Public Organizations Embracing Strategic Management

Introduction

With the rapidly changing political and economic environments coupled with the requirements posed by globalization, governments from all over the world are faced with numerous challenges. They have to improve public services, provide higher added value, and increase accountability to be able to satisfy the ever-growing expectations of their citizens. Currently, public organizations are expected to provide the same high-quality services as private businesses do. That necessitates the public sector to transfer to innovative management frameworks.

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The UAE is the state that in recent years has demonstrated a particular interest in the public sector and motivation to make strategic shifts that would allow improving the overall performance of the government. Thus, the paper at hand is going to prove the importance of embracing strategic management practices within government departments in the UAE. Analyzing the experiences of other countries as well as particular examples of Arab organization, it will demonstrate how strategic planning can enable governmental bodies to boost organizational productivity and solve currently existing problems.

The Strategy Change Cycle will be focused upon as the major one presently used by the UAE public sector agencies. The strategy will be aligned with the country’s Agenda and Vision and compared to the strategic management of the leading countries. Finally, a personal perspective and conclusions will be provided.

Analysis of the Issue

Strategic Performance Management

Before passing to the challenges that the government sector has to face, it is necessary to investigate the nature of strategic management (planning) to make it clear what techniques it uses to resolve problematic organizational issues.

According to Bryson, strategic planning is “a deliberative, disciplined approach to producing fundamental decisions and actions that shape and guide what an organization (or other entity) is, what it does, and why” (7). In other words, it is a framework that guides leaders’ decisions in defining the course of action their organization has to take, what methods it should implement, and what goals it is striving to achieve through performing a particular set of steps. The approach stresses the importance of creating a competitive advantage over other companies in the market field. Strategic management relies on the assumption that there are no independent players in the global market. This means that no matter what strategic moves they implement, they inevitably produce a certain effect on other contestants operating in the same segment, which accounts for the importance of winning a competitive edge (Wolf & Floyd 1755). In this context, no outcome can be viewed as a game of chance as it always comes as a result of proper or improper planning. Unpredictability is brought down to a possible minimum.

Strategic management can be useful for (Bryson 8):

  • collecting, analyzing, and synthesizing various kinds of data to assess its potential impact on choosing a strategy;
  • judging about the acceptable, desirable, defensible, and feasible missions of the organization, as well as actions and initiatives concerning various projects, programs, and policies;
  • meeting organizational challenges and predicting future problems;
  • guaranteeing ongoing education of the staff;
  • ensuring public commitment.

The process of strategic management typically involves two major stages. The first one is devoted to strategy development and elaboration (taking into account all the initiatives suggested by stakeholders). During this phase, the organization must decide upon the mission it will try to follow and choose the vision that will be aligned with its present-day operations. The leader of the company can’t set goals and objectives without these preliminary steps. Thus, the company must be able to answer the following questions (Channon & Jalland 53):

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  • What were the reasons to establish this organization and what particular novelty can it bring to the industry?
  • What is the most desirable future scenario for the company? Where does it want to find itself in a particular period?
  • What particular measurable results have to be achieved to speak about success?
  • What strong and weak points does the organization have? What opportunities can it use? Are there any serious or minor threats that could undermine success?
  • What steps are to be taken to achieve the indicated goals while following the mission?

In the second phase, as soon as planning is completed, the organization has to implement the strategy in practical settings. For this purpose, it must be introduced and monitored at all levels of the organization simultaneously. It is also crucial to remember that the outcome of each step must be measured to introduce corrections if required. If the plan is developed properly, even its failure will not result in financial losses for the company.

This is the most oversimplified model of strategic management, which is rarely implemented without further elaborations and additions, which may include (Anthopoulos and Reddick 53):

  • Key competences (indicating what the organization excels in);
  • Distinctive competencies (those features of the company that make it distinctive and cannot be copied by its major market rivals);
  • Key values (shared views of all the parties involved in organizational processes);
  • Critical success factors (the major aspects that have to be monitored);
  • Leadership (important capacities of leaders).

The Importance of Strategic Performance Management in Government Sector

It has been clarified what strategic planning is, what goals it pursues, and how the actual process of strategy development occurs. However, the key question to answer is whether the approach implemented mostly by private businesses will answer the requirements that governmental bodies have to satisfy. Is strategic management important for the public sector as it is for the private one? In particular, this section aims to prove the necessity of implementing strategic planning in UAE governmental organizations.

As it has already been mentioned, the governments as the leaders of large public organizations are forced by the external environment to change their management practices. The problem is that the operations governments have to conduct are too numerous and complex and the circumstances are too chaotic to be able to control them without an effective framework of performance planning and control (Joyce 1). Effective coordination requires a multi-purpose tool (leading organizations in the right direction, providing instruments for innovation, motivating employees, etc.) that will enable the government to deal with the increasing pressures.

As far as the UAE public sector is concerned, the majority of government organizations are forced by plenty of internal and external factors to shift the focus to customers and key stakeholders satisfaction as currently the preference is given to the private sector businesses, which provide better-quality services. The leading countries in strategic management have already implemented innovative public sector strategies, which allowed them to successfully introduce drastic transformations (Anthopoulos and Reddick 61). This implies that globalization sets standards that the government cannot ignore to maintain and increase its prestige on the global political and economic arena.

Since the public sector of the country is growing rapidly, the government cannot stick to its traditional approach to managing public organizations (mostly relying on charismatic leadership). Only through proper strategic planning, it will be possible to convince citizens to opt for public services while numerous foreign businesses are enjoying immense popularity. Another function of strategic planning would be to show the commitment of the authorities to the ideas of Emiratization, which primary goal was to create opportunities for both public and private national organizations to compete with foreign one both within the country borders and in the global market (Muhammad 554). Although the initiative has been in practice for more than a decade, it does not seem to have achieved considerable results (Anthopoulos and Reddick 63). While the business environment is transforming and adapting Western practices, governmental organizations are lagging due to the absence of clear strategic goals and movement directions.

Strategic management will eliminate artificial separation that currently exists between the public and the private sector, making their missions and goals contradictory (e.g. while public organizations hire nationals, private companies prefer ex-pats as leaders). The point is that the boundaries are blurred, and responsibilities are shared (a lot of institutions have to cooperate to achieve common goals). This makes it impossible for public organizations to ignore strategic thinking and acting as they have to align with the strategies chosen by their partners.

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Finally, the reliance on oil export in the UAE is still excessive, which is visible in the diagram, reflecting imports, non-oil exports, and re-exports (in billion AED) (see fig. 1). This implies that strategic transformations of the government sector are required to boost the economy.

UAE statistics
Fig. 1. UAE statistics (Muhammad 555).

Benefits of the Strategy Change Cycle Implementation

Those public organizations in the UAE that have already adopted strategic management opted for the Strategy Change Cycle as the basic framework for transformations (see Appendix 1). The cycle includes 10 steps (Renz 242):

  1. Initiate the process of strategic planning and agree on its steps.
  2. Determine the mandates of the organization.
  3. Agree on organizational values and mission.
  4. To conduct a thorough evaluation of both internal and external environments to identify the organization’s strengths, weaknesses, opportunities, and threats.
  5. Identify what strategic challenges the organization has to meet.
  6. Develop strategies that would make it possible to cope with the existing problems.
  7. Review, correct, and approve the major and complementary strategic plans.
  8. Decide upon the organizational vision.
  9. Develop steps of the implementation process.
  10. Conduct the reassessment of the developed strategies and planning process.

The major reason to implement strategic planning is that it answers all the requirements that strategic planning must satisfy. Namely, the cycle makes it possible to (Renz 243):

  • identify the key challenges and problems that the organization has to encounter and find ways to address them;
  • determine the purpose and reach a compromise between competing or even contradictory values that affect mission and vision;
  • pay close attention to the external environment that may produce a considerable impact on all operations even if internal problems are eliminated;
  • take into account the interests of all stakeholders involved, which keeps the goals of the organization politically realistic and attainable;
  • engage board members in active decision-making and ensure support of the staff in cases of necessity;
  • build commitments of all organization members to plans through discussion and debate over all the central issues;
  • make the organization process-oriented and bring planning to a new level;
  • concentrate on pressing problems and current solutions to ensure that the organization will show improved performance in the future.

Hence, implementation of the cycle brings about appropriate actions, careful monitoring and evaluations of the process, profound learning in all organizational issues, and expected results. The key benefit is that the cycle is flexible and allows modifications by the situation. Furthermore, the success of its implementation is not measured by the final audit. On the contrary, assessment is made an ongoing process that happens at each stage.

The UAE Agenda and Vision and Its Relation to Public Organizations

The UAE Agenda and Vision 2021 is one of several long-term plans developed by the government with the purpose to make the country one of the most prosperous global economies of the upcoming years. The vision is based on four major pillars: destiny, knowledge, responsibility, and prosperity (Muhammad 554). There are numerous objectives included in the program; however, in the scope of this paper, only its connection to the development of the public sector will be considered.

Building a strong and highly competitive knowledge economy is outlined among the key issues of the National Agenda. This can be made possible only with the support of national organizations (both governmental and private businesses). It has already been mentioned that the UAE is focused on enabling its citizen to show its full potential and gradually replace ex-pats in leadership positions. Thus, strategies within Vision 2021 are aligned with the Emiratization campaign. Emiratis will be involved in both the private and public sectors to make their contribution to economic development. The government established a special department that will track the realization of the program (finding job opportunities for country nationals) and introduced quota and incentives to ensure that each organization has a minimum obligatory number of Emiratis (Muhammad 559).

As far as Vision 2030 is concerned, it is still concentrated on the economic aspect but the focus will shift to reducing the country’s excessive reliance on oil as the major export while enhancing knowledge-based spheres. For the public sector strategic management it would imply (Muhammad 560):

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  • building a favorable and proactive organizational environment;
  • introducing a new fiscal policy to keep pace with changing economic cycles;
  • improving labor efficiency;
  • attracting workforce to make government agencies as popular as private companies in the labor market.

Despite this difference in focus, Vision 2021 and Vision 2030 are interdependent and generally pursue the same long-term goals. Strategic planning will reveal its benefits if these goals are achieved.

Comparison of Public Sector Strategies of the UAE and Leading Countries in Strategic Management

To make an adequate comparison of the UAE with the leading countries in strategic management, it is necessary to outline what Emiratis have already achieved in this sphere. First and foremost, the UAE allocated 1% of the state budget to public sector innovation. Second, the government appointed a Chief Executive Officer for Innovation (with mandatory training in Cambridge). Third, they established a Center for Government Innovation to develop organizational strategies and provide all necessary tools to boost the performance of the sector. Finally, innovation labs were created in non-profit agencies to promote strategic planning and translate strategies into practice.

The leading countries in strategic management also develop their state-specific mixtures of initiatives and learn from other governments’ experience even though their achievements exceed those of the UAE.

For instance, the US government went further in an attempt to transform the public sector. A part of their new strategy is to use behavioral insights to increase the accuracy of forecasting and bring state organizations to a new level. An executive order was issued to provide guidance to agencies in such matters as recruiting behavioral experts and develop application techniques. Presidential Innovation Fellows Program is another innovation that has not yet been adopted by the UAE but is widely implemented in the United States. The government attracts experts from large technology corporations, successful entrepreneurs, scientists, and start-up founders to work for the public sector applying private business strategies. Finally, the country heavily invests in the IT aspect, which was never given much attention in non-profit organizations (Anthopoulos and Reddick 76). Low-cost software and effective IT solutions are capable of making the sector more competitive by redesigning government services.

Another country that demonstrates impressive improvements in strategy building in the public sector in the UK. Its Open Policy Making Toolkit gained immense popularity because it gave the general public access to policymaking and evaluation. This way the government makes sure that policies introduced in non-profit organizations work in real settings. Expert opinion is taken into consideration alongside with citizens’ evaluation. The UK Policy Lab uses other digital analytic tools to collect statistics and public opinion. As in the US, Behavior Insights Team is working to redesign government services. The What Works Network is aimed to assess the effectiveness of all strategic moves relating to the sector. The Horizon Scanning Program Team coordinates the work of all government departments to identify gaps and develop strategies to bridge them (Anthopoulos and Reddick 76).

Another leader in strategic management, Canada, fosters innovation in government agencies through its Innovation Hub. The Hub provides guidelines across the system and acts as an innovation catalyst. It assists organizations in implementing particular strategies, overcoming obstacles, and developing plans. Similar to the UK, the country has Policy Horizons Canada to scanning and make predictions about policy changes and opportunities that they present (Elbanna et al. 1021).

It is evident from the comparison, that the UAE still has a long way to go in strategic management. The leaders have adopted a series of practices that allow them to engage the population in decision-making. In the UAE, leadership styles still do not allow them to step away from control and guidance to collaborative strategic planning. Moreover, the use of digital tools in the public sector has not yet been made so extensive as in other countries.

Examples and Personal Perspective

To prove the importance and effectiveness of strategic management, it is necessary to analyze the experience of real UAE organizations that have already adopted it. Since I currently work for the Abu Dhabi Centre for Technical and Vocational Education and Training (ACTVET), I can dwell upon the effects of strategic management from my perspective. The organization has a clearly defined mission, vision, goals, and plans to achieve them. The major goal is defined as promoting lifelong learning to ensure that talented Emirati youth can choose rewarding career paths. As for now, the organization has achieved a lot in this direction. TVET Innovation Week made a part of the strategy managed to bridge the gap between educational institutions and industries and even led to partnerships with some businesses. This platform regularly brings together government leaders, policy-makers, experts, researchers, and students to exchange experience and strategic solutions to educational problems. Moreover, the organization promotes the YEStoWork program that increases the employability of the country national and gives labor opportunities to young people from 15 to 21 (which is aligned with the National Agenda) (ACTVET).

Another demonstrative example of the importance of strategic planning is Dubai Electricity and Water Authority (DEWA). The organization has developed a thorough strategy to achieve a world-class utility and deliver sustainable energy and water safety and efficiency. As a result, in 2016, DEWA achieved its record in customer minutes lost per year (3.28 minutes as compared to the leaders in the US and Europe) (Moonesar 23). As for losses in distribution networks and power transmission, they currently amount to 3.3% (6-7% in the US and Europe). Water losses have fallen to 8%, which is presently one of the lowers indicators across the globe. Strategic planning made it possible for the organization to reach an unprecedented level of efficiency of fuel consumption (90%), rating it the first in the Middle East and the 4th worldwide (DEWA).

Fly Dubai one more state-owned company that has achieved stunning results applying strategic management. The organization began its operations in 2009 with a plan to increase the number of destinations and passengers in several years thereby winning its place among commercial airlines. Nowadays, the company’s plans cover 85 destinations and the number of passengers attracted by moderate fares has increased from 5 to 9 million in 3 years (FlyDubai).

Thus, the examples of real non-profit organizations that have adopted strategic planning prove that this framework makes the public sector competitive with private businesses due to the combination of high effectiveness, low prices, and increasing prestige of government-run institutions.

Conclusion

The government of the UAE has managed to introduce considerable improvements not only into the private but also into the public sector during recent years. Being faced with high competition and changing political and economic environment, a lot of non-profit organizations have already shifted from their outdated control models to innovative strategic management frameworks. The results that they have achieved prove that strategic planning allows them not only to provide high-quality services competitive with private businesses but also to do it at a lower price.

However, the country still has a long way to go. As compared to the leading states in strategic management, the UAE has not yet adopted the most popular digital planning techniques that allow involving the general public in decision making. Relying exclusively on charismatic leadership may be effective for an Arab country but will significantly decrease the country’s prestige at the global level. If the country wants to continue expanding operations of its public organizations, the authorities will have to adopt innovative leadership styles based on cooperation and shared decision-making.

Furthermore, the importance of strategy building is also supported by Emiratization and National Agenda and Vision 2021 and 2030. If the country wants to build a competitive knowledge economy relying on the national labor force, it needs strong strategies that will motivate graduates to develop the public sector and take leadership roles currently occupied by ex-pats. Only this way it will be possible for the UAE to step away from its dependence on oil exports and reorient its economy.

Appendix 1

the strategy change cycle

Works Cited

ACTVET, 2017. Abu Dhabi Centre for Technical and Vocational Education and Training, 2017, Web.

Anthopoulos, Leonidas G., and Christopher G. Reddick, editors. Government e-Strategic Planning and Management: Practices, Patterns and Roadmaps. Springer Science & Business Media, 2013.

Bryson, John M. Strategic Planning for Public and Nonprofit Organizations: A Guide to Strengthening and Sustaining Organizational Achievement. 4th ed., Jossey Bass, 2011.

Channon, Derek F., and Michael Jalland. Multinational Strategic Planning, Springer, 2016.

DEWA, 2017. Dubai Electricity and Water Authority, 2017, Web.

Elbanna, et al. “Strategic Planning and Implementation Success in Public Service Organizations: Evidence from Canada.” Public Management Review, vol. 18, no. 7, 2016, 1017-1042.

FlyDubai. FlyDubai Airlines, 2017, Web.

Joyce, Paul. Strategic Management for the Public Services, Open University Press, 2010.

Moonesar, Immanuel Azaad. Dubai Electricity & Water Authority (DEWA) – Strategic Thinking & Planning. In Actions and Insights – Middle East North Africa: UAE Public Policy Perspectives. 1st ed, Emerald Group Publishing, 2017.

Muhammad Siddique, C. “A Comparative Study of Strategic Planning Practices of SMEs and Large‐Sized Business Organizations in Emerging Economies: The Case of UAE.” Strategic Change, vol. 24, no. 6, 2015, pp. 553-567.

Renz, David O. The Jossey-Bass Handbook of Nonprofit Leadership and Management. John Wiley & Sons, 2016.

Wolf, Carola, and Steven W. Floyd. “Strategic Planning Research: Toward a Theory-Driven Agenda”, Journal of Management, vol. 43, no. 6, 2017, pp. 1754-1788.

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