Leaders without answers? Strategising in a context of continuous socio-economic decline

Context and rationale for the paper The mainstream strategic management literature is based on notions of ‘development’ and assumptions that there are always opportunities to improve the status quo, provided organisations adopt the right strategy. But what about strategy in a context where there can be no realistic expectation of ‘development’ in its broadest sense? Governments are reporting that the economic downturn appears to be coming to an end and that there are signs of ‘growth’, but in most European countries statistical evidence of growth still has to translate into improved employment and living conditions for the majority. Progress reports on the Europe 2020 strategy for ‘smart, sustainable and inclusive growth’ are also up-beat about a post recession growth trajectory (European Commission 2014), but the reality is that a large number of European cities, which are Europe’s engines of growth, are in caught up in spiral of decline. Current estimates suggest that 40% of all European cities with more than 200,000 inhabitants are shrinking – the number for smaller settlements is assumed to be even greater. Scholars working on the COST funded research on shrinking cities in Europe speak about ‘islands of growth in a sea of shrinkage’ (Wiechman 2012). Others warn that governments cannot rely on the market to halt or reverse the process of urban shrinkage. They call for targeted action to develop the capacity of municipalities to generate viable forward strategies in a context of continuous socio-economic decline (Bernt. M. et al. 2012; Bontje and Musterd 2012; Großmann et al. 2012). The question is: what concepts, models and analytical tools can we offer those charged with developing forward strategies for cities which find themselves in a continuous cycle of decline? A recent review of current practice (Schlappa and Neill 2013) suggests that leaders of declining cities ‘recycle’ strategies which might have worked in the past or which reflect policy goals of supra-national funders rather than a realistic assessment of existing assets and capabilities. This is can be attributed to a number of factors, including denial of the reality of decline as well as EU policy which focuses on locations perceived to be capable of generating ‘growth’. However, there is also a void of ideas about how local strategies can be developed based on a paradigm of decline – rather than growth – and it is this issue this paper begins to address. Conclusions and contribution of the paper This paper initiates a discussion on new perspectives and approaches to strategy which reflect the realities public agencies face when attempting to arrest or reverse socio-economic decline. Drawing on public sector strategic management literature (Bolden 2011; Brookes and Grint 2010; Joyce 2012) and institutional theory concerned with the analysis of change(Ostrom and Basurto 2011), and illustrating arguments with a case study (Schlappa and Ferber 2013), the paper puts forward a revised model of Mintzberg’s (1998) strategy cycle. The proposed revisions are based on the argument that strategy rooted in a context of continuous decline must break with dominant assumptions that the outcome of the strategy process is ‘development’. The paper concludes with a number of suggestions, including: • Developing the capacity of leaders to develop strategy collaboratively; • Applying co-production theory for the analysis of collaborative strategy and service development, and • Exploring alternative economic models to guide strategic analysis in declining cities.