STRATEGY DEVELOPMENT AT NEW TOWN COUNCIL

Andy Bailey and Julie Verity

This case study was prepared by A. Bailey and J. Verity, Cranfield School of Management. It is intended as a basis for class discussion and
not as an illustration of either good or bad management practice. A. Bailey and J. Verity, 1996.

The two cases, New Town Council and Castle Press, illustrate the process of strategy
development within different organisational contexts. Both cases are based on the views of
the strategy development process as seen bv members of the respective top management
teams. The New Town case describes how four members of the top management team view
their strategy process. Both cases are constructed around two general themes. The process of
strategy development and the organisational context in which it takes place.
The two cases illustrate differences in the strategy development process, demonstrating that
the process of managing strategy development in one organisation may not be the same as, or
necessarily appropriate to, managing strategy development in another organisation.

________________

I'm not reallv comfortable with the way we develop strategy here, but I'm not sure I know how
to manage the process to make it more coherent either.
CHIEF EXECUTIVE, NEW TOWN COUNCIL, 1995

New Town Council formed one part of a two-tier system of local government responsible for
the provision of services within a geographical area of the UK; the other part was the county
council. Both authorities operated under .\ets of Parliament, with specific duties laid down by
these Acts and with central government controlling many of the activities of local authorities.
The county council had responsibility for school education, tire and police services, highways
and social care, while the council had responsibility for environmental health, housing,
planning, recreational facilities and refuse collection.

Local authorities consist of councillors (Members) and paid employees. The councillors are
elected representatives and decide the council's policy and priorities. The paid employees are
responsible for implementing policy, with the role of senior officers (the senior ranks of the
paid employees) being to advise the councillors on policy and to implement the policy
decided.

New Town Council grew up alongside New Town as it was built on its greenfield site in the
1970s. Central government decreed that New Town would exist and the Development
Corporation designed, planned and built it. As the bricks, mortar and amenities were
developed, the council ‘followed on behind, picking-up the litter, literally. I mean the
Corporation built it and we provided the refuse collection systems for the people when they
arrived to live here. When the Corporation was wound up and we had to take over, it was a lot
to cope with. I think we are still learning to cope in some respects,’ explained a senior officer
at the council.

When the Development Corporation ceased activities in the early 1990s, New Town Council
took responsibility for housing, environment, recreation, economic development and
community development services. It did not assume control of education or social services,
which remained with the county council, an arrangement which by 1995 was under review.
From 1979 to 1997, the Conservative Party had been in central government and had made
frequent and significant changes to local government legislation.

It was against this backdrop that some of the top management team of New Town Council
described how they thought strategy came about in their organisation.

MAKING SENSE OF STRATEGY

The chief executive had been in his role for ten years:

For the majority of my time here we have had a hung council. 1 My 'management board',
therefore, is a group of elected representatives who are generally interested in a common aim
- the greater good of the community - but who are totally split about the way to achieve it.
They also rarely make a clear decision; they simply delegate, and when they don't like the
proposed solution, they block implementation. Hence, my role is to act as an interface
between the party political processes of the Members of Council and my management
organisation [the officers]. I have to seek to understand the party political process, interpret
it and help manage things via that process. At the same time, l have to understand the
strengths and weaknesses of my management organisation [the officers], repair the
weaknesses and build on the strengths.

Two senior officers had been recruited to the organisation within the last five years. One was
head of personnel services:

Our focus is the local community. Our strategy is based on the combined expectations of
these people. Being a new town, taking over from the Development Corporation, you would
expect us to have a defined vision to do With the social and physical development of New
Town. The vision we have is not our own vision, we have inherited it. It is the vision of the
government who decided to build New Town 30 years ago.

The other was commercial director of the direct services directorate. -this was one of six main
directorates within the council with responsibility for those services which the government
had decreed should be subject to compulsory competitive tendering (CCT).2 This included
services such as landscape, highways, building, vehicle maintenance and leisure management,
and accounted for about a fifth of the cottticil's workforce:
1
No political party in overall control.

2
Central government legislation which compelled local authorities to invite competitive tenders for the provision of certain types of work,
with in-house teams bidding against private sector competitors for a specified task.
From my perspective, strategy develops in fits and starts. Since I've been here we have had a
hung council, which has meant that no one political party has been able to stamp its views
firmly on the whole organisation. In strategy terms, that has left its floundering because it has
been very unclear whether an initiative will get approval or not.

As a group of officers, we have had to say that, regardless of the party political sittuttion,
there are certain things we are going to have to cope with: one is the extension of CCT,
another is the Local Government Review3 and lastly is our struggle with the budget, whereby
the money that we get from government hits been held at the current level or reduced,
year-on- year, while they have mandated we provide extra services!

Finally, there was the central services director, with responsibility for 200 people who largely
provided services internally, to council departments. This directorate included computer
services, estates management, the law division and central administration:

In 1987 we held a conference to think about the future. We coupled that with a large public
consultation exercise and as a result, the elected Members were asked to approve a strategic
plan which had six main objectives in it. The process since then has been yearly reviews
conducted by a small team within the policy directorate, which has reported back to the
management team on the changes that have occurred in the environment and sought
endorsement from Members. As a result of this review process, this year there are some fairly
significant changes to the strategy document.

Strategies also arise through the various council directorates: for example, housing or
Environment. Directorates produce their service plans each year, reviewing the external and
internal influences and reacting to changed circumstances, revising their objectives for the
current year in line with these changes.

Therefore, the council's strategy is a series of very broadly based objectives which express the
aspirations of the community. This is meant to be supplemented by the council's short-term
objectives, its policies and the directorates' service plans. It is an interaction between these
two sets of objectives that determines the way we go.

3
A rcvicw of local government structure from which recommendations are made for either the retention of the present two-tier system or the
creation of a single unitary authority to provide services within a geographical area.
PLANNING IS DESIRABLE, BUT...

Traditionally the organisation has not been focused on planning or developing policy. There
was actually an anti-policy line. Instead, strategy developed in an ad- hoc manner, with the
council being able to do as it wanted because it was well resourced. In the late eighties, we
developed a community strategy New Town 2000. This was perhaps a first for a local
authority: that is, to try and devise a corporate strategy. After that, I think we got blown off
course by events of the time: massive inflation, couldn't find staff or keep staff, so I spent a lot
of time reorganising and looking internally. When we did find time, we tried to get the
individual businesses of the council (because we are a series of services) to project their own
services into the future and formulate their own plans.

Now we are back to trying to realise the community strategy. So strategy to us is about
determining where we are principally in our community, the key influences which are pushing
us around within this, and trying to make sense of the steps we are taking, knowing that we
are going to falter on some and going to be accelerated on others.
CHIEF EXECUTIVE

The chief executive went on to conclude that planning was desirable and something he had
tried to introduce into the organisation by bringing in facilitators and training his people to
become skilled in planning processes and techniques. He admitted, however, that the
organisation was still struggling to plan effectively. Some issues were easier to plan for than
others. The Local Government Review, for example, ‘had encouraged officers to come
together and realise that, despite the political differences, you can have planning for the
future’.

Others in his team, however, stressed that strategies had to be built around a theme of
flexibility. With strategies liable to change at any point, there were doubts about the value of
planning in this sort of organisation.

What strategic objectives we have do not emerge from inside the organisation, they emerge
from outside the organisation [from central government].
HEAD OF PERSONNEL SERVICES

The strategic objectives and priorities of New Town do not really come out of planning.
Whatever is particularly powerful at the time will et attention first and then next week it could
be something different. This creates cynicism in the organisation because this week something
is important and the week after it is something else entirely, and all the time we are required
to keep picking up the bits and pieces and delivering them.
COMMERCIAL DIRECTOR, DIRECT SERVICES
NEW TOWN COUNCIL IS ACTION ORIENTED

The culture is not about restricting actions. Even in times of severe financial constraint
-which we have at the moment - the culture about this place is always to develop and try
something new.
CENTRAL SERVICES DIRECTOR

The chief executive believed that, in the past, the council would have grasped every
opportunity, a situation influenced by Members who saw everything as a priority. Things
were changing. Now it was not realistic to try and put everything first on the priority list;
budgets were shrinking and central government's list of demands was growing. However,
despite an environment apparently littered with obstacles, there were opportunities to get
things done and his council did deliver. After all, local authorities were essentially
independent. There was a choice:

You have to look at what you want to achieve, understand what is limiting and what is
possible. A classic example is how we were capped4 on capital projects in every area except
for housing. Despite this we have just built a £6m recycling facility which we persuaded the
government was in line with their ideas about the environment. There is no doubt that we
have to accommodate ourselves to deliver what central government want, but there are ways
and means of getting what you want as well. Another example is to get your community
supporting you. If you can stand together, you can be vastly influential - if you ignore
them, you are dead!
CHIEF EXECUTIVE

POWER IS NOT EVENLY DISTRIBUTED

While all the officers agreed that political behaviour was common at New Town Council,
there were differing views on how this influenced the development of strategy. The chief
executive said:

No one individual has dominated New Town. Individuals and groups do, however, determine
the nature of the organisation and the way it does its business, and heavily impact on
strategy.

Power was held in certain directorates because of the size of their budgets, the nature of the
service or the strength of the director's personality:

There is some internal competition where one director is more powerful than another. These
people tend to get more resources and perhaps develop their services at a faster pace. That
often goes along with having more party political support. For example, housing is
traditionally a strong department. It is an important concern of the council, and strong
Members have chaired that committee. So resources do tend to move in that direction.
HEAD (1F PERSONNEL SERVICES

4
Limits placed on the amount which can be spent.
We had an extremely powerful finance director, for example, because he was a very powerful
individual. But, finance was also a key issue for us, so the function was important. Now, since
this particular director left, finance is still an important issue, but the department does not
have the same amount of power. By definition, the directorate structure tends to isolate us;
communication does not happen across directorates. It is only through corporate working
groups that we have been able to get people together.
COMMERCIAL DIRECTOR, DIRECT SERVICES

From my position, we are divided into two camps. Those who provide a central service (in a
co- ordinating corporate role) and those who provide specific services like housing and
recreation. In effect, we at the centre think we always compromise in favour of the direct
services. Those in direct services always say that they find themselves compromising in
favour of the centre. But I don't think this has a big impact on strategy.
CENTRAL SERVICES DIRECTOR

The way to win the game of influence in this organisation was described by officers and chief
executive alike as being close to members. However, only the chief executive thought he was
good at bridging the divide between members' ideas and the organisation's ability to deliver.
The central services director knew that, on the rare occasions that he had been particularly
close to members, he had been very effective at influencing decisions. Influencing fellow
officers was a matter of being `in on the network: or leading a working group on a specific
issue.

The head of personnel did not like ‘politicking’ with members, but realised that while she
resisted indulging in this behaviour she was liable to remain less effective at getting her view
heard. Talking with people was how the commercial director of direct services tried to get her
ideas adopted talking with colleagues on the top management team who might be sympathetic
to her cause, or influential members and other senior managers. This took the form of
informal preparation before the formal process. By the time the formal process was in action,
she would have a good idea of the likelihood of her initiative being successful.

A DEMOCRATIC CHIEF EXECUTIVE

New Town officers were in agreement about the chief executive's style. He was a leader, but
not a domineering one. He sensed the issues and hot spots: he was very conscious of what
members were thinking; he was a facilitator and someone who moderated the power of
different interest groups.

He is not the most powerful person in the organisation. There are others with more outright
power. He doesn't lay down the law or anything like that. But he is very good at making sure
all interests are met, and when you look back, you can see what he has achieved even though
it was difficult to appreciate at the time.
COMMERCIAL DIRECTOR, DIRECT SERVICES
The previous CE was an extreme autocrat, in complete contrast with our current CE, who is a
democrat. The power is not institutionalised in the position.
HEAD OF PERSONNEL SERVICES

He is the counterbalance between the power of two or three of the service chiefs and their
committees on the one hand and, the members of the council as a whole. He is a facilitator who
uses his personality to manage the process.
CENTRAL SERVICES DIRECTOR

A CLARITY OF PURPOSE?

If you asked people working here if they had a good understanding of what this organisation was
trying to achieve, then I predict their answer would be ‘no’. This is partly because we are very
poor at communicating about these issues.
CHIEF EXECUTIVE

Other members of his team agreed. The commercial director of direct services said:

I don't think there is a strong shared assumption about what New Town Council is here for - other
than to provide services. I doubt if you would even get people to agree on what those services
should be on a priority list. When the Development Corporation was dissolved, New Town Council
was suddenly responsible for everything and it struggled to cope and is still not taking a lead.
Members in particular have found it quite difficult to become strategic thinkers and develop
long- term plans, particularly given that none of them have overall responsibility anyway.

The head of personnel disagreed, believing that there was a unifying theme:

We have managed to hold on to being something other than what the government requires us to be.
That is the over- riding ‘raison d'etre’ of the organisation. This makes organisational life difficult,
because we are fighting against the government's direction and trying to set a strategic direction of
our own.

IN PURSUIT OF THE IDEAL

How would members of the top management team like to improve the strategy process?

I don't think strategy is about forecasting the future. I think strategy is about setting out to say what
do I want to do, what are we seeking to do, what are the guidelines that are going to take us in this
direction. It's like playing football; you need to know if the strategy is to attack or defend.

Also, because we are all rational, well most of us are, we want a strategy to be rationally based on
some sort of hard evidence. What we have not done in organisations like this is develop a very
rational basis of thinking. Our thinking is based partly on principle, partly on political philosophy
and partly on the way you interpret what your local community might want in the future. The
rationality comes when we try and bring these three together. Then something changes, as it
always does, and we have to be prepared for that change as well.

If we could forecast it rationally, it would be ideal. That is what we should strive for.
CHIEF EXECUTIVE
My criticism is that we spread ourselves too thin, that if we focused our strategy and concentrated
on two or three very important goals then we might make more impact. On the other hand, by
spreading ourselves thinly we have achieved an amazing amount. Maybe the downside of that
though is that we have not all been pulling in the same direction, which means there could be room
for improvement.
CENTRAL SERVICES DIRECTOR

There is scope for improvement. We need to develop strategic skills and redefinethe Members' role.
We need to prevent the debate from slipping into the nitty gritty, operational details and move it
into the arena of developing policy and the strategic direction of the council.
HEAD OF.PERSONNEL SERVICES

In the top management team, we spend a lot of time talking about strategy, but we don't talk much
about the implications of the strategy. So, we all may leave the room, having spent three hours
together, with different interpretations of what the strategy means. Therefore, how we implement it
may actually vary.

What we need is general agreement as to what our purpose is. Some people might call it a vision.
Something which says this is what we are trying to achieve and this is the direction we are trying to
pursue.

I don't believe we have this, but we need it. Why? Because we have lots of conflicting demands that
we can't meet. A lot of our time therefore, is spent firefighting. I don't know if there is an
alternative. Fire fighting might not be a bad thing if there is no clear system to direct you
otherwise. You just try and keep as many balls in the air as is possible until it becomes clearer. It's
just that we seem to have been doing that for such a long time now!
COMMERCIAL DIRECTOR, DIRECT SERVICES

One view was that they should make a virtue of their system, given the hostile and volatile
environment:

In a way it works. It is very flexible and we may be doing exactly the wrong thing in trying to fit a
rigid framework on to something that is inherently unstable. In which case we need to try and get
this message over to staff, who see the process as it currently is as a mess and difficult to work in.