Confronting Institutional Inertia

Recently, Matthew Burton, former Acting CIO and Deputy CIO of the Consumer Financial Protection Bureau, posted an excellent series of blog posts documenting his experiences and lessons as a CFPB IT executive. While the technical details and personal insights are the most valuable aspects of his posts, I’d like to focus on a couple of short sentences that particularly resonated with me. Burton writes:

The CFPB is new. You might therefore discount the CFPB’s online success as a moment-in-time achievement whose lessons will not help any agency that is saddled with legacy culture, legacy systems, and the GS pay scale (the CFPB pays higher salaries than most agencies). Having worked in such agencies, I understand the belief that a fresh start creates a freeway to success. I won’t lie: the lack of legacy culture was invaluable.

However, Burton argues, many of the lessons he highlights can be adopted by any agency willing to take a chance by rewriting a few rules of management.

I firmly believe this is possible, even for the most conventional agency or department, but I would also like to dwell on the experience of working in a “startup” public sector department versus one saddled with what I might characterize as “institutional inertia” –the relative absence of innovation or change due to the accumulation of policies, regulations, practices, and customs over time.

I began my public sector career as an analyst at the Los Angeles Unified School District’s IT division, in a new unit created to implement the district’s first completely integrated Enterprise Resource Planning system (powered by SAP). I didn’t realize it at the time, but this ERP unit operated very much like a technology startup. Some characteristics included:

  • Working all hours: Since we were in project mode, the staff was on call at all hours of the day (or night). This of course included programmers and basis administrators, but also functional and general staff as well. I remember seeing air mattresses set up in the middle of bullpens and sleeping bags stuffed into the corners of offices.
  • Capital: Like a tech company teeming with venture capital, for a very short time, and before the global financial crisis, our coffers were flush with special project funding (and later bonds), which fueled a seemingly infinite supply of overtime funding, new software and equipment, and contractor contracts.
  • No History: Since the unit was completely new, with each project phase completely different from the last, we felt as though we were charting new territory. Also, our leadership was more willing to take risks and propose redesigns since there was no existing organizational structure dismantle – no sub-departments to displace or management to lose ground.
  • Personnel: In addition to new hires (like me), virtually all veteran staff members in this unit had volunteered for this assignment, so there was a very palpable feeling that everyone wanted to be there. This meant that morale and motivation were both extremely high. Also, since employees were pulled from all over the district, we had a diversity of talent and experiences that was quite unique. Finally, individual roles were more fluid; we found ourselves “wearing many hats” as project priorities shifted. In fact, most of the rank and file worked outside of our union-mandated scope of responsibilities.
  • Technology: As with most IT units in an agency or organization, our tech focus meant that we were more willing to adopt new software or allow the technology to replace manual processes (in many cases, there was no existing manual process to replace).

Of course, it is possible to have a serious debate about the relative merits of these characteristics, but the end result was irrefutable: in project mode, our unit produced outcomes that one might most associate with a small tech company. We innovated, we adopted new technologies and practices, we put in long hours, and were compensated accordingly.

I finally discovered the atypical nature of my work environment when I, out of curiosity, interviewed with another department for a more senior analyst position. This anonymous unit was located under the well-established Accounting and Disbursements Division, and from the beginning of the interview, I found my potential managers warning me about the problems associated with a yearly audit process or the “drama” of working with a particular manager outside our department. In many ways, the interview felt like an initiation into a world governed by limitations. Thinking that this was some sort of test, I remember suggesting an alternate way around one of the audit problems, only to be met by a pitying look from my interviewers. Don’t even bother trying, they seemed to suggest.

I decided not to take the job.

As I move forward in my professional public sector career, I know that the likelihood of working for another brand new operational unit is very slim. And even my old team has transitioned from project to production support mode, meaning processes are more cyclical, roles more clearly defined, the hours (thankfully) more regular. Yet, I don’t think that the curse of “institutional inertia” is simply a condition to which employees must inure themselves as part of an unwritten job description. Burton provides some excellent lessons for producing quality web products for internal and external consumption. Many are most relevant to IT or facilities departments (“do it yourself” and “put immense time into hiring”), while others can be adapted to nearly all public sector organizations (“give your team good tools”).

I have compiled a few bold ideas that may help break the patterns that stifle change and ultimately disempower employees – including managers.

1. Expiration dates: Like food in a cupboard, processes, software, and roles can grow old and stale, outliving their usefulness for an organization. Management can commit to keeping things fresh by placing an expiration date on business processes, thereby forcing themselves to rewrite business rules every couple of years.

Potential concern: Management must still confront the problem of ‘sunk costs,’ meaning we won’t be able to abandon a process or tool because of the costs associated with its implementation. Perhaps more importantly, management will still have to make decisions that affect real people, most of whom the manager knows personally. This will likely encourage the automatic renewal of expired processes.

Tip: Remember that replacement does not always entail a loss, financial or otherwise. Many times, tools – especially software or operating platforms – have recurring maintenance costs that can be reduced or eliminated by a newer, cheaper alternative. The important step here is to perform the cost-benefit analysis and discover which alternative is best. Expiration dates force this kind of analysis to take place. Secondly, the elimination of outdated roles or responsibilities may actually free an employee to perform a more valuable task (rather than lead to separation). This has the potential to improve morale and productivity.

2. Certainty conferences: Uncertainty is one of the highest barriers to innovation. If there are risks associated with adopting a new process, with potential costs and benefits unclear, most decision-makers will wisely choose the certainty of the status quo.

Senior managers and executives can reduce the level of organizational uncertainty by holding periodic ‘all-hands-on-deck’ meetings with employees. These should be used to clearly define management and organizational priorities, emphasize desired outcomes, communicate the acceptable threshold for risk and failure, and establish rewards for success. These meetings will provide employees, especially mid-level management, some freedom to pursue new, untested strategies with a clear understanding of their operational environment.

Potential concern: Senior management has the most to gain and lose from failed initiatives. How will they be motivated to encourage innovation if they are the ones with the greatest incentive to maintain the status quo?

Tip: Keep in mind that although senior executives often have the most to lose, they also have the most expansive view of the mission. They are in the best position to know which areas have the greatest need for reengineering or which outcomes must not be jeopardized by risky, untested methods. The clear communication of these priorities or concerns can provide valuable guidance for staff.

3. Innovation time: Google made this famous, but virtually all organizations can benefit from grassroots innovations or ideas from below. Provide a small chunk of time – no more than a few hours each week or biweekly – for employees to provide feedback on existing processes, develop new strategies, or propose new technologies.

Potential concern: Didn’t Google have problems with this? Having every employee working on individual projects with no alignment strategy can lead to organizations looking scatterbrained. Besides, we have union rules or taxpayer obligations that prevent us from having employees do the crossword while pretending to innovate.

Tip: We can continue to learn from Google. Having discovered some of the pitfalls of its original 20% policy, Google is now tightening the rules. Employees in an agency or department can be asked to work within the parameters of predetermined strategic priorities, and can even volunteer for certain areas (technology adoption or different business processes). Furthermore, if an idea picks up steam, the innovating employee can recruit other, less innovation-minded employees to help implement the idea. Lastly, language can be added to official job titles to include the development of new business processes, etc. To avoid the “crossword” problem, employees who opt into this program can have their innovation time pegged to periodic deliverables, such as written proposals, presentations, or diagrams, which can be reviewed by management for compliance.

This list is far from conclusive, and each potential solution must be implemented carefully to reduce the likelihood of unintended consequences, but the need to keep agencies fresh, down to the smallest operational unit, cannot be overstated. Rules, regulations, and customs must be respected, but perhaps equally important is crafting an operational environment that is working at its maximum potential.

What are your ideas for fostering innovation in an established agency?

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Lindy Dreyer

I’d add the idea of mitigating risk. I’ve found that risk is a useful lens, since sometimes the status quo has more risk than the innovation the organization is exploring. And if you can show simple ways that you will manage risk throughout the changes ahead, the next steps seem more palatable.

Adrian Pavia

You are absolutely right – in the long run, it is sometimes riskier to maintain the status quo than to take a chance on something new. And I agree that demonstrating preparation and planning can go a long way towards mobilizing even the most risk averse organization. Thank you for the insight, Lindy.