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4 CHAPTER TWO LITERATURE REVIEW OVERVIEW Finally, a recent TCRP study about "emerging new para- digms" in transit has suggested that fundamental changes will The literature review revealed that strategic planning is a be required if transit is to succeed in a world of increasing popular and widespread practice in both the private and pub- social, economic, political, and technological change. If so, lic sectors. It is a leadership and management tool that has it could well be that strategic planning and management will been successfully used for decades to help organizations bet- be a crucial tool toward this end. ter prepare for the future and improve long-term performance. There is increased recognition that strategic planning is not enough by itself and that too many good strategic plans have INTRODUCTION been left to gather dust. Effective leadership is required to As would be expected, there is a significant amount of liter- both develop and implement strategic plans. This has led to ature on the subject of strategic planning in general, particu- the concept of "strategic management," which includes the larly in the private sector. There is also a fair amount written implementation and ongoing management of strategic plans, on strategic planning in the public and nonprofit sectors. How- not just their development. ever, much less has been written specifically about strategic planning in public transportation. Another trend has been to make the strategic planning process briefer and more flexible. Part of the problem in the This literature review will be selective rather than exhaus- past has been that formal and elaborate planning processes tive. It will cover strategic planning in the private sector; how- have often led to the development of comprehensive and thor- ever, it will primarily focus on strategic planning in the ough plans that are out of date by the time they are produced. public sector and in public transportation. Today's more turbulent and uncertain times require that less emphasis be given to the form of the plan and more to the substance and timeliness of the results. HISTORY Henry Mintzberg has suggested that strategic planning is Strategic planning has a long history in organizations. Its ori- quite different than "strategic thinking," the creative synthe- gins are often thought to have been in the military, where sis of visionary new business strategies. He goes further by there was a need to develop comprehensive, long-term strate- suggesting that strategic planning, essentially analytical in gies to win a war as opposed to the shorter-term, more limited nature, may even be antithetical to strategic thinking. He tactical planning needed to win battles or skirmishes. An early believes that strategic planning is more appropriately thought form of strategic planning, the SWOT analysis (strengths, of as "strategic programming." As such, it may be quite suit- weaknesses, opportunities, and threats), came out of the Har- able for relatively stable public transportation systems. vard Business School in the 1950s as part of their efforts in regard to business policy development and the analysis of Although it began in the military, the early nonmilitary use business strategies in relation to an organization's internal of strategic planning was primarily in the private sector. How- and external environments. ever, its use in the public and nonprofit sectors has increased substantially and there are now several good sources of infor- The practice of strategic planning achieved considerable mation on performing strategic planning in these sectors. Sev- popularity in private-sector organizations in the 1960s and eral reports and articles that pertain specifically to public- 1970s. In the 1980s, it became more and more prevalent in sector transportation are also reviewed. the public and nonprofit sectors. Unlike other management fads that have quickly disappeared, strategic planning is a Effective strategic planning and management requires not management technique or practice that has demonstrated only deciding what an organization should do, but also its staying power and broad usage across a variety of organiza- having the knowledge and skills required to do it. With this tions in both the private and public sectors. in mind, the tools of organization development are discussed as a factor that could increase an organization's capability to STRATEGIC PLANNING IN GENERAL develop and implement strategic plans. This includes devel- oping and retaining a workforce with the requisite knowledge Early on, strategic planning was a relatively formal, elabo- and skills. rate, and often lengthy process. In addition, because times

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5 were more stable, a strategic plan was intended to last for does not fail because of such commonly mentioned pitfalls several years. More recently, largely in response to these as a lack of commitment from top management or resistance more rapidly changing and turbulent times, there has been a to change, but instead because of its fundamental nature of clear trend in the private sector to being too analytical, too formalized, and too detached from the functions and interests of the business's line managers. Shorten the strategic planning cycle so that the plan is not out of date by the time it is finished. (However, it In spite of his belief that strategic planning is not effective should also be noted that there has been a countervail- at creating business strategies (strategic thinking), he believes ing trend to open up the process and involve as many that it can play important roles including: participants as feasible, rather than having it be a "top- down" plan developed largely by top management and Strategic planning as strategic programming--Instead imposed on the organization. The effect of this has been of trying to use strategic planning to generate strategies to lengthen the process.) or visions, use it to program them. This can be done Make the planning process less formal and more flexible. through a process of "codification" (expressing the strate- Make the process relatively continuous rather than some- gies in ways that are clear and operational), by "elab- thing undertaken only every 2 to 5 years. oration" (breaking strategies down into substrategies Link it to other important business processes such as and action plans), and "conversion" (identifying the budgeting and performance measurement. impacts of the strategies on operations; e.g., on budgets and performance controls). An example of this is found in Strategic Readiness: The Strategic plans as tools to communicate and control-- Making of the Learning Organization (1) in which the Plans can be an important way of communicating the authors suggest a shift from strategic planning to strategic organization's intentions both internally (helping to learning through a regular process of ensure that everyone in the organization is pulling in the same direction) and externally. Continuous planning--wherein the organization focuses Strategic planners as analysts--Planners can use their on questioning and quickly adjusting existing plans; analytical skills and orientation by performing special Improvised implementation--that is, both experimental studies and by offering new perspectives. and evolving, and that provides good information for Strategic planners as catalysts--In this role, planners do learning; and not try to enter the "black box" of strategy making, but Deep reflection about original assumptions--what has instead encourage and assist line managers to think in changed and what has been learned. creative ways about the future (3, pp. 112114). The authors maintain that "most organizational change results In Mintzberg's words, "Planners shouldn't create strategies, not from formal plans and fixed programs for change but from but they can supply data, help managers think strategically, a process of learning--and not just from the learning of indi- and program the vision" (3, p. 107). viduals but, more importantly, from the collective learning of entire organizations" (1, p. xi). Although insightful, Mintzberg's distinction between strategic thinking and strategic planning may be more rele- The 1994 publication of The Rise and Fall of Strategic vant to the private sector, where the environment tends to be Planning by Mintzberg (2) presented a very comprehensive, more volatile and where businesses must constantly be on the complex, and contrarian view of the practice of strategic plan- lookout for new business strategies and opportunities. Gen- ning. His central argument is that strategic planning by its erally, in the public sector, and in public transportation more very nature is the antithesis of "strategic thinking." He views specifically, the situation is usually more constrained. For strategic thinking as a creative act of synthesis, and strategic example, the purpose and geographic jurisdiction of public planning as a process that is essentially one of analysis. (An transportation agencies is usually prescribed by state legisla- analogy might be right brain versus left brain thinking, in tion. For the most part, public transportation agencies are not which the right brain is considered to be more creative and going to be pursuing business opportunities outside of the holistic and the left brain is considered to be more linear and area of public transportation. In addition, their financial struc- logical.) Mintzberg believes that "strategic planning often ture is often defined or controlled in large part by their enabling spoils strategic thinking, causing managers to confuse real legislation or funding bodies. vision with the manipulation of numbers" (3, p. 107). It might therefore be argued that strategic planning, Mintzberg goes on to argue that "Strategic planning, as it when thought of as strategic programming as described by has been practiced, has really been strategic programming, Mintzberg, may be the primary role it should play in public the articulation and elaboration of strategies, or visions, that transportation. Mintzberg implies this when he states that already exist" (3, p. 107). He asserts that strategic planning "Only when an organization is sure of the relative stability of