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Sunday, November 30, 2008

Commentary: Change and the transition

For months one of the most frequently heard words on television has been “change.” Now we know that President-elect Barack Obama will lead that change and federal agencies will be affected. How agencies prepare for and execute change will determine if envisioned outcomes are achieved.

Meaningful discussion of change must distinguish between external change imposed on agencies and internal change agencies introduce to meet the demands of external change. Organizations cannot control external change. For example, the government is not in a position to directly “control” changes in U.S. demographics or political developments in other countries. Similarly, agencies cannot control the priorities of Congress and the president as they relate to program issues. But organizations must manage and control their response to external change.

Best-practice organizations engage in meaningful strategic planning and use that planning to proactively drive internal change. The most successful private-sector companies almost universally engage in proactive change, as their success in a changing environment demands it. As organizations become more reactive to change, however, options typically diminish while the urgency and risk of change increases. Carried to the extreme, organizations are reluctant to undergo change until at the brink of the proverbial “burning platform.”

Government organizations tend to be more risk averse than the private sector. As one Senate staffer recently said, “Congress only has the budget and embarrassment” to induce agencies to meet congressional program objectives. As a result, agencies tend to be slow to change because change brings risk, and risk can bring embarrassment. Moreover, change in agencies — lacking a profit incentive — is often driven by legislative priorities. Consequently, planning takes on a compliance orientation. Agency strategic plans may meet the mandates of the Government Performance and Results Act, but too seldom truly guide agency business decisions. Moreover, the strategic planning process is underused as a primary basis of adapting to the changing demands in the external environment.

Managing risk by becoming more proactive in managing change requires two actions. First, organizations must undertake strategic planning that is less focused on generating glossy public reports and more on driving business decisions across the agency. Such strategic planning is an ongoing process that scans the external environment and proactively seeks change to align organizational goals, objectives and processes to the needs of the shifting environment.

Second, the management of risk is often addressed in an informal, even haphazard manner. A disciplined approach to enterprisewide risk management, using an established framework facilitating a more complete identification, assessment, treatment and monitoring of risk is required. Risk management typically operates within functional silos. Government needs to borrow a private-sector best practice, enterprise risk management, to cross functional silos and focus on those key risks that can adversely affect the achievement of agency strategic objectives.
The transition to a new administration will bring major change — and major risks. As stewards of the public trust, government managers must drive internal change while cognizant of the corresponding risks, and apply the best practices of meaningful strategic planning and enterprise risk management to achieve the results rightfully expected by the nation’s citizens.

-Douglas Webster, FederalTimes.com

Douglas Webster is chief financial officer at the Labor Department and co-author of a newly published book on change management, “Chasing Change.”

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