Public Administration CommitteeWritten evidence submitted by Professor Andrew Kakabadse (ST 18)

I understand that PASC is still collecting evidence concerning strategic thinking and capability in government. I provide below the results of my global research study on the Strategic Capability of top private sector managers and also senior public servants. My database now stretches to many thousands of organisations in the private, public and third sectors spanning 21 countries. Despite differences of culture, religious tradition and national economic circumstances, very particular trends have emerged concerning strategic thinking, strategic design and effectiveness of implementation of strategy for both private and public sector organisations. In fact, three key areas of concern have emerged from this series of global studies.

Strategic Alignment

In terms of defining strategic direction, approximately one third of the world’s top teams are divided on the vision and mission of the organisation (see Appendix 1). In fact, from 20% of the top directors of the UKs National Health Service organisations to 56% of top public servants of the Australian Federal Government, these executives recognise that fundamental divisions exist within their top teams concerning the future, vision, mission, purpose and strategy to pursue on behalf of the organisation, yet do little. Commitments made are frequently broken by the members of the top team, leaving the organisation vulnerable to merger/takeover, inefficiency, a demotivated management and staff and ultimately the demise of the organisation. However, organisation demise is slow. Such a state of affairs can continue for an extensive period of time unless the leadership of the organisation decide to attend to the strategic tensions that exist in their enterprise. What makes improving the situation and realising strategic alignment difficult is the fact that each of the directors likely holds a well developed and logical view concerning the future but the range of views expressed clash with each other. So the challenge is how to align a spread of logically developed perspectives on strategy that unfortunately do not synthesise well.

Dialogue

Under circumstances of continued strategic tension at the top level of the organisation, the ability of the members of the top team to enter into meaningful dialogue becomes a vital consideration. My global strategic studies indicate that from 36% of French private sector executives through to 80% of top Chinese directors, senior managers find it difficult to raise “the uncomfortable issue” (see Appendix 2). In fact, all of the directors interviewed and questionnaired identified the issues that should be discussed but stated that these issues were too sensitive to air in the top team and so remained suppressed. Thus, concerns are continually neglected. Through inaction top managers knowingly allow the organisation to deteriorate fully aware of the consequences of so doing. The studies also indicate that top directors/senior public servants can see in detail the consequences of their lack of action 70 months into the future and still do nothing.

Communication within Organisations

These global studies further identify that winning the trust of the senior general management population (ie just below the top team/senior public servant population underneath the Permanent Secretary) is also a process fraught with tension (see Appendix 3). On a number of dimensions, such as the ability to communicate consistently, build trust, display Cabinet responsibility and be a credible strategic thinker in the eyes of the senior general management population, most top directors rated themselves as high in these above areas. In contrast, those general managers tasked with implementing strategy considerably under rate their bosses. The implication is that strategy is poorly implemented.

Overview

As indicated damaging organisational tension continues for many years into the future. My studies clearly show that private sector organisations do not immediately go bankrupt due to poor strategic design and ineffective implementation. The organisation “soldiers on” but eventually collapses or is taken over by a predator. In the public sector the same occurs but without corporate takeover. The result is poor service delivery becomes a cultural norm. It is under these circumstances that public sector bodies tend to be unduly manipulated by private outsource providers who offer poor service but charge high fees continually.

My global studies clearly point to the need for serious consideration to be given to Engagement and Alignment. The studies pinpoint to the fact that high performing organisations adopt their own approach to realising effective Engagement and Alignment by uniquely positioning themselves to fully exploit the strengths and capabilities of the enterprise. How can the national interest be best defined?—is a vital question which needs to be examined in relation to past performance, failures and successes, in order to fully understand how the organisation pursues strategy and should pursue strategy. In order to more effectively design and implement strategy it is important to raise those sensitive issues from the past that have remained unaddressed and hamper the development of a national (or for that matter corporate) strategy. There is no short cut to streamlining strategic design and implementation other than to surface the blockages, constraints, tensions and silo mentality in the organisation and the reasons why such problems exist. Penetrating deep conversation is the way to find appropriate ways forward. It is for these reasons that latest thinking on strategy focuses on the concept of Emergent Strategy, as opposed to clearly defined but somewhat inflexible strategic planning. The reason emergent strategy is given such attention is partly due to the need to be flexible and continuously responsive to a dynamic and constantly changing environment, but also partly because internal organisational tensions need to be worked through and resolved. Through sensitive leadership of the processes of Engagement and Alignment, strategy is shown to be responsive to external and internal challenges and in so doing focus the organisation to realise its aims and objectives.

Interestingly, only about 33% of the world’s private and public sector entities evolve “strategy that works”. The fundamental reason for this is that what is required is a robust and yet sensitive leadership that attends to the tensions and difficulties that previously remained unresolved.

January 2012

Prepared 20th April 2012