Public Value & Strategic Management

1. Public Value &Strategic Management José Jorge Saavedra

2. 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”

3. The Themes of Strategic Management • Relationship between organizational capacities and the environment • What permits a good fit between the organization and its environment? • Why are some organizations more “successful” than others? • Why do managers have to achieve a more effective fit?

4. External Analysis Internal Analysis Threats & Strengths & Opportunities Weaknesses Key Success Distinctive Factors Competencies Creation of Strategy Social Responsibility Mangmt. Values Evaluation and Choice of Strategy Implementation of Strategy SWOT Analysis Source: Mintzberg et al., 1998. [Learned, Christensen, Andrews y Guth, 1965]

5. Definition of Corporative Strategy • “Corporate Strategy is the stream of decisions in a company that determines and reveals its objectives, purposes or goals, produces the principal policies and plans to achieve those goals and defines the type of businesses the company will take, the type of economic and human organization that it has or pretends to have, and the nature of economic and non-economic contribution that it tries to make towards its share-holders, employees, clients, and communities.” Andrews, 1965

6. Differences between private and public management

7. Relation Between Mission, Values, and Resources In the private sector there is an automatic relationship between an increase in the achievements of the organizational mission and an increase in usefulness. In the public sector, organizations get resources by persuading the respective authorities about the importance of its objectives and means to receive fiscal appropriation. The mission of public organizations do not depend on usefulness, but on the creation of value and the support of the authorities.

8. DIFFERENCE BETWEEN PUBLIC AND PRIVATE SECTOR PRIVATE SECTOR In the private sector, value-creation is a linear process between clients and shareholders. Shareholders Organizational Product Client PUBLIC SECTOR In the public sector, value is created by serving the public mandate, the mission of the organization and the aspirations of the citizenry.

9. PRIVATE SECTOR: Social value is aligned with financial performance and with organizational survival. Financial Performance & Organizational Survival Social Value Products & Services

10. PUBLIC SECTOR : Social value is NOT NECESSARILY aligned with financial performance or organizational survival. Financial Performance & Organizational Survival Products & Services Social Value

11. Definition of Corporative Strategy • “Corporate Strategy is the stream of decisions in a company that determines and reveals its objectives, purposes or goals, produces the principal policies and plans to achieve those goals and defines the type of businesses the company will take, the type of economic and human organization that it has or pretends to have, and the nature of economic and non-economic contribution that it tries to make towards its share-holders, employees, clients, and communities.” Andrews, 1965

12. Creating Public Value

13. “Individuals must be seen as beings that if given the chance will actively participate in shaping their own destiny, not only as passive receptors of ingenious development programs.” (Amartya Sen, 1999)

14. Four models for decision making in the public sector • Rational • Bureaucratic • Political • Cultural Fuente: Adaptado de Graham T. Allison

15. Goals and Principles of Social Management • The purpose of Social Management is the creation of PUBLIC VALUE by ensuring that public interventions contribute significantly to the following five principles: • Reduction of Inequality • Reduction of Poverty • Strengthening of Democratic States • Strengthening Citizenship • Promoting Development Effectiveness

16. The 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.

17. The 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?

18. Public Value can be created through… • Pertinent answers to relevant problems of beneficiaries and citizens. • New opportunities for the community and its future generations • Processes that build trust, community, citizenship, social capital and a stronger democracy. • Public accountability that demonstrate the good use of public funds, governance and responsiveness.

19. Economic Cultural Social Institutional Political Environment Public Value

20. Key Questions in Strategic Management • What is our “ Business”? • Who are our “Clients? • What is our Value Proposition? How do we get support, develop programs and deliver that value? Peter F. Drucker

21. Issues of Strategic Management 1. What is our core “ Business”? Peter F. Drucker

22. MISION & VISION • CORE IDEOLOGY • Purpose • Core Values • ENVISIONED FUTURE • BHAG • Vivid Description

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

24. Issues of Strategic Management 2. Who are our “Clients? Peter F. Drucker

25. Who is the Client? • Citizens • Beneficiaries/Users • Clients • Subjects

26. Issues of Strategic Management 3. What is our Value Proposition? How do we get support, develop programs and deliver that value? Peter F. Drucker

27. What is desired E2 E1 What is possible V1 V2 Pobreza en América Latina The role of public interventions Expectations Public Value

28. Economic Cultural Social Institutional Mision Political Vision Mandate Environment Programmatic Management Public Policy, Programs & Projects Public Value Authority, Resources & Legitimacy Operational and Organizational Capacity Political Management Organizational Management

29. Program Management • The objective is to carry out the organizational mission and create public value through a package of policies, programs, and pertinent projects. • To guarantee the pertinence and to strengthen social inclusion, these programs should be formed or constructed in a participatory manner with the multiple actors involved, to achieve their participation, compromise, and guarantee a successful implementation.

30. Political Management • The objective of political management is to achieve authorization, resources, support, and legitimacy to implement the organizational mission. • It includes management with politicians, legislators, bureaucrats that have supervisory power over the organization and decision-making power over financing and development of activities. • It also includes organized civil society, social movements, NGOs, the media, the private sector and the citizenry. These are key actors and may have related interests with the operations of the organization.

31. Organizational Management • The objective is to have a strong organization committed with the mission and with organizational capacity to carry out the different activities in an effective, efficient, equitable, ethical and sustainable fashion. • The organizational capacity refers to the fact that members of organization are the ones to finally implement the strategy. • This leads us to think in the skills and capabilities that the organization needs and the values that define its culture, as well as the organizational structure, process and systems.

32. Economic Cultural Social Institutional Mision Political Vision Mandate Environment Programmatic Management Public Policy, Programs & Projects Public Value Authority, Resources & Legitimacy Operational and Organizational Capacity Political Management Organizational Management

33. Six Challenges for Social Management

34. Challenge 1 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.

35. Challenge 2 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.

36. Challenge 3 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.

37. Challenge 4 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.

38. Challenge 5 The scope of public management is composed by interinstitutional networks which will be called macro management and internal organizational processes denominated micro management

39. Challenge 6 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.

40. STRATEGIC MANAGEMENT

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

42. Strategy is a concept that simultaneously: • Declares the organization’s mission and vision in its proposal of how to create public value. • Determines the source of support and legitimacy that will be used to achieve the organizational objectives. • Defines the areas of action to implement public policies, projects, and programs. • Explains how the organization will be organized and managed to implement the programs and achieve the objectives that generate public value.

43. Instruments

44. Instruments to Define “Value” • Revision of Mandates • “Clarifying” Purpose • Mission Validation • Strategic Planning • Participation and Consultation • Mission • Vision • Definition of Mission & Vision

45. Instruments to Improve Public Management • Stakeholder Analysis • Political Mapping • Negotiations • Leadership • “Advocacy” • Networking • Political Marketing

46. Instruments to Improve the Programmatic Management • Planning • Project management • Logical framework • Monitoring and Evaluation • Stakeholder analysis • Negotiations • Leadership • “Advocacy” • Participation • Networking • Information Technology

47. Instruments to Improve Operational Management • Strategic Planning • “Re-structuring” • Decentralization • Re-engineering • Total Quality • Service management • E-government • Privatization • Strategic Alliances • Performance Measurement • Management by Results • Variable budget • Human Resource Management • Hiring by aptitude and attitude • Training • Evaluation • Teamwork • Accountability

48. Instruments to Improve the Analysis of Surroundings • PESTI Analysis • Political Mapping • Stakeholder Analysis • Analysis of National Agenda • Analysis of Emerging Themes

49. TYPES OF INNOVATIONS Mandate: New mandate, new vision, new objectives Political: Political support, more resources, greater authority Programmatic: Old objectives, new means Operational: Structure/process/measuring performance

50. Modern Citizenship Pobreza en América Latina • 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) Source: Adapted from Will Kymlicka