CHAPTER 4

The Policy Environment—Opportunities and Constraints

Learning Goals

Overview of Policy Field Analysis

Much like industry or competitor analysis illuminates opportunities and barriers that are rooted in industry structure and market forces (see Chapter 5), policy fields analysis focuses on those aspects of the institutional and public policy environments that may present opportunities and constraints for the venture concept. As discussed earlier, the social entrepreneur often has a passionate commitment to attacking an important public problem or an idea for a venture that she or he thinks will solve that problem. Nearly all of these issues and ideas touch on public policies, perhaps even laws, regulations, and funding streams, aimed at addressing aspects of the issue or idea. Therefore, it is critically important that the social entrepreneur, early in the venture’s development, become familiar with the contours of the policy environment surrounding the problem the social entrepreneur wants to solve. It is likely that many institutional and non institutional actors, such as government agencies, local nonprofit organizations, and informal coalitions, are already involved in the general problem area. For example, government agencies are involved directly in implementing poverty reduction programs and also contract with local nonprofits to provide services as well. Other nonprofits, coalitions, or partnerships may be active advocating for changes in poverty reduction policies at state and national levels or may be pushing for changes in how policy makers and the public define and understand poverty as it relates to racial and gender differences.

A policy field analysis, therefore, is especially useful to sharpen the definition of what issue or problem the venture concept is attempting to solve because it deepens social entrepreneurs’ understanding of the relevant policy and political contexts. A policy field analysis will also help social entrepreneurs refine how they frame the issue, see other issues or problems to which it is related, and enable social entrepreneurs to identify resources and engage with experts and potential collaborators.

A policy field analysis is a framework that helps the social entrepreneur systematically understand who key stakeholders are and what kinds of power and resources they have. Policy fields are federal, state, and local structures of roles and relationships among people, organizations, and institutions in a substantive policy area in a particular place.² This definition is pretty abstract but if we take the example of the need for more high quality and accessible early childhood education, we can make it more concrete.

The policy field of early childhood education is fragmented, siloed, and very complex with significant variations from state to state.³ For example, in Minnesota, early childhood education services are offered by Head Start agencies, nonprofit and private preschools and child care centers, licensed homes, local churches, and public schools. Funding for these services comes from multiple sources including the federal government (for Head Start), a voucher-like subsidy offered by the state of Minnesota’s Child Care Assistance Program (which in turn gets its funding from both federal and state sources), and local philanthropic sources, including an array of private foundations, the United Way, and one foundation created by private business leaders. Parents pay some portion of the costs as well, based on their ability to pay. Local counties administer the Child Care Assistance Program through contracts with regional nonprofit childcare resource and referral agencies. School districts implement school readiness and parent education programs. Various nonprofit advocacy groups exist to influence public policy, especially concerning public funding to those in need, while other small associations represent particular interests in the field, such as family day care providers. A national accreditation body, the National Association for the Education of Young Children, has established standards that allow providers to receive higher rates once they are accredited. The University of Minnesota also has faculty and centers that conduct research and engage with providers of early childhood education within its College of Education and Human Development.

What we see from this example are both public and private sources of funding which are likely to come with important but different requirements. Public funding is also likely to come with some mandates and regulations concerning aspects of the particular early childhood education program. We also see some networks of relationships that are relatively formal through, for example, government grants for Head Start providers and county contracts with regional nonprofit child care programs. On the other hand, many networks within policy fields emerge more informally through the development of working relationships and the formation of coalitions as people and organizations work together to implement and/or change public policy approaches and goals.⁴ We also see that there are research resources through the University and private research organizations that can be tapped for additional information.

Put more generally, policy fields both shape the roles and relationships in policy systems and are shaped by them. It is very important to understand this duality—a social entrepreneur confronts existing relationships, rules, resource flows, and even values and norms that structure how people think about and try to solve the issue that concerns the social entrepreneur, and these may be barriers to innovative ideas. However, these constraints may also be seen as opportunities for a social entrepreneur who is able to frame an issue or problem in a new way and present a novel and feasible solution or venture idea. As described in Chapter 3, in order to build an understanding of the public policy element of the community ecosystem, social entrepreneurs cannot ignore the existence of policy fields. And his or her venture may have the potential to re-shape the policy field. Especially in rapidly changing environments or even crisis situations with a lot of uncertainty, individuals can and do challenge the existing institutional order using social skills to create entirely new fields or transform existing ones.⁵ In public policy processes, these people are sometimes referred to as “policy entrepreneurs” who look for opportunities to link existing solutions and problems when the political environment is ripe to move an issue onto the public’s agenda for change.⁶ A social entrepreneur has a similar opportunity once he or she more thoroughly understands the policy arena, the flows of resources and authority, relationships among institutional players, networks of local actors, and the relative power of these players and actors. This kind of understanding is often critical to the success of socially entrepreneurial venture.

Below are five steps that form the basis for a policy field analysis along with specific tools to help complete the steps.

Step 1. Identify the Particular Substantive Policy Issue and Its Policy Domain

Policy field analysis, similar to early stages in the social entrepreneurship process, begins with identifying the particular issue, such as inadequate access to healthy food for an impoverished neighborhood, and then identifying the policy domain of the issue. A policy domain describes the general, substantive issue (such as access to healthy food) and the set of actors, political systems, and institutions most involved in that issue. Within each policy domain there is technical knowledge about the problem and often shared beliefs regarding viable solutions⁷ Depending on the issue, it may be more or less easy to identify a single policy domain.⁸ For example, “inadequate access to healthy food for an impoverished neighborhood” could fall under the policy domains of poverty, food and food access, and even community and economic development.

For a social entrepreneur, how the venture issue is framed (what is the key problem to be addressed?) will establish a primary policy domain and also suggest what other policy areas may be affected. In Chapter 2 we discussed the initial thinking needed about the issue for the venture, and this chapter builds on that thinking. Defining the problem domain or arena is also an opportunity for the social entrepreneur—he or she may find that how he has framed the issue (the problem definition) and/or the ideas (the solutions) actually crosses well-established policy domains, creating a novel way of understanding and approaching a problem and its solution. For example, while the federal Head Start program was initially framed in terms of employment policy, it has since also been described as crucial to early childhood education and poverty reduction policy domains.

Step 2. Brainstorm List of Actors, Organizations, and Institutions Involved

As we discussed in Chapter 3 through the community ecology framework, most locales (communities) have a limited number of institutions engaged in work that directly bears on the issue. The social entrepreneur can take the results from the community ecology framework and expand from there by brainstorming a more complete list of organizations, considering both those with formal public authority (such as legislative bodies, federal, state, and local government agencies and departments) and those with formal and/or informal relationships to the issue (such as nonprofit service providers, advocacy organizations, professional associations, intermediaries, evaluators, and academic institutions) who have some important involvement in the policy domain.

Essentially, this step involves using the work from the community ecosystem modeling to create a modified stakeholder analysis where the social entrepreneur lists all those individuals, formal and informal groups, organizations, and institutions that have a stake in the policy domain or domains as defined by the venture. Next to each stakeholder, the social entrepreneur can describe what “stake” or interest the stakeholder has in the policy domain and, specifically, what programs or services the stakeholder is providing. For example, is the stakeholder primarily a funder? A service provider? A well-established group of concerned community members? Table 4.1 shows a sample stakeholder sheet.

Table 4.1. Sample Stakeholder Analysis

For social entrepreneurs already active in a particular arena, such brainstorming may be easy because it uses knowledge they have developed through their work. For those entering a new field, social entrepreneurs may need to do some background research and meet with leaders in the field in order to gain a more complete understanding of who is involved, what their interests in the issue are, and what specific activities, programs, services, and so forth they may already be providing that relate to the social entrepreneur’s venture issue and idea.

Step 3. Understand Laws and Regulations, Administrative Authority, and Public Funding Streams

Following Step 2 with the stakeholder list assembled, policy field analysis then turns to understanding the structure of the field. The “structure of the field” refers to the institutional mandates and existing resource flows that are central to work on a public issue. The structure of the policy field is what often differentiates work that addresses public problems from work in private industry. In essence, in this part of the analysis, the social entrepreneur is gathering information on the nature of public investment in solving the problem and determining where administrative authority lays. Administrative authority entails the formal power, usually granted by Congress or state legislatures to a government agency, to address the problem and may include program requirements, regulations, and various types of funding resources. This part of the analysis is really focusing on formal authority systems that exist within a policy domain and have the potential to significantly impact the venture issue. These formal authority systems often include sets of “vertical” roles and relationships among, for example, federal agencies that have Congressional mandates and authority to implement programs through specific state agencies and/or local governmental entities. Funding may parallel these mandates where state agencies or local governments receive federal monies to implement specific programs. State and local government may then use these funds to contract with a variety of community organizations or other government entities, for the actual delivery of the programs to targeted beneficiaries. The flows of mandates, administrative authority, and funding can be complex and confusing, especially to the social entrepreneur who is new to a policy area. However, understanding how this field works is critical to his or her ability to operate knowledgably, recognize barriers and seize opportunities.

More specifically, the social entrepreneur needs to pay attention to three particular aspects of field structure.

Step 3 is often illuminating and critically important because it reveals barriers to entry as well as opportunities. Are mandates and funding flows concentrated within a single government agency in the federal government? If so, this may present a barrier or constraint on your idea because the agency has well-entrenched rules and relationships for dealing with its definition of the problem and it may have a federal or national view of the problem, rather than a more particular local sensibility. On the other hand, are these authority and funding flows splintered among several government agencies, as in the case of early childhood education? Fragmentation can create an opportunity for a venture to integrate at the local level if enough support can be garnered to solve a problem differently than in the past.

Through a systematic identification of major public policies, the configuration of their funds and administrative mechanisms, the social entre-preneur-as-analyst comes to understand the forces structuring the particular field. To better represent the interplay between institutional actors and public policies, it is often useful to begin to create a visual representation of the field.¹⁰ When full developed, these word-and-arrow diagrams help to trace influence and resource flows.

As illustrated in Figure 4.1, the first step in this mapping is to summarize the information from the questions above to highlight the flow of: (a) administrative authority for implementation; (b) legislative and regulatory mandates; and, (c) funding flows. Step 4 below will add more local knowledge to this map but as a first step, the social entrepreneur develops the broad contours of the structure of policy field. These maps can become quite complex but it is important to understand that the process of creating these maps through asking and answering a series of focused questions is what really comprises the analysis. In this particular map, the primary issue concerns the social welfare policy domain, for example, improving the lives of single mothers in poverty. A secondary but related policy domain, depending on the venture’s focus, may be the workforce development policy domain because of its influence over helping these women prepare for and find jobs. All three levels of government are involved in this issue (federal, state, and local, including both county and city governments) but in different ways. It is up to the social entrepreneur to discover what kinds of relationships exist among these institutional actors.

Figure 4.1. Example of a policy field.

Step 4. Within the State and Local Context, Determine What Organizations and Groups Have Interest in and Influence Over This Problem

The fourth step in policy field analysis focuses on gaining a deeper understanding of relationships, especially in the local context. In this step, both the stakeholder analysis from Step 2 and the visual map from Step 3 are important tools.

Certainly, many different types of relationships exist within policy fields. So far in our analysis, we have asked questions about formal authority (legal and regulatory) and funding relationships, primarily among government institutional players. Now it is time to expand those relationships to include the local, nongovernmental players as well as additional types of relationships concerning politics, service or product delivery, and problem expertise. In other words, while we concentrated on vertical relationships of formal authority, we are now going to concentrate more on horizontal relationships where both formal and, importantly, informal authority reside. A lot of the information collected from the community ecology analysis in Chapter 3 is central to this piece of the policy field analysis.

Start on the map by drawing different types or colors of lines which represent major flows of authority and funding. Funding flows may now include, for example, local foundations that have a history of giving grants or other resources to your problem area. Some new authority relationships may also emerge at this stage—for example, you may find that a local government agency has given some program design and funding authority to a formal coalition of service providers. Figure 4.1 shows some potentially important actors at the local level in the example above concerning a venture that wants to focus on single women living in poverty.

Political relationships may be difficult to discern but through a few interviews with key informants in the field, the social entrepreneur can ask questions about who or which organizations and people seem most central in the policy arena and have the power to influence key policies and programs. There may be city council members, county commissioners, state legislators, longstanding citizen advocates or community activists that share a similar passion about your issue and have a history of trying to frame how the issue should be defined and/or solved.

Service or product delivery relationships concern understanding who may be “producing” similar programs (see the section on “Substitute Products” in Chapter 5 and how they get the service or product to the end beneficiary). These relationships may simply represent client referral patterns, government contractual relationships, or they may be more complicated, especially if a collaboration is involved in program delivery.

Issue expertise and information are essential to understanding the informal structure of a field.¹¹ This knowledge is more often tacit than it is explicit, so it can be difficult to acquire if the social entrepreneur is new to the field. However, the social entrepreneur can gradually build this piece of the analysis as she interviews key local players and begins to build her own network of resources and relationships. Likely this expertise resides within some of the individuals identified as having political influence or a long history of program delivery.

The use of social network analysis can help sharpen this part of the overall policy analysis through the kinds of questions it asks:¹²

Even if the social entrepreneur does not conduct a formal social network analysis, asking these questions and summarizing them on a visual map can greatly enhance the ability of the social entrepreneur to understand the contours of the policy field.

Finally, in this step, the social entrepreneur needs to return to his/her stakeholder analysis from Step 2 and revise it to include (or remove) stakeholders uncovered since its creation.

Step 5. Summarize Results of Policy Field Analysis

It is now important for the social entrepreneur to step back and reflect on the results of his or her analysis so far. First, where does he or she need to collect more information? Is this information technical in nature, for example, gaining a deeper understanding of aspects of the issue itself or the specific laws and regulations that bear on issue? Or, is the information more about the relationships and networks at the local level that seem vitally important to understanding the contours of the venture issue? Second, where do there seem to be real and concrete constraints in this policy field? Are there legal or regulatory constraints that would be very difficult to overcome or are constraints more because people and organizations have defined an approach to the venture issue that differs from the way in which the social entrepreneur is framing the issue? In other words, what realistic assessment can the social entrepreneur make about the constraints that have surfaced in the analysis? Third, what gaps seems to exist, especially at the local level, for addressing the venture issue? This is often just the reverse of a constraint identified above—if most organizations are approaching the issue in one way, there may be an opportunity to develop a venture that re-frames the issues and provides a new way of thinking about programs or services. Table 4.2 provides a sample sheet for how to organize some of these summary thoughts.

Table 4.2. Summary Policy Field Analysis

Summary

This chapter has focused the social entrepreneur on the policy environment that is most relevant to his or her venture concept. Because most social entrepreneurial ventures exist to solve an important public problem or issue, the social entrepreneur needs to understand several facets of the public policy context that bear on the problem. A policy fields analysis allows the social entrepreneur to systematically work through several sets of questions in order to determine:

The result of a policy field analysis is a better understanding not only of the context surrounding the venture but also of significant constraints and potential opportunities.

Venture Development Questions