Measuring Strategic Management Maturity: An Empirical Study in Turkish Public and Private Sector Organizations
Measuring Strategic Management Maturity: An Empirical Study in Turkish Public and Private Sector Organizations
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Systems – Installing strategic support systems.
Abstract—Strategic Management is highly critical for all types of Policies – Establishing strategy supportive policies.
organizations. This paper examines maturity level of strategic Managerial skills are:
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management practices of public and private sector organizations in Interacting – The exercising of strategic leadership.
Turkey, and presents a conceptual model for assessing the maturity of
Allocating – Understanding when and where to allocate
strategic management in any organization. This research focuses on
R&D intensive organizations (RDO) because it is claimed that such resources.
organizations are more innovative and innovation is a critical part of Monitoring – Tying rewards to achievement.
the model. The Strategic management maturity model (S-3M) is Organizing – The strategic shaping of corporate culture.
basically composed of six maturity levels with five different The intent here is not to examine strategic management in
dimensions. Based on 63 organizations, the findings reveal that the depth. Rather, the aim is to analyze maturity level of strategic
average maturity of all organizations in the sample group is three out
of five. It corresponds to the stage of ‘performed’. Results simply
management in a particular group of organizations in
show that the majority of organizations from various industries and developing countries.
sectors implement strategic management activities; however, they R&D has always been considered a domain of firms in
experience multiple challenges to optimize strategic management technologically advanced and economically developed
processes and integrate organizational components with business countries [3]. R&D in developing countries (DC) has figured
strategies. Briefly, they struggle to become an innovative less prominently. Most research has concentrated on
organization.
technology transfer to these countries, and import advanced
Keywords—Strategic management, innovation, developing technologies from abroad [4], [5]. There is still a lack of
countries, research and development. studies concerning the maturity of the strategic management
activity of RDOs in developing world. Data on strategic
I. INTRODUCTION management practices of R&D institutions in DC is scattered
and only a few countries outside advanced economies receive
T HE subject of strategic management has been notably
studied in related literature for decades. The importance of
strategy has been highlighted by practitioners as well.
research attention. Therefore, this study seeks to contribute by
the filling of the gap between strategic management and R&D
Strategic management is concerned with formulating business in DC. In this sense, it suggests a framework to determine
strategies and planning how those strategies are to be put into maturity of strategic management in public and private sector
effect. In actual practice, strategic management revolves organizations.
around the following separate tasks: 1- Determining the long- The purpose of the research is to give an overview about the
term direction of the organization; 2- Assessing the external strategic management activities in RDOs of Turkey. The main
environment and competitive position; 3- Establishing the contribution of this paper is to the highlight maturity level of
overall objectives, goals and strategic; 4- Determining strategic management in a developing economy and in certain
resources requirements; and, 5- Establishing the foundation types of organizations. Obviously, further researches are
for tactical and operational plans and programs [1]. needed for more detailed results and comprehensive
Briefly, strategic management has three main phases: 1- conclusions.
Analysis, 2-Formulation, and3-Execution. Crittenden and A. Developing Countries
Crittenden [2] present a model of strategy implementation Historically, countries have been classified based on their
which is consisting of eight levers. The eight levers are economic conditions. Many different institutions have
classified into structural variables and managerial skills. proposed various classifications such as industrialized,
Structural variables are: developed, advanced, developing, less developed, and
Actions – Who, what, and when of cross-functional undeveloped.
integration and company collaboration. While there is no common formula to determine which
Programs – Instilling organizational learning and country is developed or emerged, the so-called BRIICS
continuous improvement practices. (Brazil, Russia, India, Indonesia, China, and South Africa) are
considered some of the largest emerging markets [6]. Other
F. Demir is with the DKR Consulting, Turkey (e-mail: commonly identified emerging markets include Mexico,
[email protected]).
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Argentina, Poland, Turkey, and South Korea. All of these institutions through the NPM reforms [12].
countries are growing rapidly and their societies are Since the socioeconomic and regulatory uncertainties have
undergoing big transition. Since significant socio-economic had a powerful influence on the nature of administrations in
and political reforms are undertaken, the nations become DCs, governmental institutions provide basic goods and
important players in their region and world affairs. services in many cases.
Understanding how organizations in different countries In many parts of the world, governments and public sector
adapt, resist and generally manage themselves may be one of organizations have been providing market products and
the key success factors for global business activities in the services. For instance, infrastructure facilities traditionally
new century. However, most of the theoretical and empirical have been constructed and operated by governments of DCs
studies of organizations and management issues have been [7]. Because government agencies play a significant role in
developed based on samples from industrialized countries or DCs, this study examines not only private sector
firms and organizations established in these countries [7]. organizations; it also includes public sector organizations.
North [8] and Olson [9] claim that successful national business Even though most of the literature on strategic management is
systems of industrialized countries may not be successful in based on experiences of for-profit organizations [11], in this
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other parts of the world. research, a significant portion of the sample group (76%) is
DCs may vary significantly in many respects, and may be composed of governmental institutions.
categorized into subgroups in terms of their stage of This paper is structured in the following way. First, a
development [10]. Indeed, there are some common critical literature review is presented. Then, the research
characteristics that have separated these countries from so- methodology is explained. Subsequently, the results are
called industrialized countries: Uncertainty is a fundamental demonstrated, and finally, the conclusions are disclosed.
characteristic of regulatory and economic reality in most DC.
Some other main characteristics of organizations in DCs can II. EMPIRICAL AND THEORETICAL BACKGROUND
be listed as the lack of organizational identity, strong Despite the vital role of management systems in the
resistance to change, concern for survival, the vital role of organizations and institutions of DCs, there are few theoretical
informal organizations, and goal ambiguity [7]. and/or empirical studies on this topic [7]. Strategic
B. Strategic Management in Public Sector management studies have been mostly focused on the
organizations for profit. Also, the available empirical literature
In many DCs, national governments are forced by multi-
of strategy studies in RDOs, especially in DC, is scarce.
lateral development agencies to produce “vision” strategy
Additionally, factors that influence maturity of strategic
documents for 2030 or 2050, which are then used to produce
management have been neglected. Lastly, no model for
mid-term and short-term planning documents. These
evaluating maturity of strategic management practices,
documents usually contain lists of goals, sometimes with a
description of policy instruments, and associated investment especially in RDOs has been proposed. Therefore, this paper
proposes a model that assists executives to identify the
costs. Many DCs have whole ministries devoted to creating
maturity of such practices in any country.
long-term development plans, but this does not necessarily
ensure their quality or relevance [11]. A. Maturity Models
In 1987, Turkey applied to join European Economic Today, many maturity models are based on the Capability
Community, and it was declared eligible to join the EU in Maturity Model (CMM) proposed by Carnegie Mellon
1997.Accession negotiations started in 2005 and University in the late 1980s. Maturity models address a wide
European Council recognized Turkey as a candidate. As part range of topics from risk management to business analysis. In
of the accession process, since 2006, public institutions are related literature, a number of maturity models are introduced
obliged to prepare a strategic plan and to prove that they are to evaluate different aspects of organizations such as corporate
governed according to this plan by publishing annual performance management [13], business process management
performance reports. The Public Financial Management and [14]-[16], project management [17] and innovation
Control Law (Law no. 5018) was enacted in Turkey in 2002. management [18].
According to this legal framework, the strategic planning
application is identified and is made compulsory for public B. S-3M
administration. However, it was launched with all instruments In the research literature, based on CMM, many maturity
on January 1st, 2006. models are proposed, however, no one is developed for
Through New Public Management (NPM), the strategic management activities. Only the Balanced Scorecard
administrative relationship between central and local Institute’s framework [19] provides a foundation for
government has been re-regulated in favor of democratization determining strategic management maturity. It is very useful
and localization in public administration. By means of for quick assessment, but it mostly targets organizations for
regulations, it is emphasized that the strategic management profit and it might be a bit complicated for SMEs, and also,
techniques of the private sector must be utilized for citizen innovation is not clearly addressed in the model and there is
satisfaction exactly like customer satisfaction. It is observed no direct link between innovation and its’ strategic
that strategic planning became a primary obligation for public management dimensions. Therefore, this paper has attempted
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to provide a simple and structured S-3M which is still in early with the visible commitment executive team. It is obvious that
stage of development. It can be used in any type of not only strategic management efforts, but all organizational
organization and industry. One of the biggest differences of S- projects including business transformation and change cannot
3M is obviously the essence of innovation. It provides a succeed without powerful leadership and the full support of
foundation to integrate innovation efforts with strategic top management.
management activities. Formulation: This dimension refers to core values,
principles and critical success factors. It also contains strategic
C. Five Dimensions of Strategic Management
goals and objectives. All components of a strategic plan
The S-3M contains assessments of performance along five should be formulated including performance
different dimensions of strategic management: metrics/indicators and actions.
1. Leadership Execution: Without implementation, strategy is merely a
2. Formulation fantasy. Strategic management systems must then be created
3. Execution in order to implement the strategy and monitor progress
4. Integration towards its declared goals [20]. In the execution stage,
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TABLE IV
CHARACTERISTICS OF THE RESPONDING COMPANIES (N=63)
Sector Industry Number of employees involved in R&D R&D Budget (Million USD)
Public76% ITC21% 1—50 (46%) <1 (17%)
Private24 % Defense & Security 19% 50—100 (8%) 1—50 (29%)
Aerospace11% 100-250 (8%) 50-250 (3%)
Transport6% >250 (7%) >250 (6%)
Energy5% Unanswered (27%) Unanswered (38%)
Finance3%
Education3%
Health2%
Other30%
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IV. RESULTS AND ANALYSIS Almost all of the organizations have a strategic plan
(92.1%), while 89.7% of those organizations update their
A. Strategic Management Practices
strategic plan regularly, which is quite a promising figure. As
Overall, the results seem relatively promising regarding the expected, a good portion of the sample group, nearly half of
strategic management activities that RDOs practices in the organizations (44.4%), have innovation strategies. Again,
Turkey. In this research, whether any department or employee this is not surprising because RDO value innovation more than
assigned for strategic management/planning activities is other firms operating in traditional industries. Lastly and
questioned. Obviously, boundaries of leadership extend surprisingly, more than half of the organizations have no KPI
beyond that. All organizations in the sample group have an to track R&D activities. Most of those organizations are
assigned person or team to lead strategic management works. governmental institutions (88.2%).Almost all private sector
While 4.8% of the organizations have an employee for such organizations assign at least one KPI to measure performance
duties, 90.5% of them have a department/unit to formulate of their R&D activities. Unfortunately, we had a relatively
strategies and carry on all related activities. In 4.8% of the high number of unanswered participants; especially, in regard
organizations, there is no a particular department or employee to innovation strategies and KPI for R&D studies.
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TABLE V
STRATEGIC MANAGEMENT PRACTICES (N=63)
Employee 4.8% Exist 92.1% Yes 82.5% Exist 44.4% KPI Exist 19%
Strategic SP Innovation
Owner Department 90.5% Nonexistent 6.3% No 11.1% Nonexistent 41.3% for Nonexistent %54
Plan Revision Strategy
Top Management 4.8% Unanswered 1.6% N/A 1.6% Unanswered 14.3% R&D Unanswered %27
B. Measuring Maturity Level of Strategic Management were surveyed, of which, 4 organizations scored “excellent”
As shown in Table V, five questions were asked to the with full points (100). Not surprisingly, those enterprises
participants. Firstly, all organizations have an ownership for operate in the private sector and develop advance
strategic management activities; that is a starting point for and technologies. Three organizations have initial maturity level
effective leadership indicated in the S-3M. Also, it is (1) with minimum scores (5, 10, and 20), while the maturity
considered sufficient for initial level of the maturity. level of four organizations is 2 (planned). In terms of
Obviously, in future studies, more questions must be asked to optimization and integration, government agencies relatively
examine other aspects of leadership. The organizations that set performed less than companies for profit. Even though most
a department or business unit for strategic management actives public institutions have a strategic plan and revise their plan
had full points (20).The ones that assign only one employee constantly, they do not have a clear innovation strategy. Also,
for such activities had 10 points. The other organizations that they have no KPIs for measuring performance of R&D
have neither a separated business unit nor fully responsible activities. Majority of organizations surveyed has level 3.
individual to lead and follow strategic management, received Average score of all 63 organizations is 64.8, which is level 3
only 5 points. Secondly, the organization that prepared a valid (planned) as well.
strategic plan had 20 points. The others had no points. If the
organization updates its’ strategic plan regularly, it gets 20 V. DISCUSSION AND CONCLUSIONS
points. The organizations that developed innovation strategies This paper has attempted to identify maturity level of
regardless of the type of strategy had 20 points. If they do not strategic management practices at R&D intensive public and
pursue any innovation strategy, they have 0 point. private sector organizations in Turkey. Even if this research is
Clearly, having an innovation strategy does not imply that conducted in a developing country, the maturity model
corporate and innovations strategies are linked. Therefore, proposed is applicable in any country. Although S-3M is still
additional and more specific questions should be asked in in the early stage, it is useful to understand, analyze and
further researches. On the other hand, developing an improve strategic management activities of any type of
innovation strategy is a ground and starting point to move organization. Our findings are as expected. Average maturity
forward a fully integrated organization. Lastly, it was asked level of the participated organizations from various industries
whether participated organizations have key indicators to is three out five; basically, it implies that the organizations
measure performance of their R&D activities. The ones that have a sponsor (leader) for strategic management activities.
have set KPIs for R&D projects and initiatives got 20 points. Most of them have a plan covering strategic goals and
Once again, having KPIs may not infer that such an objectives. They develop business strategies. They perform
organization optimized its’ all strategic management their plans. However, they face some obstacles to formulate
processes. However, it is a strong indicator that the innovation strategies and align them with business strategies.
organization monitors and measures its’ R&D activities which Also, they struggle in measuring R&D performance. Only few
is basically the beginning of the optimization process. organizations have an optimized process of strategic
In total, 63 organizations from public and private sector management and excellent maturity.
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TABLE VI
MEASURING MATURITY LEVEL OF STRATEGIC MANAGEMENT (N=63)
Questions
Owner Strategic Plan SP Revision Innovation Strategy KPI for R&D
Organization Score TOTAL
1 10 20 20 0 0 50
2 20 20 20 0 0 60
3 20 20 0 20 20 80
4 20 20 20 20 0 80
5 20 20 20 20 0 80
6 5 20 20 0 0 45
7 20 20 20 0 20 80
8 20 20 20 0 20 80
9 5 0 0 0 0 5
10 20 20 20 0 0 60
11 10 20 0 0 0 30
12 20 0 0 20 0 40
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13 20 20 20 0 0 60
14 20 20 20 0 0 60
15 20 20 20 0 0 60
16 20 20 20 20 0 80
17 10 20 20 20 0 70
18 20 20 20 0 0 60
19 20 20 20 20 20 100
20 20 20 0 0 0 40
21 20 20 20 20 20 100
22 20 20 20 20 20 100
23 20 20 20 0 0 60
24 20 20 0 20 0 60
25 20 20 20 20 0 80
26 20 20 20 0 0 60
27 5 20 20 20 20 85
28 20 20 20 20 0 80
29 20 20 20 20 0 80
30 20 20 20 20 0 80
31 20 20 20 0 20 80
32 20 20 20 0 0 60
33 20 20 20 0 0 60
34 20 20 20 20 0 80
35 20 20 20 0 0 60
36 20 20 20 0 0 60
37 20 20 20 20 0 80
38 20 20 20 20 20 100
39 20 20 20 0 0 60
40 20 20 20 0 0 60
41 20 20 20 20 0 80
42 20 20 20 0 0 60
43 20 20 20 20 0 80
44 20 20 20 20 0 80
45 20 20 0 0 0 40
46 5 20 0 0 0 25
47 5 20 20 0 0 45
48 20 20 20 0 0 60
49 20 20 20 0 0 60
50 20 20 20 20 0 80
51 5 20 20 20 0 65
52 5 20 0 20 0 45
53 10 20 20 20 20 90
54 20 20 20 0 0 60
55 20 20 20 0 0 60
56 20 20 20 20 0 80
57 20 20 20 0 0 60
58 20 20 20 0 0 60
59 20 20 20 20 0 80
60 20 20 20 0 20 80
61 20 20 20 0 0 60
62 20 0 0 0 0 20
63 10 0 0 0 0 10
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Beyond that, this paper provides a novel contribution to the sample, has limitations, posing the need for additional
literature from various respects. First, it introduces a new research. The results of this research are restricted with a
model for identifying strategic management maturity. Even sample of 63 organizations. Further research can use a larger
though several maturity models such as business process sample size to validate our findings. Even if findings might be
management, project management and organizational maturity transferable, this survey is conducted on RDOs of Turkey. It is
models are suggested in related research literature, no one was also recommended that further research can be conducted in
proposed for strategic management. different countries. Another limitation of this survey is that
Second, this research focused on RDO of a developing some respondents did not answer certain questions. Also, this
country which is not studied heavily. More than half of the survey includes only five questions which may not be
organizations (32) in the sample group operate in high-tech sufficient to assess maturity very accurately and suggest more
industries. Obviously, technology producers of DC deserve comprehensive conclusions. Further surveys may include
more research attention. more questions to check every aspect of the strategic
management. Data collection can be done in face-to-face
TABLE VII meetings by managers from multiple levels that are very
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