Solution Manual for Managing the Public Sector, 9th Edition

Solution Manual for Managing the Public Sector, 9th

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 CHAPTER 5: PLANNING

Opening Case

Robin Hood*

This case was prepared for a class discussion by students who have had no previous
exposure to strategy. The basic aim of the case is to initiate students into the conceptual
framework of strategy.

With this aim in mind, a situation was chosen which illustrates the central
problems of strategy while itself not being a standard business strategy situation. The
choice of a non-business situation was made in order to avoid the interference of
preconceived notions on the nature and conduct of business. Instead recourse was made
to a familiar story. The device serves to draw the students at once into the issues they will
later encounter in the course in their more conventional business examples.

Among these issues we have the following topics:

1. The role of the organizational leader as a strategist and articulator of global goals.
2. The pitfalls of success: how to channel and control organizational growth.
3. The relationship of structure to environment.
4. Strategy making and group values or culture.
5. Strategy making as a creative response to contradictory constraints.

Analysis

At the point in which the case begins we are confronted with an organization and
a leader which in the space of two years has emerged from fragmentation and obscurity
into strong regional presence. As is often common in entrepreneurial organization, the
Merrymen were build around the leadership of Robin Hood. He found his “top
management” already motivated. It was left to him to organize and train them.

The organization is functionally structured, with each lieutenant specializing in a

particular task. This structure performed well in the early days of the band. Growth,
however, is beginning to undermine the structure. Robin has relied on informal
communication to organize and implement operations. His lieutenants could do double
time as staff and line personnel: fulfilling their staff duties in off-peak periods, but
available for line duty during field operations. Growth has meant that their specialized
duties were taking up most of the time, leaving a command vacuum between Robin and
the first line recruits.

Robin is pleased with the growing size and influence of his organization.
However, while growth and power are an important criteria of strategic effectiveness,
they often generate the seeds of future failure. In our case, centralization and growth have
gone hand-in-hand. The nature of the Merrymen’s environment and operations requires
stealth and flexibility. They are now all located in a large encampment that can be seen
for miles. This creates the potability of a surprise attack by their position. The hunter has
grown fat, and may yet become the quarry.

Growth has also put great pressures on resources. In a typical fashion, Robin and
his lieutenants conceive of the problem from a purely operational perspective. They
harvest the forest more thoroughly. They are spending past gains on present problems in
the assumption that future revenues will continue to grow at the same pace as in the past.
This assumption, one that is often pervasive in successful organizations, may be
unwarranted. Rich travelers are avoiding the forest. The Merrymen are reduced to
robbing poorer travelers. But these individuals are their main stay of political support.
We see here again a common pitfall of success, the tendency of organizations to take
their best and most important customers for granted, to extract from them the highest
return for least effort in the belief that they have no practical alternative.

In desperation, Robin is considering abandoning the higher segment of his market

for a deeper exploration of a very large segment of limited resources. Here he runs up
against organizational traditions and values. His lieutenants are aghast at the notion of
telling their men that they must now rob their brothers and fathers. They see clearly that
the Merrymen, like other organizations of its type, is quasi-voluntary. While it provides
food and shelter, it also gives its members a sense of order and purpose.

Part of the problem that Robin confronts is that the purpose for which the
organization has been formed, has now been to some extent subverted. What started as a
rebellion has been routinized into banditry. This is common to many entrepreneurial and
dynamic organizations who forsake creativity, innovation, and their original sense of
purpose for smooth operations and the satisfaction of solid performance. In Robin’s case
there is a danger in this. Not only may his men become professional bandits with all the
moral and practical consequences that this entails, but his environment may become more
hostile to his activities. Robin must therefore begin to question the Merrymen’s mission.
Should it still be an extension of his private grudges and aspirations? Has the
organization acquired a new mission? If so, what is it? On whose behalf should the
organization formulate its mission?

These alternatives are generated by the options that Robin is contemplating. If the
organization is still Robin’s extension, then displacing the Sheriff should be the primary
mission of the Merrymen. If the organization is acting on behalf of the district then
replacing the Sheriff with a more benign administration should he the priority. If,
however, the Merrymen’s existence is an expression of widespread dissatisfaction with
the present political order, then Robin should consider his potential contributions on a
national scale. An analysis of the options confronting Robin ought to lead the students to
question the criteria by which strategy is judged. Who is the actor in strategy? The chief
executive officer? Top management? A coalition of stakeholders? There is clearly no
theoretical answer to these questions. A discussion ought to set the ground for an
appreciation of the political and structural forces under which strategy emerges.
Recommendations for a New Strategy

After categorizing and clarifying Robin’s problems, the students will pass to
recommendations either spontaneously or with the encouragement of the teacher. Given
their lack of theoretical familiarity in the field, it would be too much to expect that they
would apply the standard prescriptions that are found in textbooks for alleviating the
problems of growing organizations in a turbulent environment. Nevertheless, it is more
than likely that students employing native ingenuity will arrive at recommendations,
especially if they have a clear understanding of the problems. Pedagogically these
solutions are a chance to exercise their creativity unencumbered by stereotypes or
fashionable instances of business behavior. In sum, it is probably best to leave the phase
of recommendations and implementation somewhat broad. The students have the rest of
the course to appreciate the intricacies of strategic implementation.

Without prejudicing alternative strategies, one strategy is suggested by the

analysis phase of this case.

The Merrymen began as a simple and centralized organization. They are now an
overcentralized functional organization. The imperative is to decentralize. Given earlier
mentioned problems that decentralization should be geographic, the band must be broken
into subbands with small headquarters coordinating their movements. The advantages of
geographic divisionlization are clear:
1. It increases the flexibility of the total organization by moving the organizing of
operations closer to those who undertake them.
2. It reduces the chance that the whole band would be detected and surprised.
3. It pushes food-gathering down the line thereby eliminating problems of
distribution.
4. Small scale operations can be carried on with greater economy.

But, as always in strategy, there are certain disadvantages or pitfalls that must be
overcome.
1. Decentralization calls for an efficient control and communication system. In this
case a group of runners may perform this function.
2. It is always an issue which functions should be decentralized and which retained
at the corporate level. In this case intelligence and finance should probably be
kept centralized.
3. Robin’s best men have been trained to take charge of functional activities. He
must now decide which ones should be made heads of their divisions and which
should be kept with him at headquarters. He must search for men qualified to be
leaders. At the same time, the only proven leaders are his lieutenants. Dispatching
them away would mean a loss of talent at the center.
4. The problem of implementation is severe. Robin must restructure under pressure.
He must find the men he needs, train them, have them take charge at the local
level. He must do all this while carrying on routine operations. Mistakes are
bound to occur. Yet he must contain their costs while directing the difficult
 transition. This implies thorough preparations for implementation. Robin must
familiarize his lieutenants with his intentions and the projected problems. They
must actively become involved in the evolving implementation.

It is crucial for the students to appreciate the contradictory pressures that

implementation generates. The new decentralized structure will call for more intricate
communication and command systems. It increases flexibility, but also increases the
probability of breakdown and mismanagement. In this case runners keep the various
subbands in communication. This is a primary technology that may be insufficient to
ensure coordination. An opportunity exists here for the students to appreciate to what
extent sophisticated organizational forms are made possible by modern technologies that
are ordinarily taken for granted.

While restructuring is going on Robin must begin to consider other aspects of his
strategy. He should examine the possibility of diversifying beyond the confines of his
traditional forest territory. This is viable now that he is decentralized. Operations can be
carried on in the countryside by the autonomous subbands. He must also resolve the issue
of the proposed transit tax. What should be his relationship to the local population?
Should he increase their burden of taxation?

Ultimately, however, Robin Hood must consider the long-term course of action.
Here the various options can be laid out and their pro’s and con’s discussed. What should
be brought home to the students is the uncertainty of strategy, the risk elements that are
beyond calculation but go to the heart of the reasons for which organizations exist. If the
Merrymen were a profit-maximizing organization in the classic sense, they would be
satisfied with keeping the Sheriff off balance; or perhaps work toward his replacement
with a more inexperienced man. They are, however, a missionary organization. To pursue
profit maximizing would sooner or later lead them to thievery pure and simple. It would
also undermine their unity and spirit of daring.

Robin Hood has little choice but to increase his involvement in issues that lie
beyond his task environment. He should begin to negotiate a series of alliances that bring
about a change in the political order, as well as hold out the promise of return to legality
for him and his men.

*Professor Joseph Lampel prepared this teaching note.

Selected Questions for Discussion

4. David G. Gorner, a San Francisco—based management consultant, thinks the

following questions suggest the type of macroenvironmental issues most institutions
should address:
 Economic Analysis
1. What is the current state of the economy, and what are the forecasts for the future?
2. What is the inflation rate?

Demographic
1. What are the present characteristics and projected trends of national population
growth?
2. What is the present and projected age distribution of the population?
3. Are there trends indicating significant regional shifts of the population?
4. What are the characteristics of the population with respect to educational
attainment (for example, percent of persons with some college education)?

Sociocultural
1. What are society’s current and emerging attitudes about the values and purposes of
higher education?
2. What are the trends in career expectations and personal lifestyles?
3. Is there evidence of significant value reorientation in the society?
4. What are the consumer demands on education?

Political and Regulatory

1. What present and projected governmental regulations require compliance?
2. What are the concerns of accrediting or other regulatory agencies?
3. What is the political climate (e.g., suspicions of overinvestment in education)?
4. Are there significant legislative proposals that would have an impact on higher
education?

Technological
1. Are there new technological developments or new applications of present
technology that suggest alternative means of conducting education?

(Source: PMM & Co/Management Focus, March—April 1979, p. 15)

Closing Case

A STRATEGY IS BORN

This case illustrates nicely just how messy the planning process is and thus fits well with
the logical incrementalism model on page 217 of the text. It shows the need for
adjustment, for course corrections. "No plan of battle ever survives contact the enemy" is
a widely applicable adage. Also revealed in the case is the role of luck and bottom-up
decision making.
As Ricks concludes, the surge, while successful on the tactical level, faltered on the
strategic one. Does Petraeus, and his colleagues bear any responsibility? While they
were pushing for the surge, a parallel group of experts -- the Iraq Study Group -- was
advocating a broader approach that would take into account the influence of the other
countries in the region.

In The War Within, Bob Woodward describes the frustrations that the co-chairmen of that
group, James Baker and Lee Hamilton, felt as they sought to get Bush officials to think
more strategically about the war. Baker felt especially distressed at the Bush
administration's adamant refusal to explore possible common interest with Iraq's
neighbors. "Nearly everyone else had told the study group that active diplomacy with
Syria and Iran was vital to stabilizing Iraq and the Middle East." The Iraq Study Group
report remains the road not taken. Had the broad diplomatic offensive it advocated been
carried out alongside the surge, it might have helped get at Iraq’s political problems in the
way the surge did not.

Supplemental Case

Three Cases about Strategic Management

The following three cases should be used together to illustrate various aspects of the
strategic planning process and to draw lessons that might be applied to different types of
organizations.

The Environmental Protection Agency

The Environmental Protection Agency was established in 1970 under a presidential

reorganization plan in response to public concern over unhealthy air, polluted rivers,
unsafe drinking water, and haphazard waste disposal. Congress gave the EPA
responsibility for implementing federal environmental laws. From the start, however, the
agency lacked an overarching legislative mission, and its environmental responsibilities
had yet to be integrated with one another. As a result, the EPA could not ensure that it
was directing its efforts toward the environmental problems that were of greatest concern
to citizens or posed the greatest risk to the health of the population or the environment
itself. Therefore, the EPA decided in 1992 to launch the National Environmental Goals
Project, a long-range planning initiative under which it would involve its stakeholders in
developing measurable goals for it to pursue in improving the quality of the nation’s
environment.

The EPA designed its National Environmental Goals Project to produce a set of long-
range goals, including milestones to be achieved by 2005. The agency recognized that
while environmental goals should be grounded in science and factual analysis, they
should be based, as well, on the needs and expectations of the nation’s citizens. In 1994
the EPA initiated a series of nine public meetings to hear their views. The meetings were
held around the country and included environmental organizations, businesses, state and
local governments, tribal governments, and other stakeholders. To provide a basis for
discussion, the EPA drafted and distributed to participants a set of goal statements and
descriptive information on the 13 broad areas that its staff considered to be of the greatest
importance.

The EPA used the information it received at these public meetings to revise and better
define its goals. For example, the agency added milestones for managing and cleaning up
radioactive waste, restoring contaminated sites to productive use, and slowing habitat
losses. Further, it added the goal of improving its dissemination of environmental
information and its other education efforts. The EPA found that its stakeholders’ interests
included how it carries out its core processes – for example, the amount of flexibility it
can offer to the regulated community.

U.S. Customs Service

Consider now the oldest federal agency. The missions of the U.S. Customs Service are to
ensure that goods and persons entering and exiting the United States comply with all U.S.
laws and regulations while also facilitating the legitimate movement of goods and
persons through U.S. ports. But by the mid-1990s, long-standing management problems,
including weaknesses in strategic planning, threatened the agency’s ability to adapt to
changing demands.

Recognizing that the international trade environment had undergone many changes in
recent years, the Customs Service identified the new challenges the changes brought in its
1993 strategic plan. The clearest challenge for Customs would be to manage a workload
that was growing rapidly and that could not be expected to taper off. From 1986 to 1995,
for example, total imports increased by 242 percent, from 1.1 million to 38 million
entries. During the same period, passenger arrivals increased by 42 percent, from 304
million to 431 million. Customs anticipated that world trade would also continue to
accelerate. During 1997 alone, $730 billion in merchandise was imported into the United
States. Over the next several years, Customs expects that figure to grow by more than 10
percent every year.

The Customs Service anticipated that trade issues would assume greater prominence in
the coming years as developing countries continue to industrialize, corporations continue
to expand internationally, and trade barriers continue to fall. Further, the proliferation of
international trade agreements, such as the North American Free Trade Agreement
(NAFTA) and the General Agreement on Tariffs and Trade (GATT), should lead to
further increases in trade and travel volume.

Internally, Customs anticipated that as public pressures to keep the federal deficit under
control continued, no real growth would occur in the agency’s funding. Customs also
anticipated attrition among its staff and a loss of valuable expertise due to that attrition. It
determined that about 10 percent, or 2,000 employees, would be eligible to retire in five
years.
All these forces – external and internal – have caused the Customs Service to begin to
redesign its core processes, including those related to the movement of people and cargo
into the United States and the movement of cargo out of the States. For example, the
agency is undertaking a major reorganization structured from the ground up, using its 301
ports as its foundation.

Federal Emergency Management Agency

Established in 1979, the Federal Emergency Management Agency (FEMA) is responsible

for the coordination of civil emergency planning as well as the coordination of federal
disaster relief. FEMA is responsible for responding to floods, hurricanes, earthquakes,
and other natural disasters. The federal response to Hurrican Hugo and the Loma Prieta
earthquake in 1989 generated intense criticism. Hurrican Andrew, which leveled much of
south Florida in 1992, raised further doubts as to whether FEMA was capable of
responding to disasters. In 1993 FEMA’s new director refocused the agency on meeting
its mission and aligning its activities to better service the public.

Since FEMA issued its mission statement in April 1993, it has been reexamining its
approach to limiting death and property loss from disasters. Traditionally, FEMA had
concentrated its efforts on postdisaster assistance. But after taking a hard look at its
performance, FEMA concluded that it could better fulfill its mission by addressing the
range of activities available before and during, as well as after, diasters.

As part of its first agency-wide strategic planning effort, FEMA comprehensively

reviewed its programs and structures and initiated a major reorganization in November
1993. FEMA concluded that all emergencies share certain common traits, pose some
common demands, and ought to be approached functionally. FEMA’s new, “all-hazard”
mission takes a sequential approach to managing disasters: mitigation of the damage,
preparation, response, and recovery.

Note that FEMA now focuses its disaster planning and response processes on steps that
need to be taken not just during and after the event but in advance. The build
preparedness, FEMA now seeks to form partnerships with other federal, state, and local
organizations. For example, the agency works with local governments and the building
industry to strengthen building codes so that structures will be better able to withstand
disasters. It has also launched an effort to increase the number of flood insurance
policyholders – something that had not been a traditional focus of the agency but is now
understood as being critical to helping individuals recover from disasters. In sum, by
more closely aligning its activities, processes, and resources with its mission, FEMA
appears today to be better positioned to accomplish that mission.

Case Questions

1. What aspects of the strategic management process are illustrated in these cases?
2. How would you apply the lessons of each to a hospital, a large church, a university,
and a medium-size city?
Solution Manual for Managing the Public Sector, 9th Edition

Each of these cases provides a detailed, concrete example of certain steps in Figure 5.6.
The EPA case shows several ways in which an agency can involve stake holders. The
U.S. Customs Service case shows how an agency can assess its environment both present
and future, internal and external. It also shows how an organization can redesign its core
processes in light of this assessment. Finally, the FEMA case shows how an agency can
align activities to better serve the public, which is, after all, its mission.

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