Intended and unintended outcomes from strategy implementation activities by middle managers in state-owned entities

Abstract

South Africa (SA) faces significant challenges, including rising unemployment, high inequalities, widespread poverty, and stagnant economic growth. To address these challenges, the government has established State Owned Entities (SOEs), which are wholly owned and operated by the government. SOEs in South Africa drive the implementation of the large-scale national priorities that the private sector cannot deliver at the required scale. These include energy security, efficient logistics, industrial growth, and economic competitiveness. For each SOE to deliver on these priorities, they develop a set of strategic priorities to be achieved. The implementation of these strategies is monitored through the National Development Plan (NDP). A decade since its launch, the NDP has not yielded the desired outcomes, with entities such as Eskom and Transnet far from achieving their strategic goals. These failures in achieving the NDP goals suggest that the problem lies not in strategy formulation but in strategy execution. The study aimed to explore the strategic outcomes of strategy implementation activities through the lens of middle managers in SOEs. This is because middle managers in these SOEs are central to implementing these strategies, as the Top Management Team (TMT) delegates to them to operationalise within their teams and translate them into day-to-day activities. Given the SOEs' important role, understanding how middle managers influence strategy implementation within them is critical. Based on 15 semi-structured interviews with SOE middle managers, the study investigated how their strategy implementation activities relate to intended and unintended strategic outcomes. The research found that middle managers experience challenges during implementation, including resource constraints, frequent leadership changes, and competing mandates, which lead to unintended strategies. These challenges are further compounded by the SOE context of having to achieve financial goals and public service objectives simultaneously. It identified their strategy implementation activities and how they relate to intended and unintended outcomes of the strategies, providing insights into how SA SOE can improve the delivery of their strategies.