantly to the reduction of poverty and inequality as well as the strengthening of the democratic States and citizenship.

Challenge 1Challenge 1

Public resources, which are limited or scarce in relationship to the necessities or desires of the public, are assigned by a political process that determines their priority. Public organizations should compete effectively for these scarce resources.

Challenge 2Challenge 2

Citizens have the last word about the actions to be taken by the government and its agencies, this voice is expressed by deliberation mechanisms and politic representation, therefore public organizations respond to different social mandates.

ChallengeChallenge 3 3

People have multiple roles in their interactions with public organizations. The State must provide pertinent and quality services to clients, beneficiaries and subjects. And at the same time, they have the obligation to inform, respond and be accountable to the “public”, treating all stakeholders with respect because they are all citizens.

Challenge 4Challenge 4

The scope of public management is composed by interinstitutional networks which will be called macro management and internal organizational processes denominated micro management

Challenge 5Challenge 5

Outcomes should not be conceived only as the delivery of products and services. These outcomes should be focused on the impact of the products as well as the quality of the processes that produce these outcomes.

Challenge 6Challenge 6

STRATEGIC MANAGEMENTSTRATEGIC MANAGEMENT

It can be said that an organization has strategy when It can be said that an organization has strategy when its managers and the organization as a whole have its managers and the organization as a whole have committed to a particular vision of how to operate and committed to a particular vision of how to operate and achieve support to implement a series of activities achieve support to implement a series of activities that create social value.that create social value.

Definition of StrategyDefinition of Strategy

Strategy is a concept that simultaneously:Strategy is a concept that simultaneously:

1.1. Declares the organization’s mission and vision in its proposal of how to Declares the organization’s mission and vision in its proposal of how to create public value. create public value.

2.2. Determines the source of support and legitimacy that will be used to Determines the source of support and legitimacy that will be used to achieve the organizational objectives. achieve the organizational objectives.

3.3. Defines the areas of action to implement public policies, projects, and Defines the areas of action to implement public policies, projects, and programs.programs.

4.4. Explains how the organization will be organized and managed to Explains how the organization will be organized and managed to implement the programs and achieve the objectives that generate implement the programs and achieve the objectives that generate public value.public value.

Instruments

Instruments to Define “Value”Instruments to Define “Value”

Revision of MandatesRevision of Mandates ““Clarifying” PurposeClarifying” Purpose Mission ValidationMission Validation Strategic PlanningStrategic Planning Participation and Consultation Participation and Consultation

•Vision•Definition of Mission & Vision

•Mission

Instruments to Improve Public ManagementInstruments to Improve Public Management

Stakeholder AnalysisStakeholder Analysis Political MappingPolitical Mapping NegotiationsNegotiations LeadershipLeadership ““Advocacy”Advocacy” NetworkingNetworking Political MarketingPolitical Marketing

Instruments to Improve the Programmatic ManagementInstruments to Improve the Programmatic Management

PlanningPlanning Project managementProject management Logical frameworkLogical framework Monitoring and Monitoring and

EvaluationEvaluation Stakeholder analysisStakeholder analysis

NegotiationsNegotiations LeadershipLeadership ““Advocacy”Advocacy” ParticipationParticipation NetworkingNetworking Information TechnologyInformation Technology

Instruments to Improve Operational ManagementInstruments to Improve Operational Management

Strategic PlanningStrategic Planning ““Re-struRe-structuringcturing”” DecentralizationDecentralization Re-engineeringRe-engineering Total QualityTotal Quality ServiceService management management E-governmentE-government PrivatizationPrivatization Strategic AlliancesStrategic Alliances

Performance MeasurementPerformance Measurement Management by ResultsManagement by Results Variable budgetVariable budget Human Resource ManagementHuman Resource Management

Hiring by aptitude and Hiring by aptitude and attitudeattitude

TrainingTraining EvaluationEvaluation

TeamworkTeamwork AccountabilityAccountability

Instruments to Improve the Analysis of SurroundingsInstruments to Improve the Analysis of Surroundings

PESTI AnalysisPESTI Analysis Political MappingPolitical Mapping Stakeholder AnalysisStakeholder Analysis Analysis of National Agenda Analysis of National Agenda Analysis of Emerging ThemesAnalysis of Emerging Themes

TYPES OF INNOVATIONSTYPES OF INNOVATIONS

Mandate: Mandate: New mandate, new vision, new objectivesNew mandate, new vision, new objectives

Programmatic: Programmatic: Old objectives, new meansOld objectives, new means

Operational: Operational: Structure/process/measuring performanceStructure/process/measuring performance

Political:Political: Political support, more resources, greater authorityPolitical support, more resources, greater authority

Civil Rights: basic right of freedom, associated with courts of law. (Equality before the law)

Political Rights: right to participate, associated with the executive and legislative powers (one person = one vote)

Social Rights: right to a minimum level of wellbeing, associated with social services (education, health, work)

Fourth Generation Rights: (Environment, future generations, cultural identity)

Pobreza en América LatinaModern Citizenship

Source: Adapted from Will Kymlicka

Thank You !Thank You !