CHAPTER FOUR
Case Studies of Transforming Public and Nonprofit Organizations

During 2005–2007, we conducted a two-year study of change and transformation in the public sector (Kee and Newcomer 2007). The four cases we examined in the study exhibit a range of change complexity issues within local, state, and federal government agencies. With the cooperation of the agencies, we conducted more than 100 in-person and telephone interviews and examined relevant historical and current documents, websites, and legislation. We also examined two cases dealing with nonprofit organizations, one through personal interviews and the second by reviewing a case study conducted by a New York institute. For each of the cases, we analyzed issues concerning the complexity of the change, the perceptions and involvement of stakeholders, the external environment, and the capabilities of the organization initiating the change. The six case studies illustrate a variety of important issues for leaders seeking to transform their organizations.

The first case involves a local government agency, the Department of Systems Management for Human Services (DSMHS), which was given the responsibility of facilitating the coordination of human services delivery in Fairfax County, Virginia. DSMHS implemented a central system for matching the human services needs of county residents with services available in the county from both public and nonprofit agencies.

Two cases involve the federal government. In the first federal case, the United States Coast Guard (USCG) initiated a major change to address the consequences of its aging “deepwater” assets—those that operate beyond 50 miles from the U.S. shore, including ships, aircraft, and other infrastructure. Aging ships and aircraft threatened the Coast Guard’s ability to meet vital and expanding mission requirements. USCG leadership developed two key strategies to address its needs. First, leaders planned to design and build each new deepwater asset (ships and aircraft) to function as part of a coordinated, interoperable system, which would enhance the overall capability of the Coast Guard’s collective assets. Second, recognizing the agency’s lack of experience and organizational structure needed for a procurement of this scale and magnitude, USCG leaders decided to use a public-private partnership to lead the acquisition strategy. This was a novel approach in organizational change that also was a first for the Coast Guard.

The second federal case involves the Veterans Health Administration (VHA), a federally funded, centrally administered healthcare system for veterans. By the mid-1990s, VHA struggled with a poor public image. The system had multiple hospitals with empty beds and doctors who infrequently practiced their special disciplines. While most healthcare systems were increasing the number of procedures undertaken at outpatient clinics, VHA was still requiring hospital stays for routine procedures. There was even discussion in Congress of closing the system or privatizing it. Faced with external pressure to change the entire healthcare delivery system, in 1994 President Clinton appointed a new leader, Ken Kizer, to transform the VHA system.

The final public sector case involves a complicated intergovernmental initiative, REAL ID, a new federal government requirement imposed on the states. The REAL ID Act of 2005 requires that all state-issued driver’s licenses and identification cards meet new minimum security standards. The act specifies technologically complex, nationwide personal identification and fraud-proof specifications with which state motor vehicle agencies are expected to comply. Our research focused on how various stakeholders reacted to the law and developed strategies to deal with the federal mandate.

The REAL ID study represents an externally imposed, or involuntary, organizational change for state motor vehicle agencies, and it differs from the other cases because the implementation phase has not yet occurred. Nevertheless, REAL ID is a prime example of how state governments are responding to an extensive, post-9/11 federal mandate for change in the way they deliver public services. The REAL ID case also presents a rich opportunity to illustrate how pre-implementation strategizing and planning efforts by affected stakeholders can enhance organizational capacity to undergo change.

The two nonprofit sector cases involve a social services organization and a religious service organization. N Street Village (NSV) was founded in 1973 by the Luther Place Memorial Church in Washington, D.C. NSV focuses its efforts on homeless women, as fewer programs are available to women than men in the D.C. metropolitan area. By the mid 1970s, the church, in cooperation with other faith-based organizations, had turned over its block of townhouses on N Street to a wide variety of services, including temporary housing, a medical clinic, and a food and clothing distribution center.

In the late 1980s the church led an interreligious and community-based effort to pursue and enhance NSV’s mission and programs. Among the new services NSV offered were affordable rental housing for individuals and families. By early 2004, however, the financial strain of subsidizing the affordable housing, along with a general lack of solid management, reliable data, and accountability structures at NSV, resulted in a cash flow shortage and low staff morale. These factors, compounded by the exit of an ineffective executive director, created the need for major change—an effort initiated in 2004 by the newly hired executive director, Mary Funke.

The second nonprofit case involves Hillel, widely recognized as the premier organization serving Jewish college youth. The organization’s mission is “to enrich the lives of Jewish undergraduate and graduate students so that they may enrich the Jewish people and the world.” However, 20 years ago, financial crisis, poor reputation, and weak governance threatened the viability of Hillel as a sustainable and effective nonprofit organization.

Richard Joel, a newly appointed national leader, led Hillel through a seven-year transformation that enabled the Jewish campus outreach organization to reach unprecedented levels of achievement. Despite this leader’s phenomenal ability to achieve stake-holder buy-in and adapt to the external environment, the change was quite risky; not only was it enormously complex, but it challenged Hillel’s decentralized, rabbinical culture.

In this chapter we apply our model to analyze these six cases of large-scale change. In each case we focus on how the sociopolitical environment, the complexity of the change initiative, stakeholder involvement, and organizational capacity posed challenges to leadership. In many cases, effective leadership was critical in addressing and overcoming the challenges; in some cases, challenges remain.

FAIRFAX COUNTY HUMAN SERVICES MANAGEMENT TRANSFORMATION

The Fairfax County Department of Systems Management for Human Services (DSMHS) facilitates the coordination of human services delivery in the county. Through extensive communication and information sharing, DSMHS staff promote collaboration between the organizations that provide services to the community and county residents.

The organizational and cultural challenges of implementing a coordinated approach to providing human services to the community were enormous. The redesign and implementation teams had to gain the support of social workers within DSMHS, staff of other county agencies, and members of community nonprofits. The cooperation of these nonprofit service providers was especially critical to creating a meaningful multiservice access point for citizens.

The Fairfax County initiative demonstrates the importance of effective leadership for a major change effort, not just at the top but throughout the organization. While it is difficult to break through the “stovepipe” mentality that sometimes characterizes bureaucratic structures, in this case, strong leadership encouraged effective communication and collaboration with affected stakeholders, promoted the use of performance metrics to spur change and keep everyone on track, and worked to ensure that adequate flexibility was available to accommodate unexpected resistance.

Sociopolitical Environment

Beginning in the 1980s, a rise in the number of immigrants entering Fairfax County caused a dramatic increase in the number of residents requiring social services. The county increasingly relied on a network of nonprofit social service agencies to provide those services. The demographic change and the expanding number of providers spurred county officials to commission an organizational redesign study to improve service delivery. Fairfax County officials sought to establish a more efficient central system for matching services with the needs of individuals.

While the original vision of full integration of client intake was not achieved, DSMHS has transformed the way the county delivers social services through the implementation of Coordinated Service Planning (CSP). CSP consists of a call center to receive inquiries from prospective human services clients. DSMHS staff prioritize the urgency of the requests and direct residents to governmental and nonprofit agencies that can deliver the services they need.

Complexity of the Change Initiative

Our research indicated that stakeholders were not fully aware of the complexity involved in the redesign proposal, despite the initial strategic planning process and the engagement of consultants and high-level county officials in the effort. While many on the oversight committee and redesign team, as well as other staff providing input, wanted to create a department to consolidate services, many sensed a lack of clear direction from top county officials. There was uncertainty about the effect of a redesign on various programs supported by state funds as well as which parts of each Fairfax County human services agency would be subsumed into the new entity. Across the agencies, perceived issues about the redesign plan translated into fears about losing turf and control.

Stakeholders were unclear about numerous aspects of the proposed change, including:

• The number of county departments that would lose some of their traditional functions

• The specific functions that would be transferred to the new unit

• The extent to which funding sources should be reallocated from different county human services programs

• The likelihood that social workers would accept a more integrated and holistic approach to client intake and referral involving telephonic rather than face-to-face client interaction.

County officials opted for a less sweeping integration, partly because the budget was cut, but also in response to some strong resistance from key stakeholders to total consolidation. The establishment of the CSP unit reduced the complexity of the change, yet achieved a key goal—a sharper focus on client needs.

Stakeholders

The redesign team initially identified a diverse group of stakeholders in both state and local governments, including human services workers, county residents who use human services, and other agencies and nonprofits that provide services to Fairfax County residents. The redesign plan had to be completed in just over nine months, perhaps leaving insufficient time to fully develop trust among the diverse internal stakeholders and to assess all stakeholder perceptions. Interview responses from nonprofit volunteers, however, indicated that the redesign team did succeed in involving them and their organizations in the planning and implementation processes.

Part of the original redesign plan was to build an online system accessible to all social workers. Although client confidentiality issues prohibited full implementation of a shared online database, DSMHS leaders took a number of other steps to improve communications. Regional managers now attend staff meetings to provide updates on performance and other regional and agency activities, and they encourage staff learning opportunities and quarterly meetings with community groups.

Organizational Capacity

DSMHS underwent a successful, large-scale change in part because of strong, widespread leadership, spearheaded by a change-centric leader, Margo Kiely, whom the county hired to implement the transformation plan. In addition to leadership, other key organizational capacity issues involved culture, performance measurement, and implementation processes.

Kiely’s leadership vision and style were broadly viewed as critical. Even administrators who had been passed over for the department directorship praised the new director’s leadership approach. Overall, the DSMHS director and leadership team strove to shift a change-resistant attitude among some in the department by fostering a shared sense of ownership in the change process. Leaders worked to maintain a trusting, non-threatening work environment and culture.

The DSMHS change implementation strategy included making the organization prevention-oriented, improving ties to community nonprofits, and decentralizing operations. This approach created a need for more connectivity among agencies involved in providing services to clients. DSMHS leaders established a redesign committee of creative thinkers from relevant nonprofit and for-profit partner organizations, as well as DSMHS personnel, to make sure that the best quality services were being offered in the most effective way.

A critical component of implementation was the leadership decision to adopt a metrics-based performance management system to measure the performance of individual staff and the overall organization. The system was adopted after much discussion among affected stakeholders and testing through pilot programs, office by office and region by region.

In the effort to instill a “data-driven” work culture in a gradual and collaborative way, leaders “mined” responses from follow-up staff surveys to identify ways to improve the use of metrics. In addition, they created a “process manager” position to manage the service delivery data system, freeing up supervisors to attend to their staff supervisory responsibilities instead of worrying about maintaining the performance measurement system. Interviewees observed that separating function/process from staff management facilitated internal collaboration between supervisors and their staff as well as between program and administrative functions.

INTEGRATED DEEPWATER SYSTEM: THE COAST GUARD TRANSFORMATION STRATEGY

The Coast Guard’s mission is quite broad. In addition to its most visible activity, search and rescue (SAR), the agency conducts drug interdiction, alien migrant interdiction, fisheries enforcement, boating safety, overseas maritime intercept (sanctions enforcement) operations, port security and defense, peacetime military engagements, general defense operations in conjunction with the Navy, maritime pollution law enforcement, and overseas inspection of foreign vessels entering U.S. ports. Since September 11, 2001, the Coast Guard’s responsibilities for homeland security and for interdiction of potential terrorists and port safety have expanded significantly. In turn, increased capability is now required of Coast Guard assets.

In the late 1990s Coast Guard leadership developed a “system of systems” approach to recapitalizing Coast Guard assets, which means that the design of any single asset must take into account every other asset with which it will operate. The whole solution or system is more effective than its individual parts as a result of enhancements to networks, integrated sensors, and far more interoperable command, control, and communications capability. The Coast Guard realized that this integration would necessitate some changes in how it purchased and acquired assets and how efficiently it used them.

Despite great leadership, the Coast Guard’s system of systems strategy is risky because of its complexity, the number of stakeholders involved, and an organizational culture that has not easily adjusted to the change. The Deepwater case is still being played out. Cost overruns and congressional criticism of the project have led the Coast Guard leadership to revise its original strategy. This case demonstrates the difficulty of implementing extremely complex change initiatives with insufficient organizational capacity.

Sociopolitical Environment

At the turn of the century, the United States Coast Guard (USCG) faced a looming crisis: The majority of its mission-critical “deepwater” assets—including ships, aircraft, and communications systems—were aging, putting Coast Guard personnel and their expanding mission requirements at risk. Through the Integrated Deepwater System (IDS) program, or “Deepwater,” USCG leadership planned to design and build each new asset to function as an integrated system, significantly enhancing overall capability but adding to the complexity of the undertaking. This “system of systems” approach is a far greater challenge than the Coast Guard tradition of building assets platform class by platform class (i.e., one asset at a time)

Recognizing that the agency lacked the knowledge, experience, and organizational structure needed for a procurement of the scale and magnitude of Deepwater, Coast Guard leaders decided to establish a unique public-private partnership. They selected a Lockheed Martin and Northrop Grumman consortium, named Integrated Coast Guard Systems (ICGS), to manage the performance-based procurement. Neither the government nor the private sector integrator fully appreciated the complexity of this arrangement; it was abruptly abandoned in 2007 because of cost overruns and the failure of initial assets to meet the Coast Guard’s expectations.

Complexity of the Change Initiative

The Deepwater project represented an extremely complex change strategy—in magnitude, scope, and fluidity—that included a number of challenging elements:

• Nearly all Coast Guard operations and personnel were impacted by the system of systems approach to the change, and the implementation of network-centric capability significantly changed the way the Coast Guard tactically manages its assets.

• The change involved diverse groups of actors, from both the public and private sectors, whose support and collaboration were vital to the success of the change.

• During the initiation and planning phases of Deepwater, the Coast Guard did not have the internal acquisition staff to manage the proposed acquisition.

• The enormity of the change challenged the internal conventional wisdom that the Coast Guard could do its job with minimal resources.

• The change involved creating a complex partnership with a private sector systems integrator—an arrangement with which the Coast Guard had little experience.

In addition, Deepwater was being implemented in a tumultuous, post-9/11 environment. The expansion of Coast Guard responsibilities for homeland security increased capability requirements for USCG assets. The Coast Guard was integrated into the new Department of Homeland Security (DHS) with 21 other agencies, creating immense management challenges. In essence, Deepwater presented a change within a change.

Stakeholders

Overall, a majority of the interviewees feel that Coast Guard leadership did a better job of reaching out to external stakeholders—making the case for change with executive branch agencies and Congress—than they did with internal stakeholders. It appears that the internal stakeholders’ perceptions of gain or loss were not analyzed or addressed in any systematic fashion; Coast Guard personnel simply “were expected to follow along.” This led to some confusion and a word-of-mouth type of understanding of Deepwater, leaving operations personnel feeling that they were not an important part of the process.

Organizational Capacity

Successful change can occur only with effective leadership—and if the organization manages its human capital, its structures and processes, and its systems to support the proposed change. Our interviews and research reveal both successes and weaknesses in the USCG’s implementation of Deepwater.

The Coast Guard places heavy emphasis on leadership and individual initiative both in the educational programs at the Coast Guard Academy and in the evaluation of personnel. Thus, a number of strong change leaders played integral roles in the strategy and implementation of Deepwater. Further, the external environment was very favorable because the agency is highly regarded among key external stakeholders, including Congress. Nonetheless, two key areas of potential concern were identified: the new partnership with the agency’s private sector partner ICGS, and a strong Coast Guard culture that was resistant to change.

Working with a private contractor as a lead systems integrator proved to be a challenging learning experience. First, the Coast Guard’s acquisition and contracting staff was not experienced enough to negotiate and monitor such a large program and therefore had to play catch-up. Second, the importance of developing metrics to measure the program’s success was recognized but no performance measurement system was in place to build upon. Third, there was a growing recognition that this type of partnership is “not a marriage, but a business relationship” and that this arrangement requires a commitment to high levels of accountability among the partners. Ultimately, after some highly visible failures of new assets and pressure from Congress, the Coast Guard dissolved the arrangement.

The Coast Guard has a defined, some say deeply entrenched, culture that is a perpetual strength in meeting the agency’s mission. At the same time, this culture may be a hindrance in implementing change. The Coast Guard culture appears to cultivate individual command initiative at the expense of more collective systems approaches to issues. This works well in a search and rescue environment, but perhaps not as well in planning for broader, systemic threats and challenges, such as the one addressed by Deepwater. The current Coast Guard leadership is addressing both the effective use of performance measurement and the culture issues as the agency moves forward on the Deepwater program without the public-private partnership.

TRANSFORMING THE VETERANS HEALTH ADMINISTRATION

VHA is a federally funded, centrally administered healthcare system that was originally established to treat veterans with combat-related injuries as well as to provide rehabilitation to those with service-connected disabilities. The need for specialized hospitals to treat veterans expanded rapidly after World War II, when nearly one million soldiers returned from war suffering from physical and emotional trauma. The newly formed specialty hospitals struggled with a staffing shortage, which led to a partnership between outside medical professionals (mostly in academic institutions) and VHA. In exchange for professional training, these medical professionals staffed VHA hospitals to serve troops returning home from war. VHA’s agenda evolved into a four-part congressionally mandated mission: patient care, research, teaching, and contingency backup for the Department of Defense medical care system.

In the VHA transformation, the sociopolitical environment, effective leadership, performance management, and good communications with stakeholders were all key to the successful transformation to improved patient services.

Sociopolitical Environment

VHA was operating in a challenging external environment. Legislative restrictions constrained the legal and budgetary authority for the proposed change; moreover, resources were strained, necessitating redeployment of other agency resources to engineer a major change. Good leadership was critical to VHA’s ability to align resources with the change and to receive congressional authority to implement the strategy.

After decades of declining reputation, VHA was energized by a new leader, Ken Kizer, who was hired in 1994 to make major changes to the system. Under his leadership, VHA personnel worked to transform the agency from a decentralized, inpatient network into an integrated, patient-centered leader in the healthcare industry. While there was no specific external impetus for change, it was common knowledge that VHA’s survival as a healthcare system was at stake. VHA hospitals treated too few patients, the quality and access to care for those patients were perceived to be poor, and VHA’s reputation as a healthcare institution among the general public was waning.

The external healthcare environment was very different from the environment within VHA. Increased use of out-patient procedures, the computerization of records, and cost-containment efforts all provided examples of current healthcare practices that VHA could potentially emulate.

Complexity of the Change Initiative

When Ken Kizer was selected as the new head of VHA in 1994, he knew that major changes were needed in the agency’s method of operations. Patient care was poor, the management system had become inefficient, and some critics in Congress questioned whether there should be a separate federal veterans’ healthcare system at all. As the new leadership analyzed its options, the threat of not changing and becoming obsolete seemed riskier than making the changes that were needed. In an effort to reshape the veterans’ healthcare system, prominent players within VHA started to determine how to restore its reputation, improve services, and increase the numbers of patients using VHA services.

The changes proposed to improve VHA services required extensive coordination and collaboration among employees, physicians, and facility managers, as well as the wise redeployment of resources to align them with the change. The transformation within VHA was a complex change initiative that posed many challenging obstacles:

• VHA employees were heavily invested in the current system and the practices of each of their own hospitals; change was likely to be met with great resistance and tension among the staff nationwide.

• Employees and patients were accustomed to episodic care, which was to hospitalize, stabilize, and send the patient home. This limited contact between patient and healthcare professional did not allow for the formation of ongoing doctor-patient relationships. Instead, treatment of the ailment at hand superseded treatment of the whole person. Implementing a continual care model presented the medical staff with a dramatically new way of handling patients.

• Changes in the delivery of care occurred at the same time that VHA was publicly criticized in the political arena. The change agents had to work to prove that these new ways of providing services to veterans would enhance both the system and the quality of care.

Stakeholders

The VHA change involved a diverse group of stakeholders. The primary stakeholders were the veterans who use or are eligible to use services through VHA. The second group of stakeholders was Congress and other government entities that funded or oversaw VHA, including the Office of Management and Budget. The political imperative was for VHA to make improvements, alter the public’s perception of its value, and demonstrate that the resources invested were yielding successful outcomes. The third group of stakeholders comprised the service organizations and advocacy groups that provide additional support to veterans outside the VHA system. Service organizations provided feedback, collaboration, and consistent support throughout the entire change effort.

Academic affiliates, including medical schools and residency programs, represented another group of stakeholders. These stakeholders stood to gain from improved technology, which could in turn enhance their scope of learning. The services and benefits that VHA received in working with outside physicians and medical professionals enhanced the quality of care for veterans. Even though there was some concern over funding for research, the academic community embraced the move to a continual care approach as a positive change for both medical staff and patients.

Overall, collaboration among key stakeholders encouraged sustainable relationships based on synergy of goals and perceptions of equitable treatment. Although they recognized the difficulty of the transformation, in the end, stakeholders found that the positive results made it worth the effort needed to implement these changes. The public’s perception of VHA has shifted from that of an unstable, inefficient provider to one that is capable and reliable. Stakeholders and staff now feel that they were a part of the transformation and view the change as a success.

Organizational Capacity

Change can be successful only when leadership is strong and a vision is put into action and understood by all the active participants. Interviews and research show that VHA’s transformation was successful not only because of the widespread leadership and commitment demonstrated by employees, but also because of the development of an integrated system and the implementation of advanced technology.

The Veterans Integrated Service Network (VISN), a structural vehicle VHA designed and used to implement this change, produced 22 geographically defined network locations. The VISN structure, derived from a regional model of organizational management, shifted the delivery of healthcare from individual medical centers to integrated service networks that provide services to veterans in defined geographic areas. A critical aspect of the change was incorporating the use of technology called the Veterans Health Information Systems and Technology Architecture (VISTA) and the Computerized Patient Record System (CPRS). VISTA supports ambulatory, inpatient, and long-term care, and CPRS allows providers to access patients’ health information and update their medical records from any VHA location.

To maintain an integrative and collaborative environment, VHA, with considerable staff input, launched a performance metrics program. This program measured six different “domains of value”: quality of care, access to service, satisfaction (initially with patient care, but later expanded to include employee satisfaction), cost-effectiveness, restoration of patient functional status, and community health. Each director in VISN was accountable for his or her group’s performance, and accountability was dispersed throughout the entire organization from the top directors to the frontline workers.

As a result of the use of performance metrics and increasing service levels, morale among employees improved. The use of technology and the implementation of systemwide policies and procedures have developed VHA into what is now considered one of the best healthcare systems in the United States.

VHA has expanded into the largest integrated healthcare provider in the nation, with more than 200,000 employees and an annual medical care budget of over $16 billion. The transformation of VHA’s medical system included the overhaul of 157 hospitals, 134 nursing homes, 887 clinics, and more than 1300 outpatient sites where care can be provided directly to communities throughout the United States. Most important was moving VHA from an inpatient model of care with a limited number of facilities that were inaccessible to many veterans to an outpatient model of care that is accessible to all those who are eligible.

VHA healthcare resources were redistributed from hospitals to clinics to improve the performance and quality of health-related services, to increase access to care for veterans and improve the veterans’ experience, and to achieve better health outcomes overall. In addition, innovative approaches were used to improve veterans’ access to VHA healthcare. Internally, decision-making was decentralized and performance metrics were implemented to improve performance and increase staff accountability.

STRATEGIZING AND PLANNING FOR IMPLEMENTATION OF THE REAL ID ACT OF 2005

The REAL ID Act of 2005 (U.S. Public Law 109-13) requires that all state-issued driver’s licenses and identification cards meet new minimum security standards by May 11, 2008 (later extended to December 31, 2009). While states may opt not to comply with the act, failure to do so will trigger negative consequences for state citizens because federal agencies will not accept driver’s licenses or identification cards unless they meet the minimum standards.

The lead federal agency, the Department of Homeland Security (DHS), issued a Notice of Proposed Rulemaking to establish minimum standards for state-issued driver’s licenses and identification cards in accordance with the REAL ID Act and solicited public comment. On March 1, 2007, DHS issued a draft rule; however, by the end of 2007, DHS had not issued the final regulations for REAL ID that will provide state-level officials full information about the technical specifications. In the interim, motor vehicle administrations (MVAs), through the American Association of Motor Vehicle Administrators (AAMVA), have been compiling cost estimates and sharing their concerns as they anticipate implementing the requirements of this new law.

Of the four public sector transformations cases, the REAL ID study represents the only imposed or involuntary organizational change.¹ The case also differs from the other studies because, as of this writing, the implementation phase has not yet occurred. Nevertheless, REAL ID is a prime example of major intergovernmental change in a post-9/11 environment.

Sociopolitical Environment

The external environment is ripe for conflict, given the involuntary nature of the legislation, the politically charged atmosphere in which it was developed, and the myriad unresolved technical and funding issues the states face. The REAL ID Act imposes highly complex policies on the states, requiring them to produce and monitor driver’s licenses and identification cards that will meet specific national standards. The member organization representing the state MVAs has been actively involved in initial deliberations to plan for implementation of the law and has acted as technical advisor to members that will eventually have to implement REAL ID.

The politics surrounding the imposition of this mandate on the states is playing out differently in the 51 affected jurisdictions (the 50 states and the District of Columbia), and the different political and economic contexts will affect these individual state outcomes. Some states are beginning to implement the new regulations, but others (as of early 2008) are resisting implementation, with the Maine and Utah legislatures adopting official resolutions in opposition and a number of other states considering similar actions.

Complexity of the Change Initiative

The strategies followed by MVAs and the key interest group collaborators—AAMVA, the National Governors Association (NGA), and the National Conference of State Legislatures (NCSL)—have had to account for many layers of complexity. These include the need for wide-ranging intergovernmental cooperation; the personal impact on more than 245 million citizens; projected nationwide implementation costs of $11 billion (estimated by AAMVA); multifaceted politics; technological challenges; and a tight implementation schedule in the face of continued uncertainty about the final regulations. Additionally, Congress stipulated a closed, rather than negotiated, rulemaking process, thus decreasing transparency surrounding deliberations over technical specifications.

Implementation will involve dozens of government, nonprofit, and for-profit organizations. Although it is understandable that a law to combat terrorism is under the purview of DHS, Congress complicated implementation by not assigning the Department of Transportation, which is the federal government’s main repository of highway and driver expertise, any formal role in implementation of the REAL ID Act. Processes for securing and issuing driver’s licenses and identification cards have to be revamped by every MVA in the nation. Related agencies at the local and state levels, including law enforcement and human services, also will be affected. The key stakeholders didn’t begin collaborating until several months after the REAL ID law was enacted.

Stakeholders

The complexity of the change imposed by the REAL ID Act underscores the urgency of identifying stakeholders and their perceptions early in the process. AAMVA leadership needed several months to reach a working compromise with affected stakeholders; craft a consensus-based, coordinated plan; identify organizational capability needs and strengths; and implement the plan. Open, frequent communication from the beginning of the change process is ideal, but in the brief amount of time available for pre-implementation for REAL ID, open communication was time-consuming and difficult to sustain. Fortunately, the pre-Act existence of AAMVA—a coordinated network of MVAs—provided a critical vehicle for understanding and addressing stakeholder perceptions.

Organizational Capacity

Leadership, organizational culture, and implementation mechanisms are the relevant nodes of organizational capacity in this case. The primary lead has been the chair of the AAMVA REAL ID Steering Group, Anne Witt, who exhibited an inclusive, transparent, collaborative change-centric style. The chair followed a “whole systems” approach, finding the proper balance of top-down and bottom-up direction to facilitate a successful change effort. The Steering Group at AAMVA served as a model for new implementation mechanisms at MVA offices nationwide, where “change teams” are now being established to begin to plan for REAL ID.

Two aspects of organizational culture present conflicts for implementing REAL ID. First, MVAs traditionally have included the protection of customer privacy in their mission; national security and enforcement have not been in their purview. Second, the political cultures of the state organizations are different, complicating the process of adapting REAL ID in 51 different legal, geographical, and cultural settings.

Given the imposition of the REAL ID changes on the states, partisan politics, funding issues, technological challenges, and internal organizational factors, the MVA administrators have learned some good lessons and made some smart moves to mitigate their change risk. The lack of a negotiated rulemaking process raised anxiety and uncertainty among MVAs. Clearly, it is wise for public managers to begin planning for implementation early, in a collaborative fashion, when confronted with externally imposed, sweeping changes.

NEW LEADERSHIP AT N STREET VILLAGE

By the late 1990s the N Street Village (NSV) mission of “empowering homeless and low-income women to claim their highest quality of life by offering a broad spectrum of services and advocacy in an atmosphere of dignity and respect” (NSV mission statement 2007) was in jeopardy because of inadequate resources. This case illustrates the importance of understanding the complexity of the change, developing appropriate strategies with affected stakeholders, and building organizational capacity for the long-run success of the organization.

Sociopolitical Environment

When Executive Director Mary Funke took office in 2004, she faced a financial crisis that was not well understood by the staff or board, but she knew she needed to take action quickly. N Street Village needed short-term fiscal adjustments to address the budget shortfall and survive the coming fiscal year, but the financial woes of the organization pointed to deeply rooted problems that would require more complex, long-term planning. Realizing the severity of the problems, the new director launched a plan to transform NSV from an organization rooted in the hopeful belief that “God will provide” to one capable of moving forward through practical mechanisms and systems.

The director began by engaging an external accountant from the Enterprise Foundation to conduct a pro bono analysis of NSV’s financial situation. He delivered a realistic, but “scathing,” report to the senior officers of N Street, the executive committee of the board, and the operations committee. No one on the board had been aware of the extent of the organization’s troubles, and senior staff and board members lacked both the willpower and the strategic capabilities to cope with the financial management problems. The director thought it crucial that she follow the accountant’s report and recommendations (in conjunction with the major elements of her own plan for addressing the problems) to build confidence in her leadership and ability to effect lasting change.

Funke’s initial proposal entailed cutting $200,000 from the budget as part of a 12-month stabilization plan that involved ending one program, eliminating nine staff positions, and making other budget cuts. The board agreed with the director’s plan and also established a $250,000 line of credit (recommended by the external accountant), $150,000 of which was used before the financial situation stabilized. In a more comprehensive strategic plan, Funke articulated a vision that involved creating a nonprofit “business model” and embarking on a new, aggressive fundraising and grant-writing campaign. She also included $25,000 a year in training funds for the staff.

Complexity of the Change Initiative

One major theme of the change effort—developing and implementing a nonprofit business model—was extremely complex in both magnitude and scope. The model not only required that the organization rethink its most basic management and administrative processes, but its execution affected all management, programmatic, and fundraising efforts. It included a commitment to the following (NSV Annual Report 2005):

• Performance, financial, administrative, and program accountability

• Client outcome measures

• Best principles of accounting and finance

• Up-to-date knowledge and information technology infrastructure

• Complete administrative documentation

• Effective staff, board, and volunteer communication systems.

Other challenges to implementing changes in operations included reliance on a small number of staff members for a large number of services, representation of the church on the board and the church’s influence on NSV’s culture, and negative spillover from the negligence of the former executive director. Moreover, a nonprofit must usually grapple with even more stakeholders and less stability in funding resources than other public organizations.

In light of these challenges, the lack of some key staff competencies, and the extent of the needed shifts in attitude and culture, Director Funke planned the change at NSV as a gradual process. She ensured a focus on fluidity—adjusting the plan as circumstances changed—which reduced complexity overall by allowing for incremental changes over an extended period.

Stakeholders

Since the new director lacked a background in social work or direct service delivery, she relied on her leadership skills and relational strengths to gain credibility with NSV’s diverse group of stakeholders. She focused on sharing her vision with both internal and external stakeholders by personally involving them in a concept she called “N Street expectations for excellence.” In addition to connecting with two typical external stakeholder groups in the nonprofit sector, volunteers and donors, NSV has a unique relationship with its founding institution, the Luther Place Memorial Church. Communication with both internal and external groups was vital, and the new director made a conscious effort to keep everyone well informed.

The first stages of the change effort primarily affected stakeholders within the organization: NSV’s staff, regular volunteers, board of directors, and clients. On the day the changes were communicated to the organization, Funke walked the floors of NSV and personally informed the staff who would be losing their jobs of the decision she had made. She carefully explained the reasoning behind the cuts, encouraged them to emote, and offered support, including pro bono job placement services. She also talked directly to the residents who would be affected by the program cuts and asked whether they preferred to stay at N Street or be referred to another program.

To connect with the remaining internal stakeholders, Funke called an initial meeting of staff where she conveyed her vision and informed them that they would be her core implementation team—and that she was expecting a great deal of improvement in staff operations. She invited anyone unhappy with the arrangement or the vision to leave, and one staff person did decide to terminate as a result of the proposed changes.

Once internal stakeholders were familiarized with the impending changes and plan of action, the new director reached out to external stakeholders: volunteers, major donors, and members of the church. She wrote a letter to the core group of volunteers, explaining the changes and the year-one stabilization plan, met individually with major donors, and made a formal address to the church.

Funke and her director of development generally followed a philosophy of individual treatment for donors and volunteers, taking a personal interest in their lives and following up with them in meaningful ways, often in the form of a handwritten note or a freshly prepared meal. Funke iterated that it takes years to cultivate and keep donors and that the smallest actions and attention to detail sometimes make the greatest impact on individual decisions to give.

Organizational Capacity

Executive Director Funke played an enormous role in building the organization’s capacity to embrace the change, and her diligence ultimately led to success and numerous organizational achievements. While some weak areas persist within the organization, NSV proved its ability to adapt to changes introduced through good planning, staff training, and performance management and accountability systems.

The director felt the staff was particularly ill-equipped to meet the challenge of the change, but she made it clear from the start that they were expected to work hard, stay positive, and adopt a new “suck it up” mentality; she reiterated that everyone had to “do what had to be done.” This was an incremental process, with staff slowly gaining a better understanding of why changes were beneficial and gradually communicating their buy-in to the vision. Board members conducted an extensive self-evaluation of the board as a whole, and of themselves as individual members, to determine strengths, weaknesses, and gaps in skills needed on the board.

Funke facilitated a full-day retreat where all staff collaborated to produce a fiscal stabilization plan and initiated a SWOT (strengths, weaknesses, opportunities, threats) analysis, which gave all staff the opportunity to offer input on the vision and plan. A second retreat attended by senior management and appointed members of the board was held to rewrite the mission statement and develop a new vision statement, value statement, and five-year strategic plan.

Although implementing immediate changes necessitated a top-down approach, Funke also maintained a bottom-up management ethos throughout the change. She was sensitive to internal stakeholders’ reactions and feelings; as a result, strategic goals and objectives are updated yearly, according to annual progress and stakeholder feedback. Staff members have independently written a new community statement for N Street, and they continue to play an integral role in major change decisions. They introduced a client satisfaction survey and regularly solicit input from clients about the quality of care and their overall experience at NSV.

Initially, the NSV culture was a hindrance in the proposed shift to a nonprofit business model. The staff and board were rooted in a long-established culture of grassroots service, described as “matriarchal” in nature, and tied to the “God will provide” approach to problem-solving. The staff had no experience working under a system of accountability or maintaining comprehensive and accurate data, and they generally lacked strong management skills. Staff and board members seemed content as long as core services were being provided to the clients.

The director envisioned numerous components of the nonprofit business model. One goal related generally to policies, procedures, and practices and listed as objectives: better record keeping, updated data analysis and collection procedures, and the evaluation of administrative and client policies and practices. The goal relating to the immediate budgetary problems called for adherence to approved spending and income, a $1.5 million fundraising target, the hiring of an assistant director for development, efficient use of in-kind donations and volunteers, and a redefinition of the training subsidy program. Finally, Funke helped staff through the learning and change processes via the most far-reaching of the core goals: a strong performance management system. Specific objectives of performance management included updating job descriptions, staff members developing their own performance objectives to serve as the basis for their performance evaluations, and identifying staff training needs (for which funds were included in the budget).

Feelings of gain were clear after N Street Village began to surpass its goals and reach new levels of achievement. Staff morale skyrocketed after NSV won the 2006 Washington Post Excellence in Nonprofit Management Award—in its first application attempt. NSV staff benchmarked other winners, worked on the application as a team, and rehearsed for the final site visit, with staff playing a large role in the presentation. Since being honored, the organization has flourished and staff feel a stronger sense of belonging. The result has been a fundamental change in organizational culture and the manner in which employees and clients “sell” N Street Village to external stakeholders.

TRANSFORMATION OF HILLEL²

A Christian professor, a Jewish business owner, and a rabbi began Hillel at the University of Illinois in 1923 in response to a growing number of Jewish students on college campuses who were relatively ignorant about aspects of their identity. The initial success of the organization was largely attributable to the magnetic personality and powerful preaching of Rabbi Frankel, who assumed day-to-day leadership. B’nai B’rith, which was established in 1843 as a lodge for Jews and by the 1920s was the most prominent organization in the Jewish communal world, became the parent organization for Hillel, sponsoring the B’nai B’rith Hillel Foundation in 1923. By the 1940s, Hillel had expanded across the country and served as a “synagogue on campus,” providing Jewish learning opportunities, playing a role in Jewish dating and courtship, and offering a refuge to Jewish students.

Sociopolitical Environment

Hillel’s reputation began to erode when the organization fell out of touch with the campus environment of the 1960s, which was much more “activist” than the Hillel programming. Hillel positions were viewed as a last resort for rabbis who could not get credible positions in synagogues. Even so, the rabbis and staff loved their work, and Hillel enjoyed a strong rabbinic culture throughout the 1960s and 1970s.

Because of the intertwined structures of Hillel and B’nai B’rith, the financial woes of B’nai B’rith in the late 1970s and early 1980s had a detrimental impact on Hillel. No longer at the cutting edge of Jewish social services, B’nai B’rith was rapidly losing members and revenue because of an inability to adapt its mission. After a four-year period of ineffective leadership at Hillel, a B’nai B’rith search committee in 1988 hired Richard Joel as the new international director.

Complexity of the Change Initiative

The B’nai B’rith Hillel Foundation’s transition from its traditional rabbi-led culture and decentralized structure to Hillel International’s culturally based franchise model represents a highly complex transformation. Hillel had been without stable leadership for almost a year, the national office relied on the contributions of B’nai B’rith for $3 million of the $14 million annual budget, and that dependence had paralyzed efforts to provide adequate, independent leadership for the national offices. The national office was understaffed and its existing staff was underutilized. Hillel directors on campus (mostly rabbis) were not receiving enough support from the national office, and morale among staff was generally poor.

The new International Director was handed the monumental task of “both integrating and synthesizing the past and yet breaking from the past” (Rosen 2006, 34). Radical changes were necessary, but Hillel’s rich history and its strong religious and intellectual values had to be carefully preserved. Richard Joel’s leadership team reframed the mission of Hillel, separated the organization from B’nai B’rith, founded a new umbrella organization, implemented a national accreditation system, built a dual board structure that included a management and a leadership board, and improved fundraising capacity. During these changes, Joel was confronted by internal resistance as well as conflicting interests both within Hillel and in its external environment.

Key factors that increased the complexity of the changes required included the following:

• Changes impacted both the International Center and all local Hillels, including a fundamental shift in the organization’s approach to its mission, its name, its fundraising capacity, national and local management and accountability, and external relations.

• The individual campus Hillel foundations had been functioning as autonomous units and varied widely in size, attendance, quality of programming, and leadership.

• B’nai B’rith lacked the capacity to continue funding Hillel at the same levels, yet closely guarded its hold on Hillel. The national office of Hillel had always been run as a department of B’nai B’rith and lacked essentials such as its own bank account, accounting department, and fundraising or development staff.

• Other potential sources of support, such as Jewish federations and philanthropists, refused to make donations because of the poor management and uneven quality of services among local Hillels.

Stakeholders

In 1993, Hillel broke from its parent organization, B’nai B’rith, and established a new Foundation for Jewish Campus Life to increase Hillel’s fundraising capacity and to serve as an umbrella organization for all campus Hillels. Although the leaders of B’nai B’rith had kept Hillel under their administrative and financial control in the late 1980s, they did not consider Hillel a priority. The new director needed to work carefully with key B’nai B’rith officials to take advantage of their potential receptivity to change the relationship. Joel commented: “There were never any secrets kept from them. We just used the right kind of language in the right kind of way. Because…they didn’t want to be responsible for losing Hillel” (Rosen 2006, 44). The role of B’nai B’rith was reduced in stages over a three-year period to allow internal stakeholders ample time to adjust to the new governance structure.

Because most of the previous directors of Hillel had been rabbis, the decision to hire Joel, a layperson, disturbed those who felt he was an outsider who would be unable to relate to the organization’s values. Joel understood their concern and initiated efforts to build rapport with the local rabbis. He met with the executive committee of the professional association of Hillel rabbis and asked the members individually about their experiences at Hillel and what the organization meant to them. Joel responded with passion about his personal values and described his own vision for Hillel: “We have the power, the opportunity, and I suggest the sacred responsibility to reshape ourselves and be one of the key forces for Jewish continuity and survival in the emerging century. We are positioned to seize the moment…and command the respect, support, and partnership of the community” (Rosen 2006, 41).

Realizing that the magnitude and scope of the change would require strong leadership throughout the organization, Joel began to make difficult personnel changes at the national office and at local Hillels. He was lauded for skillful human resource management and successfully encouraging many ineffective directors to resign. Because local chapters had operated for years with little accountability to the national office, the introduction of Joel’s “franchise” model upset many rabbi-directors and lay leaders. To provide an outlet for discussion, he made heavy use of boards, task forces, and commissions, providing a platform for volunteer engagement that brought diverse groups of stakeholders together to share their perceptions.

Joel brought performance evaluation to Hillel in the form of accreditation, a system he borrowed from his experience in college administration. The entire process included local feedback and was implemented using a bottom-up approach because Hillel directors felt the new accreditation system threatened their job security.

A retreat organized by a National Committee on Quality Assurance (composed of a diverse mixture of Hillel’s internal stakeholders) resulted in the Everett Pilot Program for Excellence, which featured a four-stage accreditation process. Local Hillels engaged in their own self-study in the first stage and then worked with an outside Hillel team that led a site visit and delivered an action plan for the local organization. After passing accreditation, local Hillel foundations were expected to comply with other national directives, like engaging in independent fundraising and participating in new program initiatives, with support from the national office. Joel designed the programs and gave local Hillels half of the money needed for the programs (from national fundraising efforts), while the new director of development taught them how to raise the other half.

Joel always felt most comfortable speaking to the students directly. The greatest asset he brought to Hillel may have been his ability to understand the experience of Jewish college students and connect with them on a personal level. He put students at the center of strategic planning and also demonstrated his dedication through active participation with students on their campuses. He renewed a national assembly for student leaders in Hillel, placed 12 students on the Hillel board, and established several new programs designed to enhance the long-term influence of students.

With respect to external stakeholders, Hillel lacked any relationship with the philanthropic community before the 1990s. The first major gift, which came from one of Joel’s contacts at Yeshiva University, was used to begin an endowment that provided grants to local Hillel foundations. This initiative spurred other one-time gifts from donors, which were used to pioneer new student-centered initiatives.

Hillel’s Committee on the Fiscal Future later targeted Edgar Bronfman, President of the World Jewish Congress. By forging a long-term relationship with such an influential figure in the Jewish community, Hillel dramatically improved its reputation and attracted the support of other key philanthropists. Through Bronfman, Joel gained access to the Study Group, or “Mega Group,” a collaboration of the most prominent Jewish philanthropists in the nation, and eventually secured $1.2 million from the group annually.

Joel recognized that the Jewish federation system (an important nationwide system) could provide the most stable and long-term funding for Hillel. He worked diligently to promote a partnership with the Council of Jewish Federations (CJF). A CJF Task Force on Jewish University Student Services report recognized the impact of Joel’s leadership and recommended that the federations play a more active role in student services on college campuses. CJF agreed to provide 40 percent of the total budgets of local chapters (approximately $20 million in the first year)—“for the first time, Hillel and the federations would have a cooperative working partnership” (Rosen 2006, 55).

Organizational Capacity

As a large and long-established organization with many local foundations and an international office closely connected with B’nai B’rith, Hillel had a basic ability to design and implement major change initiatives. However, without skilled leadership, the organization might not have survived its financial crisis and inner turmoil. The separation from B’nai B’rith and transition to financial independence became the hallmark of Hillel’s transformation, but Joel’s first action as director was to sell his vision to internal stakeholders. Joel identified two distinct groups of Hillel participants: (1) those who were knowledgeable about Judaism and eager to become part of a Jewish community on their campus and needed empowerment and (2) those who felt uncomfortable or unfamiliar with their Jewish identity and needed engagement (which required more effort on the part of Hillel staff).

To restructure the Hillel system, Joel not only had to remove ineffective local Hillel directors, but he also wanted to make permanent changes in the composition of the national office and Hillel’s governing structure (its board of directors and international board of governors). He began hiring individuals as Hillel directors based not on rabbinical experience but on skills for running a nonprofit. He named a new chairman of the board who could build credibility with the federations and appointed new “young, inspired, and intelligent” members, while adding women and students as representatives on the board of directors and other governing boards.

New fundraising campaigns that permitted freedom from fiscal reliance on B’nai B’rith, the hiring of the first director of development, and the new board of governors all empowered Hillel to develop self-sustaining programs and sparked a spirit of innovation in staff members. Original programs that propelled Hillel forward included the Steinhardt Fellows program and the Jewish Campus Service Corps. Jewish philanthropists appreciated the opportunity to sponsor particular programs that aligned with their own priorities. The national center ensured that local Hillel foundations maintained the capacity to adopt changes by providing professional development, training opportunities, and grants in recognition of good directors and good programming. Joel reconfigured Hillel’s interface with its environment by maximizing timely opportunities (such as a population study that raised concerns about Jewish students marrying non-Jews) and reaching out to all the important groups of external stakeholders.

The business-like franchise model, which included centralized decision-making, performance measurement, and quality assurance, was and still is controversial, given the history of the organization and its reluctance to ascribe to a corporate framework. Some Hillel insiders felt that the turnover in leadership from academically oriented rabbis to professional administrators weakened relationships between directors and university officials and detracted from Hillel’s participation in the intellectual life on campus. Others believed that “Hillel had become too standardized, corporate, and impersonal” (Rosen 2006, 67). Seeking the students who needed engagement required the “mass marketing” of Judaism, and Hillel chapters began to measure success by the number of students reached through cultural and social programming. If outreach becomes “too religious,” participation may drop, but if it is “too popular and secular” it may lead Hillel away from its central mission.

By 1995, Joel had clearly transformed Hillel into a new organization that was independent from B’nai B’rith with new, diverse revenue sources and fundraising systems. With the ability to generate 60 percent of its own funding, Hillel, under Joel’s leadership, quadrupled its total annual budget from $14 million in 1988 to nearly $60 million in 1995. The accreditation program had improved quality at many local foundations, and some were even generating their own funding, conducting successful capital campaigns, and building new facilities.

New partnerships with CJF reconnected communities with Jewish college students, who were now viewed as an essential link in forging sustainable Jewish continuity. CJF secured Hillel’s credibility when it identified Hillel, in a highly anticipated task force report, as the “central federation agency through which campus services are delivered” (Rosen 2006, 52).

LESSONS LEARNED FROM THE CASE STUDIES

These six case studies do not presume to reflect the entire spectrum of challenges and change issues faced by public and nonprofit organizations in the 21st century. They are, however, strikingly similar in a number of important aspects that are likely to be common to most organizations facing the challenge of change. These cases highlight the role of leaders in analyzing the challenges involved and in devising strategies to support the change.

Complexity of the Change Initiative: Keeping the Focus on the Mission

Change efforts should always begin with a strong focus on the organization’s mission. Revisiting the fundamental mission and goals of the organization is essential to ensure that nothing valuable is lost during the change. Keeping the mission foremost in mind helped the leaders in Fairfax County, VHA, the Coast Guard, NSV, and Hillel to cut through the complexity and challenges they faced and create a vision that clearly focused on what was most important to them, their organizations, and their stakeholders.

While incremental change may be the most successful in complex situations, such as Hillel and Fairfax County’s Department of Systems Management for Human Services (DSMHS), sometimes organizations such as VHA or NSV face a “burning platform” that demands sweeping change for survival. At other times, the changing nature of the external environment (e.g., the Coast Guard’s expanded mission brought about by the 9/11 attacks) requires immediate action.

Most public and nonprofit organizations have a clearly defined culture, often the product of the founders and other key leaders, that is likely to be resistant to change. Successful leaders of change do not underestimate the power of an organizational culture to hamper a change effort. In the Coast Guard Deepwater case, the use of a public-private partnership and the establishment of a separate Deepwater program unit added layers of complexity and conflicted with the underlying culture of the agency. As a result, many Coast Guard personnel felt marginalized; interviews revealed that internal communication was insufficient to bring personnel in line with the new vision of a “system of systems.”

In the nonprofit sector, where most stakeholders exhibit a passionate dedication to the organization’s mission, cultural change can be a formidable challenge. In the cases of NSV and Hillel, the challenge was to keep what was most important to the culture (their defined values and ethos) while working to modify the culture in a way that supported the change initiative. Leaders should frame their transformational vision as a compelling narrative that demonstrates an understanding of the organization’s history, shared values, and ideals.

When a change registers high in complexity, it is even more important that effective change mechanisms be in place to minimize long-term risk. A recent study by Brandeis University found that local Hillel chapters have integrated the changes from Joel’s tenure into their operations but have not developed the fluidity they need to react to changes in the environment on their campuses. Amy Sales notes, “The foundations learned to engage in the new behavior called for by a given innovation, but they did not learn how to become innovating organizations” (Rosen 2006, 77).

Furthermore, when Joel left Hillel, he had not facilitated any succession planning and thus left the organization vulnerable to the performance of future leaders. In contrast, at NSV, Mary Funke has already identified persons in the organization with the potential to assume leadership and is actively working to expand their leadership opportunities.

Sociopolitical Environment: Staying Aware of External Conditions

Scanning the sociopolitical environment is essential to lead public and nonprofit organizations through a change because their survival generally depends on external support—whether from a legislative body or from donors. Leaders have to be aware not only of the sources of that potential support, but also of their potential competitors for funds, and take advantage of opportunities (good reputations, important new studies, major crises, etc.) to attract additional support.

Our case studies demonstrate a number of successful efforts in this regard. At Hillel, the new director successfully understood the changing environment and issues for funders of Jewish causes and was able to position Hillel to take advantage of those changes. Similarly, at VHA, the director was able to exploit changes in healthcare technology and practices as part of the VHA transformation effort. In contrast, REAL ID is being implemented in a turbulent environment with significant state opposition; federal agency actors failed to understand likely state attitudes or to involve critical state actors in the implementation efforts, unnecessarily complicating their efforts.

Stakeholders: Building an Upward Spiral of Trust and Collaboration

Public and nonprofit organizations have to involve their multiple stakeholders in any change. Identifying and incorporating internal and external stakeholders at the front end of sweeping change is often critical to successful change and transformation. The key is building trust and confidence that the organization is capable of meeting the mission and objectives that motivate stakeholder involvement and collaboration. The new “vision” must capture what is important to stakeholders while moving the organization forward. Simply put, there is no such thing as too much communication!

In anticipation of the REAL ID implementation, the AAMVA REAL ID Steering Committee Chair Anne Witt initiated and consistently supported collaboration and transparency in her approach to her colleagues in state government. Collaborative processes are an important part of any change strategy. In this case, the failure of Congress to develop a transparent and negotiated rulemaking process will undoubtedly create problems in the 50 states and lead to more resistance than might have occurred with a more collaborative process.

Communicating with stakeholders, both internal and external, was a principal responsibility of the new leadership at VHA, NSV, and Hillel. In those cases, success depended on gaining the trust of a wide range of actors upon whom their organizations were financially dependent. Developing a compelling vision and common language that stakeholders could buy into was key to the success of those change initiatives.

Kizer had to convince a reluctant Congress that VHA was providing valuable healthcare to veterans. In the cases of NSV and Hillel, their leaders, Funke and Joel, really seemed to care about their donor stakeholders, creating deep, genuine relationships that went beyond the relationships typically found in public and private sector activities.

A leader’s determination to achieve results can stimulate “upward spirals” from even the most deadlocked dilemmas. Both VHA and Hillel had fallen into poor repute, which repelled funders (in Congress and in the private sector) and in turn prevented the possibility of improving programming to rebuild reputation. Kizer focused on “domains of value” to energize the VHA system. Through the accreditation process, Joel brought movement to a stagnant situation and solicited financial support for new programs at Hillel. When others observed these great ideas in action, “the spiral was set in motion and success bred more success” (Rosen 2006, 77).

Organizational Capacity: Creating Change-Centric Organizations

These case studies and other reading in public and nonprofit management suggest that building organizational capacity is a key to long-term success and the ability of the organization to meet changing conditions and challenges. That capacity starts with—but goes beyond—“the leader” of the organization. Organizations like the Coast Guard, Fairfax County, VHA, NSV, and Hillel that are able to meet the challenges of change invest in leadership throughout the organization, often setting aside funds for individual growth and enrichment even in tight fiscal circumstances.

Successful public and nonprofit leaders are realistic about the present, but focus on the future. Just as important as presenting the grand picture, vision, or plan is the need to understand where the organization is and then to develop the incremental steps toward making improvements. It’s important to find the right balance between “innovation” and sticking to the “fundamentals.” Straying too far in one direction will result either in not changing enough or in spinning out of control.

Nonprofit organizations often get by with very loose and informal organizational and accountability structures. While this may work with small organizations, as the organizations grow and expand their mission, those structures are not able to support their needs. A key function of leadership is thinking about the nature of the challenge and the need for organizational structures to align with the change needs.

Performance measurement is an important strategic process in facilitating change. Even just the introduction of measurement can have an important symbolic effect, indicating that the organization is committed to a new model of operation. This was true with DSMHS’s automated call center, VHA’s domains of value, NSV’s performance-based employee reviews, and Hillel’s accreditation process. In the case of the Coast Guard’s Deepwater program, the failure to identify key matrices prior to the public-private partnership may have contributed to the ultimate demise of the partnership. Good performance measurement helps everyone focus on the key elements necessary for the change and can be used to track the success of various change efforts.

In the nonprofit arena, fundraising is a key organizational capability—and it is everyone’s job. An important leadership responsibility is instilling in the members of the organization the importance of fundraising, particularly of being attuned to potential donors and of nurturing current donors. For example, when leaders at all levels of Hillel began to work in concert to brainstorm new sources of revenue, the organization rapidly progressed. Nonprofits must be careful, however, not to just chase dollars and lose their central focus and mission.

Finally, leaders need to create change-centric organizations that can adapt to changing needs and challenges, that are open to new ideas, and that are entrepreneurial but still accountable. The best reforms can lead to unanticipated positive long-term outcomes. Amy Sales refers to these secondary effects as “ripples” (Rosen 2006).

In Fairfax County, it was the use of performance measures that encouraged greater coordination and productivity from the central call center workers. At VHA, it was the automation of patient records that allowed a better continuum of care. At Hillel, it was the accreditation process that enhanced quality, attracted funding, and heightened pride in the quality of performance. At N Street, Mary Funke’s mantra of “do what has to be done,” coupled with her investment in staff training, led to a more capable, performance-based organization that won the Washington Post award for nonprofit excellence.

IMPLICATIONS FOR CHANGE LEADERS

Our research in the six cases demonstrates that widespread change is possible, even under the pressure resulting from environmental forces and financially tight circumstances. The key is effective change-centric leadership: creating a vision that incorporates the organization’s important values and engaging in effective communication and collaboration with key stakeholders. While recognizing the vast differences facing public and nonprofit organizations as they undertake major change or transformation, leaders of change can benefit by examining other successful (or unsuccessful) change initiatives and determining whether those lessons are relevant and can be applied to their own organizations.

SUGGESTED READINGS FOR CASE STUDIES

This book provides a number of case studies of innovation in American government at the local, state, and federal levels, including some that received the Innovations in American Government Award from Harvard’s Ash Institute for Democratic Governance and Innovation. The authors argue for the importance of innovation within a framework of democratic accountability. They contend that innovation is necessary because current government programs are failing to meet the needs of 21st century challenges and citizens are demanding increased government performance.

This book is based on Minnesota’s “STEP” (Strive Towards Excellence in Performance) approach, developed in the mid-1980s to improve state government programs and services. STEP was developed by Minnesota’s Department of Administration to spur and legitimize change efforts at the state and local levels. The key elements of the STEP approach are (1) closer contact with the customer/citizen; (2) increased employee participation; (3) increased discretionary authority for managers; (4) partnerships; (5) productivity improvement techniques; and (6) improved work measurement. The STEP program won the Harvard Kennedy School’s Innovation Award.

This book describes “preferred states of being” for organizations that seek to be innovative through removing barriers and debunking myths that discourage innovation; examining the preferred environment, internal structure, leadership, and internal management systems of an innovating organization; and encouraging organizations to “fit the list of preferred states to their realities.” The conclusion looks toward the core values that help innovating organizations know what is right for them: trust, honesty, rigor, and faith.

PART II
Key Leadership Change Processes

CHAPTER FIVE
Communicating and Collaborating with Stakeholders

The new public service in the United States is a blended, multisector workforce comprising public and nonprofit servants who often work closely with the private sector to deliver public goods and services. The composition of the blended workforce means that stakeholders in change initiatives may have very different stakes in the outcomes, as well as diverse values and incentives affecting their behavior.

The challenge of forging the trust and cooperation among diverse stakeholders needed to implement complex change initiatives can be intimidating. Understanding who the key stakeholders are and where they are coming from, and then devising effective communication strategies to achieve productive collaboration, are fundamental challenges for transformational stewards.

THE SCOPE OF STAKEHOLDER INTERESTS

We define “stakeholders” as all the individuals and organizations involved in, or affected by, a change initiative. Internal stakeholders are managers and employees within the organization, which includes regular volunteers in nonprofit organizations. Private contractors to public sector organizations are identified as external stakeholders in that they are not direct employees of a public or nonprofit organization. In this age of networked government that is increasingly dependent on public-private partnerships and outsourcing of functions, contractors are often key stakeholders. Other critical external stakeholders may include Congress; executive branch agencies; private firms and interest groups; other governmental, nongovernmental, or international organizations; potential funders for nonprofit organizations; and individual citizens or residents. Leaders need to systematically identify all people and groups involved in the implementation of a change initiative.

Where does a change leader or manager begin in the effort to shape communication strategies that facilitate regular, open, and meaningful internal and external stake-holder collaboration? The change leader begins by looking inside, outside, and ahead of the immediate organization (Brinkerhoff, D. 1991a; Goldsmith 1995).

Looking inside, in the new public service environment, requires understanding and acceptance among internal stakeholders of each other’s diverse work-related orientations and interests. Up-front investment in sound communication strategies to encourage collaboration can reap dividends.

Open deliberation, in settings considered by employees and other stakeholders to be safe and nonthreatening, helps foster a trusting culture. A trusting culture is conducive to securing buy-in to change initiatives. Both internal and external stakeholders are primary sources of ideas about how to strategize and implement change projects. Building trust among stakeholders through intentional communication processes can facilitate planning. “A “mindset’ or commitment to the whole” is a worthy yet hard-earned objective (Mandell 1994, qtd. in Mandell 1999, 46). When employees and other actors in networked public service delivery share similar values and ethics, they are more likely to develop workable approaches.

Along with implementing change effectively, ensuring accountability for contributions to performance is another key leadership responsibility. The larger the number of stakeholders, the more complex the accountability challenge. Agranoff and McGuire (2001) note that because multiple interests are involved in network transactions, everyone in the network is somewhat accountable, but no one individual is completely accountable, for outcomes or to various stakeholders (309–310). Strategies for ensuring accountability are even more problematic in nonhierarchical networks, and communication and collaboration structures are needed to clarify expectations about accountability for the achievement of change outcomes.

Looking outside at the external environment, leaders should engage stakeholders (such as citizens, labor unions, and consumers) and encourage open communications. Ongoing, routine monitoring of how external stakeholders view an organization and organizational performance certainly helps when innovation or external demands require change. Increasing the quantity, quality, and speed of feedback will engage stakeholders as changes are planned.

Looking ahead, leaders must anticipate new stakeholders who may become involved as a result of the change initiative. It is likely that organizations or interest groups may be drawn into the planning and implementation of change initiatives—by intention or not. Careful consideration of the requirements for successful change can help in preparing for the consequences of a larger and more diverse number of collaborators or interested parties. In either case, forecasting changes in implementation partners and stakeholders is helpful as a means of securing effective collaboration.

COLLABORATION

We view the term “collaboration” as multifaceted. For example, Agranoff suggests that collaborative networks may be informational or developmental, and they may involve outreach or action (2003). The need for interdependence in collaborative relationships may vary from cooperation, to coordination, to collaboration, to more intensive integration (Selden, Sowa, and Sandfort 2002). Collaboration is typically based on reciprocity, or two-way flows of information and expectations (Agranoff and McGuire 2003).

We believe that trust—in leadership and in other stakeholders—facilitates candid reciprocity in sharing views and ideas. However, collaboration may also be based on resource dependency, expertise dependency, or contracts that establish de facto hierarchical relationships. Regardless of the role of trust vis-à-vis other forces linking stakeholders who are responsible for implementing change, candid communication about tangible as well as intangible obstacles to change initiatives is a key foundation for effective collaboration.

We view authentic collaboration as candid, network-wide communication supported by a trusting, change-centric culture. Trust among stakeholders to share resources and ideas is more difficult to establish in networks than in the single public service organization. The process of engendering authentic collaboration is more labor-intensive than command-and-control management, but it is a more effective process for ensuring sustainable, improved performance overall.

Authentic collaboration among stakeholders in networked service delivery chains will likely lead to innovation and efficiency. Milward and Provan (2006) note five essential network management tasks: the management of accountability, legitimacy, conflict, design (i.e., governance structure), and commitment. We believe that authentic collaboration is essential to carrying out these tasks. Deliberations about accountability for accomplishments, the division of responsibilities, and personal commitments will clearly be more effective when based on authentic collaboration.

STAKEHOLDER ANALYSIS

Stakeholder analysis is a crucial first step toward understanding how stakeholders throughout an organization or network view a change initiative. Stakeholder analysis can be conducted in a variety of ways, from worldwide web-based surveys to focus groups consisting of representatives of the stakeholder interest groups. Leaders and managers should assess stakeholders by analyzing (1) the intensity of stakeholder perceptions, (2) the diversity of stakeholder beliefs and interests, and (3) the existence of collaboration networks to facilitate stakeholder relations.

Intensity of Perceptions

Perceptions matter. The more intensely beliefs are held or fears are felt, the more they matter. Fears and rumors about the effects of a change initiative can easily become exaggerated and blown out of proportion. It is the leader’s job to work through overdrawn perceptions and adjust implementation steps to address reasonable but previously unknown or unaddressed concerns.

To reduce the friction produced by time-consuming rumors and to maximize stakeholder input, leaders should pay careful attention to assessing and addressing stakeholder perceptions on a continual basis. Understanding stakeholder perceptions should involve identifying the perceptions of gain and loss held by internal and external stakeholders; measuring the intensity of those perceptions; and gauging whether their perceptions will lead stakeholders to impede the implementation of change initiatives.

Diversity of Interests

The range of views about organizational mission, value preferences, and worldviews held by stakeholders is generally a function of the size and variety of the organizational units or groups involved in or affected by a change initiative. The need for effective communication processes and collaborative networks increases with the diversity of stakeholders.

Collaboration among diverse internal and external stakeholders is predicated on extensive communication processes and structures backed by steady commitment from leadership. Such collaboration should result in increased employee and external stake-holder buy-in. If relations among stakeholders prove difficult, conflict resolution may be in order, pointing to the need for conflict negotiation structures such as in-house negotiation experts.

Existence of Collaboration Networks

The third focus of stakeholder analysis is on the collaboration networks—both processes and structures—that are in place to facilitate the flow of communication among internal and external stakeholders. The more institutionalized and valued the collaboration networks are, the easier it will be to generate candid dialogue among stakeholders about their perceptions vis-à-vis the actual vision and goals for the change initiative. Sustainable improvement in performance is likely associated with communication and collaboration across multiple organizations. Consistent and frequent communication is all the more essential for grappling with the increasing complexity of change initiatives in the public sector.

FOSTERING COMMUNICATION AND COLLABORATION

Fostering communication and collaboration starts with visible leadership commitment. Once the leadership conveys its commitment, an effective communication strategy can be designed by establishing mechanisms to ensure that pertinent stakeholders are brought into the dialogue. Frequent opportunities for networked communication can help cultivate honest and open dialogue among internal and external stakeholders in the change initiative. Over time, a level of trust will be established, allowing differences in preferences, norms, and incentives to be mediated cooperatively rather than competitively.

Because organizational actors and goals differ, the processes and structures leaders employ will also vary. Table 5.1 provides a list of tasks involved in planning and implementing effective stakeholder communications.

TABLE 5.1: Tasks Involved in Planning and Implementing Stakeholder Communications

PLANNING 1. Identify stakeholders (internal and external) affected by the change initiative. 2. Assess stakeholder perceptions. 3. Assess communication needs and gaps. 4. Practice “reflexive listening.” 5. Negotiate roles, responsibilities, and strategies. 6. Use existing collaborative networks or develop new ones to ensure two-way communication. 7. Develop change performance metrics. 8. Identify media contacts and the organization’s spokesperson. 9. Develop a common case for change. 10. Plan for unknowns, crises, and unexpected problems. IMPLEMENTING 1. Institute a communication plan. 2. Develop and initiate feedback mechanisms. 3. Value and celebrate the contributions of stakeholders. 4. Monitor, evaluate, and report results. 5. Build communities of trust. 6. Encourage teaming and reward collaboration. 7. Partner with the community. 8. Keep public officials informed. 9. Take a long-term view.

SOURCES: Barge 2004; Darling, Parry, and Moore 2005; Elias and Cavana 2000; Harvard 2005; Klein 1999; Lazes and Savage 2000; U.S. GAO 2005b.

In the more traditional public service organization, cross-management teams are used to ensure communication and coordination among departments and other bureaucratic units. In networked public service, cross-management teams have the additional, critical function of instilling and normalizing creative brainstorming among managers at all levels throughout the network. Table 5.2 summarizes various communications and coordination structures.

TABLE 5.2: Structures to Facilitate Collaboration within Organizations and Network Service Delivery Systems

Structure	Process
Cross-Management Teams	Regular meetings of representatives of all relevant units are held to discuss management issues.
Ad hoc Collaboration Teams
Collaboration Councils	Panels of experts meet with internal stakeholders to assess planning and implementation of change initiatives.
Virtuous Circles	Groups of citizens and external stakeholders meet to offer feedback on the consequences of change initiatives.
Collaboration Compacts	Formal agreements are established between stakeholders regarding resources.
After-action Reviews (AAR)	Internal and external stakeholders meet to evaluate specific changes.
Conflict Negotiation Experts	Conflict negotiation experts on teams can be secured internally (e.g., human resource officers) or by contract to meet with stakeholders involved in change initiatives.
All structures are supported by collaboration software, including podcasting, wikis, blogs, and listserves.

Ad hoc collaboration teams are groups of people across the public service delivery systems who formally or informally organize as the need arises. For example, collaboration councils consist of stakeholders and other experts and advisors whose purpose is to guide and strengthen an organization’s collaboration strategy, which is crucial to the effectiveness of public service networks. Virtuous circles refer to groups of citizens who voice their preferences and demands for improvements in public services to public officials on an ongoing basis, and might provide useful feedback from external stakeholders throughout the implementation of a change initiative (Brinkerhoff 1997 ref. in Mandell 1999, 51). Collaboration compacts, or formal agreements that anticipate the need for intergovernmental sharing of resources, are becoming more common in interagency emergency management. In after-action reviews (AARs), managers and staff assemble promptly after a program or project is implemented to evaluate program efforts. AARs are just as appropriate in the civil service as they are in the military, especially in public and nonprofit service environments where health and safety are paramount (Waugh 2006–07, 14).

Conflict negotiation experts are consulted when intractable issues arise during collaborative efforts. These experts can be located in program offices, human resource departments, or umbrella operations that work across a network of agencies and other cooperating organizations. In the long run, however, training permanent staff in negotiation techniques may be more efficient.

Principled negotiation is an approach to conflict resolution that emerges from dialogue about the merits of opposing stakeholder needs and desires, as opposed to (more commonplace) bargaining over positions (Fisher, Ury, and Patton 1991). Facilitated dialogue about various interests and needs can lead to recognition of mutual assets and purpose. Principled negotiation encourages thoughtful, respectful, appreciative communication. For implementing change involving more complex service delivery networks, principled negotiation has particular strategic value because the behaviors and expectations of various stakeholders will likely reflect different values and ethics.

A number of support mechanisms can be adapted to support cross-management and ad hoc team building. For example, various applications of information technology are helpful. Useful technological approaches to support collaboration include pod-casting, wikis, blogs, and listserves (Leary 2006). These collaborative technologies can be used to complement (but not replace) face-to-face meetings and telephonic conferencing. Software should be simple to use, inclusive, and compatible with and adaptable to technology used by the multiple organizations in a network (Harvard 2005).

DEVELOPING TRUST AMONG STAKEHOLDERS

The development of a trusting relationship among stakeholders is clearly key to long-term communication and authentic collaboration. But how can this be accomplished? Hardin suggests that one type of trust is based on “encapsulated interests” and a second, deeper level of trust (“thick relationships”) is based on constant interactions, mutual respect, and common purpose (2002).

Initially, most individual and organizational trust is based on mutual interests: We trust you to do a certain thing (e.g., to provide us with a certain service) because we believe that doing so is in your interest as well as ours. For the change leader, the challenge is to demonstrate to the various stakeholders that their individual or organizational interests are congruent with the proposed change—that both parties will “gain” from the relationship.

As individuals and organizations work together over a longer period of time, growing respect may lead them to trust each other without specific quid pro quos. During this phase of trust, individuals in public and nonprofit organizations (and the organizations themselves) work together for a common, public interest; their goals have become more aligned and there is less emphasis on what each party gains from the relationship. Thus, the long-term challenge for change leaders is to encourage individuals and organizations to work together to achieve a joint public purpose.

Leaders must craft and manage a governance structure that allows individual members to voice their interests and needs, yet minimizes the potential for outlying interests to obstruct improvement and change that will benefit the group as a whole. In other words, transformational stewards need to move forward by providing incentives to stakeholders to work together to protect the collective interest.

In essence, the public and nonprofit leader’s responsibility for collaboration and change involves balancing individual and collective interests, while performing an integrating role that encapsulates the core values of public service and stewardship.

ILLUSTRATIONS FROM THE CASE STUDIES

Understanding stakeholder perceptions, recognizing the diversity of affected stakeholders, and involving key stakeholders, as well as understanding the availability of existing collaborative networks and working to create new networks, were critical aspects of change and transformation in all the cases we reviewed.

Involving Key Stakeholders

Many of the change leaders we interviewed felt that working more effectively with stakeholders could have helped them in planning and implementing their change initiatives. For example, the costs imposed on state motor vehicle agencies by the REAL ID Act have produced deeply held, intense perceptions among state-level stakeholders about the burden facing them. In fact, their anxiety and fears about costs have become tangible obstacles to implementation of the federal mandate as state politicians and associations have voiced opposition.

The act was passed in May 2005, but the rulemaking of proposed regulations was not issued until March 1, 2007, leaving only until May 2008 (later extended to December 31, 2009) for governors and their state motor vehicle administrators to implement the act’s provisions. During the waiting period for the rulemaking, members of the American Association of Motor Vehicle Administrators (AAMVA) assumed a critical role in planning for REAL ID by assessing perceptions of key stakeholders in the change initiative. An AAMVA steering group conducted a national survey of members’ perceptions of the potential impact as well as the estimated costs of the REAL ID Act. The survey allowed key stakeholders to “vent” and communicate their fears. Results from the AAMVA survey have informed the strategy for ongoing communication and collaboration processes among motor vehicle agencies.

In Fairfax County, the extensive engagement of external stakeholders, whose nonprofit organizations provide the majority of services and donations to clients, increased the need for coordination and networking among groups of professionals (such as social workers and communication technology specialists) with different worldviews and business orientations. Fairfax County leaders conveyed in interviews that they wished they had had more time to assess and address the perceptions of stakeholders. They realized that the change ultimately made was less extensive and effective than might have been possible had they learned about some key internal actors’ perceptions at the beginning of the change effort.

Learning how key stakeholders view the impact of change can help change agents develop their “common case for change.” For example, the leader of the VHA transformation authored Journey of Change, which became the reference manual for VHA staff (Kizer 1997). The VHA document was disseminated throughout the organization to address internal stakeholder perceptions about potential gains and losses. The involvement of key stakeholders in developing the change strategy and in formulating the “domains of value” that would drive the change initiative provided the opportunity for collaboration and involvement, and consequently reduced stakeholder fears about the proposed changes.

Diversity in group values and the professional training of key stakeholders can increase the challenges to leading change. This was true in the Coast Guard case, where a new public-private partnership required private sector engineers to communicate clearly with USCG officers. The differences in worldviews provided a particular challenge because the USCG officers and the engineers from the private sector literally did not share the same technical vocabularies.

At N Street Village, the director had to balance the needs of both internal and external stakeholders. Internal stakeholders included the clients being served, staff, regular volunteers, and the board of directors. External stakeholders included members of the Luther Place Memorial Church (NSV’s founding organization) and current and potential donors and volunteers. Dealing with a “forced change” (brought on by the financial crisis), the directors initially focused on communicating to internal stakeholders the rationale for why changes were needed—and the consequences. As noted, the director reached out personally to staff and external stakeholders.

The Hillel transformation involved a complex group of actors, including the parent organization B’nai B’rith, the staff of the national organization, and the local Hillel foundations (including staff and students being served). The new national director had to develop extensive communication and collaboration strategies to achieve buy-in for the proposed changes and vision. In addition, the director believed that for long-term financial success it would be necessary to expand Hillel’s support base by seeking support from Jewish philanthropists and entering into a partnership with the Council of Jewish Federations (CFC).

The challenge for the Hillel director (as for many nonprofit change leaders) was to demonstrate that Hillel’s mission and goals were aligned with the priorities of the individuals and organizations that could provide financial support. To accomplish this, the Hillel director sought to position the organization as “one of the key forces for Jewish continuity and survival” (Rosen 2006).

In both the Hillel and NSV cases, new directors were hired to make changes and the fiscal problems they both inherited required an initial top-down approach to change. However, both directors exhibited a bottom-up leadership ethos through their detailed planning and implementation of the change, allowing stakeholders to play a major role in the design and implementation of the change strategy. For example, the NSV director saw the need to develop a stronger business model for the organization’s operation, but was careful to incorporate the values of her stakeholders into the revised mission, vision, and community statements for the organization.

Creating Communication and Collaboration Networks

Although it is wise to use existing networks to communicate plans among stakeholders, the unexpected inevitably happens, so leaders and their organizations must be able to improvise. In the Fairfax County case, development of new collaborative networks and processes was critical to facilitate communication and to build trust as challenges arose during implementation of the change initiative. At Hillel, the director involved stakeholders through the extensive use of boards, task forces, commissions, and ad hoc groups that provided a platform for volunteer engagement, a bridge between lay leaders and rabbis, and advice and direction on implementation of the change initiative. For example, a National Committee on Quality Assurance (a diverse group of Hillel’s internal stakeholders) developed an accreditation approach that addressed the need for greater quality and standardization of the services provided by local Hillel foundations.

New cross-functional teams can help create new networks for needed consultation about implementation of change initiatives. The teams should be interactive and nonhierarchical groups, with representatives from across lower levels or geographically dispersed units within the organization, and they should address change-related implementation issues pertinent to their organizational level.

For example, the AAMVA Steering Group was a team devised to strategize about implementation of the REAL ID Act. Motor vehicle administrations in the states have established “sub” change teams comprising other state-level stakeholders across the country. At N Street Village, at a full-day retreat, staff collaborated on a detailed fiscal stabilization plan and initiated a SWOT (strengths, weaknesses, opportunities, threats) analysis that allowed all staff to have input toward the new NSV vision.

Collaborative efforts should encourage an open, trusting organizational culture. Change leaders need to monitor morale and productivity consistently throughout the implementation of change initiatives. The REAL ID steering group chairperson’s individual phone calls with each state MVA director and routine e-mails established a trusting relationship among AAMVA members. In Fairfax County, the DSMHS director established charrettes (planning meetings where all stakeholders are represented), “collaborameters” (for assessing the readiness of groups to collaborate on a project), and other feedback mechanisms to monitor the perceptions of critical stakeholders. At NSV, the director took a personal interest in her stakeholders, providing training funds for staff. At Hillel, the director discussed experiences with the Hillel association of rabbis. This allowed him not only to gauge the intensity of their perceptions, but also to find ways to incorporate their individual values into overall change values and direction—forging a common sense of shared interests.

Internal and external collaborative strategies, processes, and structures should reflect the type of change being implemented. For example, reorganization coupled with service integration, as in the Fairfax County and VHA cases, incorporated communication and collaborative structures and processes that addressed issues of cross-training and information system interoperability.

Direct contact and communication with all stakeholders involved in a change process are key to ensuring successful change efforts. In the analysis of the VHA transformation, a principal change leader observed that “there is no such thing as too much communication.” VHA leaders recognized and communicated vulnerabilities and risks, and used many communication strategies to secure the buy-in of stakeholders by explaining the benefits of the changes for them.

Creating New Networks, Organizations, Teams, Systems, and Positions

In both VHA and Fairfax County, new organizations were created to manage the transformation. VHA leadership created 22 geographically defined Veterans Integrated Service Networks (VISNs) to analyze potential structural shortcomings and recommend change. Effective management of these networks was key to the change design. Performance goals were developed for each VISN and each VISN director was accountable for his or her group’s performance, thereby dispersing accountability throughout the organization. In Fairfax County, the DSMHS director formed a cross-management change team. Like the AAMVA steering group, Fairfax County’s central change team sprouted “sub” change teams among various agencies and regional offices around the county.

In the REAL ID case, the AAMVA steering group was a nonhierarchical, geographically diverse team formed to strategize about implementation of the REAL ID Act across the national membership of AAMVA. Sub change teams have subsequently cropped up at the state level, involving motor vehicle administrations and other state-level stakeholders. As states opting to comply with the REAL ID law begin implementing it, their change teams are relying on the pre-implementation efforts of the AAMVA steering group to gather data and implementation cost estimates in anticipation of issuance of the actual regulations.

Fairfax County’s deputy county executive wanted to create a “university system” for all the human services agencies. The system would develop a curriculum and deliver it to staff during the change, thereby increasing receptivity to the coordinated services approach, rather than just doing the traditional social work. While the university system project was scuttled (at least temporarily) because of budget constraints, the DSMHS leadership put all managers through the same training in “process analysis.” At DSMHS, leadership used training to help shape common experience, a common language, and the same frame of reference in planning for and adjusting to the redesign.

Reinforcing that strategy, the Fairfax County’s DSMHS director also created a “process manager” position to monitor and coordinate the telecommunication and data processes at the call center where client intake and referral occurs. The process manager has no supervisory responsibilities, but provides support to the social workers in the call center, which includes preparing regular reports on volume of client intake and response time, staff scheduling, and other data.

PROMOTING A SHARED VISION

When leaders communicate their vision of collaboration intentionally and consistently through various formal and informal channels of stakeholders, they promote a shared vision that generates common, public interests and a level of trust. New collaborative synergies that are critical to facilitating implementation of even massive changes in the ways of providing public services can be fostered.

Leaders cannot afford to overlook the views and motivations of their staffs—their internal stakeholders—or their contractors and other external stakeholders. In the increasingly complex networks of organizations that supply public services, leaders will pay a high price if they fail to secure stakeholder buy-in and collaboration from the outset when strategizing for change.

At the beginning of any change, leaders must diagnose the extent and nature of their stakeholders’ perceptions about the change and the diversity of their viewpoints, and also assess the extent to which communication and collaboration processes already exist in the organization. The questions provided with our change model in Chapter 3 (Table 3.2) offer a starting place for that analysis. Second, change leaders must develop a strategy to address each of the internal and external stakeholders. In the short run, the goal is to develop trust based on shared interests; in the long run, it is to develop a shared perspective about the public interest so that all stakeholders are working toward a common purpose. Third, leaders must implement their strategy. This will generally require new approaches to communication and collaboration. Finally, change leaders must continually reinforce their directions, through their own actions and those of members of their organization as well as through incentives that encourage communication and collaboration.

SUGGESTED READINGS ON STAKEHOLDERS

The authors explore how sectors in a democratic society interact, cooperate, and collaborate to deal with rapid change and important challenges. They contend that cross-sector collaboration is an important but achievable objective and can facilitate success in a complex world. This article provides a framework and propositions for cross-sector collaboration that will be useful and relevant for change leaders.

This is a practitioner-oriented, succinct, and comprehensive report on the use and management of networks. The authors organize networks according to purpose and task, and discuss four types of public management networks: service implementation networks that actually deliver public goods and services; information diffusion networks that share data and best practices; problem-solving networks that attempt to resolve joint problems; and community capacity-building networks that build social capital. Management issues addressed include accountability, legitimacy, conflict, design, and commitment. The report also contains a good reference list.

Mandell provides a different perspective on networks, suggesting that they should be viewed as formal and organized structures. She terms these interdependencies “program structures” and emphasizes—through empirical examples—how better choices can be made for public programs as they seek to change.

Thomson and Perry discuss how to dissect the “black box” of collaboration processes. Their identification of key components of collaboration is interesting and relevant for both practitioners and academics. They also discuss the risks and benefits of collaboration in dynamic situations.

In the face of new and growing challenges, U.S. federal agencies must find ways to collaborate to provide coordinated actions. This report evaluates three efforts that demonstrate how agencies have collaborated to achieve common objectives: Healthy People 2010, wildland fire management, and VA and DOD health resource sharing. In addition, GAO provides recommendations for the future, including specific ways to promote collaboration across agencies so they can respond better to the needs of the nation.

1 A summary of the REAL ID Act requirements most relevant to this study is found on the U.S. Library of Congress website. The act “prohibits Federal agencies from accepting State issued driver's licenses or identification cards unless such documents are determined by the Secretary to meet minimum security requirements, including the incorporation of specified data, a common machine-readable technology, and certain anti-fraud security features….” The act also requires, among other measures, “electronic access by all other States to the issuing State's motor vehicle database….” (Available at http://thomas.loc.gov/cgi-bin/query/z?c109:H.R.418: [accessed February 21, 2008].)

2 This is a summary and adapted version of a case study written by Mark I. Rosen with analysis by Amy L. Sales, The Remaking of Hillel: A Case Study on Leadership and Organizational Transformation (Fisher-Bernstein Institute for Jewish Philanthropy and Leadership, January 2006). Used with permission.