Strategic planning in government-dependent businesses

Abstract

As the role of government has expanded in various countries, standard distinctions between the public and private sectors have become blurred. This paper explores the special context within which strategic planning must take place in organizations with a very high dependence on government. Four types of government dependency are considered: ownership dependency (public enterprises); regulation dependency (private, regulated firms); input-dependency (e.g. non-profits dependent on state funding); and output-dependency (e.g. defence contractors who sell a considerable portion of their output to governments). Despite their seeming differences, all four types of government-dependent organizations (GDOs) experience five distinctive problems that seriously limit the relevance of traditional planning models (or what are often referred to as ‘rational, comprehensive models’). They are: fragmented strategic decision-making authority; heightened goal ambiguity; politicization of strategic decision-making; short-term orientation and internal bureaucratization. The concepts of strategy and strategic planning are as relevant to Government dependent organizations (GDOs) as they are to other kinds of firms, although the planning system has to be designed somewhat differently. Six tentative guidelines for designing the planning system in GDOs are presented in the paper: (1) plans must be ‘negotiated’ rather than ‘formulated’ in GDOs; (2) outsiders must be involved in the planning process; (3) socio-political issues must be integrated with technoeconomic tissues; (4) top management must play an active role in running the system, especially in managing interfaces with government; (5) the planning system should emphasize flexibility over discipline or rigor and (6) plans must be written up with the expectation that much of their contents could become public knowledge. The paper concludes with the view the GDOs may have a lot to learn from one another despite superficial differences in institutional status (public vs private) and nature of goals (for- profit vs not-for-profits).