Understanding and Managing
Public Organizations
Chapter 7
Formulating and Achieving Purpose
Power, Strategy and Decision Making
Power: Why is it important?
• People in organizations have varying degrees of power
and authority.
• Power has implications for pursuit of goals and patterns of
effectiveness.
• Understanding power is necessary to curb its abuses.
• The definition of abuses of power depends on the
distribution of power among those who want to influence
that distribution.
Power and Politics Inside
Organizations
• External power and politics influence internal power and
politics.
• Recently scholars of management have started looking at
power inside of organizations.
– Early management theories depicted decision making as rational
choices based on comparison of alternatives.
– Social scientists now recognize that power and politics are
important factors in understanding decision outcomes.
Bases of Power in Organizations
• French and Raven (1960) provide the most
common description of power.
• Power is divide into five different forms.
1. Reward
2. Coercive
3. Legitimate
4. Referent
5. Expert
Power at Different
Organizational Levels
• Power accrues to those by virtue of positions within the
organization.
– People in formal positions often have power because
they can influence the allocation of resources.
– Top managers can control decision premises –
fundamental values or principals that guide decision
making (Simon 1948).
– Middle managers can sometimes have influence over
those above and below them. Location at hub of
information – network centrality – often brings power.
– Lower level employees often have street level
discretion.
Power Among Subunits
• Studies that analyze power among subunits find
that a department or subunit has more power
when there is greater dependency on it, when it
has more control over financial resources and
greater centrality to the important activities in
the organization, and when there is less
substitutability of services
Advice on Getting and Using Power
• Play an important role in areas of uncertainty or strategic
contingencies facing an organization.
• Increase other departments’ dependence on you.
• Provide resources from external sources.
• Build coalitions and networks.
• Influence the premise behind decisions.
• Enhance the legitimacy and prestige of your position.
• Be reasonably aggressive and assertive but quiet and
subtle about power.
Decision Making in Organizations
• Decision making and power are closely related.
• Decision making in public organizations tends to
be complex, dynamic, and characterized by
intervention and interruption.
• These conditions have led to demands for
accountability, efficiency, and rationality.
Overview of Decision Making Models
• Rational decision making models
• Rational decision making techniques in public
organizations
• Rationality assumptions and the behaviors of public
managers and officials
• The limits of rationality
• Contingency perspectives on decision making
• Incremental decision making processes
• Mixed scanning
• Logical incrementalism
• Garbage can model
Rational decision making techniques
• Numerous examples can be found in the public sector.
– Various systems of tracking files and bar-coding
• Workflow charts
• Mathematical models
• Zero-based budgeting techniques (Carter)
• Management by objectives (MBO)
– GPRA requires agencies develop strategic plans and reports on
status of meeting objectives.
Limits of Rationality
• Can we be truly rational?
– Constraints limit full rationality.
• Managers have cognitive limitations and can
never fully know all possible future contingencies
when making a decision.
• Literature refers to managers as intendedly
rational or boundedly rational. Managers satisfice
(Simon, 1948).
Contingency Perspectives on
Decision Making
• Decision making varies along two dimensions: the degree to which
decision makers agree on goals and the degree to which they
understand means-ends or cause-effect relationships – have technical
knowledge (Thompson, 1967).
Goal Agreement
Technical Knowledge
Lack of Technical
Knowledge
No Goal Agreement
Rational Procedures
Apply
Bargaining, political
maneuvering,
judgmental techniques
Incremental Decision Making
• Charles Lindblom (1950) The Science of Muddling Through
is the classic statement.
– The responsiveness of decision makers to the requirement for
political consensus and compromise necessarily leads to unclear
goals that result in the restricting of the size of the changes
[decision-makers] propose. In other words, instead of choosing an
alternative that a rational decision-making process would predict,
decision-makers choose to make less controversial, intermediary
decisions to ensure some degree of success at achieving vague
goals presented.
Mixed Scanning
• Etzioni (1967,1986)
• A compromise between the rational and incremental
extremes
• Assumes “bounded rationality”
• Certain key issues are subjected to a detailed and
deliberate process of decision-making, while others are
allowed to tick over and evolve incrementally.
Logical Incrementalism
• Quinn found that strategic decisions emerged
from an unfolding and incremental yet logical
process.
• Long-range general priorities set the stage for
limited, experimental incremental steps.
Garbage Can Model
• The Garbage Can model developed by Michael Cohen, James March, and
Johan Olsen in reference to "ambiguous behaviors” – i.e.
explanations/interpretations of behaviors which at least appear irrational.
• Greatly influenced by the realization that extreme cases of aggregate
uncertainty in decision environments would trigger behavioral responses
which, at least from a distance, appear "irrational" or at least not in
compliance with the total/global rationality of "economic man" (e.g. "act
first, think later“)
• "The theoretical breakthrough of the Garbage Can Model is that it
disconnects problems, solutions and decision makers from each other,
unlike traditional decision theory. Specific decisions do not follow an
orderly process from problem to solution, but are outcomes of several
relatively independent stream of events within the organization”
Four Streams Conceptualized in
Garbage Can Model
1. Problems
– Problems require attention. They are the result of performance gaps or the
inability to predict the future. Problems may originate inside or outside the
organization. Traditionally it has been assumed that problems trigger
decision processes; if they are sufficiently grave, this may happen. Usually,
however, organization man goes through the garbage and looks for a
suitable fix, called a solution.
2. Solutions
– They have a life of their own. They are distinct from problems. Solutions are
answers (more or less actively) looking for a question. Participants may
have ideas for solutions; they may be attracted to specific solutions and
volunteer to play the advocate. Only trivial solutions do not require
advocacy and preparations. Significant solutions must be prepared without
knowledge of the problems they might have to solve.
Four Streams Conceptualized in
Garbage Can Model
3. Choice opportunities
– There are occasions when organizations are expected (or think they
are expected) to produce behavior that can be called a decision (or
an initiative). Just like politicians cherish photo opportunities
organization man needs occasional decision opportunities for
reasons unrelated to the decision itself.
4. Participants
– They come and go; participation varies between problems and
solutions. Participation may vary depending on the other time
demands of participants (independent from the particular decision
situation under study). Participants may have favorite problems or
favorite solutions which they carry around with them.
Why Garbage Cans?
• It was suggested that organizations tend to produce many solutions
which are discarded due to a lack of appropriate problems. However
problems may eventually arise for which a search of the garbage might
yield fitting solutions.
•
Organizations operate on the basis of inconsistent and ill-defined
preferences; their own processes are not understood by their members;
they operate by trial and error; their boundaries are uncertain and
changing; decision-makers for any particular choice change capriciously.
• To understand organizational processes, one can view choice
opportunities as garbage cans into which various kinds of problems and
solutions are dumped. The mix of garbage depends on the mix of labeled
cans available, on what garbage is currently produced, and the speed
with which garbage and garbage cans are removed.
Applications of Strategic
Management in the Public Sector
• Numerous prescriptive frameworks
– Example: A version of the Harvard Policy and Stakeholder model of
strategic planning involves
•
•
•
•
•
Strategic Issue management
Stakeholder analysis
Environmental scanning
SWOT analysis
Strategic Management Group (SMG) oversees a structured group
process.
• Group list views on stakeholders, opportunities, threats
• There’s a procedure for synthesizing and analyzing views.
Environmental Scan
• A comprehensive Environmental Scan includes:
– Forecasting trends
– Conducting internal and external scans
– Describing the current workforce
– Projecting workforce supply and demand
– Identifying current and needed competencies
(knowledge, skills, abilities, and behaviors)
SWOT ANALYSIS
A Balanced Perspective:
Strengths, Weaknesses, Opportunities, Threats
Internal
External
Build on Strengths
Exploit Opportunities
Resolve Weaknesses
Avoid Threats
SWOT Analysis
• Your Internal Strengths: Core competencies that provide the
basis for strategy
• Your Internal Weaknesses: Critical parts of your operation
you must strengthen or hide from your competitors
• External Opportunities: Benefits that are likely to accrue
from pursuing your vision and external opportunities
• External Threats: The pitfalls and the dangers, the variations
and exceptions possible
Strategy
• Organizational leadership lead the development
of strategies to achieve goals.
• When effective, the strategy-building process
links environment, goals, values, structure, and
those in pursuit of organizational performance
and effectiveness.
• Strategists must work with internal power
relations and decision making processes.
Miles and Snow (1978) Typology
• Argues that different company strategies arise from the
way companies decide to address 3 fundamental
problems:
1.
2.
3.
Entrepreneurial: how a company should manage its market
share
Engineering (or operational): involves how a company should
implement its solution to the entrepreneurial problem
Administrative problems: considers how a company should
structure itself to manage the implementation of the solutions to
the first two problems
• Companies develop their adaptive strategies based on
their perception of their environments.
Miles and Snow
• Defenders react to stability and emphasize efficiency and
centralization.
• Analyzers operate in moderately changing contexts,
allowing looser control of innovative efforts.
• Prospectors are found in contexts of growth; they seek
opportunities and take risks employing decentralized
organic strategies.
• Reactors appear in all contexts and simply drift without
purpose.
Issues for Managers and Researchers
• Consensus about general features of public sector
context but non consensus on how to deal with
variations in it.
– Scholars agree that public sector has, among other
things: goal ambiguity, vague mandates, more
constraints, and a challenging political environment.
– How to effectively deal with these issues in decision
making (best approach) is more elusive