Sanderijn Cels is a senior fellow with the Consensus Building Institute and a research associate with the MIT-Harvard Public Disputes program. Jorrit de Jong teaches in executive education programs at the Harvard Kennedy School, where he is a senior fellow at the Ash Center for Democratic Governance and Innovation. Frans Nauta is professor of Public Sector Innovation at HAN University of Applied Sciences in the Netherlands and leads the Dutch Entrepreneurship program of the European Institute for Innovation and Technology s Climate-KIC.

Agents of Change

STRATEGY AND TACTICS FOR SOCIAL INNOVATIONBy SANDERIJN CELS JORRIT DE JONG FRANS NAUTA

BROOKINGS INSTITUTION PRESS

Copyright © 2012 SANDERIJN CELS, JORRIT DE JONG, AND FRANS NAUTA
All right reserved.
ISBN: 978-0-8157-2262-5

Contents

Acknowledgments………………………………………………………………………………………..ix1 Introduction…………………………………………………………………………………………32 Strategies and Tactics………………………………………………………………………………..133 Crafting the Case: The Art of Making a Start…………………………………………………………….244 Prompting Progress: The Art of Moving Things Forward……………………………………………………..325 Managing Meaning: The Art of Making Sense……………………………………………………………….446 Under the Radar: Medical Informatics in Japan……………………………………………………………577 Relentless Incrementalism: Financial Literacy Training for Newcomers in Canada………………………………758 Just a Tool? Implementing the Vulnerability Index in New Orleans…………………………………………..959 Join the Club: The Emergence of Alzheimer Cafés in the Netherlands With Marica Crombach…………………11510 The Sun Kings: The Emergence of Solar Energy in Germany With Peter Kasbergen………………………………13311 Change on Steroids: Public Education in New Orleans……………………………………………………..15412 The Value of Values: Higher Education in Virginia……………………………………………………….17313 The Cat out of the Bag: Institutional Reform in Denmark Klaartje Peters…………………………………..19314 Innovating Strategically……………………………………………………………………………..213References…………………………………………………………………………………………….223Index…………………………………………………………………………………………………231

Chapter One

Introduction

There is no more delicate matter to take in hand, nor more dangerous to conduct, nor more doubtful in its success, than to be a leader in the introduction of changes. For he who innovates will have for enemies all those who are well off under the old order of things, and only lukewarm supporters under those who might be better off under the new. —Niccolò Machiavelli, The Prince

Professor Kazuhiro Hara’s idea was as simple to express as it was difficult to realize: improving the quality of perinatal care in Japan while reducing the costs. As a gynecologist, he knew that sharing patient information with professionals in other facilities would significantly reduce child and maternal mortality. But he also knew that getting medical professionals to cooperate was nearly impossible. Japanese society was strongly risk averse when it came to health care innovation. Medical professionals were not keen on experiments; failure could terminate one’s career and even result in litigation. Hara understood this well, but the wariness of his colleagues did not deter him from pursuing his plan. In the 1990s he built HelloBaby, his own online platform for perinatal care, and started to enlist participants. Ten years later, HelloBaby was rolled out across the country. Not only did Hara’s innovation change perinatal practice, it also changed the perception of risks, costs, and benefits. Now, innovation in Japanese health care is no longer seen as costly, risky, and undesirable—instead, the status quo is.

Around the same time Dr. Hara conceived of HelloBaby, a German member of parliament by the name of Hermann Scheer concluded that his country could no longer afford to postpone the switch to solar energy. But a transition to solar energy would require a profound reshuffle in the entire energy market; the fossil energy sector had been dominant for decades and had considerable influence on key decisionmakers, such as the chancellor and the minister of finances. In Scheer’s words, asking fossil energy companies to turn their businesses around was like “asking the mafia to help fight organized crime.” Nevertheless, he took his chances and started an ambitious energy policy program. Within five years of its inception, the program led to a sevenfold increase in solar energy production, making Germany the world’s second largest solar energy market. In Germany today, innovation in energy production is no longer an ecological dream; it is an economic reality.

Successful Social Innovation

This book is about social innovation. By social innovation we mean attempts to transform the way societies address social problems and produce public goods and services—efforts like Hara’s online platform or Scheer’s solar energy program. Social innovation is primarily aimed at improving social outcomes and creating public value. The cases presented in this book feature a variety of people (individuals and groups) operating in the public sector, meaning both government and nonprofit sectors. These innovators are all involved in designing, managing, delivering, or overseeing public goods and services. And they all have successfully implemented innovations, meaning that their work has actually changed practices and altered how things are done. In other words, we are interested in how social innovators operating in the public sector have brought about transformative change despite all the difficulties and uncertainties in their institutional environment.

These undertakings come in many shapes and sizes; our focus is on concrete and deliberate efforts that have been successful within a period of approximately a decade. Success can be interpreted in various ways. One way of evaluating innovations would be to focus on certain performance indicators: one would measure the palpable results that can be attributed to the innovation. For example, success might be expressed in terms of efficiency gains, client satisfaction, or social outcomes. While we are naturally interested in the positive effects of successful innovations, in this book we focus on the success of the innovation process and on what the innovator has done to successfully introduce the innovation in the public sector. By a successful innovation process we basically mean, first, a changed practice—a clear and tangible change from the way things were done in the past, and second, operational capacity to sustain the innovation as well as continued support from crucial stakeholders for the innovation. In other words, at the end of a successful innovation process, the innovator has secured the resources, staff, and other capabilities needed for the change and obtained the necessary permissions and endorsements of all those with the authority to make or break the project.

Tricky Business

Like Hara and Scheer, all of the change agents discussed in this book had a vision, gained support and resources, and delivered results. What makes the successful accomplishments of the change agents particularly remarkable is that they did so in environments that were not conducive—and were sometimes even hostile—to change. Social innovators often do their work under adverse circumstances. If and when they are successful, they may be celebrated. But until that moment, they typically struggle to manage the process. It is therefore interesting and important to look at what innovators actually do and how they do it. What is most intriguing about their stories is neither the inspired beginning nor the successful ending. It is what happened in between. We are fascinated by the question, how did they pull it off?

How did Hara and Scheer manage to overcome the obstacles in their way? How did they gather the necessary capacity and support? The simple answer is that they were more than just men with a vision. They were masters in strategy and tactics. Key to their success was their ability to understand the nature of the challenge they faced and to influence their context. From the outset, they knew that they would meet resistance, and they prepared for it. They carefully orchestrated actions to generate backing and resources for their plans. They were observers of the world around them and had a keen eye for threats and opportunities. And for all their preparation, their ability to adapt and improvise was among their most important skills.

These talents and skills are essential because social innovation in the public sector takes great effort to succeed. To people who are not familiar with making change in working environments dominated by bureaucratic organizations, it might be hard to understand why. Why are apparently good ideas not met with enthusiasm? Don’t we all want more value to be created out of our tax dollars and charitable contributions? Why, for instance, would honest public servants have to go to so much trouble to improve things for the common good? Why does a public sector in need of improvement, in the words of the innovation scholar Sandford Borins, not provide a more “fertile ground” for new ideas and practices? We know from the literature on innovation that a wide range of problems stand in the way.

Innovation Is Destructive

Innovations often render current practice obsolete. Just as machines replace manual labor and put people out of jobs, novel methods pose a threat to existing organizations and their employees. Even if an innovation is a constructive contribution to society from any other perspective, from a status quo perspective it is destructive by definition. Joseph Schumpeter long ago coined the term “creative destruction” to describe this phenomenon. While he referred mainly to industrial innovation and its effect on the economy, there is a strong analogy with social innovation: radical innovation creates value, but it also destroys established organizations and jobs that thrived under the old order. The same goes for social innovations. They can, and often do, threaten to obliterate incumbent interests, interrupt traditional funding pathways, and reassign bureaucratic turf.

The public sector political economy involves frequent—and often fierce—fights to protect the status quo. For example, it can be administratively difficult and politically risky to defund government programs or organizations and redirect resources toward an innovation. Social innovations also pose the threat of embarrassment. They may produce outcomes so obviously preferable to the current situation that those responsible for the status quo cannot accept the new situation without acknowledging their failure.

To make matters worse for innovators, there is no rigorous market mechanism that decides whether a novel product or service is preferable to the ones currently provided by other producers. The aggregation of consumer preferences can be an efficient mechanism to judge the value of innovation. For example, consumers can stop buying bulky TVs when elegant high-definition flat screens with equal performance become affordable. The absence of such a mechanism gives established organizations or practices in the public sector much more power to actively resist destruction in their fight for survival.

Innovation Is Hard to Account For

Anyone who attempts to reallocate budgetary funds, bend rules, or change procedures in the public sector will immediately feel the constraints of public accountability. Budgets in the public sector are usually allocated for specific tasks and organizations; rules are designed to govern current practices and guide current operations. Even if the benefits of innovation are quite clear, a social innovator will find that public sector organizations and individuals derive much of their legitimacy from the fact that current rules and budgets have been established and allocated by formal authorities. There are accountability frameworks in place, which are based on the way political overseers originally envisioned the mandates and responsibilities of those entrusted with taxpayers’ money and public authority. Deviating from current practice can only be tolerated—let alone appreciated—if the new situation is officially legitimized. Summoning sufficient legitimacy, however, may not be easy, because it is not always clear what the benefits of an innovation will be, nor that the innovation will succeed. The burden of proof is on those who want change, since the status quo is already accounted for.

Innovation Is Not Rewarded

In his classic, Bureaucracy: What Government Agencies Do and Why They Do It, James Q. Wilson explained why the public sector is not disposed to change and innovation. Based on an analysis of schools, armies, and prisons, he argued that these environments put certain constraints on the work of operators, managers, and executives. This encourages behavior that is distinctly “bureaucratic” and that can be understood as rational behavior within a context that places bounds on rationality. In other words, embracing innovation may seem rational from an outside perspective, but within a system controlled by politics, scrutinized by the media, and confronted with difficult problems and demanding clients, other considerations may prevail. Dealing with these forces is a challenge in itself, leaving little time and energy—let alone rewards—for innovating.

Many others, including Michael Lipsky and Borins, have pointed out that innovative behavior can be discouraged not only by external pressures. The way in which public sector organizations are managed often lacks incentives to improve performance or go beyond the call of duty. If an organization does gain some efficiency, its budget will simply be reduced, and it will need to manage the same workload with less money in the next year. Thus success is not rewarded. Meanwhile, failure is punished, and the media will be only too happy to expose it, while high-performing officials and organizations are neither rewarded financially nor praised for exceptional service. After all, the public expects the public sector to do the best possible job with the money and authority entrusted to it.

Innovation May Actually Work

Sometimes public sector organizations are not supposed to work. There can be certain—often hidden—motivations not to be effective, efficient, or equitable. This may come across as a cynical view, but it is not unrealistic, and it is based on evidence. Michael Lipsky coined the term bureaucratic disentitlement in 1984 and defined it as a way of using flawed bureaucratic procedures to deprive people of their entitlements. The phenomenon has been further investigated by Deborah Stone, Jorrit de Jong, and Gowher Rizvi. They found that bureaucratic disentitlement is most commonly manifested in the underfunding of agencies. These agencies need to find a way to balance the budget and ration services, and they do so by making services less accessible for citizens entitled to them. After all, if their clients do not pick up their entitlements, less money flows out—and budgets are met. To meet budgets, agencies can reduce office hours, reduce call center employees, tighten eligibility criteria, or make application forms for clients more complicated. Arre Zuurmond observed that service agencies often fail to address underenrollment in social services for the same reasons. Many governments know (or have a hunch) that certain groups (for example, those with less education, immigrants, the elderly) are not claiming their benefits but do not actively approach them to make them aware of their rights. After all, this would only weigh on their already tight budgets. So innovations that would increase the efficiency and effectiveness of operations intended to discourage rather than assist individuals who would like to use them can be threatening—and may very well be unwelcome. Of course, the resistance would never be articulated in explicit terms, but very few bureaucrats from such underfunded agencies would support the change, and that alone would suffice to prevent an innovation from going anywhere.

Innovation Is at Odds with Bureaucratic Structure

The most fundamental challenge for change agents in the public sector may be the nature of the organizations they find themselves working with and within: bureaucracies. Bureaucracy is a system of administration that almost everybody loves to hate. But the truth is that despite all the criticism, most of the world’s organizations (public, private, and nonprofit—all the same) still function—or aspire to function—in accordance with Max Weber’s ideal definition of bureaucracy. Weber’s basic principles of bureaucracy can be clustered into six categories, each of which presents at least one challenge to innovation.

PRINCIPLE 1: REGULATED CONTINUITY. The bureaucratic office must be organized in such a way as to ensure the continuity of its tasks through regulation. Work is not dependent on individuals but is perpetual in nature. Although this principle does not preclude innovation, it makes disruption of the status quo—which innovation inherently creates—an undesired event.

PRINCIPLE 2: FUNCTIONAL SPECIALIZATION. The tasks of bureaucracy are divided in a manner that appears rational. With every task come specific authorities, resources, and sanctions. Whenever an innovation involves or requires reassignment of tasks or a reallocation of resources or authority, this will mean much more than a simple reorganization of the work process. It means that functions are redefined and that people who occupy certain positions, with certain powers and perks, based on certain expertise, will have to adjust to the new situation. Not everyone will be willing and able to do so.

PRINCIPLE 3: HIERARCHICAL ORGANIZATION. There is an elaborate hierarchical authority system within each bureaucracy that assigns duties to every official. The functioning of this system depends on obedience to higher levels of authority. As long as the top of the organization instigates and supports innovation, there is no immediate problem, but if frontline or middle-management employees come up with ideas for changing practice, they may face the dilemma of either spending a long time obtaining approval or putting the innovation in place without approval, with all associated risks.

PRINCIPLE 4: EXPERT OFFICIALDOM. Because bureaucratic work is structured through regulation and functional specialization, officials must be experts in applying rules technically and legally. The problem with this principle with regard to innovation is that it makes employees focus on the rules rather than on the social problem or opportunity at hand. Expertise is defined in terms of the current mandate, rule, or operation—not in terms of adaptability to new realities or creativity and flexibility vis-à-vis a changing environment.

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Excerpted from Agents of Changeby SANDERIJN CELS JORRIT DE JONG FRANS NAUTA Copyright © 2012 by SANDERIJN CELS, JORRIT DE JONG, AND FRANS NAUTA. Excerpted by permission of BROOKINGS INSTITUTION PRESS. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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