Health services will generally have a Strategic Plan on their website. Find such a Plan (your favourite search engine will help) and include the URL link in your post, so that all of us can read it as well. Given what you have read and learned in this Module, what is your view about the quality and usefulness of your selected strategic plan? What do you think was the purpose of the Plan? Can you find any evidence of consumer engagement in the Plan?
10.1 | Strategic planning
The process of strategic planning is, in itself, a change intervention. The outcomes of strategic plans usually change initiatives, even if those changes are not identified as such. That is why we will now consider the roles and process for developing strategic plans. A strategic plan is ‘an integrating set of ideas and concepts that guide an organization in its attempts to achieve competitive advantage over rivals.’1
‘Planning is the design of a desired future and of effective ways of bringing it about.’2
Strategic planning is perhaps the sine qua non of the organisation as a rational entity. The purpose of strategic planning is to do the following:
1. Set the direction for the organisation’s future. Strategy is a plan.
2. Focus the effort of the component parts of the organisation to achieve that desired future. Strategy acts to integrate and control organisational activity.
3. Define the organisation to its internal and external constituents in terms of what it seeks to do and be. Strategy is position (by determining the organisations products and their markets), and strategy is perspective (in describing the way the organisation does things).
4. Provide consistency of view about the organisation and its future. Strategy is a pattern of organisational behaviour that seeks to reduce uncertainty and ambiguity and hence make sense of what the organisation is and does.
The core assumption of strategic planning is that organisations, their members, and their environment are rational. This leads to the commonly held view, in the words of the planning critic Aaron Wildavsky3 (quoted in Mintzberg4), that ‘planning is good because it is systematic rather than random, efficient rather than wasteful, coordinated rather than helter-skelter, consistent rather than contradictory, and above all, rational rather than unreasonable’. Woe betide the ambitious young healthcare executive who would promote the alternative view. But, as we will discover, all is not so rational in the organisational world, and this irrationality has profound consequences for the role and process of strategic planning.
Not surprisingly, the literature presents a plethora of strategic planning models, some reflecting prevailing concepts, or metaphors, of organizations, some reflecting theoretical paradigms, and some seeking to describe the observable behaviour as organizations go through the process of planning.
If you are interested in further descriptions, comparisons, and critiques of these models, see Mintzberg4 and Mintzberg et al.5
Reflection
Have you been involved in a strategic planning process? Are you aware of a strategic plan in the organisation in which you work? If so, what are/were the essential features of the plan?
In the following section, we will explore formal strategic planning as a process. This is followed by a review of the factors that compromise the capacity of this form of planning, leading to a useful typology of planning strategies. We will then explore some strategies for planning in the complex, messy world that too often faces the manager in real organizational life. Finally, we will explore two reasons for rational planning in a messy world – planning that appears rational to external stakeholders and planning for organizational control.
10.2 | Conditions for formal strategic planning
If the following conditions apply in an organisation, then the organisation can engage in classical formal strategic planning:
• The environment is understood and predictable.
• There is complete understanding of the technology of the transformation process (the tasks the organisation performs to convert inputs into outputs).
• There is an effective hierarchy of control.
10.2.1 | Characteristics of formal strategic planning
A number of models of formal organisational strategic planning, of increasing levels of complexity, have been promoted over the years. They tend to share the following core, cyclic characteristics:
A. The organisation establishes objectives. These objectives are set by the top echelon and promulgated, as a mandate, down the hierarchy. Objectives should be clear, unambiguous, and preferably quantifiable.
• Objectives are typically set following a top-level analysis of the organisation’s environment for threats and opportunities, leading to an identification of the organisation’s key success factors. Similarly, the organisation’s internal strengths and weaknesses are analysed, leading to an identification of its distinctive competencies. This is sometimes called a SWOT analysis (strengths, weaknesses, opportunities, threats).
• Formal checklists often accompany each of the analyses (see Box 10.1).
• In developing its objectives, the rational organisation seeks to find the ‘best fit’ between its distinctive competencies and key success factors. It has been argued that organisations find this best fit, in the minds of consumers, by competing through lower cost, higher product differentiation, or by establishing a distinctive niche in the marketplace.6
(The remaining core, cyclic characteristics continue on the next page of this workbook.)
Box 10.1 The elements of a SWOT analysis
1. Societal 1. Marketing
a. Changing consumer preferences a. Product quality, number, and differentiation
b. Demographic trends b. Market share
2. Governmental and regulatory c. Pricing policies
a. New legislation d. Distribution
b. New enforcement priorities e. Advertising and promotion
3. Economic f. Customer service
a. Cost of capital g. Sales force
b. Growth h. Market research
c. Exchange rates 2. Research and development capabilities
4. Competitive 3. Management information systems
a. New technology a. Quality
b. New competitors b. Timeliness
c. New products c. Responsiveness
d. Pricing changes 4. Management team
5. Supplier a. Skills and experience
a. Changes in input costs b. Value congruence
b. Availability c. Coordination of effort
6. Market 5. Operations
a. New use of products a. Control of inputs
b. New markets b. Capacity
c. Product obsolescence c. Cost structure
d. Inventory control
e. Quality control
6. Finance
a. Financial leverage
b. Balance sheet ratios
c. Stockholder support
d. Tax situation
7. Human resources
a. Employee capabilities
b. Personnel systems
c. Turnover
d. Morale and industrial relations
e. Development
Source: After Power DJ, Gannon MJ, McGinnis MA, Schweiger DM. Strategic management skills. Reading, MA: Addison-Wesley; 1986, 387 quoted in Mintzberg H, Ahlstrand B, Lampel J. Strategy safari: A guided tour through the wilds of strategic management. New York: The Free Press; 1998.5
10.2.2 | Characteristics of formal strategic planning (cont.)
B. Having promulgated the objectives, a formal plan of action is developed through the organisation’s hierarchy to achieve these objectives. This plan may include the following:
o program (or project) plans dealing with specific initiatives (including capital budgets)
o operating plans dealing with the activities of formal sub-components of the organization (for example, departments), including operating budgets.
The plan is implemented – this is the work of management.
C. Implementation is evaluated, either through structured managerial feedback (as in management by objectives) or by specifically designed management information systems reporting to the top. Occasionally, the organisation may establish a formal review, which often uses external consultants.
D. The planning cycle is repeated with objectives reviewed in the light of the evaluation. The organisation might have a formal ‘planning department’, employing professional ‘planners’, tasked with facilitating each of these steps.
10.3 | Scenario: Central bankers – Can they do strategic planning?
In preparation for your next individual activity, a reflection blog, read the following:
All at sea
Over the years, central bankers have popularly been referred to as captains, admirals, pilots, and life-boatmen. Implicit in all these nautical titles is the assumption that central bankers know exactly where they are heading, how their craft (that is, the economy) works, and how their actions will affect its course. Yet in reality, central bankers have more in common with early navigators. They operate in a world of huge uncertainty, with no reliable maps or compasses. Because of lags in the publication of statistics, they do not know precisely where the economy has got to even today, let alone where it is going. And some of the policy dilemmas they face are the equivalent of not knowing whether the earth is round or flat.7
The preceding quote is from The Economist in 1999. 10 years later, the central banks had to play a major economic recovery role in response to the Global Financial Crisis of 2008, undoubtedly something they did not foresee, but did contribute to.8
10.4 | A typology of planning and planning under conditions of high uncertainty (non-synoptic systems change)
Why does it seem so difficult for organisations to plan rationally? This is the topic of the following activity.
A typology of planning and Planning under conditions of high uncertainty (Non-synoptic systems change)
Slide 2:
The literature that focuses on observing how planning is actually done in organizations, rather than on prescriptions of how it should be done, observes that two key dimensions shape the planning process. These are
• • uncertainty about the ‘what’ of planning, including consensus about objectives because of diversity of values and agendas; and
• • uncertainty about the ‘how’ of planning, including uncertainty about the environment and the organization’s work processes.
Slide 3:
Planning strategies have been mapped against the range of these two dimensions of uncertainty by Pava, which provides a useful heuristic.
When there is ready consensus between stakeholders about ‘what’ to plan for, objectives can be set in clear and unambiguous ways. This situation is more likely to occur when there are fewer stakeholders. (The more there are, the more likely there will be differing values and agendas brought to the task.) The less interdependence there is with the environment, the fewer external stakeholders, and the less interdependence within the organization, the fewer internal stakeholders.
The obverse applies with greater interdependence resulting in more likely divergence amongst stakeholders – there are usually more of them and more is at stake.
When stakeholders have diverse values about objectives, setting objectives becomes the battleground where one has to ensure that one’s values prevail. Once the ‘wrong’ objectives are set, the battle is lost. Prevailing is a matter of power, or politics. Perhaps this is why so much effort goes into the front-end of strategic planning and so little comes out of it?
Slide 4:
To develop strategy in circumstances of high uncertainty about ‘what’, the process must include methods of resolving conflict. This may be achieved by ‘power plays’ that over-ride the interests of some stakeholders. Remember, in circumstances of conflict about ‘what’, any choice means siding with one stakeholder(s) at the expense of others. The risk is that those stakeholders who are disenfranchised will withdraw or offer passive resistance (or even engage in guerrilla warfare) against the implementation of the strategic plan. After all, implementation of most strategic plans is done throughout the organization by middle management.
Slide 5:
The cost to the organization of stakeholder withdrawal depends on the criticality of the involved interdependence and/or the extent to which they can be substituted. For example, ignoring the objections of the Head of the Anaesthetic Department may have little consequence if anaesthetists are easily replaced. It may be risky for the organization to do so if anaesthetists are
MPH5304 Leading and managing in public health and health care
in short supply and the offended anaesthetist and colleagues ‘take their marbles and go home’. Ignoring the needs of Department Heads may lead to passive resistance with budget control, for example.
Slide 6:
Therefore, in circumstances of conflict about the ‘what’, strategy planning needs to incorporate processes that lead to consensus about the ‘what’ if it is to maximise support and compliance from stakeholders.
Slide 7:
(Test your understanding)
Slide 8:
Assuming, for now, that there is consensus about the ‘what’ of a strategic plan, the next step is to determine the actions that are to take place to achieve that ‘what’ – the ‘how’.
Sometimes achieving the objective involves actions that, although they may be complex, are known. Manufacturing a motorcar is a complex set of steps that are, however, well known – so much so that the process can be engineered in an almost automatic assembly line.
Building a hospital is more complex and customised, but the steps and their sequence are well known. Deciding on a new car design to manufacture, or determining how to decide where a new hospital should be built, is more problematic.
Slide 9:
What happens to the process of strategic planning if the tasks required to achieve a ‘what’ have high levels of uncertainty? When this occurs, the process of strategic planning must incorporate learning. Tasks will need to be performed as experiments to see if they work.
Slide 10:
A number of writers have described various planning methods that incorporate consensus building, when there is uncertainty about ‘what’, and learning, when there is uncertainty about how. Of course, if there are both uncertainties about ‘what’ and ‘how’, the planning process will need to both build consensus about the ‘what’ and learn the ‘how’.
(Click each box to learn more and gain access to the next slide.)
Slide 11:
Unfortunately, much strategic planning, because it is high order planning, occurs in the context of high uncertainty about both ‘what’ and ‘how’. You will soon be learning more about the consequences of this. First, what is an effective planning process in this context? Second, how else might the planning process be affected? Because of the difficulty (impossibility) of planning rationally in this context, strategic planning takes on other purposes.
Slide 12:
(Follow the instructions to test your understanding and gain access to the next slide.)
MPH5304 Leading and managing in public health and health care
Slide 13:
As we have already explored, classical formal planning is problematic in contexts of high uncertainty about ‘what’ to plan and ‘how’ to achieve the plan.
In fact, efforts to establish clear objectives, as the first step of the rational planning process, often have the effect of derailing the whole process as stakeholders scramble to achieve their objective, at best, or to defend against another stakeholder achieving their objective. In any uncertain situation, with many theoretical outcomes, stakeholders under threat tend to fantasise that the likely outcome will be the worst they can imagine. It is this worst outcome that stakeholders will defend against. For example, if two organizations are merging, the worst outcome for a staff member is that they will be retrenched. Not surprisingly, the first reaction to such an announcement is industrial action about job security.
Slide 14:
So what works in these circumstances? Pava, amongst others, has observed successful implementation of strategies in a number of circumstances. The process has been described as nonsynoptic systems change.
Classic formal planning is described as synoptic in that a logical progression from objectives, to plan, to implement, to evaluate, enables a comprehensive mental view, or synopsis.
Non-synoptic implies an emergent, unpredictable, and even chaotic process that has to be lived to be understood.
This planning typology would suggest that classical formal strategic planning would only appropriately occur in contexts of low uncertainty about ‘what’ and ‘how’. However, one observes efforts at strategic planning in the full range of contexts. Why might this be so? Organizations seem to engage in formal planning for a variety reasons, either to appear to be rational, or as a mechanism of organizational control.
Take a moment to click on each step in the non-synoptic systems change to learn more.
Slide 14, Step One:
Themes are ambiguous, vague statements of organizational direction, often hinting at qualitative improvement. Their vagueness invites skepticism, but they are so good (‘Mum and apple pie’) that who could disagree? Leaders articulate them; this gives them legitimacy. However, they are often externally inspired, implying a fundamental change in values, a qualitative discontinuity, something really new. Some examples of themes are
• • ‘improving the quality of patient care’;
• • ‘an integrated service system’; and
• • ‘a stronger Victoria’.
In this way, themes are the antithesis of the clear, unambiguous, measurable objective of formal planning. The reason themes have these characteristics is that their vagueness enables a range of stakeholders to mobilise to act in the name of the theme. (They must be vague but relevant enough to engage at least the main stakeholders). The key is to engender action in the name of
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the theme. Leaders may need to ask stakeholders to suspend disbelief in the theme until they have acted.
Slide 14, Step Two:
Typically, a new structure, often in parallel with the existing organizational structure, is established by the leadership to pursue the theme. Action, usually described under the name of the theme, is legitimised, resourced, and encouraged. Rather than coordinated action flowing down the hierarchy, these action steps usually occur in a decentralised, ad hoc manner, often by specially created groups, such as ‘task forces’ or ‘planning groups.’ The action steps often take the form of ‘prospecting’, looking for, and following up on successful initiatives – rather than a carefully thought through predetermined sequence of actions.
Slide 14, Step Three:
During the action steps, leadership engages in and promotes reflective matching throughout the organization. This consists of repeated, and often public, events and communications that describe the actions taken, the results achieved, lessons learnt and how these link to the theme. This is done to give meaning to the theme, to make sense of the theme. The theme is further defined by the actions that are taken in its name. Organizations talk in order to discover what they are saying and act in order to discover what they are doing.
The theme of ‘better patient care’ starts to mean the actions that are taken to achieve it. In this way, the theme evolves and matures, becoming more sophisticated and relevant. Actions determine and describe the objectives, rather than the other way around. Reflective matching is not a passive process; it is the key component of the leadership’s contribution.
10.5 | Formal strategic planning in uncertain conditions
The planning typology outlined in the activity on the preceding screen would suggest that classical formal strategic planning would only appropriately occur in contexts of low uncertainty about ‘what’ and ‘how’. However, we observe efforts at strategic planning in the full range of contexts. Why might this be so?
Organisations seem to engage in formal planning for a variety reasons that fall into two categories: either to appear to be rational or as a mechanism of organisational control.
10.5.1 | Planning to appear rational
Some people suggest that strategic planning is just a ploy organisations use to appear rational. ‘Planning is not done for what it accomplishes, but for what it symbolises – rationality.’
Connected to this notion is the observation that many organisations only produce a formal strategic plan when required to do so to meet an external need. Most typically, this will be when a firm needs to access external capital, through either a bank or the equity market. On these occasions, planning is not used to ‘create strategy so much as program a strategy that already existed’.4
Health services are often required by their Acts to engage in formal strategic planning. For example, Ambulance Victoria, for which I have been Chair of the Board of Directors, is so required under Section 25E(1) of the Ambulance Services Act 1986: ‘The Board of an ambulance service must, at the direction of the Minister … prepare and submit to the Minister for approval a strategic plan for the operation of the ambulance service.’
Scenario
A local Victorian example of this symbolic reason for planning was the development of “A healthier future: a plan for metropolitan healthcare services”.
Melbourne’s (then) six Metropolitan Hospital Networks were established in August 1995 after a special Government inquiry resulting from the political crisis associated with the implementation of severe budget cuts. The view was put that while operating as 35 individual hospitals, there was no incentive for services to be rationalised, yet alone transferred to the under-resourced peripheral population growth corridors. Furthermore, the implementation of the budget cuts through a case-mix funding formula meant that all hospitals were suffering ‘pain’. Wouldn’t it be easier if one or more inner city hospitals were closed and the resources saved used to meet the budget cut, with what remained transferred to areas of need? This would have the political advantage of limiting the ‘pain’ to one or two seats, rather than to the whole metropolitan area.
As part of a rationalist, prescribed governance agenda, the new networks were required to produce strategic plans within six months. The networks embraced this planning task with a variety of strategies. Some established central planning teams, with more (or less) consultation. Some engaged in non-synoptic processes. One month before the strategy plans were due to be submitted, the Government called an election, and all further planning was forbidden. Where networks had engaged external stakeholders in the strategic planning process, any emergent strategies that were controversial (for example, closure of a hospital) became part of the electioneering, sometimes placing the idea and its proponents at risk. In the event, the Government was returned to power, a new Minister appointed, and the strategy planning restarted.
When the aggregated network strategy plans were finally released, towards the end of 1996, 50 specific strategies were identified. In 19 of these strategies, ‘maintaining current role’ was the main feature. Three strategies involved the closure of small insignificant community hospitals under the euphemism of ‘relocate services’. The remainder were essentially capital works proposals.
The strategic plans were hardly an articulation of a desired future and the means of achieving it. Rather, they responded to the political needs (public relations) of the time and provided the basis on which the Department of Human Services was able to deal with its banker, the Department of Treasury and Finance.
10.5.2 | Planning for control
Many people have noted that strategic plans (and their incorporated capital plans, program plans, and budgets) often primarily articulate the known status quo, or very marginal adjustments thereto.
Plans ‘provided a mechanism through which earlier strategic decisions were confirmed’; in other words, planning helped to codify as well as formalise and calibrate ‘agreed-upon goals, commitment patterns, and action sequences’.4
10.6 – Reading | Chapter 10
Read Chapter 10, “Strategic Thinking and Achieving Competitive Advantage” in your textbook.
10.7 | Formal planning in public health
For students focused on public health, a strategic planning model called ‘Logic Model’ is often used. You can find a guide to this model in the following reading:
W.K. Kellogg Foundation: Logic Model Development Guide. W.K. Kellogg Foundation; 2004.
10.8 | Consumer Engagement
(This Section written by Peter Bradford)
It is appropriate to complete the topic of Strategic Planning, and our Subject of Clinical Leadership and Management, with some commentary on the role of consumers in health care leadership and planning (and management).
10.8.1 | Reading
In your textbook, read pp. 401-2 and 408-13 in the Chapter on Consumerism and Ethics. Note the American perspective.
10.8.2 | Consumer Engagement in Recent Times
Hospitals were of course once “owned” by the community. Many not for profit hospitals in particular still retain this local or charitable ownership and of course we all “own” public hospitals which are largely funded by the tax payer. Prior to the 1970’s in Australia, the concept of hospitals as doctor’s “workshops” and bureaucratic management structures left little room for consumers in the management of hospital and health services. Hospital boards of course were made up of health service consumers but these largely took up a managerial rather than a consumer advocacy or advisory role.
When I started managing hospitals in the early 1980’s it was common for hospitals to have consumer advisory committees, howsoever named. These would meet once a month and reports would be given by the Executive on topics which were thought might be of interest to the committee, questions would be asked and answered. Advice and advocacy might be given by the committee to the Executive but this was about as far as consumer engagement went.
More recently, engagement has significantly developed in health care organisations and this was in part in response to the rise of consumerism and in particular with the development of social media. More specifically related to health, the rise of the clinical governance movement emanating from major patient safety issues in Australia, United Kingdom, and the United States of America has seen the development of a philosophy that consumer engagement in patient safety is not only beneficial but critical in improving safety and quality in hospitals9.
In Australia, the leadership of the Australian Council on Healthcare Standards has been critical since its inception in the 1970’s in requiring structures, processes, and outcomes for consumer engagement through its Accreditation program. More recently, the Australian Commission on Safety and Quality in Health Care has made consumer engagement and partnership mandatory through Standard 2 “Partnering with Consumers” of the National Safety and Quality Health Standards10.
9Berger Z, et al. BMJ Qual Saf 2014;23:548–555. doi:10.1136/bmjqs-2012-001769
10National Safety and Quality Health Standards; Australian Commission for Safety and Quality in Health Care; September 2012
10.8.3 | ACSQHC Partnering with Consumers Standard
The Australian mandatory Standard is surveyed every 2 years and requires structures, processes, and outcomes relating to consumer partnerships including:
• Governance structures for partnerships with consumers; usually through a consumer advisory committee of the Board
• Relevant policies, procedures, and protocols
• Orientation and training for consumers
• Consultation with consumers on issues such as patient information, consent processes, care design processes, and on safety and quality
• Training for managers and staff on consumer engagement and partnerships
• Reporting to consumers on safety and quality performance; in Victoria through an annual report to the community
• Engaging consumers in design and analysis of safety and quality structures, processes, and outcomes10.
Do you know what ACSQHC is – look it up!
10National Safety and Quality Health Standards; Australian Commission for Safety and Quality in Health Care; September 2012
10.8.4 | An inclusive approach to consumer engagement
Through the above influences, consumers have become much more visible in organisations.
Apart from the consumer advisory committees; consumers are now regularly seen as contributing and critical members of quality and safety committees in particular, including infection control and patient safety committees howsoever named. Some organisations now involve consumers in the answering of complaints about the organisation, or at least in the review of responses to complaints from a consumer perspective.
Consumer involvement on the design of facilities has become mandatory, and organisations will now quite often have an Executive responsible for overseeing consumer partnerships in the organisation.
Consumer engagement is also beginning to be incorporated in legislation. Mental health is a leader in this area and it is interesting to note that the most recent update to the Victorian Mental Health Act in 2014 focuses on people with a mental illness and their carers being at the centre of decision-making about their treatment and care.
In addition the development of a peer volunteer workforce for mental health patients is encouraged in the new Act.
So consumers are increasingly being involved in engaging with health services as well as supporting clinical care….
https://www2.health.vic.gov.au/mental-health/practice-and-service-quality/mental-health-act-2014
10.8.5 | What can clinical leaders do to promote consumer engagement?
Much of the activity in consumer partnerships and engagement to now has occurred at an organisational level.
However, clinical leaders can promote consumer engagement at the service level through:
• Being open to initiatives and advice emanating from your organisations consumer advisory committee
• Offering to meet with the committee and brief consumers on your service
• Approaching the committee to see if the committee can provide advice on your service
• Ensuring that service design, including the design of patient information brochures and consent information, has input from consumers
• Ensuring that all complaints about your service are answered with an eye to the perspective of the consumer and in language which is accessible to the consumer
• You might want to consider having a consumer attend your service management committee.
10.8.6 | Consumers and Strategic Planning
As we have seen above; strategic planning can have many outcomes; but one important outcome is to engage consumers in the planning of services for your organisation. It would be rare nowadays for consumers not to be significantly involved in the development of a strategic plan, and structures are created within the project plan to develop a strategic plan for significant consumer partnership and engagement at all levels through community surveys, community meetings, focus groups, and significant engagement and leadership of the consumer advisory committee.