Using a Dynamic Performance Management approach to reinforce the benefits of territorial strategic planning

Abstract

The purpose of this paper is to present how system dynamics (SD) can be used to enrich performance management in local government and to foster a common shared view of the relevant system’s structure and behavior among stakeholders for territorial strategic planning. We begin by framing how dynamic complexity through SD modeling can support consensus building among different stakeholders within a territory, which moves beyond the traditional view of strategic planning within the context of a single jurisdiction. A Dynamic Performance Management (DPM) approach, as shown by our case-study, may help such players to overcome possible barriers to collaboration because of its support to better detect how pursuing a sustainable development in the territory’s performance impacts on the sustainability of each single institution belonging to the territory. This implies that territorial public agencies, e.g. municipalities, may understand and communicate to their stakeholders that long term performance cannot be only assessed in financial terms or by referring to output measures only, but also in relation to the outcomes that public services will be able to generate as value transferred to the territory. Likewise, the enterprises operating in a given territory should be enabled to detect how their own performance can be sustainable in the long run if they will be able to generate not only financial capital, but also social capital to the benefit of the other players belonging to the territory. Therefore, a key to implement a DPM approach for each of the players is to combine an institutional (single-player) with an inter-institutional (i.e. multi-players or territory) perspective with a view to enhancing performance and pursuing sustainable development. An inter-institutional perspective frames the territory (rather than a single institution) as the relevant system where to comprise and manage the cause and effect relationships between performance factors and strategic resources.