Strategy Taxonomy and Classification System Development Study of two State Governments

Transcription

1 Strategy Taxonomy and Classification System Development Study of two State Governments A. Chakraborty, G. Stewart Information Systems Discipline, Queensland University of Technology, Brisbane, Australia Abstract - There is limited understanding about business strategies related to parliamentary government s departments. This study focuses on the strategies of departments of two state governments in Australia. The strategies are derived from department strategic plans available in public domain and collected from respective websites. The results of this research indicate that strategies fall into seven categories: internal, development, political, partnership, environment, reorientation and status quo. The strategies of the departments are mainly internal or development where development strategy is mainly the focus of departments such as transport, and infrastructure. Political strategy is prevalent for departments related to communities, and education and training. Further three layers of strategies are identified as kernel, cluster and individual, which are mapped to the developed taxonomy. Keywords - Strategy, Strategy formulation, Strategy process, Value chain I. INTRODUCTION Despite the fact that strategic alignment is important for business success, researchers continue to struggle with issues of conceptualization and measurement. These issues are affected, in part, by the unobservable nature of alignment and by the fact that the building blocks of alignment are highly complex [21]. As prior literature reveals, measuring business strategy alignment by commencing with an assignment of organization to a strategy typology, such as [16] or [18], yields a less than perfect picture of how that organisation is running its business [21]. Much of the literature on the alignment of IT and business strategy references are based on the research by [7], [12], [21]. These studies focus on the processes of alignment rather than developing a measurement of alignment. The studies about strategic orientation of business enterprises in terms of a strategy typology create rich insights into how firms compete and how IT supports or enables their efforts (Venkatraman 1989). While much can be learned from considering the resulting fit between actual business activities and actual information technology (IT) use [20], [21] there seems to be a missing link the relationship of business service to strategy attainment. An information system supports the delivery of a set of business services and the relationship between strategy and IT is established through the business service [13]. There are reasons behind such a conceptualization. Since business strategy is implemented using a series of services rendering the value chain, differences in strategic foci could mean that some service are more important than others. For example, a low-cost firm may have little use for services that treat each customer as a stand-alone market; instead their focus is more on mass production or standardization as a way to reduce costs. In comparison, a niche provider may see customer-facing services or marketing as key [21]. This change in emphasis requires organizations to identify key services where alignment with business strategy should ideally be tight and other services where misalignment may create less of a threat to organization s performance, competitiveness or survival. This research on Service Identification through Process Prioritisation seeks to develop a robust and generic protocol of developing, articulating and producing specific as-is service-strategy maps for organisations. Three layers of strategies have been identified through literature and empirical work. These layers are called kernel, cluster and individual. A kernel strategy is a strategy in common across all agencies. A cluster strategy is a strategy shared by a subset of agencies in such a way as to be thematically linked. An individual strategy is a strategy applicable in to only one agency. Services support strategies. A kernel service is a service used by every agency. A cluster service is a service used by a sub-set of agencies, again thematically linked. An individual service is a service used by only one agency. Services are high-level elements found in the process reference model. A process reference model can be an artefact produced in the business architecture level one development of an enterprise architecture model. There are three levels of such reference processes: management, core and enabling. There are three types of process reference models: kernel process reference model depicting all the processes in common across all agencies; cluster process reference models depicting processes in use in specific clusters of agencies and individual process reference models, showing those unique processes found only in specific agencies. In this paper, we first review the literature on strategy alignment and strategy taxonomy. Next, we move on to the case studies of two state governments. The studies help in answering the research question of what kernel and cluster strategies exist? And also forms the basis of answering other questions in this research such as: what services support these kernel and cluster strategies? Which of these kernel and cluster services are critical to organisations? How can these relationships be visualised to provide business decision makers an understanding of the interactions between service and strategy? These questions are though out of scope for this paper and form the broader perspective of our research. In closing, we highlight key implications for research and practice and future directions.

2 II. BACKGROUND A. Strategy Alignment Alignment has been conceptualised in the academic literature in various ways (Chan and Reich 2007). According to Henderson and Venkatraman (1999) alignment is the degree of fit and integration among business strategy, IT strategy, business infrastructure and IT infrastructure. There are several other perspectives and equivalent terms such as fit, linkage and integration related to alignment is in the literature. The Information Systems (IS) literature also discuss about related dimensions of alignment. Significant attention is being given to the dimension of strategic IT alignment (Chan et al 1997). Strategic alignment refers to the degree to which the business strategy and plans, and the IT strategy and plans, complement each other (Chan and Reich 2007; Henderson and Venkatraman 1999). The strategic alignment is discussed at various levels in the literature. Predominantly, the alignment is observed more at organisation level (Tallon 2007). At the organisational level, the alignment can be both external and internal. Externally, organisations must align their business and IT strategies with industry and technology forces while internally organisations must align organisational and IT processes and infrastructure (Henderson and Venkatraman 1999). Rather than visualizing alignment at the organizational level as the IS literature has traditionally done (Tallon 2007), we propose conceptualizing and evaluating alignment at business service level. Along a functionality dimension, services range from business-oriented views of traditional business services to purely technical views of electronic services or web services (Kohlborn et al 2009). On a business level, these services are driven by service strategies and serviceoriented business models, which impacts organisational structures and individuals (Grönroos 2007). On a technical level, services are implemented as encapsulations of autonomous, valuable software capabilities (Krafzig et al 2006). Considering these technical services, interfaces are more often clearly defined than for business services which even enable researchers to combine services on-the-fly and based on current performance needs (Zeng et al 2004). Still, the relation between business and technology is obvious and intensive. Thus, the service paradigm becomes both a driver and enabler of the widely postulated business/it alignment (Avison et al 2004). Baida et al (2004) compared and analysed the service terminology used in both, the business science and the computer science (refer Table 1). Business science TABLE I SERVICES TERMS USAGE: SUMMARY (Baida et al, 2004) Services E-Services Web services Well-defined Core-interpretation Rarely used, is shared; definition interpretations vary borrowed Computer science Divergent interpretations in the extent of generalisation Technical or business definition from computer science Well-defined Considering this categorization of services and the different areas the term service is used in, one should always be aware of the context. Thus in this paper our focus is purely from business science perspective and service here refers to business service. According to Tallon (2007), there is variability in service-level alignment among organizations with different strategic foci: variability, not just in the extent of alignment as measured on a service-by-service basis but, in the implications of failing to achieve tight alignment in core services. There may be little or no variability in terms of organization level alignment between organizations with different strategic foci, as noted in study by Sabherwal and Chan (2001). When individual service are considered, misalignment may not be a threat in non-core areas for some organizations but, this varies between organizations and can only be understood using service-level analysis. Detecting service-level variability also becomes difficult with strategy typologies focusing more on content rather than execution of strategies. Identifying these existing gaps in literature and focusing on business side of strategic alignment model (Henderson and Venkatraman 1999), we developed a strategy classification system to better execute strategy-service alignment for organizations. B. Strategy Classifications Classification is the development of a system or scheme in order for researchers to arrange entities into taxonomy based on their similarities, differences, and relationships to one another as determined or inferred from their most fundamental characteristics (Chrisman et al 1988). A classification scheme includes one category of taxonomy whereas a classification system has one or more categories of taxonomy. Thus, taxonomy can be said as the theory and practice of delimiting and classifying different kind of entities (Chrisman et al 1988). So, taxonomy not only includes the classification system but also, the theory on which the classification system is built and the methods employed to construct it (Chrisman et al 1988). When classifying strategies, researchers have often used the terms typology and taxonomy interchangeably (Charih 2000). Researchers such as Hambrick (1984) and propose distinction between typology and taxonomy. A typology is generated by a conceptually derived approach and then tested in terms of first-level and mid-range theories. Taxonomies, on the other hand, are empirically derived and are useful in developing mid-range theories. Doty and Glick (1994) further add that taxonomy is appropriate to the study of strategies, because it helps classify phenomena in exhaustive and mutually exclusive categories.

3 As a mode of classification, a typology groups strategies according to a range of attributes. In classifying the strategies, it becomes possible to identify the various effective strategic organisational behaviours. Researchers thus recognise that strategy is the result of the interaction of forces both internal and external to the organisation (Charih 2000). The most popular typology to date has been developed by Miles and Snow (1978) and has four basic strategies of defender, prospector, analyser and reactor. The typologies developed so far focus mainly on strategies of private sector with a few exceptions. There are various studies such as strategies for declining industries (Harrigan 1980), strategies for dealing with competitive forces and aggressive competitors (Porter 1985), promotion of innovation (Lodahl and Mitchell 1980), and mergers (Reed 1988) have been considered for developing typologies. Typologies have been developed to suggest when to use particular type of strategies (Nutt and Backoff 1995). A few studies on typologies and taxonomies specifically for the public sector are by Charih (2000), Nutt and Backoff (1992) and Wechsler and Backoff (1987). The first two studies focused on typologies whereas the third study focused on taxonomy of strategies. The typology proposed by Nutt and Backoff (1992) offers five organisational strategies: bureaucrat, director, accommodator, compromiser and mutualist. The study conducted by Wechsler and Backoff (1987) identifies three strategies: developmental, protective and political. Charih (2000) focused on the strategic actions for Canadian government departments and proposed seven strategies. The taxonomy developed by Charih (2000) builds upon earlier works of Nutt and Backoff (1992) and Wechsler and Backoff (1987), who have developed typologies addressing public sector strategies. The strategies of government agencies are affected by various factors, including pressures from the elected representatives, demands and interests of powerful constituents, specific mandates and jurisdictions, centralised resource allocation mechanisms, and requirements of collaboration and competition fashion the types of strategies in public sector (Charih 2000; Nutt and Backoff 1992; Wechsler and Backoff 1987). In Australian state governments, the departments and agencies operate within the framework of a parliamentary government. Generated from the political will to fulfil mandates in a given field, the agencies have to deal with factors such as collective cabinet responsibility, ministerial accountability, and the program of the party in power. Further, the agency s strategic room to manoeuvre is conditioned by political imperatives, the departmental mandate, the division of powers between the various departments and agencies and the various levels of government, and the demands and support originating in the environment of these organisations (Charih 2000). We conclude that a lack of understanding about strategy of public sector organisations is reflected in limited taxonomy and typology development in this area. The literature is still ambiguous about the terms typology and taxonomy. So, it is necessary to understand what actually is being developed and whether developed classification system, taxonomy or typology can be generalized or specific to certain domain as public or private sector organisations. C. Taxonomy Development We observed from literature that developing or using existing taxonomies of strategies provided another way of understanding the formulation of strategies (Charih 2000; Fuller 2010; Wechsler and Backoff 1987). Table 2 provides a brief description of the derived strategy taxonomy adapted mainly from the work of Charih (2000) and Wechsler and Backoff (1987). TABLE II STRATEGY TAXONOMY DEVELOPMENT (ADAPTED FROM Charih 2000; Wechsler and Backoff 1987) Strategy type Internal Development Partnership Political Environmental Reorientation Status quo Focal activities - Staff development, improvement, support - Strategy review, implementation, development - Technology implementation, improvement - Framework, plan or policy development, implementation, improvement - Internal service or process improvement - Program development, implementation, improvement - Infrastructure development, improvement, maintenance - Citizen centric service development, improvement, implementation - Resource (water, minerals, conventional energy sources) management - Work with industry, community (national and international), governments (local, national, and international) and other government departments - Community encouragement, participation, support, development - Focus on specific section (underrepresented/disadvantaged) of community - Development, improvement, conservation of resources - Protection of cultural heritage, flora and fauna - Education/awareness of citizens, communities - Focus on climate change, pollution (air, noise, water) - Re-positioning - Maintain or continue existing frameworks, plans, policies, programs and strategies Once taxonomy is derived the next step is to develop the classification scheme. Charih (2000) observed a pattern where internal and development strategies are most frequently encountered, political, environmental, and partnership strategies are relatively frequent, whereas, status quo and reorientation strategies are infrequent. This approach of classifying strategies is different from existing schemes. Firstly, the analysis is based on strategy content and also on the spread of strategies across agencies. Second, this classification scheme moves away from the paradigm of using widely acclaimed works of Mintzberg (1981), Porter (1980), and Miles and Snow (1978) by other researchers (for example, see Boyne and Walker 2004; Nutt and Backoff 1992) in the area of public sector organisations.

4 The two case studies are discussed in the next section. First study was done using strategic plans of departments in Queensland Government. The strategic plans are downloaded directly from the respective department websites. In most cases the focus was on current strategic plans of the departments. Initially strategies identified from strategic plans are mapped to the developed taxonomy. Then based on the spread of the taxonomy of strategies, they are classified as kernel, cluster or individual. Similar process is observed in the case of second study on New South Wales (NSW) Government departments. The second study provides advantages of multiple case studies. Multiple case study approach allows a more direct comparison between the similarities and differences of the implementation practices in the different contexts considered (Silverman, 2000). Based on the second study, taxonomy descriptions are revised and strategies of Queensland government departments were revisited to accommodate the necessary changes. III. MULTIPLE CASE STUDY A. Queensland (QLD) Government The Queensland government is made up of departments and a number of government bodies. There are 13 departments (also called agencies) to help streamline Queensland government information and services. These departments are further divided based on the focus of their service delivery areas. The strategic plan document collected helps in identifying further the divisions in individual department. The study is based on strategic plans collected from 20 different agencies in Queensland government. Mapping to Taxonomy A total of 500 strategies were identified from the strategic plans of the departments. The strategies are then individually segregated based on the criteria and mapped to the developed taxonomy. Highest numbers of strategies identified are as internal strategy. This is followed by development strategy, partnership strategy, political strategy and environmental strategy. Internal strategy and development strategy also emerged as kernel strategy. Political, partnership, and environmental strategies are identified as cluster strategies and reorientation and status quo as individual strategy. The strategy set was revisited after NSW study is completed. This resulted in reorientation of strategies based on the revised criteria. The only notable change observed was the shifting of the development strategy as a kernel strategy to a cluster strategy. The analysis shows that most departments are focusing strategies which are internal and is related to development or improvement of plans, policies, strategies, frameworks, etc. It is also observed that the internal strategies are mostly related to departments which focus on communities or citizens. For example, in the departments of communities; community safety; or child safety have more than 50 percent of their strategies as internal strategies. In comparison Department of Transport and Main Roads and Department of Primary Industries and Fisheries have more development than internal strategies. Intriguingly, the departments of Public Works; Infrastructure and Planning; and Employment, Economic Development, and Innovation have more than 60 percent of their strategies as internal strategies. Given the nature of these departments it is expected to have them more development strategies than internal strategies. Based on the distribution it might be inferred that Queensland Government departments are focusing at the planning stage in comparison to development of infrastructure. This also implies that the departments are still evolving and preparing for future challenges. The distribution of strategies across departments is presented in Figure 1. As can be seen from the figure, that internal strategy is common for all 20 departments and so can be classified as kernel strategy. Similarly, development, political, partnership, and environmental strategies are classified as cluster and status quo and reorientation fall under individual strategy. Fig. 1. Strategy distribution across QLD government departments B. New South Wales (NSW) Government The NSW government like any other state government in Australia administer responsibilities related to education, transport, law enforcement, health services and agriculture. These responsibilities are controlled by departments. Government departments and agencies are also referred to as the public service or the public sector 1. The NSW Government has streamlined the structure of the public sector by replacing over 130 agencies with 12 Super Departments. The study includes strategic plans or corporate plans obtained from these 11 out of these 12 departments. Premier and Cabinet is excluded from the study because of the supervisory nature of the department. Mapping to Taxonomy The number of strategies analysed for NSW government are around 494. In comparison to QLD 1

5 government departments, the departments for NSW appeared more structured. The departments though consist of agencies but the strategic plans are also not scattered across agencies under the departments. The departmental strategies are highly skewed towards internal strategy except for the department of transport. The dominant strategies are internal, development, and partnership which constitutes around 92 percent of the overall strategies. In contrast to QLD government, the departments related to planning, infrastructure, etc. have more focus towards internal strategy than communities, and education and training. Similar to QLD government, political strategy after internal strategy is dominant for departments of communities, and education and training. The internal strategy emerged as kernel strategy, development, partnership, political, and environment as cluster strategy, and status quo and reorientation as individual strategy. The distribution of strategies across departments is presented in Figure 2. Fig. 2. Strategy distribution across NSW government departments IV. DISCUSSION The study of strategy statements from strategic plans of two state government departments provided a basis of developing taxonomy and subsequently identifying three different layers of strategies. The study also helped in understanding the strategy formulation of the departments. It is observed that the strategies follow a definite pattern and is almost similar for both the state governments. The strategies are mainly internal, i.e., focusing on development or restructuring of policies, plans, frameworks, etc. Departments such as transports, infrastructure, have more development strategy in comparison to other departments. Given the nature of these departments it is expected but they also have substantial internal strategy which means that they still have to work more on their internal structure before focusing on development. Political strategy is observed mainly for departments related to community, which is understandable given the nature of strategy towards betterment of community or focusing on specific sections of community. It is also observed that major proportion of the strategies fall under internal and development (comprises almost 80 percent of strategies), while remaining strategies are sparsely spread across the taxonomy. Strategies related to political, partnership, and environment, are almost non-existent for most of the departments. Our work so far helped in understanding public sector strategies, developing a taxonomy and identification of three layers of strategies as kernel, cluster and individual. The work has limitation as the current coding is based on single researcher. Though, we tried to minimise the bias through review of another researcher and including strategic plans of departments from two state governments. In order to overcome the limitation we plan to have independent researchers coding the same strategies. Further work is required to test if this classification scheme is generalisable (useful for all comparative studies), parsimonious (facilitates identification and information retrieval), hierarchical (facilitates comparative research because generalizations can be developed at each categorical level) and timeless (useful for identifying both the past and future strategies followed by organisations) (Chrisman et al 1988). This work is underway by examining further sets of state governments in similar parliamentary systems. Summary After studying strategies of two state governments, we were able to finally develop and visualise strategies which can be termed as kernel, cluster and individual strategies (refer Table 6). Strategy classification just forms one part of our overall objective of the study. The developed strategy taxonomy also does not help us in identification of services related to particular strategy. The objective is to develop a service-strategy mapping and prioritise services to assist in developing decision support system for organisations. This will further work towards better strategy integration (Henderson and Venkatraman 1999). TABLE III STRATEGY CLASSIFICATION SYSTEM Kernel Strategies Cluster Strategies Individual Strategies Internal strategy Development strategy Political strategy Environmental strategy Partnership strategy Reorientation strategy Status quo strategy V. CONCLUSION This paper has provided the foundations for building a system for classifying business strategies by specifying the contents and spread that must be considered in developing such a system. It identified that kernel strategies did exist and that these belonged to the internal strategy. In addition, cluster strategies were identified and belonged to development, political, environmental, and

6 partnership components of the taxonomy. From this work, the perspective of business strategy as the driver for alignment as proposed by Henderson and Venkatraman (1999) can be strengthened by clear understanding about articulation of strategy based on the developed classification system. The developed classification system provides top management with a tool that facilitates their role of strategy formulator in articulating the logic and choices pertaining to business strategy. Well formulated business strategies will then help IS managers in efficiently and effectively implementing the supporting IS infrastructure and services. In addition, this taxonomy and the referencing system that enables the standardised labelling of business strategies, supports enhanced discussion within our research discipline of differing theoretical approaches to the field. The limitation at present is generalizability outside public service organisations, which we aims to overcome through empirical studies in private organisations. Researchers can modify and test the taxonomy and the classification system empirically in multiple organisational contexts or conceptually continue to employ their preferred theoretical approaches while invoking the standardised referencing system. Practitioners will have greater descriptive clarity through which business strategies may be identified and pursued. Collectively, both academicians and practitioners may use the classification system in ways best suited to their individual needs while enabling a common understanding by those from differing theoretical perspectives. In closing, we observe that alignment remains an important but elusive goal. Managers should continuously re-evaluate and re-adjust strategic alignment in accordance to environmental changes. REFERENCES [1]. 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