Individual Paper I: Strategic Change

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Buy-in and Commitment

Buy-in and Commitment Program Transcript

[MUSIC PLAYING]

NARRATOR: It is important that stakeholders actively participate in the strategic planning process. Such participation increases the likelihood of achieving buy-in and commitment. In this video program, Dr. Paul Nutt explains how a stakeholder analysis might be used to encourage buy-in.

DR. PAUL NUTT: Buy-in and commitment is a very difficult thing to realize, and process like this, oftentimes, there are choices that are—benefit one group and not another, and compromise is a bad word in some ways. A friend of mine called it, "half of a stale loaf." You don't want to do that. You'd like to go for "win-wins," if you can.

Typically what we do is resort to the concept called co-optation. And there's a connotation that as people participate in a process, the more apt to buy into or develop ownership with, whatever the result of the process might be.

Most of us, and I’m probably one of these, their process relies heavily on co-optation, the notion of participation is presumed to create this result. It doesn't always work that way.

Sometimes people are unhappy, even if the vote is 10 to 1, and they were the one. They feel that they should've won somehow. And voting does not resolve differences like this. The only way you can resolve them is through discussion.

And when there's limited time, there's limited opportunity perhaps to get all the questions and concerns in motivating differences in opinion and points of view.

One example of how to handle, say, a very diverse organization. We used to call it headquarters in field, and there are a lot of these in state governments in particular, where there's an enormous cadre of people that are working in a variety of locations that can't communicate on a regular basis.

We successfully use a process we called kiva, which is designed after the Hopi Indians. And the Hopi Indians have the following process that I

Buy-in and Commitment

always find a little interesting—at least they're rumored to have this process. If you can imagine the sort of concentric rings kind of going down into the ground in which there is a small ring at the center.

And what Hopi used to do is organize themselves around status. The Chief sat in the center, one ring out, or the next lower, so to speak, individuals in the community and so on, until the outermost ring are adolescents; that is people that are not of age in the tribe.

And so what the chiefs would do would be to discuss the issue in question. Then they could go to the outer ring and everybody would move down a ring. And then the people—the next outer ring—will discuss what they thought they heard and what they believe was said. And the only people who could talk were the people in that center ring, and you continued in this fashion until the chiefs were back in the center again. At this point, they're reflecting on all the reflections. That's the goal of these kinds of processes.

Oftentimes you can't realize that, so one of the things we've done recently that helped a great deal is we had a strategic management group asking historical context, questions, SWOT analysis, questions issues, strategies and implementation strategies.

As we went to this process, we had scribes on pcs, actually typing up the notes. People were online in their various organizations. They could type responses. We had—if there are 10 people around the group, we had two people that we called, that could step into the group at any point in time. They couldn't do it every week.

And we also had the opportunity for people that hand people in the center circle notes, and they're coming from the field. This simulated this kiva process to some extent, where you had online, kind of, participation, and the process itself. People are fully aware of discussion as it took place. People could comment on the discussion.

This is a huge commitment on the part—the head of this organization, to buy-in, cooperation, and collaboration. You oftentimes don't find that level of commitment, but where you do, this process might work well for the organization.

[MUSIC] [On-screen Text: Involving Strategic Personnel]

Buy-in and Commitment

We have, on one hand, people that are going to be responsible for the implementation of the process. People are going to have to—will take grief if things aren't done the way perhaps their constituents wished them to be done. And oftentimes we involve these individuals in the group. They tend to dominate the group.

In other words, politics won't be tends to swamp quality results. This is a very pragmatic consideration. And all the facilitation I've done, this has always been a major issue. One possibility is develop a different set of people to deal with it.

At this point, the issues have been identified. This is difficult to do, the change of team, so to speak, although firms do that quite often. Platform teams at ford, the dream room at Disney, for example, don't allow any accountants.

The idea of the platform team is you're coming up with a brand new design, something totally new and different, therefore you're allowed to reject everything that's happened in the past.

To reject everything that's happened in the past creates this—saves space and opens the door to a new space that people could go into. If you have nothing, then it frees the mind to think about what might be. You oftentimes have to discredit the past or you can't get people to think creatively about what might be, what might fill that space.

If for example I’ve—say we've got a corrections issue where the mental health treatment people have always been a part of the mental health organization and they've kind of provided on a contractual basis based on whatever budgetary limitations corrections apply.

The person I went with, and the budget shortfalls, says, "I’m going to give you the staff. I'm going to transfer these budget lines to your organization."

It's almost unheard of the public sector to do that. It's thinking outside the box. It's thinking about, you know, the best interests of the organization as a whole, and also is based on the notion of collaboration that we talked about earlier. Very difficult to initiate, but very—it has enormously positive results if you can. The facilitating change can often be difficult.

One way to think about this is a phrase called exemplary followers. Basically, these are the high act—the very highly active people on organizations have also the best skills. And what studies have shown is

Buy-in and Commitment

that 80 percent of the positive things that happen are promoted by or developed by five percent of the total population and falls into this exemplary follower category.

And exemplary followers are people that say—recognize the fact that everybody is a follower. The head of the organization takes walking orders from someone, so everybody is really a follower.

Exemplary follower is one that is constantly prepared to be high on the action and high on trying to think of new and better ways of doing things. Now, some organizations can stifle this by emphasizing what's called the pragmatist—those are people right in the center of the diagram.

They do a little, they are somewhat proactive and somewhat creative but they'll only go so far. You have to liberate that circumstance. You have to create a situation in which it's legitimate to be an exemplary follower, where it's legitimate to offer new ideas.

Now, if you're running a board of directors meeting and someone offers a new idea and that idea is squelched as being impractical, inappropriate, whatever, you can be assured that hat person won't offer ideas in the future. Furthermore, everybody in the room has got the message—okay. “Don't speak up; don't offer ideas.” They're not wanted.

So there's a—it's a very fragile situation. Create change or you have to create this kind of environment in the organization. The organization will not change otherwise. To do that, oftentimes it's very difficult.

I used an example of Harley-Davidson and got to the point where Harley’s quality was so bad people were buying Kawasakis—same group. It's hard as it is to imagine that—new CEO comes into Harley and says, "Well, there's a new sheriff in town. Things are going to change."

Well, the organization had run forever on the notion of keeping cost down. That was a key issue. Make the production line run, and in order—it took months for a new scheme of things to be initiated.

But the CEO said, "Any time you see a quality problem, stop the production line." Nobody stopped the production line. That just wasn't a part of how the organization functioned, and it took six months before someone did.

A little old lady did it just before retirement, apparently, and the CEO rushed in and gave this individual a check. Then things changed and

Buy-in and Commitment

production line didn't turn out a motorcycle for six months.

But Harley turned their product quality problems around. That's a case in point, you know? Once you change the way things are going, it takes a long time to get that reinstituted into the culture and organization. And it's very easy for that to change and go south on you.

[MUSIC] [On-screen Text: Dissenters]

Dissenters are extremely difficult—in organization. Sometimes you'll have dissenter strategic management group. One individual that constantly says, “I don't understand why we're doing this. I don't think this is of any value.”

If you're teaching a class, you got the same issues. Sometimes there's one student that says—constantly objecting to what's being said and creating a disruption. When you're teaching a class, what you have to do is manage the issue without attacking the individual.

The same thing would be true in this setting. In between sessions, we might have a neutral party approach the individual and say, "It's really necessary for us to move these questions along. Can we get a list of the things that we need to attend to so that you can participate more fully in the process?" – words to that effect. Sometimes a third party negotiating with someone and trying to find out what the real issues are can be helpful in this regard.

[MUSIC] [On-screen Text: Stakeholder Analysis]

Many are very interested in the question of, “What is a stakeholder analysis, and how does one conduct a stakeholder analysis?” Stakeholders are an important part in any process.

And most strategic management processes go through a serious and systematic effort of identifying who has stakes in the outcome, on the one hand, and classifying them in some way to find their relative importance.

Buy-in and Commitment

The process that I recommend will—is go through an identification process typically with a strategic management group or some other body in the organization that's familiar with this, and that's when we have a strategy.

And we ask the question as, who can win and who can lose, so to speak, by this strategy? Who are the winners and who are the losers? We need to get—identify both groups. Who have an important interest in this in some fashion? There are service providers, there are service receivers, et cetera.

We make a list of almost individuals, sometimes agencies that are going to be players when we try to make these changes. And then we try to sort them by what I call certainty and importance.

How certain is that these individuals are going to be players in the future and what is the relative importance in the strategy we're trying to implement?

And basically, we sort ourselves into these two categories.

There's the supportive of the antagonistic stakeholder. And the supportive stakeholders, you mobilize to try to work with the antagonistic stakeholders.

That is the people that believe that the organization is going to benefit their constituency by the actions that are being proposed work with people that might oppose it. This can be very difficult.

An example that might be useful here is we had a closure taking place in Cincinnati and the representative, state representative, in Cincinnati was also the speaker of the house, the most powerful politician in Ohio history.

This individual—of course—was approached by his constituents and say, you know, "We're losing another resource here locally." You know, "Step up and try to save this for us." And the head of the department was, you know, had to deal with this. Here are two stakeholders. His view was, "I want to save $6 million if I close this facility and I have to do that according to state law."

And the speaker of the house is saying, "Not in—N-I-M-B-Y, not in my backyard." How are we going to do that?

So—sat down and met with the individual, and pointed out the amount of

Buy-in and Commitment

money that would be lost and then showed how they could merge this mental health agency or hospital, actually, with a community hospital that was grossly overbuilt.

And in the process, get mental health reimbursement for the third parties because unless the mental health is provided in a hospital, you can't get third party reimbursement of those—so what we're able to do is come up with a win-win for all concerned that also facilitated more treatment within people in the area and eliminated $6 million on the budget. It was absolutely essential, you know, to make this plan work. That's an example of stakeholders.

The point is you had to understand that by the action of closing—that would be the strategy. The action of closing that plant, it would this antagonistic stakeholder. This antagonistic stakeholder was extremely important in the total scheme of things.

Therefore, it had to be tended to on a priority basis. So stakeholder analysis tries to identify these kinds of glitches, manage them ahead of time. It is not to say that this process is going to move on quickly. In the case of the downsizing I'm talking about, it took eight years. It took eight years. You can't do these things quickly and have them be effective.

So when the real dilemma is in the public sector because oftentimes, the expectation is within a very short period of time, at least less than a year, major changes are going to be produced. That's just not realistic and it's not going to happen.

[MUSIC] [On-screen Text: Resource Analysis]

Another issue that's very important that goes along with stakeholder analysis concerns resources. You have a strategy; you're in a resource- poor organization, oftentimes in public sector organizations or in nonprofits.

And the real question is, “What resources do you have that'll help you facilitate this plan?” I'm trying to make some major change, trying to create a new service environment. What am I going to do, or where are these resources going to come from?

So we inventory our resources and treat them just like stakeholders. We

Buy-in and Commitment

say, "What are the most important resources we have and what's the likelihood of retaining or maintaining those resources into the future."

For instance, do we have the opportunity to do more paid-for service? Oftentimes in the public sector, we can bill for a portion of the total cost of the service or we can bill a third party for portions, particularly in health care, there's that kind of billing.

One of the real dilemmas—I use mental health example a lot because I know a good deal about that. That one of the dilemmas is the sickest patients are the ones that require the most care and going to have the least amount of resources after disposal.

The patients that are the most difficult, forensic in-patients, for example, it's N-G-R-I, not guilty by reason of insanity, which are committed to an institution, you get resource support, although these people aren't necessarily the most treatable and aren't necessarily—aren't going to— obviously going to fit with your patient population. You're going have to separate them in some ways. So there's lots of cost associated with it.

The resource issue then is if we deal with a particular strategy to manage, say, that patient population, what resources will be made available to us, and how do we balance those?

Say, the next strategy has to do with the seriously ill patient that we can treat effectively if we have drugs and other forms of therapies. Good results, you can actually create a positive net benefit because you're putting—you're taking them off the welfare role and putting them, hopefully, into a job or at least the situation where they're not costing you anything in terms of the total cost of the treatment process.

And on the other hand, you have these people that you're not going to be able to do much—not be able to help, but they pay you. So how do you trade that off? And resource analysis helps you do that.

Basically, you try to differentiate between what's core support and what's additional supports that's necessary to deal with that particular strategy you're trying to implement.

In addendum to the resource question has to do with how the cost in revenues of the organization sort out. These typically come from clients, and there are included types and excluded types. And the included types are those that are typically served by this organization.

Buy-in and Commitment

The excluded types are those that could be served, but may be eligibility requirements or just budget limitations have made it such that they can't be managed. Oftentimes, the organizations don't really have a good idea about who the excluded types are, what their needs are. So inventorying those needs are usually very useful.

[MUSIC] [On-screen Text: Services]

A second question here has to do with services. It is also—in a particular organization, there's a set of services that are kind of expected.

If some states, for example, are organized in such a way that the Bureau of Motor Vehicles is actually a part of a larger organization that provides a variety of services, such as license plates, license suspensions, maybe the state highway patrol, and a few other activities are all bundled together in one area.

In other states, there would be a different profile of services. If you look at it that way, you'll see services included, services excluded in your particular area.

The question is, “Is that mix make sense for your organization?” You may want to include—are excluded and exclude some that are included, depending on what your strategy looks like.

When you analyze things in from revenue and cost, services included, services excluded, clients included, clients excluded, you get a pretty good idea of what the mix ought to be in your organization that you can get. Also, oftentimes budget that and try to go to the state legislature, perhaps, or some oversight body and argue for a budget, with a much more rational approach than oftentimes one sees.

In terms of process, implementation has to do with getting people on board that are necessary, either to implement the plan, that is the—Either control resources or points of view that need to be managed intelligently if you're going to move ahead with a change.

And we're talking about people outside the organization, stakeholders, that also need to be aware of the organization strategy or where are the

Buy-in and Commitment

reasons why this strategy was identified and oftentimes told what the benefits are going to be sometimes to a larger group and where they may not get any benefits.

There are benefits for the citizens in general that need to be realized. Oftentimes, if you make that point, you can facilitate buy-in and ownership through persuasion argument. However, participation is always going to be more effective in doing that.

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