Strategic Planning and Management in Transit Agencies (2005)

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31 This synthesis project was designed to address a number of key questions in regard to strategic planning and manage- ment in the transit industry. These questions, and a summary of information gathered to answer them with the conclusions reached, follow. • Do the transit agencies have a formal plan or other ele- ments of strategic management? Based on a random survey, strategic planning and management is conducted in some form by more than 80% of the agencies sam- pled. Consistent with previous studies (as well as with intuition), it is conducted to a greater degree by large agencies than by medium and smaller ones (100%, 90%, and 74% of those surveyed, respectively). This level of strategic planning and management rep- resents a significant increase from a study done in 1986, which found that well under one-half of the respondents were conducting what would normally be considered as true (“classic”) strategic planning. It also suggests a sig- nificant increase from a 1990 study (NCHRP Report 331) that found that not many publicly funded trans- portation agencies “seem to have a strong interest in or understanding of strategic management.” Although strategic planning and management are quite prevalent among the agencies surveyed, there is a wide spectrum of planning methods used and planning documents that are produced. Only one agency reported that it did not have a specific plan document, but instead looked at various planning processes and related deliv- erables. However, each of the other agencies produced some kind of formal strategic planning document. Com- mon components of these documents included a vision and/or mission statement, an internal and external envi- ronmental scan, the identification of strategic issues and/or initiatives, action plans, and performance mea- sures. A few agencies included a description of their core values. • How were the plans developed and implemented? The strategic plans were generally developed by internal staff over a period of several months. Consultants were some- times used, usually when an agency was first beginning to undertake strategic planning, or more commonly as facilitators at planning workshops or management and/or board retreats. The most common length of time for the strategic planning process was 3 to 6 months. Most of the agencies took less than 12 months to com- plete the process. Although specific planning practices varied greatly from agency to agency, there were a number of fairly common steps in their overall planning processes. These include: – Creating an organizational vision and a vision statement. – Developing a mission statement and goals and objectives. – Identifying the organization’s core values. – Conducting a “stakeholder” analysis (i.e., who are the important stakeholders and what are their inter- ests or needs?). – Assessing the organization’s external and internal environments to identify strengths, weaknesses, opportunities, and threats (a SWOT analysis). – Identifying the key strategic issues facing the organization and formulating strategies to manage these issues. – Developing an effective process for implementing and managing the strategic initiatives. – Evaluating progress and making necessary mid- course corrections. Two key implementation strategies were used in regard to strategic plan implementation. One was to make sure that the strategic plan was linked to the oper- ating budget and capital programming processes. This helped to ensure that the resources necessary to support the plan would be available. The other key strategy was to link the plan to performance measures that created accountability for implementation and that allowed progress toward plan achievement to be tracked. One strategy used by several agencies was to link strategic plan achievement with the chief executive officer’s per- formance appraisal. • What are the benefits of strategic planning and man- agement? Strategic planning has demonstrated broad usage and staying power for several decades. This indi- cates that it is providing real value to organizations. Moreover, if TCRP’s New Paradigms project is correct (i.e., that fundamental change is needed in the transit industry in view of the substantial social, economic, and technological changes occurring in this country and beyond), it may be that strategic planning and manage- ment is not just important to transit organizations, but critical. Survey respondents rated strategic planning as “very useful” to their agencies (a 4 on a scale of 1 to 5). They CHAPTER FIVE CONCLUSIONS

cited numerous benefits, some general, some quite specific. Among the more general, respondents often remarked that the process was instrumental in creating a new vision for the agency, or in helping to give the entire agency a sense of direction. It helped several agencies become more customer oriented. It also encouraged staff and agency boards to have a more long-range view in decision making and priority setting. Similarly, it has helped several agencies to organize and foster a shared understanding of organizational goals and objectives, and enabled staff to work together more effectively. Other internal benefits cited were that it allowed the agency to establish budget priorities, redirect staffing levels, and create more effective workflows. It was also used to restructure services to gain a more efficient use of resources or to expand existing services. Strategic planning provided many external benefits as well. It increased external stakeholder (local govern- ment, the public, and local businesses) awareness and input, and resulted in greater stakeholder support. Also, it was used in conjunction with funding concerns and decisions. Specifically, strategic plans were used to jus- tify a need to increase funding by indicating that the agency would need more resources than they currently have to meet the needs of the region. Finally, it helped define an agency’s core role and responsibilities to the community. • What were the drivers for creating the strategic plans? The most common driver for undertaking strategic plan- ning was an internal decision by management. Almost as common was a decision by the agency board. In a few cases, there was an external impetus, such as a state law or a metropolitan government. Some specific rea- sons cited for undertaking strategic planning included: – A desire to link the operating budget, capital bud- get, and performance measures together. – A desire to drive change throughout the organi- zation. – To help make a case for increased funding. – To focus on important issues facing the organiza- tion in the coming year. – To take a fresh look at how transit could develop in the region in order to attract new markets. • What organizational roles were involved? What was the role of the oversight board? Most (80%) of the agencies have placed responsibility for strategic planning with specific departments. However, the organizational loca- tion varied considerably. The most common location (five agencies) was in the “executive office.” Next most common (three agencies) was in a strategic planning department (e.g., strategic organizational planning). Four agencies had assigned the responsibility to more general planning departments or to administrative units such as human resources. Three organizations did not have responsibility assigned to a specific department. Approximately one-half of the agencies reported that their strategic plans were approved by the agency board. 32 However, many agencies involved their boards in plan development as well; for example, by involving them in planning retreats or workshops. In some cases, the board provided policy guidance or broad goals at the begin- ning of the process and then left development of the plan to management and staff. • What are the linkages to other organizational processes? Most of the agencies (more than 75%) indicated that they link their strategic plans to other key organizational processes, such as service planning, budgeting (operat- ing and capital), financial planning, information tech- nology planning, performance measurement, and orga- nization development. However, there is substantial variation in terms of how well they think their agencies have accomplished this. • Are there any measures of plan effectiveness? Overall, the agencies rated themselves between “fairly effec- tive” and “very effective” in regard to implementing their strategic plans (a rating of 3.6 on a scale of 1 to 5). One of the ways the agencies determine their effective- ness is by linking their plans to performance measures and then monitoring and reporting performance monthly or quarterly. • What lessons were learned? There were a number of lessons learned or keys to success cited by agencies in terms of making their strategic planning more effective. – Make the strategic planning process as participative as possible. Do not let the plan be developed by just the planning staff. Include not just internal staff but external stakeholders as well. A key method for getting buy-in and commitment to the plan is to involve people in its development. – Strategic planning by itself is not enough. The broader concept of strategic management is needed to ensure that strategic plans, no matter how good they are, get turned into action. – One way to encourage strategic management is to closely link the strategic planning process to other important business processes such as budgeting, capital programming, and performance measure- ment. To be accomplished, the plan has to trans- late into necessary resources, and monitoring is essential to ensure that plan goals and objectives are being achieved. – Defining the organization’s core values can pro- vide a beneficial context for the development of goals and strategies. – Make the plans and goals a stretch, but not so much so that they are unattainable. – Methods and techniques from the field of orga- nization development can be a useful adjunct to the strategic planning and management process (e.g., process consultation, team building, lead- ership development, collaborative goal setting, and employee feedback surveys). – It can be very helpful to designate strategy “cham- pions” that are responsible and accountable for the

33 implementation of specific plan strategies, and to give them appropriate incentives for doing so. – Good communication is key. People need to know what is being done, why, and what their role is. – Tailor the planning process to the agency conduct- ing it. One size does not fit all. A small agency will not need the same level of effort as a large, more complex one. Other factors to consider are the cul- ture of the agency (e.g., formal or informal), the resources needed, and the time frame available. – Recognize that change will be difficult and that it will take time and effort. Buy-in from staff and agency board is critical for strategic planning to succeed. – A strategic plan is a living document that must be regularly updated. • Are there any gaps in knowledge? Several possibilities for additional study are suggested here. In general, tran- sit agencies are better at developing plans than they are at implementing them. Some agencies pointed out that they were just getting started with strategic planning or were still in a learning phase. More study of effective strategies and techniques for turning strategic plans into action could therefore be very beneficial. Correspondingly, a key to making strategic planning effective is derived from linking strategic plans and processes to other key organizational processes such as budgeting, capital programming, and performance mea- sures. Most of the agencies surveyed are doing this, but it is not clear without more analysis exactly what tech- niques are being used to do this or how effective they have been. Similarly, only a few agencies have made the attempt to drive their strategic plans down to the level of individual employees, particularly by making this a part of performance appraisals and/or compensa- tion decisions. More study on this could be helpful. One possibility would be the development of a comprehen- sive and integrated system or model that would combine strategic planning, budgeting, capital planning, financial planning, performance measurement, and organization development. Although most agencies incorporate some kind of per- formance measures in their strategic planning process, additional study of what specific performance measures are most appropriate and effective might be helpful. Another area for research would be in regard to tech- niques for accelerating the strategic planning process and more effectively involving multiple and diverse stakeholders, particularly external stakeholders. One such technique is the “future search conference,” a process that engages key stakeholders in a 2 to 3 day retreat that creates a vision of a desired future and then develops strategies and action plans for achieving it. In regard to external stakeholders in general, it would be useful to know more about when to involve them and the best ways for doing so. One issue this project did not address is the relation- ship of strategic plans to the Long-Range Transporta- tion Plans and Transportation Development Programs that agencies develop in response to federal planning regulations. It is assumed that most of the agencies make some kind of linkage between the two plan- ning processes, but it is not clear how or to what extent they do so. Relatedly, it is not clear to what extent the strategic plans address larger community issues such as sustainability, land use, and comprehensive regional planning. More study of these relationships could be worthwhile. There is a tendency in planning to assume, either explicitly or implicitly, that the future will be pretty much like the past. There is a need for more planning that challenges the status quo, that “thinks outside the box,” particularly in this age of increasing uncertainty. One technique frequently used in the private sector as a strategic management tool is “scenario planning,” a planning methodology that develops several plausible future scenarios and then develops strategies for what the organization will need to do to respond to them. In addition, strategies can be created that will help the organization realize a particular scenario. Research into ways to combine this planning technique with more tra- ditional strategic planning in the transit industry may be merited. Finally, the TCRP New Paradigms study has sug- gested that fundamental change in the transit industry will be necessary if the industry is to be successful in view of the significant social, economic, and political changes in the world. This will require more than just traditional strategic planning, which is often more a matter of “doing things right” than a matter of “doing the right things.” Research into methods for effectively doing what Mintzberg calls “strategic thinking” might be valuable in this respect. These ideas for further study also suggest a need for training; for example, how to do scenario planning, or creative and collaborative organizational “visioning.” There may be a need for training about strategic plan- ning in general. Such training is not available through the National Transit Institute and it is not clear where a transit agency would go to learn how to do effective strategic planning. One suggestion is to consider creat- ing a peer review team made up of transportation pro- fessionals who have executed a successful strategic plan- ning process.