EGPA Pre-Seminar for Doctoral Students and Junior Researchers
September 1, 2009, St. Julian’s, Malta
Strategic Management in the Public Sector
- an Empirical Study of the Implementation Status in Germany’s Biggest Cities
by Mirja Jelen
1. Introduction ...............................................................................................................................3
2. Research questions ....................................................................................................................4
3. Theoretical background .............................................................................................................4
3.1 Strategic management framework ......................................................................................4
3.2 City-wide and departmental strategic management............................................................5
4. Methodology for empirical research – three-tiered survey .......................................................6
4.1 Screening for content/ results of cities’ strategic management activities – Phase 1...........7
4.2 Questionnaire for department heads on strategic management implementation – Phase 2 8
4.2.1 Opinion about effect of strategic management..........................................................9
4.2.2 Actors involved .........................................................................................................9
4.2.3 Instruments applied during the formulation phase ..................................................10
4.2.4 Content/ results elaborated and instruments used for implementation....................11
4.2.5 Factors that affect the actual implementation of strategic management .................13
4.3 Interviews with department heads on details about experience with strategic management
– Phase 3 ...........................................................................................................................14
5. Expected results and intended contribution.............................................................................14
Figure 1: Process and elements of strategic management ........................................................... 4
Figure 2: Stepwise approach for empirical research.................................................................... 6
Figure 3: Focuses of empirical research phases........................................................................... 6
Figure 4: Content/ results of strategic management activities (exemplary) ................................ 8
Figure 5: “Reported Use of Elements among Respondents”..................................................... 11
Figure 6: Content/ results and implementation on departmental level (exemplary).................. 13
Table 1 “Perceptions of the usefulness of strategic decision making"...................................... 9
Table 2: Actors involved in strategic management (exemplary).............................................. 10
Table 3: Analysis application during formulation phase (exemplary) ..................................... 10
Table 4: Analysis application during formulation phase (exemplary) ..................................... 11
Table 5: “Cities Linking Budgets to Strategic Plans” .............................................................. 12
Table 6: “Cities Linking Performance Measures to Strategic Plans”....................................... 12
Table 7: Factors influencing the implementation of strategic management (exemplary) ........ 13
Strategic management focuses on the long-term health of an organization (Vinzant, D./ Vinzant,
J., 1996, p.140) by achieving the best „fit“ between the organization and its environment
(Bryson, J./ Roering, W., 1987, p.11).
Strategic planning which is one of the main pillars of strategic management was developed by
private US corporations in the late 1950s and early 1960s to improve existing forecasting me-
thods (Steiner, G., 1969). In the mid 1970s when the concept was already well-established, stra-
tegic management was introduced (Ansoff, H./ Declerck, R./ Hayes, R., 1976). It “extended
strategic planning to an ongoing management paradigm of anticipating and managing organiza-
tional change and environment uncertainty” (Berry, F., 2007, p.332) and broadened it to include
implementation (Nutt, P./ Backoff, R., 1987, p.44).
At the beginning of the 1980s first attempts took place to apply strategic management in the
public sector (Montanari, J./ Bracker, J., 1986, p.251). By the mid-1980s, the use of strategic
management in public organizations became more common (Vinzant, D., 1996, p.1762). In
1993, a survey of municipal managers in the United States of America found nearly 60% of the
respondents indicating that their jurisdiction used strategic planning (Poister, T./ Streib, G.,
1994, p.119). Most municipal managers with experiences in this area rated it quite favorably
and almost 90 % affirmed that the effort had been worth the time and expense (Poister, T./
Streib, G., 2005, p.51).
While international examples show that strategic management becomes established especially
in the American public sector, the situation in Germany seems to be different. The introduction
of new public management (NPM) for German cities was initiated in the early 1990s. The
implementation is still ongoing and focuses mostly on the introduction of NPM instruments
(Budäus, D./ Reichard, C./ Schauer, R., 2005, p.10 ff). It is known that some cities intended to
also introduce strategic management but recent publications criticized that the activities in
Germany are still missing a holistic, strategic approach (Bogumil, J./ Grohs, S./ Kuhlmann, S./
Ohm, A., 2007, p.13; Heinz, R./ Klieve, L., 2008, p.123).
In the current situation of the global financial crises, cities are exposed to a rapidly changing
environment and find themselves confronted with growing competition for global capital and
businesses (Frey, O./ Hamedinger, A./ Dangschat, J., 2008, p.16). Strategic management might
therefore become extremely important for them to proactively create future-oriented strategies
to deal with these increasing challenges (Nutt, P./ Backoff, R., 1993, p.299).
In addition the financial resources will be severely restricted through the effects of the financial
crisis. Especially in times of resource scarcity, incremental models that depend on “something
extra to divide up” are less successful and rational methods must be found to make hard
choices. (Henry, N., 1999, p.363).
Although the cited literature assumes rather generalizing that strategic management is not well
developed in Germany and cities could usefully apply strategic management to deal with the
current financial crises, very little research has actually been done in this area so far.
2. Research questions
To understand how far the cities in Germany have actually progressed with the implementation
of strategic management and how they are implementing and conducting strategic management
the following research questions need to be answered:
• What is the status of strategic management implementation in Germany’s biggest cities?
• Which elements of strategic management are so far applied and valued by public managers?
• Which factors influence the successful implementation of strategic management?
The focus of this research is set only on the biggest cities in Germany (more than 300,000
inhabitants) because these are expected to have the highest likelihood of strategic management
activities within the German public sector. This assumption is based on previous studies that
identified these biggest cities as most advanced in using modern instruments (Bogumil, J./
Grohs, S./ Kuhlmann, S./ Ohm, A., 2007, p.98 f.). Studies in the United States also indicated
that larger cities are most likely to regard strategic activities as effective (Streib, G./ Poister, T.,
3. Theoretical background
3.1 Strategic management framework
To be able to answer the research questions posed, a model is needed that defines what is meant
by strategic management. This framework should not only include the overall process of
strategic management but also show which elements signify strategic management.
The strategic management model that was therefore developed as the basis for the empirical
study is derived from frameworks that already exist in the strategic management and public
sector literature (Schedler, K./ Siegel, J., 2005, p.101; David, F., 2007, p.15; Moore, M., 1995,
Figure 1: Process and elements of strategic management
The process is split into the formulation, implementation and evaluation step. Strategic
planning as an important term within strategic management is often equalized with strategy
formulation but some authors also describe it as also including implementation aspects
(Johnson, G./ Scholes, K., 1999, p.49 f.). The three process steps listed above do not have to
take place in this exact sequence and in practice they are mostly carried out iteratively (Bryson,
J./ Roering, W., 1987, p.12.).
Actors are persons or groups that participate in the strategic management process or influence
the strategic management process and its outcomes.
Instruments used in the strategic management process differ significantly depending on the
respective step in which they are applied. For example during the formulation phase analysis
instruments such as an internal audit to assess the organization’s strengths and weaknesses are
common (Eadie, D., 1983, p.448). During the implementation phase on the contrary the appli-
cation of steering instruments and controlling instruments (e.g. balanced scorecard) is typical.
Content/ results are the outcome of the strategic management process. This could e.g. be a
strategic plan which determines strategic objectives for the city that tackle the most important
issues of the city.
The respective details of the mentioned elements of strategic management will be further
detailed in the next chapter which deals with the methodology for the empirical research study.
3.2 City-wide and departmental strategic management
Cities’ strategic management activities can be conducted on several hierarchical levels of the
organization. For the city as a whole, a city-wide strategic management can be established to
address e.g. city-wide strategic issues with an overall plan. With the adoption of this overall
plan, the operating departments might introduce their own strategic management which
responds to mandates established in the overall plan and addresses strategic objectives and
issues at their departmental level (Poister, T./ Streib, G., 1999, p.317). This can then proceed to
further levels within the hierarchy.
E.g. in 1993, a survey of municipal managers in the US found nearly 60% of the respondents
indicating that their jurisdiction used strategic planning, with nearly 40% using it on a city-wide
basis and the other 20% using it in selected departments or programs (Poister/ Streib 1994,
The overall strategic management and the departmental strategic management as the two top
hierarchical levels have the potentially highest effect for the strategic coordination and steering
of the city. At the same time these levels are those that are the closest to the political bodies
which usually officially authorize the administration. This means that the accessibility and
transparency of information on these levels is expected to be higher than on lower levels within
the administration that have less or no interfaces with external bodies or stakeholders. Therefore
the planned empirical study will survey these top hierarchical levels of strategic management.
4. Methodology for empirical research – three-tiered survey
To answer the posed research questions, a three steps approach is planned for the empirical
study about the implementation status of strategic management in Germany’s biggest cities.
Based on the developed strategic management framework, the existing strategic management
activities including the elements which signify strategic management will be surveyed. Before-
hand, hypotheses on how the elements of strategic management are implemented will be deri-
ved from a literature review, an analysis of the general conditions for German cities and results
of previous empiric studies. These hypotheses will then be tested during the course of the study.
To validate the hypotheses as well as to answer the research questions, a three-tiered survey
will be carried out in Germany’s biggest cities:
Figure 2: Stepwise approach for empirical research
During the first phase, Germany’s 17 biggest cities (more than 300,000 inhabitants) will be
screened for hints on strategic management activities. Based on this screening only those cities
that apparently perform strategic management activities will be selected to be surveyed in more
detail during the next phase of the study. For the second phase a questionnaire will be
distributed to department heads of the selected cities. The questionnaire will not only cover
questions on the implementation of the elements of strategic management but also questions on
the personal opinion about the benefits of strategic management as well as factors that are
important for the actual implementation of strategic management.
The details of the phases will be described in the following chapters. An overview of the
focuses of the respectives phases is shown in the figure below:
Figure 3: Focuses of empirical research phases
4.1 Screening for content/ results of cities’ strategic management activities – Phase 1
In the first phase a screening will be conducted to find out in which cities strategic management
activities have actually been applied so far.
Due to the fact that the public sector is dominated by the official legalization of the public
administration authorities through law and political bodies, the official determination of
strategic content/ results is of central importance in the context of strategic management in the
public sector (Fiedler, J., 2001). Therefore the cities’ websites and other publicly available
sources will be screened for documentation of strategic management content/ results. In
addition, the mayor’s offices will be asked if any processes have been established to prepare the
city for the longer-term future and which documentation has been elaborated in this context.
Content/ results of strategic management answer the question “what” (Schedler, K./ Siegel, J.,
2005, p.105) should be done and achieved in the longer-term future. The terms outlined in the
following paragraphs are of essential importance in this context. As the overall purpose of
strategic management is to develop a continuing commitment to the mission and vision of the
organization (Poister, T./ Streib, G., 1999, p.311), these two terms will be mentioned first.
Mission: A mission statement addresses the basic question “What is our business?” (David, F.,
2007, p.11 f.) to focus on the purpose of the organization and call attention to what is important.
It can help people at all levels decide what they should do and what they should stop doing.
(Osborne, D./ Gaebler, T., 1992, p.130 f.). Especially for public administrations it is important
to look behind the mandate to see how different political aspirations are reflected in the
mandate and how the balance of political forces seems to be changing over time (Moore, M.,
Vision: Vision is the description of the state that the organization is moving to (Von Oetinger,
B., 2003, p.224 f.). The vision should thereby provide a sense of direction (Fraser, D./ Stupak,
R., 2002, p.1203 f.) that motivates and inspires the employees (Latham, G./ Locke, E., 1995,
p.2230 f.). Developing a vision statement is often considered as one of the first steps in strategic
management (Pröhl, M., 2001, p.7).
Long-term goals (≥ 3 years): Goals have a central function in strategic management which is
closely connected to management by objectives. Strategic management develops the long-term
goals for the city that guide the municipal decisions and actions (Schedler, K./ Siegel, J., 2005,
p.111). Strategic goals represent compromises between the challenges and limitations posed by
environmental and organizational factors (Streib, G., 1991, p.14). For efficient management,
goals should be stated with some precision, or their attainment can never be properly evaluated
(Hatten, M., 1982, p.97.). Especially for public agencies that are typically not entirely clear
about their goals, the determination of indicators to measures the achievement of these goals
further supports this effort (Osborne, D./ Gaebler, T., 1992, p.146 f.).
Strategy: “Strategies are the means by which long-term objectives will be achieved.” (David,
F., 2007, p.13). It is the plan that points out the way from the starting point to the goal. It can
also be described as the fundamental long-term behaviour of the organization towards its
environment to achieve the long-term goals of the organization (Arentzen, U., 2006, p.323).
The part of this consistent pattern that has never been consciously determined and just emerged
is called emergent strategy. The other, consciously planned behaviour is called intended
strategy (Theuvsen, L., 2001, p.121). During the screening of publicly available documents
obviously only previously documented and therefore intended strategy can be identified.
The output of the screening phase will be an overview that can be e.g. depicted as follows:
Figure 4: Content/ results of strategic management activities (exemplary)
(≥ 3 years)
Indicators for achieve-
ment of long-term goals
= high/ = low percentage of implementation
Additional, noteworthy information on the content/ results that will be discovered during the
screening phase (e.g. frequency of document updates, variance in format and layout of the
documents, obvious different actors that elaborated the content) will also be utilized and
prepared as output of the study.
The output of this phase will not only show in which cities strategic management activities have
been applied with results but also provide a more concrete overview of the environment that the
departments in the respective cities work in.
4.2 Questionnaire for department heads on strategic management implementation –
In the second phase a questionnaire survey will be conducted that will be send out to the
department heads of the cities that have been identified as applying strategic management
activities. The purpose of this questionnaire is to get a deeper insight on how strategic
management is conducted on the city-wide and departmental level. The department heads as top
management of the cities are expected to have the best knowledge about the processes and
elements actually used on these levels.
In contrast to the first phase, the questionnaire phase will besides the content/ results address all
elements of strategic management. Additionally the department heads will be asked for their
perception of the effects of strategic management as well as for their opinion about factors that
affect the actual implementation of strategic management:
4.2.1 Opinion about effect of strategic management
At first the department heads will be asked about their satisfaction with the …
… preparedness of the city/ department to operate successfully in the longer-term future
… current processes to prepare the city/ department for the long-term future (e.g. through
planning and implementation of plans).
… contribution of current processes (effectiveness) to the preparedness of the city/ department
to operate successfully in the longer-term future
The following options will be given to determine the degree of satisfaction:
very satisfied somewhat somewhat dissatisfied very don't know/
satisfied satisfied dissatisfied dissatisfied not applicable
The results of these questions will show the subjective evaluation of the department heads
regarding the current strategic management activities. Depending on the intended volume of the
questionnaire, more detailed questions could be added. Other authors have done similar studies
on the perceived effectiveness of strategic management. One example elaborated by Gregory
Streib is shown below:
Table 1 “Perceptions of the usefulness of strategic decision making"
Source: Streib, G., 1991, p.18.
4.2.2 Actors involved
The next section of the questionnaire will address how different potential actors are involved in
the strategic management process. Based on the types of involvement developed by Lazes
(Lazes, P., 1995, p.12 ff.) three levels of involvement were defined and that will be used for in
actively contributing confirming elaborated con- no
in elaboration of tent/ results (with only minor involvement
content/ results requests for adjustments)
The results will show which actors are how intensely involved in strategic management.
Exemplary for the formulation phase this might be depicted as shown in the exemplary graph
Table 2: Actors involved in strategic management (exemplary)
0-10% 10-20% 20-30% 30-40% 40-50% 50-60% 60-70% 70-80% 80-90% 90-100%
City council (incl. committees)
Department top management
Department middle managem.
Internal planning specialist
(e.g. controller, strategic planning division)
External planning specialists
(e.g. process or strategy consultants)
External functional experts
Other persons or groups
= actively contributing in elaboration of content/ results
= confirming elaborated content/ results (with only minor requests for adjustments)
= no involvement
4.2.3 Instruments applied during the formulation phase
The third section of the questionnaire will focus on the instruments applied for strategic ma-
nagement. As mentioned before, the instruments applied during the formulation phase differ
significantly from the implementation phase. Therefore the instruments used during the formu-
lation phase will first be analyzed separately to find out to which extent they are used. Explicit
questions deal with the analysis instruments that were identified as commonly associated with
strategic management during the literature review:
Table 3: Analysis application during formulation phase (exemplary)
not little some much don't know/
used usage usage usage not applicable
0 1 2 3 4 5
(needs & concerns)
(opportunities & threats)
(strengths & weaknesses)
As other authors have also analyzed the use of instruments in municipal governments, it might
be possible to compare the results in Germany to those in e.g. America:
Figure 5: “Reported Use of Elements among Respondents”
Source: Poister, T./ Streib, G., 2005, S. 48.
To ensure that no important point will be missed, an open question at the end will ask which
other instruments are used. This holds true also for the following sections.
4.2.4 Content/ results elaborated and instruments used for implementation
The third section of the questionnaire will address the implementation phase of strategic
management. As the content/ results elaborated and the instruments to implement them are
closely related, these two areas will be examined conjoinedly.
Content/ results have already been discussed in Chapter 4.1 on the city-wide level. In the
questionnaire phase the focus will shift to the departmental level. Due to the fact that an
existing city-wide strategic management frames the departmental strategic management, the
interface of these two levels will of course also be considered.
The existence of content/ results on departmental level as well as its appraisal by the
department heads for the long-term health of the department will be of interest in the
Table 4: Analysis application during formulation phase (exemplary)
does exists exists very im- impor- some- not im- don't
not but un- and is portant tant what im- portant know/ not
exist written written portant applicable
Definition/ explanations will be provided
Regarding the usage of implementation instruments, all questions will be posed according to the
scale shown in Table 3 on page 10. The conducted literature review already provided a consis-
tent impression of instruments associated with strategic management: The most frequently
mentioned instrument to support implementation is the connection between strategy and
budget. To establish this relation between strategic plans and resource decisions is considered
essential for the implementation (Eadie, D., 1983, p.448; Chandler, A., 1970, p.11 ff.).
Therefore it might be useful to break down e.g. strategic goals into shorter-term objectives that
are synchronized with the mostly yearly budgeting processes (Osborne, D./ Gaebler, T., 1992,
p.160 ff). Poister and Streib included the aspect of connecting strategy and budget in their study
by giving certain options on how strategy was taken into account for budget decisions:
Table 5: “Cities Linking Budgets to Strategic Plans”
Source: Poister, T./ Streib, G., 2005, S. 49.
Other often mentioned instruments for implementation are the determination of performance
measures for the achievement of goals (Poister, T., 2005, p.1053; Dumon Du Voitel, R., 2001,
p.189) and the installation of a reporting system to monitor the progress of implementation
(Javidan, M./ Dastmalchian, A., 1988, p.101 f.; Eadie, D., 1989, p.168). Poister and Sreib also
included these aspects in their study:
Table 6: “Cities Linking Performance Measures to Strategic Plans”
Source: Poister, T./ Streib, G., 2005, S. 50.
Due to the overlap between the planned questionnaire and existing studies regarding these
topics it might even be possible to evaluate the implementation status in Germany’s biggest
cities in the light of previous, empiric research.
Another implementation aspect that was mentioned in the strategic management literature quite
often is the explicit assignment of responsibility for the achievement of goals to individuals
and the importance of cascading this responsibility down into the organization (Poister, T.,
2005, p.1053; Casey, W./ Peck, W./ Webb, N./ Quast, P., 2008, p.98).
Furthermore, the reviewed literature showed that the development of action plans is also
considered as important implementation instrument. Some authors explicitly see the definition
of milestones or the determination of deadlines as relevant in this context.
The output to be generated from this section will be based on the pyramid used in chapter 4.1. It
will be extended with implementation instruments and applied on the departmental level:
Figure 6: Content/ results and implementation on departmental level (exemplary)
(≥ 3 years)
Indicators for achieve-
ment of long-term goals
Implementation 10% 30% 20% 10% 20%
determinations Shorter-term Budget Responsible Action plans Reporting/
objectives bro- dedicated to persons developed Monitoring
ken down from goals determined installed
= high/ = low percentage of implementation (more than “little” usage)
4.2.5 Factors that affect the actual implementation of strategic management
Based on the literature review, certain factors that were considered to be relevant for the actual
implementation of strategic management were identified and formulated as hypothesis. The
department heads will be asked if these factors existed in their organization and how they them
regarding the importance for the implementation:
Table 7: Factors influencing the implementation of strategic management (exemplary)
suffi- not suffi- don't very im- impor- some- not im- don't
ciently ciently know/ not portant tant what im- portant know/ not
existent existent applicable portant applicable
More detailed explanation will be provided
As in the other sections of the questionnaire, an open question regarding other factors will be
posed to ensure that no important aspect will be missed.
4.3 Interviews with department heads on details about experience with strategic
management – Phase 3
In the third phase of the empirical study deepening interviews with selected addressees of the
questionnaires (see phase 2) will be conducted. The topics for these interviews will cover
noticeable areas of interest based on phase 1 and 2. Accordingly, the selection of the
department heads as interviewees will depend on their contribution to these topics.
The topics could e.g. comprise more details on how exactly different actors participate, how a
certain process phases work or how the reporting systems are set-up. This qualitative
enhancement of the study will further substantiate and supplement the findings about the status
of strategic management in Germany`s biggest cities.
As output of this phase case, examples will be given to back up and specify the outcomes of the
first two phases. Therefore relationships to these outcomes will be established and descriptions
of e.g. process details will be given.
5. Expected results and intended contribution
The findings of the survey will be compiled, interpreted and if necessary discussed with experts
to draw final conclusions. Concluding, the research questions will be answered and the hypo-
theses made beforehand will be validated.
The outcome of the study should consequently be an overview of the implementation status of
strategic management in Germany’s biggest cities. This overview should map the activities con-
ducted in the framework of strategic management and corroborate the activities with examples
from the cities surveyed in more detail. The criticism that the new public management activities
in Germany are still missing a holistic, strategic approach could then be evaluated more sub-
stantiated and potentially existing deficits could be pinned down objectively and concrete.
Furthermore the results should show which elements of strategic management are applied and
valued by the public managers and thereby give other public managers helpful suggestions
which activities are worthwhile to be pursued.
The same purpose of giving helpful suggestions to practitioners should be accomplished
through the presentation of factors that were seen as relevant for implementing strategic
Overall the results should give a more transparent, structured picture of strategic management
performed in German cities and thereby give a better basis for future activities of practitioners
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