Mini Case Study In Strategic Management


Mini Case Studies


Caselets, or short cases, are increasingly used as teaching aids, both in B-Schools and in executive education programs. Being brief and focused on a specific topic, a caselet is a useful supplement to a lecture. The session plan for a B-School course is likely to be more effective when there is a balanced mix of cases and caselets, along with other pedagogical tools.

A caselet is a shorter version of a case study, generally two to three pages in length. Caselets are similar to case studies in that they may either describe a sequence of events or put forth an issue or problem that requires decision making. The use of caselets is gaining popularity as a pedagogical tool in management teaching and executive education.

The basic objective of a caselet is to allow the learner to apply ideas and insights from theory to the real-life issues and problems contained in the caselet. This helps the learner obtain a deeper understanding of all the relevant factors in a particular problem situation as well as gain insights into the finer nuances of a topic in a particular field of management. The different ways in which caselets aid the learning process are described below.

Teaching Approach

Caselets are an important teaching aid for the faculty to adapt the teaching style to the needs of the situation. While discussing the topic of management teaching and learning, experts distinguish between the 'Sage on the Stage' approach and the 'Guide on the Side' approach. Comprehensive cases are quite useful while following the 'Guide on the Side' approach of facilitating a collective learning experience. However, a faculty member may choose the 'Sage on the Stage' approach due to topic-specific, class-specific, or faculty-specific factors. In such situations, comprehensive cases can be replaced with caselets to help the learner in applying the concepts gathered from the lectures. In short, while cases may be used as a substitute for lectures, caselets may be used as a supplement to lectures.

Logic and Opinion vs. Facts

A discussion leading to managerial decision-making is based on the interplay of facts, logic, and opinion. A comprehensive case study encourages the learner to sift through the information provided and identify the relevant facts, and then use logic and opinion to arrive at a set of decisions. A caselet, being brief and focused on the core issue, usually provides only the relevant facts. This forces the learner to add value during the case analysis by logically arguing his/her position based on stated opinions, rather then spend time in identifying and summarizing the relevant facts. However, it should also be made very clear to the learners that in real life, such a precise statement of a problem would be an exception rather than the rule.

Comparative Study

Caselets are also useful in comparative study as the faculty can give a set of caselets on a particular topic or industry to illustrate the variations in approaches adopted by different organizations. For instance, a set of three caselets on segmentation could cover three different sectors – consumer goods, industrial products, and services.

Specificity and Timeliness

A caselet helps the student to relate abstract models and theories to concrete situations and practical experience, and this makes the job of a faculty in the classroom easier. Due to its specificity, the faculty can lead the students to focus on narrow issues within the topic – for example, in a marketing class, the use of buzz marketing as a promotional tool. Due to its smaller size, a caselet does not eat into the classroom schedule or faculty's time and yet accelerates the learning process. Another advantage that the caselet offers is its ease of development. To develop a caselet for classroom discussion, the faculty need not spend much time due to its focused approach and brevity. For instance, if a faculty member intends to focus only on the finer nuances of the bidding process in e-procurement, a caselet can be quickly developed on reverse auctions in the steel industry.

Cases and Caselets: A Portfolio Approach

The session plan for a B-School course is likely to be more effective when there is a balanced mix of cases and caselets. Let us say an elective course on Sales and Distribution Management has four modules, – Introduction to Sales and Distribution, Planning and Organizing the Sales Effort, Distribution and Channel Control, and Channel Institutions and Future Trends. For each module, the session plan may include one or two cases, and about three caselets.

Guest Lectures and Special Situations

There would be occasions where the audience in the classroom is quite heterogeneous, with learners of varying academic/ industry backgrounds with different levels of competence and exposure to various teaching methodologies. Or, the faculty may not have sufficient familiarity with the audience, as in the case of a guest lecture. In such situations, a comprehensive case study may not be able to achieve the intended results. Caselets are a convenient teaching aid in such special situations.

Executive Education

When a faculty member or trainer conducts executive education programs, there is a need to condense the entire learning experience into the limited time available. Moreover, there may be a need to customize the teaching aids, keeping in mind the target audience. Caselets are quite suited to fulfill these requirements. Also, a caselet can be innovatively used as an ice-breaker at the beginning of the program, achieving the dual objectives of 'working in a group' and 'sensitization to the broader theme of the program'.

Conclusion

It is important to realize that the teaching approach has to be adapted to the situation under consideration, and that the faculty should use a mix of teaching aids to suitably tailor a course or a training session for the learner's benefit. Variations in the case method of teaching should be explored and utilized more widely if they lead to a better learning experience for the student. The use of caselets is one such attempt to broaden the horizons of the case method.

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32 CHAPTER FOUR TWO MINI-CASE STUDIES Because the essence of strategic management entails the integration of numerous management and decision proc- esses around a strategic framework that sets the direction for moving into the future in a deliberate manner, it can be helpful to have an overview of how given organizations tie the various elements of the process together. Therefore, this chapter presents mini-case studies of two state DOTs at very different stages in developing their strategic man- agement processes. The first is the Pennsylvania Depart- ment of Transportation (PennDOT), a seasoned leader in the field, and the second is the Illinois Department of Transportation (IDOT), a relative newcomer to strategic planning. Although different in many respects, both cases illustrate carefully crafted approaches to strategic man- agement. PENNSYLVANIA DEPARTMENT OF TRANSPORTATION Strategic planning was first initiated at PennDOT in 1982. That initial effort produced a set of 24 major objectives for the department, with the strategies for achieving them to be developed by the relevant organizational units. It also led to the formation of the top-level strate- gic management committee (SMC), which still exists as the highest level policy-making body at PennDOT, and a requirement for the major divisions and the 11 engineering districts to develop 4-year business plans and accompany- ing budget requests designed to help accomplish the major objectives. Over the past 20 years the process has been repeated and enhanced at roughly 4-year intervals, coinciding with the beginning of new gubernatorial administrations. Along the way, participation in developing PennDOT’s strategic planning has broadened considerably, to include as many as 400 to 500 managers and employees in fleshing out stra- tegic objectives and actions as opposed to the 50 top man- agers who were involved in the initial exercise. Although the process became deeply imbedded in the organization, the first round of the Baldrige assessment process, a comprehensive approach to strengthening organ- izational effectiveness, which PennDOT began in 1998, re- vealed that the lack of an effective strategic planning proc- ess constituted a major performance gap in the department. This assessment showed that although strategic planning was taken very seriously at PennDOT, the resulting plans did not drive decisions and behavior in the department on a consistent basis, the plans were not used effectively to manage people and organizational units, and the plans were not necessarily tied to fiscal reality. Therefore, the secretary and the SMC chartered a gap-closure team to lead a 2-year effort to design and implement a revamped strategic planning process. Strategic Planning From this effort a continuing process emerged consisting of planning, implementation, and evaluation on an ongoing basis (Poister 2002). PennDOT’s strategic plan was devel- oped through a process that included the following five steps: 1. Leadership direction—Developing or revalidating the department’s mission, vision, values, and strategic focus areas. 2. Customer expectations—Identifying customer expec- tations as related to the strategic focus areas through analysis of survey data, focus groups, and key stake- holder interviews. 3. Customer service capabilities—Assessing the de- partment’s capacity to meet customer expectations through focus groups with employees, and separately with partners and suppliers, as well as analyzing relevant operating data. 4. Priority tasks and strategies—Developing and evalu- ating alternatives within each focus area to produce a set of high-level goals and strategic objectives, and the strategies for achieving them. 5. Plans and performance targets—Reconciling strategic objectives, performance measures, targets, and budgets to produce plans and strategies that were effective, technically realistic, and fiscally respon- sible. The 8 strategic focus areas, 13 high-level goals, and 21 strategic objectives that came out of this process in 1999 are summarized in Figure 8, which also identifies the own- ers and leaders for each strategic objective. The owners serve as the sponsors of these strategic initiatives, whereas the leaders take the technical lead in implementing them. The targets were meant to be aggressive, but not unrea- sonable, and they were established based on budget re- alities so that the owners, leaders, and other responsible managers would know where the required funding was coming from.

33 STRATEGIC FOCUS AREAS HIGH-LEVEL GOAL STRATEGIC OBJECTIVE OWNER/ LEADER Smoother Roads Improve ride quality by incorporating smooth road strategies into a comprehensive pavement program. Ryan/ Moretz Refine winter services best practices to achieve more timely and efficient response. Hoffman/ Wise Maintenance First Cost-Effective Highway Maintenance Investment Use life-cycle criteria as a tool for asset management and investment to reduce outstanding maintenance needs. Hoffman/ Christie Improve customers’ experiences of our facilities by enhancing beautification efforts and reducing roadside debris. Yearick/ Peda & Hull Balance Social and Environmental Concerns Develop timely transportation plans, programs, and projects that balance social, economic, and environmental concerns. King/ Schreiber Quality of Life Demonstrate Sound Environmental Practices Implement a strategic environmental management program that adopts sound practices as our way of doing business. Ryan/ Kober Delivery of Transportation Products and Services Meet project schedules and complete work within budgeted costs. Ryan/ Azzato Implement congestion management strategies that limit work zone restrictions, address incident management, and reduce corridor travel delays. Hoffman/ Koser Mobility and Access Efficient Movement of People and Goods Implement Keystone Corridor rail passenger improvements as a pilot multi-modal initiative. Peltz/ Smedley Improve Customer Satisfaction Implement a department-wide systematic process to continue to improve customer satisfaction. Serian/ Cross Customer Focus Improve Customer Access to Information Improve information access by providing quality customer contacts across the organization with special attention to driver and vehicles inquiries. Serian/ Cleaver FIGURE 8 PennDOT strategic focus areas, high-level goals, and strategic objectives.

34 STRATEGIC FOCUS AREAS HIGH-LEVEL GOAL STRATEGIC OBJECTIVE OWNER/ LEADER Map key processes and improve those with the most strategic impact on business results. Tartline/ Harris Innovation and Technology World Class Process and Product Performance Deliver business results through planned enterprise-focused information technology. Tartline/ Reed Implement cost-effective highway safety improvements at targeted high-crash/fatality locations. Ryan/ Bryer Safer Travel Upgrade safe driving performance through education and enforcement initiatives. Yearick/ Seitz & Bryer Implement prevention strategies to reduce the employee injury rate. Tartline/ Dennin Safety Safer Working Conditions Implement prevention strategies to reduce the vehicle accident rate. Tartline/ Dennin Provide employees with the tools and expectations to communicate effectively to facilitate leadership at all levels. Yearick/ OCCR Internal Com. Mgr. Leadership at All Levels Improve Leadership Capabilities and Work Environment Develop employee skills and capabilities through a structured process of instruction, practice and leadership opportunities. Tartline/ Harris Implement a methodology to involve partners and stakeholders more meaningfully in PennDOT activities. Zimmerman/ Cvejkus Relationship Building Cultivate Effective Relationships Strengthen the efficiency and effectiveness of transportation grant programs using the methodology for partners and stakeholders. Voras/ Brown FIGURE 8 (Continued).

35 Scorecard The strategic plan that emerged in early 2000 from the im- position of fiscal reality onto proposed strategic objectives and targets is summarized in a scorecard that presents the goals and objectives, performance measures, and targets. There are actually two versions of the scorecard: the secre- tary’s scorecard and the SMC scorecard. The SMC score- card is used internally to manage the strategic agenda. It is organized by the strategic objectives and shows a measure and a target, or multiple measures and targets, for each of the 21 strategic objectives. The secretary’s version of the scorecard, shown in Figure 9, provides a simpler format structured by the 13 high-level goals. Although the SMC scorecard is used internally to manage the plan, the secre- tary’s version is oriented more toward public consumption, focusing attention more generally on PennDOT’s overall goals. Cascading Plans The department’s scorecard provides a framework for de- veloping organizational scorecards and business plans. Strategic planning at PennDOT is cascaded down into the organization by requiring the 11 districts and 6 deputates to develop their own strategic objectives and scorecards driven by the enterprise-level strategic agenda. These or- ganization scorecards, which must be approved by the SMC, are built, tested, and justified with the same five-step planning process used at the departmental level. The lead- ership direction comes directly from the strategic objec- tives in the enterprise-level scorecard that relate to the di- vision or district’s responsibilities, along with the underlying rationale that produced them. Each of these or- ganizational units must establish objectives, measures, and targets that contribute to those in the enterprise-level score- card that the organization “owns,” although it can add other “indirectly aligned” objectives as well. Business Planning Business planning is the vehicle PennDOT uses to align organizational units’ activities and priorities with the enter- prise-level strategic agenda. Thus, to advance the depart- ment’s strategic plan, each of the districts and deputates develops business plans designed in part to accomplish its own scorecard objectives. (Some central office bureaus and county maintenance units develop scorecards and business plans as well; however, this is not required at this point.) All of PennDOT’s strategic objectives are implemented through the 4-year business plans, which are updated an- nually. The business plans, which encompass all core func- tions and routine activities as well, present planned efforts for each objective in the organizational scorecards, spelling out exactly how the district or deputate will accomplish a given objective in terms of tasks, work programs, projects, action items, and schedules. This is important because the owners and leaders, and responsible managers at subunit levels, have considerable flexibility as to how they plan to accomplish certain objectives. Resource Allocation Some of PennDOT’s strategic initiatives, primarily those relating to IT, are funded separately through one-time allo- cations from special funds held expressly for that purpose. However, most strategic initiatives are supported through the normal budgeting process, which allocates resources to organizational units for particular uses. Therefore, the business plans all contain specific budgets that invest re- sources in planned actions responding to strategic objec- tives as well as other activities. This requires the districts and deputates preparing business plans to tie their budget request directly to strategic initiatives and to make sure that their plans and work programs are fiscally realistic. When the SMC approves business plans and their associ- ated budgets, usually after some degree of revision and ne- gotiations with respect to targets, programs, and budgets, these managers can be confident that they will have suffi- cient resources to achieve the targets for which they will be held accountable. Performance Management For many years PennDOT has used a management-by- objectives participative approach to providing direction and control over the work of individual managers and em- ployees. In its current form, the more formal written per- formance contracts have been shortened and incorporated in annual employee reviews (EPRs) as “expected work re- sults,” which are grafted onto the more constant annual job descriptions. With the new strategic management process, the EPRs are driven primarily by the strategic agenda, so that individuals who are owners or leaders of strategic ob- jectives, or otherwise identified as having some responsi- bility for them, have those objectives and their attendant action items, along with accompanying performance meas- ures, embodied in the EPRs. This is the case at the enterprise level, but also with the organizational scorecards and associated business plans. Whether or not business plans are used below the district or deputate level, managers at many levels negotiate with subordinates to contribute specified efforts toward accom- plishing strategic objectives and hold them accountable for those results through quarterly performance reviews. Therefore, by tying individuals’ expected work results to strategic objectives, PennDOT’s performance management

36 Strategic Focus Area High-Level Growth Pledge to Customers How Success Will be Measured? External (Customers) Internal (Support) Measurement Tool (Metric) Target 2002 2005 Smoother roads Better ride conditions on major (NHS) highways X International Roughness Index (IRI) 104 for NHS roads 99 for NHS roads MAINTENANCE FIRST Cost-effective highway maintenance investment Reduction in outstanding maintenance needs X Condition assessment for highways and bridges Complete asset management system Meet target established in 2002 Balance social, economic, and environmental concerns Timely decisions based on public and technical input on project impacts X Highway project environmental approvals meeting target dates 75% meeting target dates 90% meeting target dates QUALITY of LIFE Demonstrate sound environmental practices Attaining world class environmental status X ISO 14001 environmental criteria Implement a pilot program Meet ISO standards Delivery of transportation products and services Honoring commitments on scheduled transportation projects X Dollar value of 12-year program construction contracts initiated $1.3 billion per year $1.4 billion per year MOBILITY and ACCESS Efficient movement of people and goods Reduced travel delays X 2002–peak period work zone lane restrictions 2005–travel delays on selected corridors Set baseline in 2000 for reduced 2002 lane restrictions Meet target set in 2002 to reduce corridor travel delays Improve customer satisfaction Competitiveness on Malcolm Baldrige Criteria for Excellence X Baldrige Organizational Review Package Scores— Customer Criteria 80 department average 100 department average CUSTOMER FOCUS Improve customer access to information Prompt answers to telephone inquiries X Answer rate of calls to the Customer Call Center 94% of calls answered 94% of calls answered INNOVATION and TECHNOLOGY World class process and product performance Competitiveness on Malcolm Baldrige Criteria for Excellence X Baldrige Organizational Review Package Scores—All Criteria 500 level met by lead organizations 600 level met by lead organizations Safe travel Fewer fatalities from highway crashes X Number of fatalities per year 5% reduction in fatalities 10% reduction in fatalities SAFETY Safer working conditions Fewer work- related injuries X Injury rate per 100 employees working 1 year 8.25% injury rate 7.5% injury rate LEADERSHIP at all LEVELS Improve leadership capabilities and work environment Positive trends in employee feedback on job-related factors X Organizational Climate Survey (OCS)—Selected Items 48% positive rating 54% positive rating RELATIONSHIP BUILDING Cultivate effective relationships Effectiveness of partnerships to achieve business results X PennDOT/partner business effectiveness survey scores Establish metric, baseline and target Meet target established in 2002 FIGURE 9 PennDOT scorecard of measures.

37 process uses the EPRs to instill individual responsibility for advancing the strategic agenda deep into the depart- ment. Dashboards and Scorecards Basically, the scorecards are used to manage PennDOT’s strategic agenda at multiple levels. The districts and depu- tates are responsible for reviewing their scorecards on a quarterly basis, and monitoring the performance measures for each objective against the targets and milestones that have been set. Adjustments in programs, work plans, as- signments, and resource allocations are made as necessary to keep their objectives on track. As the embodiment of PennDOT’s strategic agenda, the SMC scorecard contains the most important set of per- formance measures to monitor in terms of guiding the de- partment into the future. However, the SMC also con- cluded that focusing solely on the scorecard could be problematic in that many goals, processes, and functions that are important to the department do not appear on it. Therefore, the SMC decided to develop and monitor a dashboard in addition to the scorecard. In contrast to the change-oriented scorecard, the dashboard tracks a number of measures that pertain to the department’s core functions; important activities and busi- ness results it must produce on an ongoing basis. Although there is considerable overlap between the two, the dashboard is concerned more with more immediate per- formance, whereas the scorecard is more future oriented. Thus, the dashboard focuses on ongoing operations rather than strategic initiatives, and tends to be more input and output oriented, whereas the scorecard is more oriented to outcomes and results. PennDOT’s dashboard, which uses a green light/yellow light/red light format, is reviewed on a monthly basis using a management-by-exception approach. As is the case with the SMC, the districts, deputates, and other units that have scorecards also have complementary dashboards for track- ing the performance of their core functions. Dashboards as well as scorecards are required in business plans, because the districts and deputates cannot afford to lose track of their core functions while they focus on implementing their strategic agendas. Thus, the scorecards align PennDOT’s change-oriented objectives to create a direct path from the department-wide strategic agenda through the business plans to work units and individual employees. Conversely, the dashboards are more daily-work oriented to create a di- rect path from the individual employees and work units through the organization dashboards to department-level core business priorities or objectives. Reviewing and Revising the Strategic Agenda The SMC reviews progress in achieving the strategic ob- jectives identified in “Moving Pennsylvania Forward” on a rotating basis, examining a few each month over a 6- month period, with progress on each objective reviewed every 6 months. The more detailed SMC scorecard is the principal reporting mechanism for tracking the suc- cess of the business plans in advancing the strategic agenda. The SMC scorecard, as opposed to the secretary’s version of the enterprise-level scorecard, tracks progress on each strategic objective, not the more general goals, and often incorporates multiple measures for a given strategic objective. Therefore, the owners and leaders prepare semi-annual progress reports for the SMC on each objective as it comes up on the rotating schedule. They are held accountable by the secretary and the SMC for achieving department-wide results on their strategic objectives, and their progress along these lines also feeds into their quarterly EPRs and thus their own individual annual performance appraisals. In turn, the deputy secretaries and other executives who are the owners and leaders of strategic objectives track those same indicators, or other appropriate ones, for organiza- tional units under their direction to hold those units respon- sible for their piece of the plan. Each December, the SMC conducts a systematic review of the entire enterprise-level scorecard to determine whether and how it might need to be updated. For exam- ple, if a particular strategic initiative has been completed, the SMC will probably decide to remove it from the score- card. Alternatively, the SMC may decide, perhaps based on its continued scanning of the external environment, that new strategic objectives are needed. For example, in De- cember 2001, two additional strategic objectives address- ing post-September 11 security concerns were added to the scorecard. Such new objectives are developed by technical teams of managers and employees at the direction of the SMC and they follow the same process that was used to develop the original scorecard objectives. Finally, the SMC may consider changing the measure or the targets that have been defined to track the progress of particular strategic objectives. To summarize, at Penn DOT strategic management is an ongoing process, moving through a continuous cycle of planning, implementation, and evaluation. The enterprise- level strategic agenda, summarized in the departmental scorecard, is implemented through scorecards and business plans developed by the districts and deputates, and in some cases by county maintenance units and central office bu- reaus. These organizations review their scorecards on a quarterly basis to manage with the measures and ensure that they achieve scorecard targets. The district and depu-

38 tate business plans, containing both organization score- cards and dashboards, must be updated annually and ap- proved by the SMC to ensure alignment with enterprise- level strategic objectives. At the departmental level, the SMC monitors its score- card on an ongoing basis and annually reviews the overall strategic agenda, sometimes making modifications based on current external and internal scan data in addition to the department’s progress in achieving “Moving Pennsylvania Forward” scorecard targets. Periodically, at roughly 4-year intervals coinciding with changes in administrations, Penn- DOT has undertaken more comprehensive efforts to update its strategic agenda so as to respond more deliberately to changing trends and forces, newly emerging issues, new customer demands, and shifting political mandates. Administrative Transitions PennDOT’s strategic planning process has evolved through the administrations of three governors and has become well institutionalized at this point. With a new governor and a new secretary of transportation taking office in Janu- ary 2003, the stage was set for possible additional refine- ments and further direction setting through strategic plan- ning. Initially, the new secretary has decided to retain the process, and the SMC has reviewed the scorecard and made some changes in the strategic objectives in time to guide the current round of business planning and budget development throughout the organization. The intention then is to use this coming year to undertake a more com- prehensive effort to update the strategic plan, and the proc- ess may be further refined along the way. ILLINOIS DEPARTMENT OF TRANSPORTATION IDOT initiated strategic planning activities in early 2000. Although the secretary of transportation had considered the possibility earlier, a blanket mandate from the governor in 1999 provided the leadership commitment from the top of state government that the secretary felt was needed to make strategic planning effective. The effort was led by the deputy secretary and the assistant to the secretary for strategic planning, working with a 30-member strategic planning team, and it was facilitated by an external con- sulting group. Strategic Plan Working with the balanced scorecard approach, the plan- ning team completed the enterprise-level strategic plan in a few months, and it was approved by the department’s ex- ecutive committee in July 2000. As shown in Figure 10, the original strategic plan included 14 objectives spread across the four quadrants of the public-sector balanced scorecard, which substitutes a “mission effectiveness” or “program delivery” quadrant for the “financial” quadrant found in private-sector scorecards. For each of these objec- tives, one or more types of performance measures were identified for tracking success. In addition, for each strate- gic objective, targets or more specific objectives were identified, whose accomplishment would lead to achieving the overall strategic objective. Furthermore, for each of these targets, the plan identifies specific initiatives to be undertaken to accomplish the target. This specification of measures, targets, and initiatives is illustrated in Figure 11 for IDOT’s objective concerning improved safety for the traveling public and department employees. Cascading Strategic Plans Once the enterprise-level strategic plan was approved, IDOT began training division and office teams made up of cross sections of managers and employees in strategic planning and use of the balanced scorecard model. These groups then set about developing their own strategic plans in support of the department-wide plan. As an interesting process innovation, a mobile laptop system was employed to help these teams develop their strategic plans. This collaborative software, supported by a wireless system of lap- top computers, serves as an “electronic flipchart” in facili- tated sessions; helps groups in brainstorming, analyzing, and processing information; and greatly reduces the meet- ing time required to accomplish particular planning tasks. As of April 2003, IDOT had completed 28 balanced scorecards, including those for the 4 major divisions, 8 central office bureaus, 6 staff support offices, and 9 re- gional highway districts, in addition to the department’s overall enterprise-level scorecard. Each of these scorecards is reviewed and must be approved by the next level up in the chain of command. For instance, district engineers take the lead in selecting members of their strategic planning teams and in developing their scorecards, but these teams and plans must be approved by the director of the division of highways. This ensures alignment of the scorecards de- veloped by these organizational units with the depart- ment’s overall scorecard. Several of these scorecards have now been revised and updated from their original versions. All of IDOT’s scorecards are reviewed at least annually and updated as appropriate. For example, although the en- terprise-level scorecard originally consisted of 14 objec- tives, it then added one new objective for a total of 15, and now is likely to be reduced to 13 objectives through the successful completion of one and the combining of two others. These scorecards constitute strategic plans at the division, office, bureau, and district levels, all within the

39 CUSTOMER SATISFACTION & PARTNERSHIPS LEARNING & GROWTH C1. Expedite the delivery of work and services to minimize public inconvenience. L1. Attract, develop and retain a diverse, quality workforce—tools include cohesive employee recognition program. C2. Continue to assess customer satisfaction and needs—to drive process improvement. L2. Develop knowledge management/sharing process and create an environment that encourages innovation. C3. Improve safety for the traveling public and Department employees. L3. Establish consistent internal communications to ensure all employees have access and the ability to share information about IDOT activities and progress. C4. Improve proactive external communications— increase public understanding of IDOT objectives programs, and projects. L4. Revitalize a department professional identity. BEST BUSINESS PRACTICES DELIVERY OF PROGRAMS AND SERVICES B1. Document, evaluate, and improve business processes. P1. Assess and/or establish levels of delivery of programs and services. B2. Acquire and allocate resources (including money, people, technology, and capital assets) based on demonstrated needs—evaluate investment strategy and use to ensure mission accomplishment. P2. Design and develop a mechanism to better integrate and coordinate the delivery of programs and services—reduce overlap. B3. Create an organizational environment where leadership is fostered at all levels in an effort to improve decision making. P3. Develop program/service risk assessment process relating to external factors (examples of external factors are special interest groups, resources, and components necessary for the completion of the program.) P4. Assist appropriate agencies to ensure ongoing security of transportation services in the face of credible threats or attacks. FIGURE 10 IDOT Enterprise Plan at May 31, 2002. framework of the overall enterprise-level strategic plan. Most of these units also develop their own annual work programs, and the scorecards are a driving force in devel- oping the work programs. Assigning Responsibilities IDOT assigns lead responsibility for several elements in its strategic plans. First, each of the scorecards is assigned a champion for the entire plan. Typically, this is the head of the organizational unit for which the plan has been de- signed (i.e., division or office director, district engineer, or bureau chief) or his/her designee. Second, each objective on a scorecard has a champion or leader to coordinate and report on progress on that objective as needed. Optionally, the targets specified for each objective may also have target managers. Finally, most objectives and/or targets have multiple initia- tives to help guide actions that will accomplish the objec- tives and targets. Each initiative is assigned an initiative manager who takes the lead in developing action plans for implementing the plans as well as achieving the targets.

40 To be measured by: 1. Change in internal attitudes and understanding surrounding safety. 2. Percent of reported work zone accidents that involved noncompliance with IDOT safety policy. 3. Percent of development of the General Accident Information System against established milestones. 4. Number of safety innovations implemented during the review period. 5. Percent change in vehicle crashes involving fatalities and/or serious injury. To be accomplished through: Target No. 1: Establish consistency and internal cohesion in the department’s employee safety focus: Initiatives: 1. Conduct review of current safety policy. 2. Review internal structure and recommend improvements if warranted [i.e., zone activities (internal and external)]. 3. Establish employee attitude/understanding baseline. Target No. 2: Examine and improve (internal and external) safety information flow: Initiatives: 1. Rework and implement the General Accident Information System (GAI). 2. Educate the public on a continuing basis. Target No. 3: Imbed safety in all department processes: Initiatives: 1. Develop process to find, share, and implement innovative ideas on safety. 2. Integrate safety into all relevant process steps under Objective B1. FIGURE 11 Objective C3: Improve safety for the traveling public and department employees. (Source: Illinois DOT.) At each level, these champions and managers are re- sponsible for both coordinating efforts and reporting on progress in achieving their strategic objectives. In essence, the hierarchy of strategic plan implementation and report- ing mirrors the traditional top-down hierarchy of the whole agency, which is comfortable for most managers and em- ployees. The difference is that implementation of the plans for the most part relies on teams on which individual rank has little meaning to the process. The initiative managers put together cross-functional or multidisciplinary teams as needed to implement their stra- tegic initiatives. Moving away from the command and con- trol management style that traditionally has dominated IDOT, these initiative managers are encouraged to com- municate across chains of command, if necessary, to achieve their objectives. However, they are required to re- port through the normal chains of command to ease possi- ble concerns about unsupervised activities taking place. At present, these individual-level assignments to take additional responsibilities as objective coordinators, target managers, or initiative managers are completely voluntary, and although they are recognized as an important part of the employee’s duties, they do not lead directly into the normal annual employee evaluation process. Rather, moti- vation for attending to these assignments and performing effectively in these roles is based primarily on leadership and communication, a sense of professional pride, peer support, and a highly visible process for reporting success or failure in implementing strategic initiatives and achiev- ing strategic objectives. IDOT’s assistant to the secretary for strategic planning indicated that assigning individual responsibility and fol- low-up on implementation activities is crucial to the suc- cessful completion of strategic initiatives. Eliciting com- mitments from individuals regarding specific tasks in the plan, emphasizing team work and collective responsibility, and then conducting quarterly, semi-annual, or annual re- views and updates in public settings serves to provide a powerful incentive for target managers and initiative man- agers to ensure that these strategic initiatives are imple- mented effectively. Performance Measurement To track overall success, IDOT uses a few general per- formance measures for each objective and encourages the use of more focused measures at each successive lower level of planning. The teams created to implement strategic initiatives use outcome measures derived from ongoing motorist surveys, employee surveys, crash reports, average daily travel counts, and so forth, to show long-term trends in bottom line results. Other more output-oriented meas-

41 ures (e.g., the number or percent of targeted process re- views completed) are used to track the efforts expended on strategic initiatives, assess needed changes in tactics, or understand when manpower shortages or other factors are slowing down progress. The assistant to the secretary for strategic planning usu- ally suggests performance measures at the outset of a new project; however, the teams have the option of rejecting them as long they have replacement measures that are bet- ter suited to the purpose. The general philosophy regarding performance measurement at IDOT is to make the meas- ures as nonthreatening as possible, rather than emphasize accomplishment of objectives; identify what is going well versus what may need to be changed. However, once agreement is reached regarding objectives, initiatives, im- plementation plans, and performance measures, tracking the measures and reporting performance data provides a powerful accountability tool for ensuring that a high prior- ity is placed on achieving the strategic objectives. Budget Linkages IDOT’s strategic planning process for the most part is loosely linked to budgeting. When additional financial re- sources are necessary, funds are earmarked in the budgets prepared by the division, office, bureau, or district that is responsible for implementing a particular strategic initia- tive. On the other hand, budget realities are often a major factor in determining whether the department can more forward with proposed strategic objectives, planned initia- tives, or recommendations from an implementation team in the first place. However, given the nature of most of IDOT’s strategic objectives, the budget is often not a major issue, even in a period of tighter fiscal constraints. Most of the strategic objectives cut across organizational lines and focus on or- ganization development or process improvement rather than the capital program or direct investment in the trans- portation system, meaning that the costs of these initiatives are typically measured in man-hours rather than dollars. Many of the activities derived from these initiatives; for example, process or program reviews, or on-the-job train- ing by peers and supervisors, can be completed using exist- ing personnel, and with appropriate time management techniques they can be cost-neutral and not require addi- tional funds. Conversely, the strategic plan does help IDOT delineate and prioritize additional spending in some areas, particu- larly with respect to IT. Although the department does not have a strategic objective that focuses on IT per se, virtu- ally all of the process improvements that are called for by several of the objectives require technological improve- ments designed to upgrade communication and informa- tion, save time, and/or reduce paperwork or other costs. In addition, IDOT’s Bureau of Information Technology has developed its own scorecard to further the improvement of IT processes and services in support of strategic objectives in higher-level plans. Through the strategic planning proc- ess IDOT identifies needs for additional IT that substan- tially exceed currently available budget levels. Rather than relying on the standard incremental approach, the ongoing planning work provides a systematic approach to assem- bling a priority list of IT acquisitions with fairly firm costs that the department can readily promote in future budget cycles. Evaluation of the Planning Process A cost-benefit analysis conducted in the spring of 2002 (SAIC 2002), and random surveys of both motorists and IDOT employees conducted in 2001, 2002, and 2003, show that the results of the strategic planning activities are paying off for the transit department and Illinois taxpayers. The benefit-cost analysis projects that all start-up costs of the strategic planning initiative, including employee time for training, planning, and implementation, will have been recovered by early 2004, primarily through process im- provements that have come out of the strategic plan. An in-house survey completed in April 2003, indicated that more than 40% of IDOT employees believe that goals and objectives are clearer as a result of the strategic plan- ning initiative. The survey also indicated that nearly two- thirds of IDOT employees believe that worker productivity and job satisfaction have improved over the 36 months that the strategic initiative has been in place. Correspondingly, annual surveys of the motoring public, conducted by the University of Illinois at Springfield, showed that a majority of motorists believe that IDOT is doing a good or excellent job, particularly in terms of roadway maintenance, high- way construction and repair, travelers’ services, and em- ployee conduct on the job. New Administration At the beginning of 2003, with a new governor in Illinois, a new secretary of transportation assumed direction of IDOT and, for the most part, assembled a new executive team. However, the new secretary also decided to retain the strategic planning process and the top staff personnel most closely associated with it, even though the new administra- tion may alter strategic priorities. Therefore, strategic planning has survived its first administrative transition at IDOT, and this is expected to help provide a sense of con- tinuity in a department that has seen substantial turnover in personnel over the past several years.

42 COMPARISONS These two departments were selected for mini-case studies as part of this synthesis because they illustrate both simi- larities and differences in their approaches to strategic management. At this time, PennDOT has been involved in strategic management for some 20 years and has worked to sharpen and deepen the process to ensure positive results in achieving its strategic goals and objectives. Currently, PennDOT has a mature strategic management process that affords a high degree of alignment among all the elements shown in Figure 1. By way of contrast, IDOT initiated its first strategic planning efforts in 2000, and it may not, like PennDOT, have all the elements in place. However, IDOT also presents a noteworthy case, because it is installing a very deliberate strategic management process, which en- sures follow-through in implementing and evaluating stra- tegic plans. Driving Decisions Both PennDOT and IDOT have developed strategic plans for their organizations that are summarized succinctly in scorecards. Both departments then require districts and di- visions to develop their own strategic plans or scorecards within the framework of the overall corporate-level strate- gic plan and, in both cases, these lower-level scorecards must be approved by higher-level management. However, PennDOT also requires these units to develop 4-year busi- ness plans, updated annually, which are the principal vehi- cles for driving the department’s strategies down into the operations of the organization. IDOT, in contrast, relies primarily on action plans developed for individual strategic objectives and/or targets as the means of implementing strategic plans at each level of the organization. Building Ownership Both PennDOT and IDOT place great importance on as- signing individual executives or managers to take the lead responsibility for implementing strategies and achieving strategic objectives. Whereas PennDOT identifies owners and leaders for each strategic objective, however, the IDOT process is more elaborate, with owners assigned for overall strategic plans, strategic goals, objectives, targets, and strategic initiatives. This is consistent with IDOT’s re- liance on the action plans developed by these owners and the teams they put together for implementing the depart- ment’s strategic objectives. Interestingly, for PennDOT, the responsibilities assigned to individuals for implement- ing strategic plans lead into these individuals’ annual per- formance appraisals, whereas for IDOT these are consid- ered to be “additional responsibilities,” which do not. Allocating Resources Many of the strategic initiatives established by both of these departments can be supported with existing budgetary re- sources, although PennDOT uses its business planning proc- ess to work these initiatives into the operating budgets of or- ganizational units, whereas IDOT has numerous labor- intensive initiatives whose costs are covered principally by as- signing individuals and teams to work on them. The two de- partments also differ with respect to strategic initiatives that entail additional direct monetary investment, such as substan- tial upgrades in IT. Whereas PennDOT estimates the cost of such initiatives as part of the planning process and earmarks funding sources at that point, IDOT establishes the initiative as part of the planning process and then, as part of the im- plementation process, begins to identify costs and priori- tize investments to be made as funds become available. Evaluating Performance Each of these transportation departments establishes per- formance measures for each strategic objective, including typically a mix of output and outcome indicators. For each of its measures, PennDOT sets numerical targets to be achieved within a given time frame, whereas IDOT identifies the measure and preferred direction of movement, but does not set numerical targets. Both departments, however, empha- size the importance of performance measures in managing their strategic agendas, and both review the performance data generated to track progress in implementing strategic initiatives and flag problems that need to be addressed. System Maintenance and Enhancement Both PennDOT and IDOT have an individual assigned on a full-time basis to support its strategic management proc- ess, providing staff support at the executive level and gen- erally facilitating development and use of the process. Both departments have also provided training to managers re- garding strategic planning, performance measurement, and related elements of strategic management. In addition, both have commissioned evaluations of their strategic manage- ment processes by consultants to help strengthen them. Fi- nally, new administrations have recently taken office in both departments, and in each case the new executives have decided to adopt the in-place strategic management processes and use them to revalidate or redirect future di- rections and priorities for these organizations.

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