Agents of Change

Agents of Change strategy and tactics for social innovation

While governments around the world struggle to maintain service levels amid fiscal crises, social innovators are improving citizen outcomes by changing the system from within.

“To be successful, social innovators need to be not only passionate, smart, and agile but also reflective and sensible—capable of adapting to their bureaucratic environment even as they seek to reshape it. They must have the proper attitude and sufficient courage to change the status quo and the skills and determination to do so in a constructive manner. They have to anticipate the resistance that changes may provoke and adequately adapt to anything that might compromise the plan. To successfully maneuver through the institutional obstacles, innovators need to combine the deep strategies of chess masters with the quick tactics of acrobats. This book asks the question, how do social innovators actually do it?” From the Introduction 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 is academic director of the Innovations in Government Program at the Ash Center for Democratic Governance and Innovation, Harvard University, and is coeditor (with Gowher Rizvi) of The State of Access (Brookings/Ash). FRANS NAUTA is professor of Public Sector Innovation at HAN University, a prominent speaker and consultant on innovation, and author of The Prime Minister’s Innovation Platform (forthcoming). ASH CENTER FOR DEMOCRATIC GOVERNANCE AND INNOVATION Cambridge, Mass. www.ash.harvard.edu BROOKINGS INSTITUTION PRESS Washington, D.C. www.brookings.edu Cover image courtesy of iStockphoto Cover design by Nancy Bratton Design

Agents of Change

In Agents of Change, Sanderijn Cels, Jorrit de Jong, and Frans Nauta offer compelling stories, lively illustrations, and insightful interpretations on how innovators, social entrepreneurs, and change agents are dealing effectively with powerful opponents, bureaucratic hurdles, and the challenges of securing resources and support.

cels / de jong / nauta

nvoice ect,

.4375” spine

6”

6”

6”

Copyright 2012, Sanderijn Cels, Jorrit Jong, and Frans Nauta sanderijn cels jorrit dedejong frans nauta

Agents of Change

strategy and tactics for social innovation

00-2262-5LC FM:0496-6

9/26/12

12:00 PM

Page i

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Agents of Change

00-2262-5LC FM:0496-6

9/26/12

12:00 PM

Page ii

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

innovative governance in the 21st century anthony saich Series editor This is the sixth volume in a series that examines important issues of governance, public policy, and administration, highlighting innovative practices and original research worldwide. All titles in the series will be copublished by the Brookings Institution Press and the Ash Institute for Democratic Governance and Innovation, housed at Harvard University’s John F. Kennedy School of Government. Decentralizing Governance: Emerging Concepts and Practices G. Shabbir Cheema and Dennis A. Rondinelli, eds. (2007) Innovations in Government: Research, Recognition, and Replication Sandford Borins, ed. (2008) The State of Access: Success and Failure of Democracies to Create Equal Opportunities Jorrit de Jong and Gowher Rizvi, eds. (2008) Unlocking the Power of Networks: Keys to High-Performance Government Stephen Goldsmith and Donald F. Kettl, eds. (2009) Ports in a Storm: Public Management in a Turbulent World John D. Donahue and Mark H. Moore, eds. (2012)

00-2262-5LC FM:0496-6

9/26/12

12:00 PM

Page iii

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Agents of Change Strategy and Tactics for Social Innovation

sanderijn cels jorrit de jong frans nauta

brookings institution press Washington, D.C.

00-2262-5LC FM:0496-6

9/26/12

12:00 PM

Page iv

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

about brookings The Brookings Institution is a private nonprofit organization devoted to research, education, and publication on important issues of domestic and foreign policy. Its principal purpose is to bring the highest quality independent research and analysis to bear on current and emerging policy problems. Interpretations or conclusions in Brookings publications should be understood to be solely those of the authors. Copyright © 2012

sanderijn cels, jorrit de jong, and frans nauta All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without permission in writing from the Brookings Institution Press, 1775 Massachusetts Avenue, N.W., Washington, D.C. 20036, www.brookings.edu

Library of Congress Cataloging-in-Publication data Cels, Sanderijn, 1970– Agents of change : strategy and tactics for social innovation / Sanderijn Cels, Jorrit de Jong, and Frans Nauta. p. cm. — (Innovative governance in the 21st century) Includes bibliographical references and index. ISBN 978-0-8157-2262-5 (pbk. : alk. paper) 1. Social policy. 2. Social change. 3. Organizational change. 4. Social problems. 5. Social planning. 6. Diffusion of innovations—Social aspects. 7. Public administration. I. Jong, Jorrit de. II. Nauta, Frans. III. Title. HN18.3.C385 2012 303.3—dc23 2012030959 987654321 Printed on acid-free paper Typeset in Minion Composition by R. Lynn Rivenbark Macon, Georgia Printed by R. R. Donnelley Harrisonburg, Virginia

00-2262-5LC FM:0496-6

9/26/12

12:00 PM

Page v

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Dedicated to

Professor Mark H. Moore A leading force in the study of leading forces

00-2262-5LC FM:0496-6

9/26/12

12:00 PM

Page vi

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

00-2262-5LC FM:0496-6

9/26/12

12:00 PM

Page vii

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Contents

Acknowledgments

ix

part i chess masters and acrobats

1

Introduction

2

Strategies and Tactics

13

3

Crafting the Case: The Art of Making a Start

24

4

Prompting Progress: The Art of Moving Things Forward

32

Managing Meaning: The Art of Making Sense

44

5

3

part ii frontline innovations

6

Under the Radar: Medical Informatics in Japan

57

7

Relentless Incrementalism: Financial Literacy Training for Newcomers in Canada

75

Just a Tool? Implementing the Vulnerability Index in New Orleans

95

Join the Club: The Emergence of Alzheimer Cafés in the Netherlands

115

8 9

With Marica Crombach vii

00-2262-5LC FM:0496-6

9/26/12

12:00 PM

Page viii

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

viii

Contents

part iii innovations in governance

10 The Sun Kings: The Emergence of Solar Energy in Germany 133 With Peter Kasbergen

11 Change on Steroids: Public Education in New Orleans

154

12 The Value of Values: Higher Education in Virginia

173

13 The Cat out of the Bag: Institutional Reform in Denmark

193

Klaartje Peters

part iv conclusion

14 Innovating Strategically

213

References

223

Index

231

00-2262-5LC FM:0496-6

9/26/12

12:00 PM

Page ix

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Acknowledgments

A

large number of friends, colleagues, sponsors, respondents, and others have contributed to this project. While we are extremely grateful to each and all of them, some deserve special thanks. Tony Saich, Sandy Borins, Archon Fung, Tim Burke, Gigi Georges, and Stephen Kosack at Harvard University’s Kennedy School of Government have provided us with helpful comments on various parts of the manuscript. We would also like to thank Gowher Rizvi, Marty Mauzy, Bruce Jackan, Christina Marchand, Kara O’Sullivan, Jessica Engelman, Jason Pryde, and Kate Hoagland at the Ash Center for Democratic Governance and Innovation at Harvard University for the many ways in which they have supported the project. Additionally, we thank Patrick Field of the Consensus Building Institute for his support. At Brookings Institution Press, we are thankful to Chris Kelaher, Janet Walker, Susan Woollen, and Katherine Kimball for their good advice, excellent work, and patience. Special thanks go to Marica Crombach, Peter Kasbergen, and Klaartje Peters, who contributed substantively to this volume. Their research and (co)authorship have been invaluable. Jessica Crewe, Johan van Gorp, and Molly Lawrence have all provided helpful assistance in preparing this manuscript. Gaylen Moore has done a truly exceptional job of editing the entire manuscript. It has been a great pleasure to work with such a talented, understanding, yet firm editor. In the Netherlands, Arre Zuurmond at the Kafka Brigade, Joeri van den Steenhoven and Chris Sigaloff at Nederland Kennisland, Kees Mouwen at Tilburg University, and Simone Veldema have given support and inspiration to the project, which has been deeply appreciated. ix

00-2262-5LC FM:0496-6

9/26/12

12:00 PM

Page x

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

x

Acknowledgments

Without the financial and institutional support of our sponsors, this book would not have been possible. We are extremely grateful to the research group on innovation (Lectoraat Innovatie) at the HAN University of Applied Sciences, the Platform for Health Care Innovation in the Netherlands (Zorginnovatieplatform Nederland), and the Alliance for Vital Administration (Alliantie Vitaal Bestuur). Finally, and most important, we would like to thank Mark Moore, who has inspired us in many ways to pursue this line of research. His deep understanding of public management, his respectful yet challenging engagement with practitioners, and his unwavering efforts to make an intellectual contribution to the practice of social change have been a major source of inspiration. This book builds on the conceptual foundation Mark has developed for understanding strategic management in government. We dedicate it with pride to him.

01-2262-5 CH 1:0496-6

9/7/12

2:44 PM

Page 1

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

part i

Chess Masters and Acrobats

01-2262-5 CH 1:0496-6

9/7/12

2:44 PM

Page 2

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

01-2262-5 CH 1:0496-6

9/7/12

2:44 PM

Page 3

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

1

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 3

01-2262-5 CH 1:0496-6

9/7/12

2:44 PM

Page 4

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

4

Chess Masters and Acrobats

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.1 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.2 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.3 1. We distinguish “innovation” from “invention” because an innovation does not have to be new to the world; it just has to be new to the local situation. Innovations differ from “ideas” in the sense that they have actually been made operational and have been implemented. 2. Much of the literature discussed here distinguishes between the public sector and the nonprofit sector, between state and voluntary sectors, or between government and citizen sectors. In most distinctions, the defining differences lie in the way actions or activities are authorized and funded. The state or government sector is authorized to act and spend by virtue of its democratic accountability to the public. The nonprofit or voluntary sector features initiatives of private citizens and their associations who spend their own money and time for the common good. The voluntary sector’s accountability is to donors, volunteers, or members who support what the initiative has set out to pursue. In practice, however the lines between the two sectors are blurred; in terms of authority we see that many public agencies have gained considerable autonomy and cannot be directly controlled by democratic politics anymore (Pollitt and others 2004). At the same time, many nonprofits are partially or wholly funded by governments that exercise considerable control over their goals and means (Smith and Lipsky 1993; Kruiter and others 2008). But there is a more important reason why the distinction is not useful for the purposes of this book: the innovators defined themselves not in terms of whose payroll they were on but in terms of their mission and their goals. While the substantive area of their work varies from basic government services to health care and from education to sustainable energy, all innovators worked to address social problems within the public sector. Finally, we refer to them as social innovators, irrespective of the institutional form or legal status of the organization they work for, because they aim to improve social outcomes. 3. A term similar to social innovator used in the literature on innovation in the public sector is social entrepreneur. Even though some of the innovators in this book would probably

01-2262-5 CH 1:0496-6

9/7/12

2:44 PM

Page 5

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Inroduction

5

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? qualify as such, we did not think this label adequately expressed what we wanted to analyze. Entrepreneurs typically create enterprises, organizational entities that create and sustain value by pursuing opportunities (Dees 1998). While we are very much interested in innovators’ strategies to create and sustain value and pursue opportunities, we do not focus on their organizations as such. Some of them work within large bureaucracies, others in politics; still others do not even have an organization they can call their own. The focus of the work of the individuals featured in this book is innovation that ultimately leads to systemic change, not to a sustainable social enterprise.

01-2262-5 CH 1:0496-6

9/7/12

2:44 PM

Page 6

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

6

Chess Masters and Acrobats

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.4 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?5 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.6 The same goes for social innovations. They can, and often do, threaten to obliterate incumbent interests, interrupt traditional funding pathways, and reassign bureaucratic turf. 4. The term bureaucratic organizations as used here refers here to public, private, and nonprofit sector organizations. In his seminal description and analysis of bureaucracy, Max Weber (1976) saw little difference between the sectors: large organizations in the private sector can be just as bureaucratic as public sector organizations. 5. Borins (1998). 6. Schumpeter (1942).

01-2262-5 CH 1:0496-6

9/7/12

2:44 PM

Page 7

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Inroduction

7

The public sector political economy involves frequent—and often fierce— fights to protect the status quo.7 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 highdefinition 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.8 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 7. Goldsmith (2010). 8. Moore (1995); Borins (1998).

01-2262-5 CH 1:0496-6

9/7/12

2:44 PM

Page 8

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

8

Chess Masters and Acrobats

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.9 Many others, including Michael Lipsky and Borins, have pointed out that innovative behavior can be discouraged not only by external pressures.10 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,11 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.12 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, agen9. Wilson (1989). 10. Lipsky (1980); Borins (1998). 11. Mulgan (2007); Mulgan and Albury (2003). 12. Stone (1984); De Jong and Rizvi (2008).

01-2262-5 CH 1:0496-6

9/7/12

2:44 PM

Page 9

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Inroduction

9

cies 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.13 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.14 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 13. Zuurmond (2008). 14. Weber (1976); Albrow (1970); Etzioni-Halevy (1983).

01-2262-5 CH 1:0496-6

9/7/12

2:44 PM

Page 10

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

10

Chess Masters and Acrobats

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 middlemanagement 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. principle 5: distinctions between public and private spheres. The resources of an organization and of the particular office a bureaucrat holds may never be appropriated for personal use. The requirement that officials maintain strong distinctions between private and public spheres discourages bureaucrats from bringing their individual interests or opinions to the job. This principle is helpful to the extent that it clearly rejects corruption of power. However, discouraging employees from bringing in their own experiences and personal reflections on their work can keep them from exercising their better judgment and questioning the status quo. To introduce innovations, employees sometimes need to speak truth to power, use their common sense, or blow the whistle on their superiors. Innovators in the public sector are not just cogs in the machine but human beings serving humanity who are at times driven by a deep personal motivation to do better. That involves some blurring of the lines between public and private. principle 6: formalized documentation. Administration in bureaucracies depends on written documents and formal communication. These are the cornerstones of accountability in the public sector. At the same time, everybody knows that it is hard to account for innovation, precisely because it requires investment without the certainty that it will yield results. Innovation is experimentation and therefore hard to record as a regular expense paid out in exchange for a certain result. Although it is not impossible to formally account for experiments with uncertain outcomes, the practice of formaliz-

01-2262-5 CH 1:0496-6

9/7/12

2:44 PM

Page 11

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Inroduction

11

ing and documenting decisions often makes it hard for innovators to pursue a novel and untested idea.

Innovation Is at Odds with Bureaucratic Culture If we want to understand why it is so hard to innovate in the public sector, we must pay attention not only to the formal features of bureaucratic institutions but also to the culture of the bureaucratic world and the people who inhabit it. Bureaucracies have a persistent learning disability and cannot adjust to performance problems by learning from their errors.15 There is a tendency among many bureaucrats to avoid risks and to perceive risk in making even minor changes. Research in the Netherlands has demonstrated that many civil servants, from top managers down to those on the front line, tend to interpret laws and regulations in the most conservative way—even more strictly than perhaps was intended, thereby impeding progress.16 They also tend to put utmost emphasis on accountability procedures, creating such a heavy administrative workload that it frustrates professionals in the front line. The reason was that the bureaucrats wanted to make sure they stayed within the regulative framework as much possible; the effect of their conservative behavior is that it discourages experiments and innovation on the work floor.

The Amazing Reality Given all these impediments in the public sector to change, it is amazing that social innovation happens at all. This raises the question of how people who are successful at the job actually operate and deal with the particular challenges they face. It is clear that to be successful, social innovators need to be not only passionate, smart, and agile but also reflective and sensible—capable of adapting to their bureaucratic environment even as they seek to reshape it. They must have the proper attitude and sufficient courage to change the status quo and the skills and determination to do so in a constructive manner. They have to anticipate the resistance that changes may provoke and adequately adapt to anything that might compromise the plan. To successfully maneuver through the institutional obstacles, innovators need to combine the deep strategies of chess masters with the quick tactics of acrobats. This book asks the question, how do social innovators actually do it? What strategies do they devise and what tactics do they employ? How do they gather the resources and get the go-ahead? It tries to answer these questions by discussing and analyzing what it took for innovators in wildly different situations 15. Crozier (1964). 16. Kruiter and others (2008).

01-2262-5 CH 1:0496-6

9/7/12

2:44 PM

Page 12

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

12

Chess Masters and Acrobats

to succeed. We look into various cases: redesigning local government in Denmark and public higher education in Virginia; improving a broken public school system in New Orleans and care to Alzheimer patients in the Netherlands; changing the approach to financial illiteracy in Canada and homelessness in Louisiana; and creating systems to exchange patient data in Japan and stimulate investment in solar energy in Germany. Drawing lessons from original case-study research, as well as from the literature on public management, social innovation, and change management, we aim to offer crucial considerations with regard to strategies and tactics for social innovation. This book does not offer a golden formula or a silver bullet; the reader will not be handed a list of the seven steps to success. Rather, we offer compelling stories in enough detail for readers to begin to comprehend what made the difference and descriptions of the thought-provoking choices and maneuvers social innovators made in the context of their institutional environments. We hope to help practitioners and students deepen their understanding of the nature of the challenge that change agents face, while making a contribution to the art and science of social innovation.

02-2262-5 CH 2:0496-6

9/7/12

2:44 PM

Page 13

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

2

Strategies and Tactics

Strategy without tactics is the longest way to victory. Tactics without strategy is the noise before defeat. —Sun Tzu, The Art of War

S

ocial innovators have ideas about improvement. They envision how certain changes could add public value—how an online platform for data exchange could help doctors avoid medical errors or how a new law could effectively create incentives to modify behavior. They may even have a detailed plan about how to realize their innovation. But they rarely control all the levers that would enable a smooth implementation of their plan. Their major challenge is to bring an idea into practice and gather the approval and resources required to put an innovation into practice in a bureaucratic environment. For that to happen they will have to work with a diverse group of stakeholders who can make or break the innovation. The term stakeholder refers to anyone who in some way has a stake in the success of the innovation—whether by giving permission for the undertaking, investing money in it, or holding the power to further or delay the implementation process—or will benefit from it as an end user, for example. We break down the challenge to generate support and resources from these stakeholders into some elements that we can discuss and analyze separately, while keeping in mind that successful innovation depends on all elements being well aligned. Building on the work of Mark Moore, we delineate three separate but interrelated challenges that face an innovative individual in the public sector: securing legitimacy and support in one’s authorizing environment, building sufficient operational capacity, and making a compelling public value proposition.1 1. Moore (1995).

13

02-2262-5 CH 2:0496-6

9/7/12

2:44 PM

Page 14

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

14

Chess Masters and Acrobats

Authorizing Environment Innovators need to build up enough legitimacy and support in their environment to make the changes they seek seem necessary and inevitable. According to Mark Moore, the authorizing environment consists of a multitude of actors who exercise authority, enhance legitimacy, and give or withhold support to the innovative undertaking.2 Real-life innovators need support from many different stakeholders, such as their political bosses, the media, unions, staff, citizens, clients, overseers, and other jurisdictions, to be able to do their job. (Moore calls stakeholders “authorizers.”) For Professor Hara, the immediate authorizing environment consisted of his fellow gynecologists and their patients. Before he could convince others of the value of his innovation, Hara needed this closest circle of authorizers to believe in, and adopt, his HelloBaby platform. In his larger context, his stakeholders were hospital directors, professional associations, and public servants whose authorization of the new practice was required. Ultimately, he had to convince the politicians who exercised influence through legislation that allows, forbids, or commands certain practices. In Germany, Hermann Scheer, a politician himself, had to garner legitimacy and support from fellow members of parliament and ministers in the administration and, ultimately, from the parties they answered to, such as regional constituencies, unions, and the business lobby. The problem is that these stakeholders do not necessarily want the same thing or share a similar vision, but in some way or another, the innovator has to get support—or at least tolerance—from all of them. In short, a change agent has to earn legitimacy and support from crucial stakeholders in his or her authorizing environment.

Operational Capacity A second part of the social innovator’s challenge is to secure the operational capacity necessary to execute a plan. Simply put, innovators need resources from some of their stakeholders. After all, an innovative idea is worthless without the actual means to put it to work. In Hara’s case, the operational capacity involved was relatively limited at the beginning: a little time, a little money, and some computers. Later, a high-quality digital infrastructure with dedicated servers and continuous maintenance was needed, requiring more and more money and manpower. In the case of Leslie Jacobs, an innovator who sought to rebuild and reform the public school system in post-Katrina 2. Moore (1995).

02-2262-5 CH 2:0496-6

9/7/12

2:44 PM

Page 15

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Strategies and Tactics

15

New Orleans, building the operational capacity meant attracting dozens of new school leaders and securing millions of dollars to fund the reopening of schools. Operational capacity thus involves all the technical equipment, financial resources, human capital, premises and vehicles, hardware and software, and anything else required to empower the innovation. Because innovators often do not have immediate control over the required resources, they need to expand their operational capacity beyond their own scope of influence. Part of their challenge, then, is to figure out how they can creatively obtain and combine resources.

Public Value Proposition If you want something from others (time, money, information, permission, for example) you need a compelling proposal: one that will convince people that their efforts will be rewarded and their resources will be spent wisely. When social innovators try to gather support and resources, they have to make a public value proposition to their stakeholders. They have to paint a picture of the value their goal would add. In Hara’s case, one such proposition could be the reduction of medical errors and the elimination of inefficiencies, resulting in fewer avoidable deaths and lower costs of health care. Hermann Scheer could chose to offer the promise of a cleaner environment, job creation, less dependence on foreign oil, and more-affordable sustainable energy consumption. The innovator’s challenge is to craft this public value proposition in such a way that it becomes not just a novel idea but an actual, workable solution to problems that stakeholders care about. Moore’s notions of authorizing environment, operational capacity, and public value help us map the landscape for social innovators. There is political work to do (obtaining legitimacy and support), a managerial task to fulfill (creating capacity), and an imaginative dimension to the job (envisioning public value). The major challenge facing an innovator is to reimagine the very notions of what is permissible, doable, and valuable. If it were up to the innovator alone, this would not necessarily be difficult; everyone can have a dream. The point is that others need to go along with the dream and get involved in exploring new ways of seeing and doing things. Moore’s theory provides a general understanding of the innovator’s environment—a lens through which we can perceive and break down the innovator’s individual challenges. In this book we use that lens to zoom in on a number of wildly different practices in the public sector. Some of the innovators, such as Hara, have to work hard to build operational capacity. Other change agents are more focused on getting support

02-2262-5 CH 2:0496-6

9/7/12

2:44 PM

Page 16

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

16

Chess Masters and Acrobats

from the authorizing environment, one example being Scheer’s efforts to pass legislation to stimulate renewable energy in Germany. But all the innovators highlighted in this book had to be mindful of the public value that their innovations would add. You cannot implement change without communicating a vision of the necessity for and possibility of change. Innovators need to articulate a public value proposition that is compelling to stakeholders in the authorizing environment and practically feasible with the operational capacity at hand. In other words, innovators cannot simply focus on one element of the challenge and forget about the rest or take it for granted. They must be aware of the full nature of the challenge and take all aspects into account as they set out to realize their goal.

Thinking in Action Seeing the landscape is one thing. Navigating it is another. To get from point A to point B you need more than a plan; you need actual forward movement. Moving requires not only an understanding of the environment and the road ahead but also skillful maneuvering around the many potholes, pylons, and detours along that road. When one operates a vehicle on a slippery road, a general strategy of driving slowly and carefully is a sensible adjustment to the environment, but it is not sufficient for success. The driver needs to make decisions and take action, such as shifting gears, adjusting the steering, and applying the brakes, to ensure that the car does not slip off the road. This is the essential difference between strategy and tactics: tactics refer to particular, well-chosen actions taken in the heat of the moment; strategies are ideas that orchestrate these actions. So when we discuss tactics we refer to actions of skilled agents to execute a strategy in practice. In reality, strategies are rarely written out plans that precede tactical actions. More often than not, strategy is an implicit, tacit understanding of how you will square up to a challenge. Strategies are also subject to change, because circumstances require you to adjust. Consequently, social innovators may sometimes be able to articulate a strategy only after they have completed a task or provided a postmortem analysis after they have failed—“How did I do that? Let me think” or “Why did my plan not work? Let’s see.” An innovation strategy may not always be clear or explicit, not even to the innovator, and much less his or her environment. Strategy is not detached from action. Although social innovators often think their challenges through and plan for action, they never stop strategizing once they have taken off. The case of Martha Kegel, the director of an organization to end homelessness in New Orleans, demonstrates what it means to continuously adapt

02-2262-5 CH 2:0496-6

9/7/12

2:44 PM

Page 17

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Strategies and Tactics

17

one’s strategy, midflight. Kegel led an organization in permanent financial crisis, dealing with the most difficult clients and complex cases in social work, and she was daily immersed in decisionmaking that can best be described as coping. Unity did not have the luxury of hiring consultants or taking a retreat to write a plan. Yet Kegel was keenly aware of the importance of strategy. She had a deep understanding of how the public perceived homelessness, how politicians thought, and how government bureaucracies worked. She also knew that her organization largely depended on public good will that would not suffice to eradicate homelessness anytime soon. She may not have had an ex ante strategic plan, but she did have the acumen and ability to recognize opportunities and manage innovation. For Kegel, innovation was strategy in practice—continuously scanning the horizon, assessing the road ahead, and adjusting course according to changing circumstances—while moving. With regard to tactics, we have to keep in mind that a visionary and skillful innovator will often make operational decisions that require strategic insight as well. It is hard to imagine skillful football players blindly following the coach’s instructions without any thinking of their own. Every player has to make many small and big decisions in split seconds. Some players fit the overall strategy, some aim toward the situation at hand. We concentrate here on the first type of choices and actions—those that are aligned with the strategy to get from A to B. However, in the midst of action on a football field, when the players try to reach the touchdown zone, the lines between strategy and tactics become blurred. We see this blurring reflected in the phenomenon of shouting coaches who cannot stay put on the sidelines and sweating players offering postgame analysis on TV as they exit the field. The former are strategists who descend to the level of tactics, as if they want to run into the field and throw the ball themselves; the latter are tactical operatives who offer strategic hindsight. The social innovators presented in this book are both coaches and players. Some are more like coaches, others more like players. But they all think strategically and make numerous tactical choices to take (or avoid) certain actions. Examining their stories helps us to identify strategic and tactical elements in the innovation process.

Goals of This Study The research presented in this book is descriptive. Our goal is to document and examine in detail real stories about successful innovators, so that practitioners and scholars can learn from them. We also offer our own postgame interpretations and analysis to help identify the underlying ideas and considerations of

02-2262-5 CH 2:0496-6

9/7/12

2:44 PM

Page 18

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

18

Chess Masters and Acrobats

the innovators in order to help other innovators evaluate or prepare for action. If these interpretations and analyses make sense to people who practice or study social innovation, we have accomplished our goal. More specifically, we hope that the concepts we use to describe strategies and tactics for social innovation help structure the work of others. Those who work to put their own social innovations into effect might start to see the challenges they face in a new way that opens up new strategic and tactical possibilities. Those who want to stimulate and support innovations might be better able to do so if they are able to understand the nature of the challenge that an innovator faces. Those who study social innovation might start to see particular dimensions of the phenomenon that they would like to explore further. To some extent, social innovation is a conundrum. It is almost impossible to trace all actions and considerations and to attribute success or failure to them. In that sense, there is no science in this field—at least not yet. Any explanatory attempt to construct variables and causal relationships between them will be stymied by a number of realities. Each situation comes with its own strategic challenge, as subjectively perceived by a certain innovator. Much of the strategic and tactical work is hard to separate from who an innovator is and what he or she is capable of. Strategy changes over time, as it is adjusted “while moving.” The lines between strategy and tactics, two different analytical concepts, are blurred in practice. Finally, stakeholders may have different views on what exactly happened and how actions have contributed to failure or success. The vast number of known and unknown variables makes it virtually impossible to investigate causal relations between strategies and tactics, on one hand, and outcomes of social innovation, on the other. There are just too many factors in each situation that influence the course of events. We approached our subject as an art rather than a science. This means that we cannot make causal inferences in our conclusions or make bold assertions with claims to universal validity. Even if that were possible in this field of study, it has not been our goal. Our research is fundamentally different in that we do not attempt to explain the successful outcomes of the innovation cases. We describe the process that led to the successful outcomes, knowing that attribution of these outcomes to any variable can legitimately be disputed, given the wide variety of variables in both the context and the actions of many actors involved. In that sense our research is much more like historiography (focused on placing the recent past in perspective) than science (focused on explaining and predicting events). We appreciate the art of innovation and those who are skilled practitioners of that art, and we tried to understand what strategic innovators have

02-2262-5 CH 2:0496-6

9/7/12

2:44 PM

Page 19

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Strategies and Tactics

19

done, how they did it, and why they did it. We learned from the masters, up close. Closeness allowed us to see things with our own eyes and make our own observations. We were curious and open minded, and so we avoided becoming trapped in research designs. That is why we relied on semi-structured interviews: we did not just want answers to predefined questions; we also wanted to find out what questions and issues were important to innovators. The eight original case studies we conducted are based on fieldwork and data analysis. In this book we present the cases as absorbing stories rather than technical accounts, bringing out the color and depth in each case. Chapters are organized in several parts, including the background of the innovator’s situation; the set of problems that the innovator aimed to address; a chronological account of the innovation process; a depiction of the institutional environment; a description of the innovation and the improvements it aims to make; and a discussion of the strategy and tactics engaged. The parts are presented in various sequences, depending on the case. This format gives the book structure but does not amount to a systematic comparison between the case studies. We also present a series of observations with regard to similarities and differences between the cases that seem important, given our interest in strategy and tactics. During our research, when we saw interesting patterns or mechanisms emerge from the data, we paused and zoomed in on the details of the cases, especially when we saw social innovators dealing with their unique predicaments in similar ways.

Case Selection When doing qualitative, explorative research, especially when using a small set of case studies, it is important to maximize diversity on the dimensions that seem most relevant to the principal questions. This approach increases the chance of identifying a variety of interesting phenomena.3 We assumed, building on Moore’s conceptual framework, that the environment of the innovator would present a number of critical factors for successful innovation: that depending on the context, the innovator’s work would involve various challenges in securing legitimacy and support, gathering operational capacity, and aligning notions of public value. Therefore, we decided to diversify the cases as much as possible in terms of their geographical origins (within the subset of industrialized, highincome countries) and policy areas (within the subset of public or social services) to maximize differences among the respective environments. 3. See Yin (2003); Swanborn (1994).

02-2262-5 CH 2:0496-6

9/7/12

2:44 PM

Page 20

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

20

Chess Masters and Acrobats

We also made a distinction between frontline innovations and innovations in governance and selected an equal number of cases in each category. Frontline innovators, such as the Japanese gynecologist Hara, start small and local and are focused on changing the practice of professionals who have immediate contact with the beneficiaries. The HelloBaby project was a typical frontline innovation in that it was conceived, developed, and introduced from the front line of public services, close to where the interactions between professionals (doctors, nurses) and clients (patients) take place. Although the introduction of medical informatics has had significant implications for management and governance in the health care sector, Hara’s innovation started at the operational level and worked from the bottom up. Innovators in governance, such as Scheer, the parliamentarian, focus on rearranging relations between oversight and management from higher-level forums. Scheer’s solar energy program was promoted by seasoned politicians through legislation and policy measures. Scheer and his allies had a deep understanding of the realities in practice, but they focused their efforts on enabling, promoting, and scaling up by making changes to the legislative and fiscal frameworks that governed the energy sector: thus the solar energy program was an innovation in governance. (By no means does this distinction imply that frontline innovations do not require—or result in—changes in governance or that innovations in governance do not involve any activities in frontline operations.) We examined four cases of frontline innovations and four cases of innovations in governance to add diversity in another dimension (for an overview, see table 2-1). We suspected that it would be interesting to see what frontline innovations and innovations in governance had in common and what set them apart in terms of strategies and tactics. By selecting cases that leaned toward either end of the spectrum and by focusing on the innovation process, we were looking for differences and commonalities across these types of innovation. Summarizing, the case selection was based on diversity in terms of geographical origin, policy areas, and the nature of the innovation. In table 2-2 we illustrate the focus of this book by making analytical distinctions between innovation and the innovation process, as well as by contrasting frontline innovations and innovations in governance. Besides the criteria that emerged from the basic conceptual framework, the cases were selected based on demonstrated success of a social innovation process within approximately twelve years and an identifiable innovator or group of innovators to whose efforts the success can be attributed. To identify cases that met these criteria, we used the databases and websites of organizations that reward successful innovators or innovations through a rigorous

02-2262-5 CH 2:0496-6

9/7/12

2:44 PM

Page 21

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Strategies and Tactics

21

Table 2-1. Terms of Innovation Innovation

Definition

Example

Indicator of success

Frontline innovation

Novel approach to practices at the operational (work floor) level

Diagnostic tool, information technology application, business process, management approach, intervention, and so on

Better outputs and outcomes; client satisfaction, employee satisfaction; more efficiency, effectiveness, equity, and so on

Innovation in governance

Novel approach to practices at the governance (oversight and management) level

Legislative framework, Sustainable instituaccountability system, tional structures and rules and regularelationships that tions, fiscal policy, better support the budgeting approach, values of transparand so on ency, accountability, responsiveness, and continuous improvement of performance (including all indicators listed above)

Innovation process

Path from idea to execution, in order to change a practice

Conception of a great idea, advocacy, prototyping, incubation, implementation, evaluation, and scaling up

Changed practice; sufficient operational capacity to sustain innovation and sufficient support from stakeholders to maintain legitimacy (the focus of this book)

selection process.4 We also relied on information provided by experts in the field and academics who study innovation to identify people and projects.5 In the following three chapters, we discuss some of the most salient strategies and tactics we discovered in our research. In chapter 2, we describe how 4. The Innovations in American Government Award Program at Harvard University’s Kennedy School, the United Nations Public Service Awards Program, and the Ashoka Fellowships for Social Entrepreneurs program. 5. The case selection was based on our goal of maximizing learning by identifying differences and similarities between the strategies and tactics of successful innovators. We did not implicitly or explicitly want to test or develop hypotheses about causal relations between

02-2262-5 CH 2:0496-6

9/7/12

2:44 PM

Page 22

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

22

Chess Masters and Acrobats

Table 2-2. Overview of Cases Innovator Frontline innovation Professor Hara, Kagawa University Hospital

Innovation

Policy area

Location

HelloBaby (software ap- Medical plication) and K-Mix informatics (infrastructure)

Japan

Peter Nares, Social and Enterprise Development Innovations

Financial literacy training

Poverty alleviation

Canada

Martha Kegel, at Unity of Greater New Orleans, a nonprofit collaborative

Vulnerability index

Homelessness

Louisiana

Bère Miesen, Leiden University, with the Alzheimer Association

Alzheimer Cafés

Health and social care

Netherlands

100,000 Roofs Program and Renewable Energy Law

Energy production

Germany

John Casteen III and Board of the University of Virginia

Restructuring Act on Higher Education

Public education (higher)

Virginia

Leslie Jacobs, Board of Elementary and Secondary Education

Accountability framework for public schools and Recovery School District

Public education (elementary and secondary)

Louisiana

Johannes Due and Commission on Administrative Structure

Redesign of local government

Public services (general)

Denmark

Innovation in governance Hermann Scheer and Hans-Josef Fell, MPs

innovators “get started” as they prepare for change. In chapter 3, we examine how innovators “prompt progress” to create momentum or seize opportunities when they occur. Prompting progress refers to the art of making things strategies and tactics, on one hand, and outcomes, on the other. If hypothesis testing had been the goal, we would have first defined independent variables (actions) and dependent variables (outcomes) much more clearly. Then, we would have selected cases on the independent variable, cases with similar, well-defined actions. Finally, we would have analyzed how and to what extent the actions were related to the outcomes.

02-2262-5 CH 2:0496-6

9/7/12

2:44 PM

Page 23

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Strategies and Tactics

23

happen to advance the innovation process. In chapter 4, we analyze how innovators “manage meaning”—that is, how they frame conversations with stakeholders to appeal to their motivations and obtain support. Each of these early chapters features illustrations from the cases presented in chapters 5 to 12. For more context and a full description of what happened in each case, we refer the reader to the individual case chapters. In the final chapter of this book, we take our analysis one step further and offer some final conclusions.

03-2262-5 CH 3:0496-6

9/7/12

2:45 PM

Page 24

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

3

Crafting the Case The Art of Making a Start

S

ocial innovators spend a lot of time preparing. The change agents that we studied did not climb out on a shaky limb; rather, they carefully analyzed their challenges and crafted their cases for change.1 The innovators knew that the burden of proof would be on them; their innovations would not be easily embraced by bureaucrats in favor of the status quo or simply skeptical about change. Innovations are the opposite of evidence-based solutions: the only way to obtain evidence of their effectiveness is to implement them, carefully study whether and how they work, and then systematically evaluate their effectiveness against other interventions (or nontreatment control groups). But to get to the point where resources, legitimacy, and support to conduct such research are available, innovators first need to craft a case for success and come up with arguments and evidence to convince stakeholders that supporting the innovation is necessary and will be safe. Even if stakeholders in their authorizing environment are sympathetic to an innovator’s plan, they still need reassurance that the whole undertaking is feasible and that expected results are worth their efforts. Based on our interpretations of the eight case studies presented here, we distinguish two strategies that seven innovators use in the early stages of the innovation process: what we call “discrediting the status quo” and “leveraging evidence of success.” By discrediting the status quo, innovators raise awareness of problems in a way that increases the chances that their innovations will look like adequate and timely solutions. Then, they gather and leverage evidence to build their case. (These are just two strategies we have selected based on our case studies; the individual cases contain others.) 1. One exception is Bère Miesen, the initiator of the Alzheimer Cafés.

24

03-2262-5 CH 3:0496-6

9/7/12

2:45 PM

Page 25

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

The Art of Making a Start

25

Discrediting the Status Quo An essential part of crafting the case for innovation involves gathering evidence that current practices do not work well enough—or at all. Stakeholders need to be convinced that it is time to leave current approaches behind and explore new ways of doing things. Change agents cannot assume that everyone is an innovation enthusiast interested in continuous improvement. Before stakeholders—and especially conservative bureaucrats—can fully appreciate the value of a social innovation, they first need to understand in what ways and to what extent current practice is failing. Besides praising the benefits of new ideas, social innovators also discredit the status quo. This helps them avoid the impression that they are pushing for something that nobody was asking for. A number of innovators in this book crafted their case along these lines. Some invested in gathering data that were perceived as objective by key stakeholders. The leadership of the University of Virginia made calculations about the costs of the current government bureaucracy. These allowed them to back up their proposal with solid evidence that the status quo was costly and undesirable. Detailed regulations, formal approval procedures, and state inspections were slowing down university operations and creating costly red tape, the leadership argued. For example, to get construction plans approved and certificates of occupancy issued, the university had to wait for government to do site inspections. State rules did not allow the school to hire its own building official. The university calculated that resulting delays could cost millions for large construction projects, and they presented their calculations of the costs to Virginia taxpayers in a form that could be easily understood. Although it took a lot more to convince the government to go along with their proposal, this was how the university administrators prepared to launch an initiative to change the governance framework for management and oversight. In a similar fashion, Martha Kegel gathered hard evidence of systemic failure to discredit the way the city of New Orleans was treating its homeless people. While she did not have a specific vision for alternative governance arrangements, she knew that unless efforts to help the homeless were intensified, the population of terminally ill people living on the streets would increase and they would continue to die outdoors. The implementation of an innovative tool, the vulnerability index, helped produce objective scientific data about the deadly medical conditions of the homeless, allowing Kegel to demonstrate that in fact many of the city’s homeless people were terminally ill. These data helped raise awareness that current policy approaches to the problem of homelessness were unsatisfactory, even inhuman, because they

03-2262-5 CH 3:0496-6

9/7/12

2:45 PM

Page 26

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

26

Chess Masters and Acrobats

failed to take the severity of the medical conditions of homeless people into account. By discrediting the level and nature of public support with these data, Kegel changed the approach to homelessness. Another tactic three innovators used to discredit the status quo was to suggest a brighter future. They realized that merely demonstrating how bad things are is not the most effective way to build a case for change. Hermann Scheer, Bère Miesen, and the leadership of the University of Virginia painted a vivid picture of a better tomorrow. When an innovation is introduced and its benefits are highlighted, the present suddenly appears undesirable, and changing course becomes an attractive option. Scheer, for example, saw a climate crisis looming in the twenty-first century, but no one in the German political establishment at that time felt the urge to prevent it. At the same time, the Green movement that promoted solar energy was generally seen as dominated by alternative energy protesters operating outside the establishment. Scheer did not fully build his case for change on the future crisis; when the Green Party suddenly found itself in power after an unexpected election victory, he was prepared. He depicted his plan (partially) as a guarantee for future job creation that would stimulate the economy, and he almost immediately threw a concrete plan on the table. The party took the bait, and Scheer got started. The strategy of discrediting the status quo requires innovators to make an important choice: they have to decide exactly what part of the current state of affairs to disqualify. Do they want to discredit the system as a whole, or do they want to single out specific practices that are particularly dysfunctional? Do they decide to make it personal and put the blame on some specific organizations or individuals, or do they challenge a policy approach instead? The innovators in this book made different calls, depending on their unique circumstances. Some chose to attack the current practice without attacking people or organizations. They were careful not to make enemies by blaming suboptimal outcomes on the incompetence or mistakes of those responsible for the current situation. Professor Hara did not say that many fatal medical errors could be avoided if doctors and nurses did their job right; he just gathered evidence to demonstrate that the system was producing a lot of avoidable errors. By elucidating the outcomes of the system and emphasizing the risks associated with the lack of cooperation and information exchange, he discredited current practice without offending or alienating the people working in the system. Similarly, Johannes Due, the chair of the Committee on Administrative Reform in Denmark, gathered evidence that the administrative structure was not fit to address Denmark’s current and future problems. If he had bluntly blamed the

03-2262-5 CH 3:0496-6

9/7/12

2:45 PM

Page 27

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

The Art of Making a Start

27

second tier of government—the counties, which were supposed to adequately address these problems—for being incompetent, he would have stirred up a lot of resistance. Instead, he focused on the bigger picture, without pointing fingers. Other innovators took an alternative course of action. They did not seem to mind stepping on other people’s toes, and they were certainly not afraid to cause collateral damage on the road forward. Leslie Jacobs, for example, set up a entire statewide accountability system for schools in Louisiana that, for the first time in history, collected and made public the performance scores of individual institutions. Until that point, the state had only calculated the scores of school districts as a whole, making it impossible to target remediation efforts at specific, low-performing institutions. “It personalized failure,” Jacobs said of her accountability system—and it certainly made some school leaders look pretty bad. With the help of the new performance data on individual schools, she was able to now identify the failure of leadership; although Jacobs initially had not envisioned it, ultimately the individual school data also allowed her to make a case for a whole new system for public education.

Leveraging Evidence of Success A second strategy that we found early on in the innovation process concerns leveraging evidence of success while the innovation is still under construction. The problem with most innovations is that there is no certainty that they will produce better outcomes before they are actually implemented. Neither a wellresearched and forcefully argued plan nor a successful pilot project guarantees large-scale success. The projected benefits may look plausible, and logic or common sense may command that current practice should immediately be replaced by the new idea, but still, there is no guarantee that it will actually work. This is why the status quo always has an advantage over the innovation: even if the outcomes of current practice are unimpressive or dissatisfying, conservative bureaucrats in the public sector might still see the status quo as better than a bad bet on a wrong idea. In the absence of hard evidence that the innovation will work, many social innovators that we studied devised strategies to leverage softer, more indirect or circumstantial evidence in support of their case. What can the innovation do or deliver that other approaches cannot? Why exactly is it better? How will it work, and under what conditions? Who will benefit from it and in what ways? Change agents have to gather as much evidence as possible that the innovation will indeed realize a public value proposition and that the desired capacity and support will be well invested.

03-2262-5 CH 3:0496-6

9/7/12

2:45 PM

Page 28

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

28

Chess Masters and Acrobats

Capitalizing on Small Successes Some innovators, like Hara, Peter Nares, and Scheer, started gathering evidence for the success of a new idea during the early phases of the process by documenting all small accomplishments, even preliminary test results. The three innovators purposely took small steps to develop and enrich embryonic ideas. They set up small pilot projects first. They devised and tested prototypes, until finally they felt comfortable testing revised versions in a somewhat broader setting; and they repeated this process again and again. Such an incremental approach enabled them to develop evidence of the efficacy and effectiveness of the innovation during each stage of the process. Peter Nares, a Canadian innovator who set up saving and asset-building programs for low-income earners, used this strategy. He started working with small groups in a pilot setting and only gradually expanded these embryonic projects, while carefully measuring impacts along the way. It sometimes took him years to develop a sound innovation that he believed in. His organization gathered the test results and produced solid reports that included both empirical evidence and an explanation of the research methodology, so that the research was transparent and the findings were scientifically sound. Nares presented those reports to government and other stakeholders when the time was right to ask them to commit to his project. This preparatory work was a necessity, he argued, because “good bureaucrats function based on evidence, and it’s very important to be able to produce that. That is how they work.”2 Such incrementalism is often cited in management literature as a way to deal with technical and political complexity and uncertainty. It is seen as learning by doing. Because, given the complexities of the real world, we cannot anticipate the outcomes of ideas, “we need to try them out in action and learn from experience; based on that learning we may need to modify not only our actions but also the policy idea and the ordinal objectives.”3 Incrementalism is also widely viewed as a way to strengthen the sense of ownership of the innovation among the participants. By demonstrating even small successes each time some progress is made, the innovator can motivate other parties—from decisionmakers to staff on the floor—to support the initiative and create co-ownership.4 Our findings, however, also indicate that working according to a step-by-step process is not only a sound scientific approach to research and development and creation 2. Peter Nares, former executive director, Self-Employment Development Initiatives, personal interview with the authors, Toronto, December 2010. 3. Golden (1990, p. 226). 4. Behn (1988).

03-2262-5 CH 3:0496-6

9/7/12

2:45 PM

Page 29

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

The Art of Making a Start

29

of a broad base of support, it also serves the strategic purpose of gathering the evidence to discredit the status quo. Additionally, we found that during each step in the process, change agents were careful to include third parties to document progress extensively. They arranged for independent, trustworthy organizations, such as think tanks, university research centers, and nonprofits, to lead evaluations of pilot projects. The goal was to have every success certified by authoritative external parties. This lent their innovations credibility with important stakeholders, including the government. Furthermore, they cherished and actively pursued endorsements of partners, beneficiaries, clients, and so on, who were involved in early projects. Evaluations of pilots and stakeholder testimonials do not constitute hard evidence that the innovation will be a success once it has been brought to scale or that it will be better than alternative policy approaches. But if such evidence is impossible to attain (as it usually is), an impressive portfolio with endorsements and temporary evaluations is a good substitute.

Gathering Indirect Evidence Another tactic innovators use to leverage success is to seek indirect evidence that supports their case. Some explore similar innovations that have worked well in related policy fields or in other geographic areas. If the innovator is lucky, the indirect evidence accumulates into a persuasive collection. Hermann Scheer enthusiastically pointed to several countries where solar energy panels had already been produced and tested on a fairly wide scale, thereby countering arguments in Germany that the technology was underdeveloped and thus too shaky to invest in seriously. During the initial parts of the process, when change agents still test and adjust their innovations to make them work better, they can make proactive use of this strategy. In this stage, innovators can deliberately copy and paste elements that have proved successful elsewhere into their project, reusing bits and pieces that can help them build their case. They can use well-established project formats as the basis for otherwise novel approaches; they can design a scale-up process according to plans government officials have approved under similar circumstances; and they can use technology that has already been tested rigorously in another information technology platform. Introducing indirect evidence not only serves to bolster confidence about the potential success of innovations but also can help enhance an innovator’s status as an expert and knowledge broker. If stakeholders find it attractive to be associated with ideas that stem from countries they see as leaders in innovative governance, or to be linked to innovations that leading institutions in

03-2262-5 CH 3:0496-6

9/7/12

2:45 PM

Page 30

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

30

Chess Masters and Acrobats

other policy areas have endorsed, they may find the innovators who are championing and advancing these ideas attractive as well. According to Peter Nares, Canadian civil servants were usually fond of innovations from the United States and the United Kingdom. “If you can attach yourself as a Canadian organization to other organizations abroad that do interesting things, that adds to your credibility,” he said.5 Nares believed that tapping into the experiences of other countries could help advance his innovations. He currently works with an international network of innovators who develop assetbuilding programs for poor people, not only to enable the participants to learn from one another’s experiences but also to encourage them to plunder one another’s archives and pull out any evidence that might help them make a case for change in their own country. Thus introducing circumstantial evidence can help secure an innovator’s reputation as a well-connected and knowledgeable leader in the field even as it helps the innovator make the case for the viability of his or her plans.

The Social Construction of Credibility A related tactic that the innovators frequently employ is what we call “the social construction of credibility.” What we mean by this is that innovators befriend people with a certain status, invent some kind of association for them with their projects, and then use that association to lend credibility to the innovation. Change agents often work to gain the confidence of important stakeholders and leverage their social positions in support of the case for innovation. Especially when innovations are in their infancy, an endorsement or nudge forward from someone with political influence, authoritative expertise, or important connections can be helpful. A step-by-step approach here— creating links with important people every step of the way—works to the innovator’s advantage. Every small success is an opportunity to celebrate, and every celebration is an opportunity to have somebody important toast the success. Nares, who calls himself a relentless incrementalist, continuously approaches new people in various spheres of society at each stage of his projects. With every step he takes, he adds people, for instance, by offering them a seat on an advisory board or a discussion panel. Innovators mobilize social networks to validate the feasibility of an innovation and its potential for success by leveraging past professional accomplishments and one’s own professional reputation. After all, the innovator has to demonstrate that he or she is the right person to carry the undertaking forward; a good plan is sometimes not enough to make a credible case for 5. Nares, interview.

03-2262-5 CH 3:0496-6

9/7/12

2:45 PM

Page 31

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

The Art of Making a Start

31

innovation when working with public sector bureaucracies. That is why innovators work on leveraging evidence not only of a promising innovation but also of a capable innovator. Scheer, in promoting solar energy, knew that to impress stakeholders he would need more than just a great plan. To get support for his project, he had to boost his profile by reminding stakeholders of everything he had done before. He presented his case for solar energy to decisionmakers not just as a good plan but as a good plan developed by a good man. He was not only a respected member of parliament but also a winner of the Right Livelihood Award for his efforts for sustainable energy production. He explicitly crafted his proposals, speeches, and other statements to position himself as the German expert in the field of solar energy (which, in fact, he probably was). So Scheer leveraged the success of his past efforts and the accolades he had received to build a credible case and win support.

Conclusion Social innovators have to walk a tightrope. They want to be engaging and appealing but not so much so that they overwhelm or scare people. They have to sketch a brighter future without appearing to be unrealistic idealists. They must firmly discredit the status quo yet not be so confrontational that they alienate key stakeholders who have a vested interest in the current state of affairs. The innovators featured later in this book navigate this tightrope in different ways; some of them are aggressive power brokers, others are soft-spoken worker bees. They have their own unique talents, style, and tone of voice, and they all face their own specific challenges. At the same time, they all make it easier for others to abandon current practices by discrediting the status quo and to embrace their innovation by leveraging whatever evidence they have of past or future success—even if there is not any yet. They capitalize on small successes, emphasize their own capabilities and track record, and mobilize the credibility and status of others in support of their case. In short, they all have mastered the art of making a start.

04-2262-5 CH 4:0496-6

9/7/12

2:45 PM

Page 32

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

4

Prompting Progress The Art of Moving Things Forward

S

ocial innovation does not happen overnight. Getting started is a major challenge, but certainly not the last. At some point preparation has to meet opportunity, and that is where strategy and tactics come in. If opportunities do not present themselves quickly enough, innovators may have to help their luck a bit by steering the course of events in the right direction. Innovators like those we studied do not wait for progress to happen; they prompt it. Once an innovation process has been set in motion, many of them spend time keeping it in motion and making sure the progress does not get reversed. Setting and keeping the innovation process in motion is a matter of managerial acumen as well as process design. In managing the innovation process, innovators use various strategies and tactics to advance and sustain transformative change. We use the term prompting progress for these strategies, because they help innovators identify and use windows of opportunity to move forward. By “prompting” we mean purposive activity that causes stakeholders to actually move in the desired direction. By “progress” we mean advancing the stage of development, implementation or scaling up of the innovation in practice. To prompt progress, in other words, is to trigger actions and behavior that are conducive to the realization of the case for change. Of course, this term is ours, and we use it for analytical purposes. Innovators refer to the same activity in a variety of ways, most often in terms of metaphors. “The cat was out of the sack,” said Johannes Due about the breakthrough in administrative reform he helped create in Denmark. “We were the dog that caught the bus,” Leslie Jacobs said, characterizing the process that led to the overhaul of the public education system in New Orleans.1 1. Johannes Due, chairman of the Commission on Administrative Structure, personal interview with Jorrit de Jong, Copenhagen, April 2005; Leslie Jacobs, former member,

32

04-2262-5 CH 4:0496-6

9/7/12

2:45 PM

Page 33

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

The Art of Moving Things Forward

33

Managing the Leap of Faith Innovators in the public sector are often held to an impossible standard: they have to present proof of success before they are given the opportunity to obtain the evidence. The people we interviewed, and whose work we studied, know that to get and keep things going, stakeholders ultimately have to make a leap of faith—or multiple ones during various stages of the innovation process. Igniting change therefore also means managing those leaps of faith. If you want someone to jump out of a window, it helps to tell that person that the house is on fire. That is why innovators make efforts to discredit the status quo. But beckoning stakeholders to jump from a burning house is one thing; convincing them to move into another house requires additional efforts. That is why many innovators spend a lot of time reassuring stakeholders. They know they are asking a lot from others and that not everybody will be comfortable with whatever they have set out to do. The accounts of their innovation processes show the different ways they manage the inevitable anxiety that change tends to provoke, but there is also a strategic lesson in their stories: to prompt progress, it is best not to tell the whole truth to everyone all the time. We found that many social innovators, depending on the occasion and their own aspirations, present only part of their ambitions to the stakeholders in their authorizing environments. They are often not completely open about what they are up to and what the implications of their innovations might be. They communicate what is necessary to make the next step, to expand a project, or to engage a particular stakeholder. Our innovators had different reasons for such reticence and discretion. Some did not want to overwhelm or alienate their stakeholders by communicating the bigger picture. Others did not want to complicate the relationship because they felt that certain stakeholders might not want to embrace their vision or might oppose certain elements of their project. They could not afford to trigger alarm bells. Peter Nares, who set up saving and asset-building programs for poor people in Canada, hated the government’s welfare policies. He told us that the system as it existed “[was] close to useless; it suck[ed] the resources right out of you.”2 Government policies took away the tools that people need to gain economic independence. He wanted to redesign the whole system, and he knew

Louisiana State Board of Elementary and Secondary Education, personal interview with authors, New Orleans, April 2010. 2. Peter Nares, former executive director, Self-Employment Development Initiatives, personal interview with authors, Toronto, December 2010.

04-2262-5 CH 4:0496-6

9/7/12

2:45 PM

Page 34

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

34

Chess Masters and Acrobats

exactly how to do it. Yet if Nares were to announce that ambition to every government official he worked with, he would not get much support for his activities, especially given that many of them worked in just the policy area that he so fiercely criticized. So he often kept his assessment of the status quo and his plans for radical change to himself and patiently advocated for adjusting bits and pieces of welfare policies. The innovators knew that their projects posed a threat to vested interests. Moreover, they realized that presenting their enterprises as stepping-stones for systemic change might inspire their allies but embolden conservative bureaucrats who were wary of such undertakings. Their strategy seemed to be this: share grand ambitions with your inner circle and tell other stakeholders just enough to make the project interesting but not so much that it upsets them. After all, systemic change implies a shift of power for some and a loss of value and certainty for others who benefit from the status quo. If Hermann Scheer had trumpeted his ambition solely in terms of pushing fossil energy providers entirely out of the German energy marketplace (something that he vividly dreamed of), he would never have gotten support from the labor unions for his new policy program, attached as they were to traditional energy companies. If Professor Hara had told government officials that he wanted to connect the whole of Japan to his online platform (something he definitely aspired to do), he would never have gotten any budget from them. They would have perceived his vision as too risky, likely to evoke protests in the medical sector against too much government interference. If he had told stakeholders that he could radically change the practice of medicine in Japan, they would have thought he was crazy. Communicating his grand ambitions could have jeopardized his credibility. Many innovators manage the leaps of faith by holding back their wild ambition to change the world. They speak, for example, not in terms of a revolution but in terms of small but interesting improvements to current practice. This is true not only for frontline innovators but also for those working on innovations in governance. While the strategy of holding back makes a lot of sense for the former (when working from the bottom up, it is more difficult for innovators to have a credible plan for full, systemic change), three out of four of the change agents working on innovations in governance held back to some extent. We found this to be remarkable: one would expect that redesign of a governance framework would imply systemic change. Still, the full implications of the administrative reform in Denmark, the turnover of public education in New Orleans, and the new solar energy policy in Germany were never fully communicated to all stakeholders. Perhaps part of the success of these ventures

04-2262-5 CH 4:0496-6

9/7/12

2:45 PM

Page 35

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

The Art of Moving Things Forward

35

can be attributed to the strategic moderation of stakeholder expectations and perceptions with regard to the transition from the old to the new.

Finding Opportunity in Critical Events Social innovators do a lot of waiting. They wait for the right time to pitch their case. They wait for the right time to approach stakeholders for strategic partnerships. They wait for the right time to make a bold move and “go live” with their innovation. They are waiting for just the right moment, when conditions suddenly shift to favor them and their innovations. They are well aware of the importance of such moments and are creative in strategically identifying and using them to prompt progress. Opportunities to move innovation forward come in various shapes and sizes and also in a range of circumstances. Our eight innovators sought and jumped through windows of opportunity when they found themselves in the midst of different kinds of trouble. Two innovators faced indisputable fiscal and economic crisis. The leaders of the University of Virginia were confronted with a state government that had to make billions in unexpected cuts owing to poor bookkeeping and overspending, a situation that seriously threatened the state contribution to the school. Peter Nares acted to help low-income Canadians build assets when the recession of 2007–08 began to affect the whole of Canadian society. Two other innovators, both from New Orleans, were faced with crises that were not widely acknowledged by key stakeholders in their authorizing environments. Martha Kegel, the director of a nonprofit that helped homeless people, knew that many of her clients had severe medical conditions and were at risk of dying on the streets, but she felt that the urgency of the situation had eluded the public eye. “People had become numb,” she said.3 Leslie Jacobs was spurred to action by the deplorable state of New Orleans public schools. Although everyone knew that the situation was critical, no performance data on individual schools were available, making it difficult to break down and analyze the educational problems or to act on them effectively. A third group of innovators confronted national problems: Professor Hara in Japan and Bère Miesen in the Netherlands faced increasing threats to the sustainability of their respective countries’ health care systems: the aging of the population, leading to rising health care costs. Johannes Due faced a challenge to the structure of government in Denmark. Similarly, some parties in 3. Martha Kegel, executive director, Unity of Greater New Orleans, personal interview with authors, New Orleans, April 2010.

04-2262-5 CH 4:0496-6

9/7/12

2:45 PM

Page 36

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

36

Chess Masters and Acrobats

Hermann Scheer’s Germany worried about the country’s dependence on foreign energy sources and the environmental problems generated by the production and consumption of fossil fuels. Yet not all stakeholders in all countries viewed these problems as urgent matters that called for immediate action; nor did they chart a particular path toward the sort of change that the innovators envisioned.

Various Situations, Various Responses Despite their dissimilar circumstances, some innovators made use of critical events in a similar way. Some cases demonstrate that innovators prompted progress while using coinciding ordinary events. Election results that create a political coalition favorable to the innovator’s agenda happened to be especially useful. In Denmark, for example, three ordinary events coincided, none of them very special in or of themselves, but together they became critical. First, parliamentary elections put a new coalition in power that was neither hostile to administrative reform nor particularly eager to promote it. Yet “some younger people of the liberal party [Venstre] got interested in the quality of public services,” innovator Johannes Due recalled. “There was a new spirit, a genuine desire to reinvent the public sector.”4 The second ordinary event was the prime minister’s summer vacation. In his absence, other politicians had room to promote their points of view without comment from the leader. The third element was the summer vacation in general. Because of the slower news cycles, newspapers filled their pages with more or less trivial discussions about subjects that were not particularly urgent. These otherwise unremarkable conditions created room for a relatively unknown politician to talk about a topic of administrative reform that would not have made it into the papers in a busy news cycle. As a result, a public debate about the need for such reform took hold in the newspapers, and by the time the prime minister returned from his vacation, the debate had become too heated to ignore. He appointed a commission, headed by an agent of change, Johannes Due, who instantly recognized the window of opportunity and pushed for reform. In other cases, innovators invested in opening the eyes of particular stakeholders to make them see and take responsibility for what was happening. This was an important follow-up on the strategy of “gathering evidence.” Innovators do not just come up with proof to discredit the status quo; they also purposely approach certain stakeholders who can help them move forward. These parties are deliberately chosen, and the data are presented to them in such a 4. Due, interview.

04-2262-5 CH 4:0496-6

9/7/12

2:45 PM

Page 37

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

The Art of Moving Things Forward

37

way that they will have to react, as the change agents hope that their reaction will set in motion the process toward change.5 Leslie Jacobs tried to involve New Orleans parents in the process of improving public schools. She made performance data of individual schools transparent and educated the local press on how to correctly publicize them to make parents realize what was happening to their children. Her tactic did not work by itself, but it was a first probe. The other example is Martha Kegel, also in New Orleans, who worked to end homelessness. When she came up with data that demonstrated the terrible medical conditions of her clients, she went directly to an unusual ally: the director of a health clinic. She asked for financial support, because, she reasoned, “as a healthcare provider you need to look at using your money to house people. Because health care services aren’t even going to work if they don’t have housing.”6 Another way to employ the strategy (as Nares and Hara did) concerns what we call the “indirect use of a critical event.” By pointing to a related, widely acknowledged problem that can be slightly different from or overlapping with the problem at issue, innovators can generate resources for their own particular innovation. Hara made part of his case for change by pointing to the earthquake in Kobe in 1995, in which more than 6,000 people lost their lives. That event had exposed how poorly organized the medical systems were for sharing patient information. Victims of the earthquake, transported to hospitals outside their own region, were admitted without any personal medical information. A better digital system, Hara argue, could easily connect even the most remote medical centers. On this basis, Hara introduced his own plans for an information technology platform to specific stakeholders. His argument sounded perfectly logical. But in fact it was not Kobe that spurred Hara into action. He initially started working on his innovation to avoid medical malpractice that happened in everyday situations, but he could not directly refer to such errors; that would have been too confrontational and far out of line with medical mores in Japan. He thus chose another point of reference and advanced his cause nevertheless.

The Problem with Crisis The foregoing cases demonstrate that not all innovators make full use of widely acknowledged, visible crises. (For this reason, we use the term critical events rather that crises.) We found that to be surprising, because crisis is the 5. This strategy is similar to what Andrew Van de Ven (1986, p. 591) calls “the management of attention.” 6. Kegel, interview.

04-2262-5 CH 4:0496-6

9/7/12

2:45 PM

Page 38

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

38

Chess Masters and Acrobats

category of critical event that is seen in the management and innovation literature as the ultimate opportunity for change agents. “Never let a good crisis go to waste” has become a famous leadership mantra. It is supposed to mean that good leaders always see a silver lining in adversarial events. In times of crisis, people are looking for leadership, solutions, and change, and therefore crises can be seen as opportunities to introduce innovations. As John Kotter writes in his famous book Leading Change, “Visible crises can be enormously helpful in catching people’s attention and pushing up urgency levels.”7 For an innovator to secure a group’s cooperation in pushing change forward, people have to feel a sense of urgency. Otherwise they simply will not help enact change. Indeed, many of the innovators that we studied acknowledged that a crisis can help them enhance their projects. “The ideal environment for innovation is disasters,” said Peter Nares from Canada. “You have to do something quickly or else people die. There are lots of resources, and it is [a] perfect [moment] for innovators with ideas. People are scared; they are looking for answers, and if you can come in with something that is sensible, they pay attention to it.”8 Not all innovators, however, make use of crises in the way Kotter and others suggest. First, the mantra raises a lot of questions. What exactly is meant by crisis? How big or small does a crisis have to be to prove useful for the purposes of innovation? What if an innovator sees a looming crisis of which few others are aware? How exactly can the crisis be turned to the innovator’s advantage? Second, the innovators told us that they could not afford to sit and wait for a crisis to happen. Hoping for some kind of disaster is not exactly a strategy. Third, we found that even if stakeholders acknowledge that there is a crisis and feel a sense of urgency, they may not assess the nature of the predicament in the same way as the innovator, or may hesitate to draw the same conclusions. Innovators build a sense of urgency around the need for change. They put their authorizing environment on the spot. They make problems more visible, pressing, and significant to those who can act, and they work with a variety of critical events. They construe the critical event in ways that make their innovations seem like adequate remedies, and they incite stakeholders to lend their support right away. Against the backdrop of a critical event, innovations seem not only valuable but also timely. It is as if innovators tell their stakeholders, This is the solution to your problems. Use it or lose it— the time is now. 7. Kotter (1996, p. 45). 8. Nares, interview.

04-2262-5 CH 4:0496-6

9/7/12

2:45 PM

Page 39

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

The Art of Moving Things Forward

39

Making Progress Irreversible Making change is one thing. Making it last is a challenge in its own right. One strategy to keep the process of innovation going is to create a mechanism that makes it difficult to reverse. Social innovators sometimes design mechanisms that pull change forward. Think of the traffic spikes in a parking garage: it is easy to drive over them to enter the garage, but trying to back up over the same spikes will shred the car’s tires. The spikes create a point of no return. And if going back is not possible, going forward becomes the best, perhaps the only, option. Innovators who want to secure progress, avoid regression, and create incentives for forward movement recognize the need for such a device. However, in the realm of social innovation, one cannot simply install traffic spikes. Creating a mechanism that prevents regression requires smart scheming. Here, innovators like Hara, Jacobs, and Scheer use their chess-master capabilities rather than their acrobatic skills.

Positive Path Dependence While developing HelloBaby, the software application for perinatal care, Hara was working on something much bigger: a high-speed digital infrastructure to run applications for electronic exchange of medical data and communication between medical professionals. He called it K-Mix. To his stakeholders, including the director of his hospital and government departments providing funding, he initially presented HelloBaby and K-Mix as a package deal. After all, the HelloBaby application needed a platform to run on. After the initial success, Hara went back to his stakeholders and told them that, as a matter of fact, K-Mix was capable of much more than just running HelloBaby. He pointed out that failure to use the infrastructure for more than one application would be a waste of resources—like building a castle (K-Mix) and using just one room (HelloBaby). Not surprisingly, Hara had a couple of ideas for how to use some of the other rooms in the castle. His grand vision was not merely the application for perinatal care but largescale improvement of health care through medical informatics. By coupling the application and the platform, he locked his authorizing environment in on a particular technology. This lock-in mechanism, or path dependence, is not uncommon in the world of information technology development or construction at large. Path dependence is the tendency for past events to continue influencing the developmental path or trajectory of a technology. It is often evaluated negatively, because it reduces the freedom of decisionmakers to change course. Innovation economists and standardization theorists warn against adopting one

04-2262-5 CH 4:0496-6

9/7/12

2:45 PM

Page 40

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

40

Chess Masters and Acrobats

particular technology or standard too early because there is a risk of choosing the inferior design if the technology is not yet mature. On the other hand, there are positive sides of the same phenomenon: progress is possible precisely because new practices build on old ones.9 From the perspective of an innovator who is confident of his or her plan, path dependence is just one way to anchor results and secure further development. Hara’s presentation of a fait accompli prompted new investments: first, the development of new applications was approved by his superiors and funding partners. Then, once those new applications were running and had become critically important, these stakeholders made further investments in the platform. The interplay between platform development and application development was the mechanism that allowed Hara to propel the innovation process. A similar lock-in effect occurs when an innovator manages to anchor progress in legislation. In terms of path dependence, the constitution is analogous to a software platform and laws to applications. Leslie Jacobs worked hard to pass an amendment to the constitution of the State of Louisiana that later proved to be crucial: it allowed the state to take control of New Orleans public schools from the dysfunctional local school board that had governed the district. This board had long been accused of corruption and mismanagement but was further paralyzed by Hurricane Katrina. It was not able to deal with the crisis and reopen schools after the storm. Many people in New Orleans think that Katrina was the critical event that made this systemic change possible, but Jacobs knew that she and her fellow agents of change could take over at that very moment only because a constitutional provision gave the governor the legal authority to do so. With most of the city evacuated, there would never have been enough citizens to hold the vote necessary for such a constitutional amendment. Only because that authority had been written into the constitution—not just the law—could the change be firmly established. Yes, the innovators in New Orleans found opportunity in crisis, but the legal instruments to allow them to do so had long before been anchored in the constitution.

High Tracks and Low Tracks The execution of the strategy differs from case to case, but there is a general idea underlying the examples: innovators do not concentrate exclusively on making one limited innovation succeed; they also try to influence the context or system in which the innovation is embedded—either a technological system, in Hara’s case, or the governance, in the case of Jacobs and Scheer. The 9. Hommels and Egyedi (2010).

04-2262-5 CH 4:0496-6

9/7/12

2:45 PM

Page 41

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

The Art of Moving Things Forward

41

essence of this strategy is to distinguish between two tracks of the innovation process: the low track, which runs deep in the foundation, like the technology platform or the constitution, and the high track, where visible results of the innovation process occur, such as the implementation of an application, a particular management decision, or the launch of a new project. To anchor results along the higher track, work needs to be done in the lower. But, conversely, to justify fundamental changes in the lower track requires results in the higher track. The genius of some innovators lies in their understanding of the nature of these tracks in their particular situation, how these tracks are related or can be connected, and what these tracks mean to different stakeholders and how they can be influenced. When successful, progress on one track pulls progress in the other forward. For that reason, Hara simultaneously invested in developing a small software application and the infrastructure at large. He and other innovators kept their eyes on two tracks, because they know that accomplishments on one would not last without accomplishments on the other. In this way, their innovation became part of a larger movement toward the change that they envisioned. Hermann Scheer, the German lawmaker, worked with two tracks as well. His high track was a limited 100,000 Roofs Program that made it financially attractive for consumers to put solar panels on their roofs. But he also introduced a law that established a financial framework regulating tariffs for renewable energy. Scheer was aware that the 100,000 Roofs Program had limitations; 100,000 roofs represented a small fraction of the total number of households in Germany. The program also had a set time horizon, so Scheer knew it would end. (But that very fact made the program less vulnerable to attacks from the oil lobby: they also knew that the program would end, so they did not bother attacking it much.) This is how Scheer created the first visible result at a national level on his high track. At the same time, he invested in the low track of the innovation process. To make sure that things would not return to normal after the end of this program, he started working on a law that lowered the price of renewable energy by providing subsidies. After all, 100,000 households with solar panels on their roofs might not be a threat to the fossil energy market as a whole, but it was a substantial number; at least 100,000 people had made an investment in renewable energy. That would have been a large number of voters and taxpayers to let down. He used the success of the 100,000 Roofs Program as a lever to pass legislation on the regulation of tariffs—giving producers and consumers more certainty about the affordability of renewable energy. The success of the program was small enough not to threaten the oil companies and their political friends but big enough to encourage legislation that jump-started

04-2262-5 CH 4:0496-6

9/7/12

2:45 PM

Page 42

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

42

Chess Masters and Acrobats

more systemic change: a permanent law that created fair conditions and incentives for both renewable energy producers and consumers. This example demonstrates that a reversible program on the high track can be much harder to reverse because of the achievements in the low track— which, in turn, creates incentives to initiate and expand programs on the high track. Innovators can build in a clever mechanism to anchor and propel the innovation process. Of course, there is often still a long way to go before a changed practice actually becomes the standard way of doing things; that is why many agents of change at least try to make progress hard to reverse and further development and expansion more likely to happen.

Constructed Irreversibility In an insightful article about the role of standards in innovation processes, Anique Hommels and Tineke Egyedi introduce the concept of constructed irreversibility. In many large technology projects, they argue, points of no return are manufactured. To the uninformed observer, it may seem that serendipity, or a fortuitous course of events, leads to certain outcomes and that at some point there is no way back. However, the authors identify at least two factors that contribute to irreversibility. The first one is path dependence in technology development. As the cases of Jacobs and Scheer indicated, path dependence also holds true for legal design and can be appreciated because it prompts progress. In this book, we evaluate innovations not from a public perspective but from the perspective of a strategic innovator; seen from this angle, creating path dependence is an important strategic device. A second factor is personal commitment. Hommels and Egyedi conclude that personal commitment to a decision, especially when made in public, makes it hard for decisionmakers to reverse the process. “The irreversibility . . . is a constructed irreversibility, shaped by the actions and interactions of several key . . . actors.”10 In their in-depth analysis of a large information technology project, they found that people who invested in the project simply did not see and hear evidence that previous decisions may have been incorrect. This personal commitment concerns both innovators and their stakeholders in the authorizing environment. Once stakeholders publicly decide to support an innovation, or standard, or any big decision, abandoning that position is difficult. They may find it hard to acknowledge that the innovation was not as good as they hoped—avoiding disappointment. It might also be because people in powerful positions do not want to be seen as having poor judgment. 10. Hommels and Egyedi (2010), p. 41.

04-2262-5 CH 4:0496-6

9/7/12

2:45 PM

Page 43

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

The Art of Moving Things Forward

43

Innovators, in their turn, construct mechanisms that make progress irreversible to a greater or lesser extent. These mechanisms are designed to propel the innovation process forward by connecting high and low tracks. But the effectiveness of the mechanisms ultimately depends on stakeholders becoming hooked or trapped. Therefore, the human element can never be underestimated. While constructing irreversibility mechanisms is largely a strategic activity exercised by chess masters, implementing those mechanisms probably requires much tactical skill on the part of innovators vis-à-vis their stakeholders.

Exit Plan Irreversibility not only prompts progress, it also provides innovators with an exit strategy. They cannot and will not stick around forever. If the innovations are to last, and if the innovation process is to go on, innovators ultimately have to become dispensable. In the case of Hermann Scheer, we see the value of a mechanism that makes innovation sustainable. Without his work over several decades, the development of solar energy in Germany would not be where it is now. But because of his strategic foresight, it will continue even now that he has passed away. Of course, the work is never finished, and there is always more to be done to maintain or scale up the innovations. For that reason, Leslie Jacobs stayed on as a member of the state board of education after the major reform had become a reality. It took a few more years to ensure that the novel institutional arrangement she helped create could withstand the volatile political environment in Louisiana. “I did that so that it lasted,” she said, “so that it withstood the test of time through three governors and two parties.” Professor Hara, who was nearing the end of his career when he delivered HelloBaby and K-Mix, had his own motives for making progress irreversible. He knew that mistakes would not be tolerated, Japan being Japan and the medical world being the medical world. He did not worry about that for his own sake, though: “I am at the end of my career, and I am a good gynecologist, so if I fail in informatics, I can still deliver babies.”11

11. Jacobs, interview; Kazuhiro Hara, director of the Department of Medical Informatics, Kagawa University Hospital, Shikoku, Japan, personal interview with Jorrit de Jong, Kagawa, July 2005.

05-2262-5 CH 5:0496-6

9/7/12

2:46 PM

Page 44

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

5

Managing Meaning The Art of Making Sense

S

ocial innovators do a lot of talking—not necessarily because they want to but because they have to. An innovative idea rarely speaks for itself. It needs to be articulated and polished to appeal to constituents. This involves more than simply selling the idea or crafting a perfect sales pitch. It requires talking with all the key stakeholders in the authorizing environment whose resources and other kinds of support the innovator needs, such as government officials, private donors, leaders of nonprofits, elected politicians, opinion makers, union leaders, members of the public that the innovation aims to address—in short, everyone who can help or hinder the project. And it is not a simple one-way communication. Talking about change involves opening up to the ideas and concerns of others, taking in their views and suggestions, and modifying or even reimagining the innovation in terms of what is valuable or feasible. After all, social innovators can move forward only if they obtain legitimacy and support. Their innovation may be the most obvious and intelligent solution to them, but they will have to persuade others that it is meaningful. Benefits of innovations can often be expressed in terms of performance and outcome metrics. Meaning, however, relates to identity, values, and perceptions and requires cognitive as well as emotional work. Change—and innovation, for that matter—has the potential for multiple meanings and corresponding public value propositions. Innovators strategically interpret and communicate the public value propositions of their undertakings. We call this “managing meaning.” Scheer’s ambition to increase the use of solar energy, for instance, could be perceived as an innovative attempt to alter climate change as well as an effort to create a new branch of industry that gen-

44

05-2262-5 CH 5:0496-6

9/7/12

2:46 PM

Page 45

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

The Art of Making Sense

45

erates new jobs. These meanings did not exclude each other; Scheer’s innovation conveyed both meanings at the same time.1 Karl Weick has observed that there is “a richness and multiplicity of meanings that can be superimposed on a situation.”2 There is no such thing as one fixed meaning of an innovation; stakeholders may each make sense of its public value in their own way. Some may share the views of the original innovator; some may see different value in it from another perspective; and others may appreciate the project but hesitate to support it because they think it does not fit into the mission of their organization. Innovators need to manage the process of sense making: they need to guide stakeholders toward a favorable interpretation (and course of action). As Meryl Libbey has written, “Innovators leverage and sustain their innovation by aggressively managing meaning.”3

Framing Conversations Let us call all the talks, communications, or encounters innovators have with their stakeholders “conversations.” Conversations can be formal or informal, written or in person, bilateral or multilateral, extended over time or one time only, face-to-face or public, through debate in the media. They can involve presenting ideas, discussing partnerships, negotiating room to experiment, digesting comments, writing op-eds, and so forth. Key to these conversations is that they allow for an exchange of ideas between the participants about the issues, interests, and opinions that they have with regard to the value of the innovator’s undertakings. But for the innovator, these interactions are not entirely open ended; they are aimed at getting stakeholders on board. To attract stakeholders, innovators do not just converse with them, they also frame the interaction. This means that they strategically structure the conversation for the purpose of sense making and creating commitment: innovators frame the exchange of ideas in a way that makes their innovation look like a sensible project and a public value proposition worthy of support. They actively promote a point of view that speaks to the interests and motivations of the other participants. As Zhongdang Pan and Gerald Kosicki have 1. An innovation is considered to be an undertaking that becomes meaningful through an interactive process of interpretation. There is no such thing as meaning in itself. 2. Weick (1979, p. 174). 3. Libbey (1994, p. 116). Throughout literature on innovation and change management, the topic of sense making has received attention; see, for example, Kim (1997); Lefebvre and Rochlin (1997); Van de Ven, Agle, and Poole (1989).

05-2262-5 CH 5:0496-6

9/7/12

2:46 PM

Page 46

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

46

Chess Masters and Acrobats

noted, framing is the act of strategically participating in a deliberation.4 A frame presents a key idea about or a central point of view on reality that assigns meaning to it and is communicated for the strategic purposes of getting the stakeholder on board. Hermann Scheer, for example, carefully framed discussions with key stakeholders in Germany. He had to appeal to the workers’ unions because without their support, his policy program to jump-start solar energy production would go nowhere. The unions had steadfastly framed the public debate about renewable energy in terms of job loss. They saw changes in energy policy as a threat to their members’ job security in the fossil energy sector, and they were quick to oppose Scheer’s plan. Scheer wanted to move the conversation with the unions in another direction. He started talking about solar energy as a new branch of industry, full of opportunities for economic growth. He stayed close to his stakeholders’ concerns, but he turned the conversation about renewable energy around by framing it in terms of job creation. He presented the unions with calculations of possible job numbers, based on examples of emerging solar industries abroad. In so doing, he made his plan appear to be a solution to, rather than a cause of, the perceived problems. This made more sense to the unions, and ultimately they gave up resistance. To gather operational capacity, legitimacy, and support, a social innovator like Scheer establishes partnerships with the parties that can provide those things. Hence framing can be understood as strategically structuring the exchange of ideas between those participating in the conversation to produce a shared sense of meaning. In interactions with their stakeholders, innovators make strategic decisions about “which frame to sponsor, how to sponsor it, and how to expand its appeal.”5 What ultimately comes out of those exchanges is a concrete public value proposition—an understanding about what the project aims to achieve and for whom—that is embedded in a meaningful frame. If innovating were an easy job, a single conversation would be enough to win the support of all stakeholders. The innovator would then simply invite all partners to the conference table and make a convincing claim packaged in a compelling frame that everyone would endorse. So Scheer’s frame of job creation would attract not only union leaders but also politicians, energy providers, and individual consumers. Such broad endorsement would allow the innovator to move forward in the confidence that he or she has partners 4. Pan and Kosicki (2001) applied framing theory to public policy debates; we use their concepts mutatis mutandis in the context of social innovation. 5. Pan and Kosicki (2001), p. 39.

05-2262-5 CH 5:0496-6

9/7/12

2:46 PM

Page 47

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

The Art of Making Sense

47

who would be inspired by the same vision of progress and would evaluate the meaning of the innovation accordingly. In this hypothetical case, the task would be to get it right once and for all; one strong frame would put the innovator in business. In reality, not everyone is persuaded by the same frame. Bère Miesen, for example, a Dutch psychologist who created an innovation for Alzheimer patients and their caretakers, learned this the hard way. Miesen framed Alzheimer disease as a tragic social and psychological problem that required more than medical solutions. He had sound scientific evidence for his views. But his more conventional colleagues at Leiden University were not as excited as Miesen and refused to accept his novel and extradisciplinary take on the condition. They understood Alzheimer’s solely in medical terms, as the medical world had for decades, and they had no reason or intention to change their ways. The conversation got stuck, and Miesen got frustrated—until he approached a regional Alzheimer’s association. The organization was enthusiastic about Miesen’s approach and agreed to support it. It dawned on Miesen that he had been barking up the wrong tree. Innovators typically have to deal with a variety of stakeholders with particular interests and perspectives. Some of them may have articulate views and clear preferences, but others may discover their concerns or preferences only through deliberation. After all, innovations represent novelty and change. People need some time to figure out the pros and cons of the innovation and what the changes would mean to them. This makes it that much harder—and that much more important—to manage meaning. Innovators cannot expect stakeholders to fall for their opening bid, and they cannot expect their partners’ perspectives and preferences to be stable forever. To add to these challenges, the requirements for an innovation may well change over time, so that in different stages of progress innovators have to involve new stakeholders. Not all stakeholders will be attracted to the initial value proposition or to the way the conversation has been structured. With every new stakeholder, new step in the process, or new development in the environment, innovators can be presented with new challenges to make sense to their partners. It is usually not enough to get it right once and move on; innovators need to get it right again and again. If conversations change, innovators need to adjust. If circumstances change, innovators must change the conversations to adapt. Some stakeholders can have rigid institutional understandings of problems, solutions, and public value—understandings that cannot be easily flipped around, even if the innovator is a skillful and inspired frame maker.

05-2262-5 CH 5:0496-6

9/7/12

2:46 PM

Page 48

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

48

Chess Masters and Acrobats

Public sector agencies, especially government bureaucracies, work with policy frames that underlie how they define and approach their problems, stakeholders, and budgets. These are all laid down in mission statements, policy mandates, and programs. Bureaucrats are held accountable for spending taxpayers’ money accordingly. Consequently, these agencies are not able to simply switch course and redirect resources toward innovative projects when they see an interesting opportunity. Bureaucracies cannot just go ahead and innovate on a whim—and innovators have to deal with that. Peter Nares, who set up novel projects to help low-income Canadians gain economic independence, knew all about this issue. The central government had framed the problem of poverty as an income issue, Nares reported, meaning that government’s solutions were framed in terms of income as well. This poverty frame led the government to design and fund income-focused responses— increasing rental subsidies, tax credits, and so forth—a policy that boiled down to determining “how much people need to maintain the basic standard of living, providing them with just enough money to enable them to avoid destitution,” argued Nares.6 Rather, he treated poverty as a form of economic dependency that deprived people of the opportunity to be self-sufficient. He believed in an alternative approach to poverty alleviation that included helping low-income earners build assets. However, the income frame underlying the government’s approach to poverty could not be changed overnight. It had been around for decades, it had become firmly institutionalized, and billions of dollars had been spent accordingly. Nares did not have enough power to overthrow it. He had to work with it, or around it, because he needed support from government to make his undertakings a success.

Serial Framing and Parallel Framing We have now identified two major difficulties for managers of meaning: first, there are many different actors who weigh in on the conversation, and, second, some of these actors may have inarticulate, inflexible, or unstable preferences. For all these reasons, a frame cannot simply be imposed.7 Social innovators have to be versatile to move the conversation ahead. The need to form a coalition with their stakeholders provides an incentive for them to increase their 6. Peter Nares, former executive director of Self-Employment Development Initiatives, personal interview with authors, Toronto, December 2008. 7. There are many reasons for not being able to simply “create” and push frames. To be successful, frames have to resonate with existing values, beliefs, preferences, and so forth, making the frame maker highly dependent on the interpretation schemata of others.

05-2262-5 CH 5:0496-6

9/7/12

2:46 PM

Page 49

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

The Art of Making Sense

49

flexibility.8 Depending on the circumstances, they can introduce a variety of frames and make their project meaningful in multiple ways, by taking the liberty to temporarily choose a frame that resonates most with the party that happens to sit at the table at that time. The conversations that innovators are involved in may not all have the same structure and outcome, and the concrete public value propositions that ultimately derive from those exchanges can be surprisingly diverse. Some strategic innovators even creatively manage meaning by making smart use of the multiplicity in their environment. Professor Hara framed his online platform for perinatal care in various ways to gather budgetary funds for its early development. He made it appealing to the provincial government by presenting it as a flagship project that could help the region stand out as innovative and forward looking. To the Ministry of Agriculture, he made a different proposition. He presented his innovation as an example of telemedicine—connecting farmers in remote areas to health care providers through modern technology. Hara’s platform was a way to fulfill the department’s promise to farmers to provide accessible medical services. Was it far fetched to market an online perinatal care platform as a first step toward telemedicine? Not in Hara’s mind. Hara had trouble getting funds from the Ministry of Health, so he partnered with other agencies that were more amenable to his ideas. That involved selling the same idea in different ways to different parties. Hara never changed the core idea or even the application of his innovation; he just changed the way the innovation was perceived. What Hara did can be understood as “parallel framing,” that is, introducing multiple frames during the same stage of the innovation process, thereby differentiating the meanings of the innovation to attract various stakeholders. Scheer (in Germany) and Nares (in Canada) used the very same tactics. Other innovators, such as Martha Kegel (in the United States) and Hara (in Japan), whose framing creativity seems boundless, switched frames when new developments occurred or moved from one frame to another over time. We call this tactic “serial framing”: introducing multiple frames over time with the same purpose in mind. The case of the University of Virginia provides a good example of serial framing. The university leadership took the initiative to change the laws that governed public higher education in the state to increase the school’s autonomy. The school proposed a trade-off: the university would receive less money from the state in exchange for more autonomy in operational and financial 8. Pan and Kosicki (2001, p. 49).

05-2262-5 CH 5:0496-6

9/7/12

2:46 PM

Page 50

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

50

Chess Masters and Acrobats

management. The university presented the proposal to the legislators and the general public in terms of common sense and backed it up with financial estimates to demonstrate the potential benefits for the state’s budget. Many Virginians and their representatives, however, did not like the sound of this. They valued the university as their top-notch public institution and were afraid that this innovation would be the first step on the road to privatization. Over the course of the process, university leadership adopted another frame and presented the legislative change in terms of improving the school’s ability to serve the public interest while upholding the spirit of public service. By adopting a new frame, the school managed to overcome the criticism and gather broad public support for an impressive piece of institutional reform. To align a wide range of stakeholders, many strategic innovators employ multiple frames simultaneously, sequentially, or both. Some change their tune in the course of conversations and end up with a different frame from the one they used when they began. Others make a tailored value proposition up front while talking to the first stakeholder, taking into account the stakeholder’s specific concerns, and arrive at another value proposition while talking to a second party. Through conversations with their stakeholders, innovators creatively explore the multiple dimensions of value that make up what Mark Moore calls the “comprehensive public value proposition”: they make good use of the rich variety of publics and meanings that their innovation can address or entail.9 Not all innovators do all of this all the time, but the case studies in this book demonstrate that all change agents are involved in some flexible form of managing meaning. They never stop envisioning, framing, listening, and rephrasing plans.

Speaking with Authority The freedom to strategically structure conversations has its limits. Social innovators cannot frame ad libitum. An innovator’s framing authority is fairly limited. Someone with framing authority can put forth an interpretation, or, to use Karl Weick’s wording, superimpose meaning on a situation in a way that is worthy of acceptance.10 We found, somewhat surprisingly, that this kind of authority does not necessarily derive from a person’s official or social position but rather arises from the quality of a person’s communications.11 The author9. Unfortunately the book in which this term is mentioned has not been published yet (Moore, forthcoming, chap. 2). 10. Weick (1979). 11. Friedrich (1958).

05-2262-5 CH 5:0496-6

9/7/12

2:46 PM

Page 51

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

The Art of Making Sense

51

ity of our eight innovators is about “the development of a way of seeing things that can be, and indeed is, taken up by others and which results in the acceptance of a particular line of thinking and acting.”12 Framing authority requires the communication skills to convince others to accept one’s perspective and endorse one’s actions. More formal power or a more prominent position at the system level does not automatically convey more framing authority on an innovator. Not a single innovator in our study could simply dominate conversations with stakeholders. Hermann Scheer, for example, being a member of parliament and an experienced politician, carried plenty of personal authority. He had been involved in the promotion of renewable energy for decades, was a successful “green” entrepreneur, and had won the prestigious Right Livelihood Award for his commitment to the cause in 1999.13 Scheer had a great reputation to build on. But he did not have the power to make others accept his ideas and plans. He had to stay close to the particular interests of the workers’ unions, for example. The innovator could not get anywhere with a frame that did not address workers’ worries over job losses. Arguments about the necessity of green energy to save the planet would have been unfruitful, since they would not have dispelled the concerns that fueled the unions’ opposition. On the other hand, the case studies also indicate that even grassroots innovators, who lack the public reputation of someone like Scheer, can carry substantial framing authority. No social innovator stands empty handed—not even those operating in the lower echelons of the power pyramid. Innovators who cannot push aside the existing frames that underlie legislation, budgets, policies, and public debates can still direct the conversation and successfully promote their take on the situation and the best course of action. Martha Kegel, for example, who led an organization that helped the homeless, depended heavily on government funding and did not have formal control over the allocation of these funds. Kegel knew that the resources of the government housing programs that could help her numerous clients were exhausted. After administering a medical survey, she found that many of her clients were suffering from deadly medical conditions (such as HIV/AIDS and cancer). With this information, she was able to reframe the conversation about her clients in terms of medical urgency. Her clients were standing on their last legs, suffering from many potentially deadly conditions. Before her intervention, the political and public debate about homelessness had been dominated by negative sentiments, and giving help to the homeless was often 12. Hajer (2009, p. 22). 13. Commonly referred to as the Alternative Nobel Prize.

05-2262-5 CH 5:0496-6

9/7/12

2:46 PM

Page 52

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

52

Chess Masters and Acrobats

depicted as creating a dependent class. By switching to an alternative frame, Kegel was able to tap into a government budget that had been earmarked to serve those in urgent medical need. Kegel chose a frame that redefined the existing support program. She was still providing services to the same people, but now that they were categorized as chronically ill or dying on the streets, rather than homeless, she could secure political and financial support. What exactly do social innovators with framing authority do? Some innovators, such as Kegel, use techniques that could be called “frame adoption.”14 They tap into a preexisting frame that has already been accepted and used by their partners. Frame adoption is a tactic that consists of taking up a frame that evokes a meaning that is already fully recognized by others. Other innovators, like Scheer, adopt preexisting frames of their stakeholders to a certain limited extent and give them a creative twist. They go along with their stakeholders’ frame and recognize their issues—in Scheer’s case, the unions’ concerns about job loss—until the two parties reach a level of mutual understanding. By establishing common ground—in Scheer’s case, the understanding that jobs are indeed crucial—these innovators continue to reason within the same frame but shift direction slightly, leading the other participants by the hand toward a different interpretation of the innovation’s meaning. This tactic could be called “frame bending”: altering perceptions without a sharp break from the other participant’s previous values and beliefs while continuing to reason with the existing frame of reference.15

Involving New Stakeholders Participants in conversations define conversations, and the reverse is also true. Conversations can change when newcomers suddenly make their appearance. Innovators who need to amend the conversation, but lack the ability to do so by themselves, can mobilize others to speak up and weigh in. A final tactic in the field of managing meaning that we found is to invite to the table new stakeholders who can help. But to do so, innovators must offer a compelling reason for new stakeholders to get involved. The case of Nares, but also those of Jacobs, Hara, and, to a lesser extent, the University of Virginia, demonstrate that innovators can benefit from the involvement of new stakehold14. De Dreu, Emans, and Van de Vliert (1992). The original notion of frame adoption has been developed in the context of negotiation theory, in relation to “gain frames” and “loss frames.” 15. David Nadler and Michael Tushman (1989) use this concept in relation to organizational change and leadership; we use this concept mutatis mutandis in the context of social innovation.

05-2262-5 CH 5:0496-6

9/7/12

2:46 PM

Page 53

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

The Art of Making Sense

53

ers.16 By redefining the problem and reframing the conversation—taking the new definition of the problem as a starting point—innovators can create novel opportunities. Peter Nares employed this tactic successfully. Nares opposed the government’s existing approach to poverty alleviation. Rather than framing poverty as an income issue, he spoke of it as a matter of economic dependency. This particular frame made people consider solutions to the problem in terms of independency. If low-income earners have assets of their own, Nares reasoned, they can create opportunities for themselves instead of relying on state support forever. The notion of asset building is of interest to banks, especially those serving individual clients with relatively modest means. By framing the solution to poverty as economic independency through asset building, Nares could appeal to financial institutions to take part in the conversation, giving him the opportunity to ask them to fund his projects. Creating opportunities by inviting new stakeholders into the conversation does not imply that such overtures represent sheer opportunism. Nares, for example, was a committed innovator who believed in giving people a chance. He did not talk to banks merely to obtain resources: he truly believed that both his clients and the banks could benefit from the involvement of the latter in his proposed asset-building programs. He also believed that poverty could only be overcome through the joint effort of all sectors in society, public and private alike. So, yes, innovators are opportunistic, if pejorative connotations of the term are removed. Driven by values and ideals, they cooperate with others not just as a means to accomplish their own goals but also as allies in a joint effort for the common good. They often walk a fine line, though. If they are too blunt, or too smooth, or move too quickly, their detractors may accuse them of opportunism and manipulation. Their ability to express their genuine motivations will influence how others judge them. If they remain sincere, open, and responsive, the very same strategies and tactics will be evaluated in a positive light.

Conclusion Innovators’ projects have to make sense to everyone around them. To bring this about, they manage meaning by structuring conversations. The strategic importance of those interactions cannot be overstated. The challenge to innovators is not to push a message but to listen carefully and creatively and to 16. The University of Virginia leadership actually did not invite the new multitude of stakeholders: the case study demonstrates that the governor invited them for dinner.

05-2262-5 CH 5:0496-6

9/7/12

2:46 PM

Page 54

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

54

Chess Masters and Acrobats

marry new ideas to existing ones. The eight social innovators we observed are good frame makers in the sense that they have a razor-sharp understanding of the perspectives and motivations of the stakeholders and what their innovation plans mean or could mean to them. Choosing a frame that provides common ground enables agents of change to build partnerships and a shared sense of purpose. Framing can be understood as a strategy to align one’s authorizing environment with one’s own innovative ambitions through structured stakeholder conversations, resulting in firmly supported public value propositions and the generation of the necessary operational capacity to move forward. In seeking this end, many innovators do not begin with one core public value proposition that reconciles different stakeholders’ interests; rather, they arrive, after a process of deliberations, at a variety of value propositions specifically tailored to various stakeholders that sometimes have in common only the actual innovation. Some innovators steadfastly try to direct the conversation, while others fully adopt existing frames that speak to those whose support is needed. The art of making sense entails many such tactical choices. Either way, social innovation involves more than making improvements; a large part of the work is managing their meaning.

06-2262-5 CH 6:0496-6

9/7/12

2:46 PM

Page 55

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

part ii

Frontline Innovations

06-2262-5 CH 6:0496-6

9/7/12

2:46 PM

Page 56

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

06-2262-5 CH 6:0496-6

9/7/12

2:46 PM

Page 57

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

6

Under the Radar Medical Informatics in Japan

O

n September 6, 2006, the people of Japan breathed a collective sigh of relief. Princess Kiko had given birth to a healthy baby boy. Although the imperial law dictating that only boys may become emperor had come under scrutiny after forty-one years without a male birth in the imperial family, the people had waited anxiously for the birth of a male heir to the current emperor’s throne. In the case of this important birth, the imperial family had done everything in its power to ensure that nothing would go wrong. The Imperial Household Agency and Princess Kiko had chosen Aiiku Hospital in Tokyo for the delivery. The hospital was a high-ranking private clinic, known for its capacity to deal with emergency deliveries, its outstanding medical care, and its excellent service to patients. Aiiku Hospital also used state-of-theart technology, including a software program for sharing medical data called HelloBaby. HelloBaby is a web-based portal through which general physicians and nurses can enter, update, and access data on mothers and their unborn children. This account is based on a case study conducted by Jorrit de Jong, Noor Huijboom, and Arre Zuurmond. Early research was cofunded by the Alliance for Vital Governance (InAxis) and the authors, and then by the Lecturer in Innovation at HAN University, the Netherlands. The authors are most grateful to Noor Huijboom, Albert Jan Kruiter, Floor van Dijk, Bas Valckx, Sebastiaan Rust, Rik Schurmann, Femke Smulders, Arco Strop, and the Netherlands-Japan Institute in Tokyo for their advice and assistance. In addition to interviewees quoted in this chapter, respondents for this case study were Mr. Kanbayashi, former civil servant, Kagawa Prefecture; Dr. Myake, plastic surgeon and chief executive officer, Myake Medical Center, Takamatsu; and Yarime Masaru, senior research fellow, National Institute of Science and Technology Policy, Ministry of Education, Culture, Sports, and Technology, Tokyo. These interviews were conducted in spring 2005.

57

06-2262-5 CH 6:0496-6

9/7/12

2:46 PM

Page 58

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

58

Frontline Innovations

When pregnant women check in at a hospital that uses HelloBaby, their medical histories become immediately accessible to doctors. HelloBaby makes communication between medical professionals across organizational boundaries simple, accurate, and instantaneous. It also improves the health and safety of mothers and newborns. Women experiencing complications during delivery often need to be transported to hospitals with specialized care. In these emergency situations, a doctor can give colleagues in the other hospital or unit immediate access to the medical history of the mother and child, allowing them to prepare for treatment even before the patient arrives. HelloBaby also increases efficiency in busy medical practices and reduces the costs of administration. HelloBaby was an initiative of Professor Kazuhiro Hara, a gynecologist and the director of medical informatics at the Kagawa University Hospital, located on the island of Shikoku. Hara is a man of few words and many achievements. For decades, he has quietly pursued a grand vision for reinventing health care. He has long believed that technological innovation can make health care better and cheaper. As a young doctor working in Germany, he was part of a team that created ultrasound technology for ob-gyn practices. His interest in technology-enabled innovation continued after his return to Japan. While building a reputation as a gynecologist in his own country, he also built up considerable expertise as an inventor of new equipment and software for doctors and patients. In HelloBaby, he brought together his expertise in gynecology and medical informatics.

Shortcomings of the Present System Doctors and other professionals in the health care sector share information about patients every day. They often do so, as they have since the beginning of modern medicine, on paper. Using this information is a relatively slow process that can cause various miscommunications and mistakes in the transfer of information, leading to inefficiency and inaccuracy. Furthermore, in relying on their own paper files, medical professionals often miss opportunities to make good use of one another’s data or judgment. Generally speaking, doctors’ working processes and administration are organized around their own area of expertise; every kind of doctor has a particular view on the patient, with corresponding taxonomies and protocols: the radiologist thinks in X-rays, the pharmacist thinks in chemical formulas, and the surgeon thinks in incisions and stitches. This can lead to a fragmented image of the patient, inefficient and ineffective communication, time-

06-2262-5 CH 6:0496-6

9/7/12

2:46 PM

Page 59

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Medical Informatics in Japan

59

consuming and unnecessary procedures, and mistakes varying from minor miscommunications to fatal errors. Increasingly, medical professionals are learning that there are alternatives to these old working habits. Doctors and other health care providers can use information technology (IT) applications to share medical information. Some innovations, like HelloBaby, create electronic health or patient records that allow workers to file patient data digitally, which can then be read, updated, and adjusted by several partners in a health care network. Other information systems allow hospitals and medical professionals to exchange information about patient discharges and send discharge letters electronically. There are also, for example, radiological information systems available that consist of a read-only database with pictures and information.

Rising Health Care Costs Such IT systems not only allow medical professionals to share information and work more efficiently but also have the potential to address broader socioeconomic problems. First (and perhaps most enticingly), innovations in information technology could help reduce health care costs. The capacity for rapid exchange and sharing of information among medical professionals over the Internet could lead to more efficient resource allocation. For example, if doctors were able to send X-rays to a remote data center for analysis, the hospital would be saved the cost of storing data internally. One center could provide analytic services for a whole region. Health care costs are a particular concern in many developed countries, such as Japan, where aging populations confront the government with steep rises in the cost of care. The elderly (those over the age of sixty-five) require not only more frequent care but also specialized services for the conditions that come with aging. The elderly no longer pay income taxes or contribute to economic growth as part of the national workforce, but they require enormous health care expenditures. As a report about Japan’s aging population notes, “With a birth rate . . . well below the level of 2.1% necessary to replace the population, and no prospect of a drastic improvement in the rate, [a leading research center] predicts that the elderly will account for more than one third (33.7%) of the total population by 2035, and for one out of every 2.5 people by 2055.”1 These facts present a clear challenge: reduce Japan’s health care costs without sacrificing the quality of care. 1. This center is the National Institute of Population and Social Security Research. Economist Intelligence Unit (2010, p. 5).

06-2262-5 CH 6:0496-6

9/7/12

2:46 PM

Page 60

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

60

Frontline Innovations

Impeded Access A second problem that innovations in medical informatics could address is access to health care. In many countries, including Japan, all citizens are entitled to health care. Mandatory insurance and universal access are at the core of the Japanese national health care system. Since the 1960s, virtually all Japanese have been covered either by employers or the government.2 Despite this, in some parts of Japan, especially in rural areas where the population is scattered, health care providers and their patients have difficulty reaching each other. In the prefecture of Kagawa, for example, the majority of residents live on the island of Shikoku in the capital city of Takamatsu, but many others live on the 110 small coastal islands in Kagawa’s jurisdiction. Every time doctors have to travel to the islands, the costs of treatment increase considerably. When such patients need specialized care, they face additional barriers to access because many local health facilities lack the necessary specialists and equipment. Medical informatics could help doctors provide basic and specialized health care for all citizens, even those who live far away from the appropriate medical facilities. A patient on an island in Kagawa could use a mobile telephone or a webcam and a fast Internet connection to exchange information with his or her physician. This kind of telemedicine could help manage health conditions without incurring additional travel expenses. Information technology innovations can lead to a more efficient use of health care resources—and thereby reduced costs—while improving access to health care for patients in remote areas and diminishing disparities in the level of health care in different regions. “Health care can improve, both in terms of effectiveness and efficiency,” said Hara. “Through remote consulting, specialization can be enforced. Doctors can easily consult each other on difficult cases, so they don’t need to be specialized in everything. Waiting lists can shortened, logistics can improve, and administrative burdens can be diminished by working digitally. So there can be many benefits in innovations in medical informatics.”3

Barriers to Innovation Given the potential for improvement that new technologies offer, one would expect the demand for IT applications in medicine to be high. However, in the 2. Fahs (1993, p. vii). 3. Dr. Kazuhiro Hara, gynecologist and director of the Department of Medical Informatics, Kagawa University Hospital, Shikoku, personal interview with Jorrit de Jong, Kagawa, July 2005. All quotations not otherwise attributed are from this interview.

06-2262-5 CH 6:0496-6

9/7/12

2:46 PM

Page 61

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Medical Informatics in Japan

61

1990s, when Hara started innovating, pioneering new methods in the Japanese health care sector was far from easy. Despite the obvious need for change, anyone who aspired to break new ground in this field faced strong resistance and challenges—especially when the proposed changes concerned sharing medical information among peers.

Risk Aversion In the Japanese medical sector, changes were often perceived as risky: public opinion deemed medical errors unacceptable. Hence to many medical professionals, experiments and innovations on the work floor, such as implementing a new IT system, seemed fraught with peril. In the early 1990s, medical malpractice was considered a criminal matter. There were many sanctions for the crime of professional negligence causing injury or death. The criminalization of medical malpractice made self-reporting of errors unlikely; doctors did not want to admit mistakes for fear of prosecution. “The problem is that many physicians refuse to open their files to their colleagues,” a professor at a medical center in Tokyo explained. “The Japanese medical culture is quite protective.”4

Professional Autonomy Peer review in the medical sector was not standard practice: that is, doctors did not comment on one another’s professional activities.5 Because they had strong incentives to remain silent about their own errors, doctors could not learn from one another’s mistakes. Lack of peer review encouraged a culture of punitive whistle blowing, and patients started to look for reviews of doctors’ performance from players outside the medical establishment, such as the media or the police, though these parties were not ideally suited for creating a culture of accountability in the medical system.6

Threat of Exposure As medical errors became standard front-page news, the threat of publicity and the resulting public outrage further ensured doctors’ silence. Worse, the constant threat of publicity encouraged active cover-ups; doctors might report to the family of the deceased that death occurred from the natural progress of disease rather than expose their possible mistakes to scrutiny. Whistleblowers occasionally revealed these cover-ups; a nurse, for example, who had been 4. Professor Akiyama, International Medical Centre, Tokyo, personal interview with Jorrit de Jong, Tokyo, July 2005. 5. In the twenty-first century the situation has changed. 6. Leflar and Iwata (2005). Also confirmed by several personal interviews in spring 2005.

06-2262-5 CH 6:0496-6

9/7/12

2:46 PM

Page 62

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

62

Frontline Innovations

badly treated by his or her supervising physician might call the media to report malpractice. The media report would lead to police investigations, often with the involvement of the deceased patient’s family, and the drama would unfold before the eyes of a curious nation eager to assign blame.7 Medical professionals were frightened of “the whistleblowers, the media, and the police.”8 In such an environment, an innovation in digital information sharing was threatening because it could force medical professionals to open their practices to the scrutiny of their peers.

Threat to Harmony Furthermore, innovation in general was at odds with the hierarchical social structures that characterize many Japanese professional environments.9 “In general, Japanese culture is characterized by harmony,” said a professor from a Tokyo medical center. “Any new system is easily perceived as a threat to the ancient harmony with major companies and politics, especially an IT system for sharing information that actually demands some kind of reform, because it requires doctors to cooperate and open their files.”10 This social-institutional environment was not conducive to medical innovation. As a result, an innovator like Hara, with ambitions to introduce a system to share information digitally, could not simply be given an all-encompassing mandate for crossboundary information exchange. He would have to get permission from all responsible officials in all pillars or organizations involved.

Fragmented System There was another, practical matter that stood in the way of efforts to share information digitally: the fragmentary nature of Japan’s health care system.11 The health care system in Japan consisted of a complex and heterogeneous network of health care providers—a constellation of large academic hospitals, local pharmacies, independent primary care clinics, small laboratories, and various other facilities. Although there was a national health care system and strong government regulation of health care financing, the delivery of care was left partly to medical professionals, who created their own units, systems, and 7. Feltman (2009); Leflar and Iwata (2005, p. 189); World Health Organization (2005); M. Yamaguchi, “Medical Errors Outrage Japan,” Associated Press, April 17, 1999. 8. Leflar and Iwata (2005, p. 46). 9. “Though Japan has a reputation for technological innovation, its top innovators note the need for broad changes to the way innovation is approached. Many of the issues are cultural, rather than regulatory.” Economist Intelligence Unit (2010, pp. 3, 9). 10. Akiyama, interview. 11. Economist Intelligence Unit (2010, p. 11).

06-2262-5 CH 6:0496-6

9/7/12

2:46 PM

Page 63

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Medical Informatics in Japan

63

work habits.12 A 1993 report on Japan’s health care system notes that most of the 81,000 physicians working in the country’s health clinics “operate in solo practices without hospital privileges, thus making it difficult to collaborate with specialists as well as with peers.”13 The fragmentation made any effort to implement an IT system for information sharing especially difficult, since such an innovation required technical standardization.

Lack of Enthusiasm for New Technology A final problem was that some medical professionals were personally reluctant to use IT, according to Hara. “Most doctors generally don’t like new equipment. They think it costs a lot of time, which they don’t have.” A director of a birth clinic who eventually would adopt IT innovations admitted that he was part of the large group of reluctant professionals. He said that he was not at all enthused about the IT project at first because of its technological aspects. “I hate IT,” he said. “I’m a bit of a cutter [surgeon] myself. So I was reluctant to participate.”14 These attitudes made successful implementation of an IT innovation with the cooperation of medical professionals a demanding task. Despite glaring problems in the provision of health care, pioneering innovations in the medical sector was a daunting challenge. To implement IT innovations such as electronic health records, information on patients needed to be shared in a complex, fragmented, and heterogeneous health network. Innovators would have to fight established norms that favored professional secrecy and reckon with strong notions of harmony through hierarchy that pervaded Japanese society. However, despite the difficulties, Kazuhiro Hara managed to do just that. How did he succeed? What happened?

Innovation Process In the 1990s Hara took several initiatives to bring IT innovations to the Japanese health care system. One of them, a seemingly small application called HelloBaby, would be the first to come into existence.

HelloBaby “We began very small and with a subject that I knew very well,” Hara recalled. “We focused on the fetus. We thought, ‘If we do this right, then the rest will 12. Fahs and others (1993, p. xi). 13. Fahs and others (1993, p. 5). 14. Dr. Sigue, director, Sigue Maternity Clinic, personal interview with Jorrit de Jong, Tokyo, July 2005.

06-2262-5 CH 6:0496-6

9/7/12

2:46 PM

Page 64

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

64

Frontline Innovations

follow.’ I had a big picture in mind about sharing information for all medical purposes, but I knew I would fail if I started working on a grand design. So I moved step by step.” To ensure professional support and collaboration for his first project, Hara approached eight colleagues to help test and develop his application. They agreed to use the prototype in their gynecological practices because they trusted him as a friend and respected colleague. It turned out that the major challenge was not the technology itself but the need to identify all relevant information and create definitions and information design that made sense to all the professionals who would eventually use the system. Within a few years, however, HelloBaby was up and running, ready to “go live.”

Expanding the Network After HelloBaby had been tested and had demonstrated success, Hara expanded the circle of participants. With the help of positive reviews from the first eight participants, he managed to convince more physicians—and their superiors—to join the HelloBaby network. Hara asked the eight original users to become, in a sense, ambassadors for his innovation. “I know how these things work,” Hara said. “You have to make a critical group of befriended colleagues comply with a standard. Once it works in that group, they start convincing others to use the standard as well. It is also important [to show] visible advantages and quick results.” After each success with HelloBaby (and other applications further down the road), Hara gave credit to his fellow physicians who had agreed to participate, turning them into ambassadors as well. With an increasing number of ambassadors to spread the word, it became easier to convince larger and more reluctant target groups and stakeholders to join the project. Over the course of years, Hara slowly achieved critical mass not only for HelloBaby but also for other projects, building on the positive experiences of all practitioners involved. To help convince other physicians to join the network, Hara presented his project as a system that reduced risks. He assured them that HelloBaby would reduce the chances of medication or treatment errors, even as it reduced costs. This rationale appealed to Japanese physicians, anxious as they were to avoid the dire consequences of medical mistakes. “I never take risks,” Hara said. “I test every innovation over and over until I am sure it works. My credibility as an innovator depends on my risk-reducing capabilities vis-à-vis my colleagues.”

Looking for Support From the outset, Hara needed money for the development of his innovations. He turned first to an institutional partner that he expected would be a natu-

06-2262-5 CH 6:0496-6

9/7/12

2:46 PM

Page 65

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Medical Informatics in Japan

65

ral ally: the Ministry of Health, Welfare, and Labor, which was responsible for the national health care system. Ministry officials, well aware of how complicated the task would be, were studying various ways of putting medical records online. In 2001 the ministry published the “Health Care IT Grand Design,” setting a national goal to achieve “computerized medical records in 60% of hospitals and clinics, and Electronic Data Interchange of health insurance claims in 70% of hospitals claims by the end of fiscal year 2006.”15 However, the ministry turned down Hara’s request for funding. It was not eager to invest in small, specific innovations, preferring a coordinated, topdown effort to develop and implement comprehensive medical record system reform. Hara’s bottom-up pilot project did not fit their design. Furthermore, despite his careful framing of the project as a risk-reducing innovation, officials at the department thought it was a risky proposition. Several interviewees attributed this lack of support for Hara to the fear of severe social consequences for errors and a strongly risk-averse attitude toward innovation. A civil servant from Kagawa Prefecture explained that “the Ministry of Health cannot afford to make mistakes and [is] conservative for that reason.”16

Funding from Agriculture Hara did not feel paralyzed or limited by this refusal to cooperate. “Yes,” he said, “money [and other kinds of government support for innovations] is important. But the idea that, for example, budgets for innovations serve their genuine purposes is a myth. Practice is always ahead of policy and budget definitions.” So Hara moved on, looking for alternative support. He figured that another ministry could very well be interested in his work: the Ministry of Agriculture. This department’s focus was the development of rural areas. As noted, many Japanese who lived outside of urban centers did not have easy access to health care, although they were entitled to it. Hara made a tailored public value proposition to this department. He reasoned that digital sharing of medical information could be a partial answer to the access problem the ministry faced. The universal right to health care meant that this ministry might feel obliged to help develop a system that ensured access for its public—the farmers, who lived in rural areas. Hara encouraged the Ministry of Agriculture officials to think of HelloBaby as an infrastructure project for rural development. After all, the distances between a small clinic in a village and the hospitals in the city were sometimes very large. 15. Tatara and Okamoto (2009, p. 89). 16. Civil servant, Kagawa Prefecture, personal interview with Jorrit de Jong, Kagawa, July 2005.

06-2262-5 CH 6:0496-6

9/7/12

2:46 PM

Page 66

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

66

Frontline Innovations

During the earthquake in Kobe in the 1990s, in which 6,000 people died, patients were being evacuated from other prefectures, and the consequences of incomplete medical information became apparent. This caused frustration and made government and hospital administrations aware of the need for an information-sharing system. In conversations with the agriculture ministry, Hara argued that people in rural areas needed such systems more than people in cities, referring to the Kobe earthquake as an example. Ultimately, he persuaded the officials from this ministry to fund the development and deployment of HelloBaby, as a necessary step forward in the field of medical informatics.

K-Mix and K-Mind While HelloBaby was picking up steam, Hara made a case for developing an online infrastructure (or platform) that was especially designed to run applications such as HelloBaby. He argued that HelloBaby would work best if run on a reliable, high-speed, and secure digital platform. Once Hara had HelloBaby up and operating, his team concentrated on developing the platform with three goals in mind: to connect clinics and hospitals electronically, to define standards for the information exchange, and to accommodate various informatics applications (such as HelloBaby). More specifically, the infrastructure should support individual patient file keeping, medical information analysis, remote consultation, and applications to facilitate evidence-based medicine (which required extensive data-sharing capabilities). They called the platform K-Mix.17 But with such a platform in place, Hara told his stakeholders, it would be a waste to use it exclusively for HelloBaby. Why not develop more applications? K-Mix had the capacity to accommodate multiple useful ones. So Hara and his team turned their attention to developing a second application: KMind, an embryonic version of an electronic medical record system that would allow all medical institutions that had or needed to have information about an individual patient to access patients’ records. Hara turned to a colleague at his own hospital, assistant professor Yokoi, to develop a third application for sharing X-rays and other related patient images. After that, other applications followed.

Support from the Prefecture Hara needed funding and support to develop K-Mix, so he turned to government again, but this time to another player in the health care field: Kagawa 17. It concerned an XML- and HL7-based exchange protocol that defined standards for the exchange of medical information.

06-2262-5 CH 6:0496-6

9/7/12

2:46 PM

Page 67

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Medical Informatics in Japan

67

Prefecture’s government. Japan’s prefectures are relatively autonomous political and administrative bodies. They levy taxes and spend the money they collect, but they also receive additional funding from the central government for specific purposes. The national government decided on virtually all legislation, but the prefectures were each responsible for the allocation of funds, operations, and regional development. Almost all health care legislation was national, but health care was administered at the prefectural level. The government of Kagawa was not averse to innovations in telemedicine. Kagawa was a small prefecture, but its scattered population meant that ensuring an equal distribution of health care and health facilities was a challenge. The prefecture was always looking for a means to guarantee all inhabitants their rights to health care. Pointing to the success of HelloBaby, Hara asked for support to roll out the underlying infrastructure, K-Mix. With the help of Fujitsu, a prominent software vendor, and some local IT partners, he made the case that Kagawa Prefecture could be one of the first regions with a functional electronic platform for telemedicine and other cutting-edge health care innovations. This was an attractive proposal for the prefectural government. There was not much risk involved (the project was a proven success), but if it would work on a larger scale, the prefectural government could claim credit for that success. This would be a source of pride for the local population and a boost to Kagawa’s reputation in Japan. Hara’s medical success could be turned into a political success. The Kagawa government now had a stake in making K-Mix a success and became active in implementing the infrastructure. “Kagawa is a small prefecture,” a Kagawan civil servant explained. “There are only 105 clinics and hospitals. We have to inspect them on an annual basis, so we know all of the places and people. Professionally, we knew everybody. Therefore, we knew who[m] to approach for participating in the project. The prefecture helped with contracts for the K-Mix systems and making rules for using it.” Besides that, the prefecture was helpful in convincing doctors by providing an incentive to them to cooperate: it offered to reduce bureaucracy. “An important aspect of K-Mix is remote consultation,” the same civil servant said. “Doctors in the bigger hospitals were afraid that they would get even busier than they already were, if they were going to get consulted by others. However, we did not want that to be a problem, so we figured out a way to ease their worries. We lowered their administrative burdens if they would join. Plus, we invested in communication and marketing.”18 18. Civil servant, Kagawa Prefecture, interview.

06-2262-5 CH 6:0496-6

9/7/12

2:46 PM

Page 68

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

68

Frontline Innovations

The Step Network While working on his expanding set of innovations with his team in his own hospital, Hara realized that he needed a broad base of support. He called a network into existence, the Step initiative, a joint undertaking of diverse stakeholders with an interest in developing and accommodating projects in medical informatics. Hara sought participants from the private and public sectors alike to help provide the broad base of capacity and support that he expected would be necessary to realize his plans. He understood that many interests would be involved if his infrastructure and applications were rolled out, and he figured that he ought to mobilize all the actors that were somehow involved in the political economy of the implementation. He needed legislation, policy, backup, good will, funding, and so on. “We needed infrastructure and standards,” Hara explained. “We needed money. After that, we needed more users; after that, we needed more applications; after that, we needed legislation such as privacy legislation with regard to patients’ data and so on and so forth.” He gradually convinced others to join this network, and by 1999, Step had grown into an established organization consisting of hospitals, academics, and vendors. Despite the fast growth of the Step network, Hara’s activities kept pace with his risk-averse environment. He made sure he did not move too fast to be effective but continued to develop his projects step by step, gradually expanding the number of partners and allies. “It is called Step for a reason,” Hara said. “With every step you take, you see the next step emerging.” His fellow change agents followed the same approach. “We worked step by step,” confirmed the director of Kameda Medical Center. “Develop while you use the system. Don’t do everything all at once. We kept our eyes on the ball. We involved users [during development] to see if the system really served the purpose. You need to understand the different perspectives of users and builders. Finally, we developed the system incrementally, component by component.”19

Funding from the Ministry of Economy, Trade, and Industry Hara needed money to get Step off the ground. He saw a potential funding source in the Ministry of Economy, Trade, and Industry (METI). With its goal of improving the quality of service in the health care sector, METI promoted research, development, and computerization in the medical sector. However, these initiatives were hindered by the lack of a system that could work with the products and standards of various hardware and software 19. Dr. Kameda, Kameda Medical Center director, personal interview with Jorrit de Jong, Sendai, July 2005.

06-2262-5 CH 6:0496-6

9/7/12

2:46 PM

Page 69

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Medical Informatics in Japan

69

providers to sustain a high level of interoperability. Custom-made systems for individual hospitals were far too expensive, but master systems made up of components from different producers often had compatibility issues. The ministry had an interest in stimulating innovation, as well as facilitating an industry standard that would be user friendly and create a level playing field for manufacturers. It had started a special program to solve this problem by stimulating the development of a multivendor system, bringing together the major companies involved in medical informatics. The ministry created a market for an integrated system and monitored its development. Hara encouraged the ministry to think of Step as a contributor to the field of industry and economic innovation. He knew that METI treated the medical sector as a service industry that could contribute to economic growth, and medical informatics as an important competitive strength for the Japanese economy. Using this frame, Hara persuaded the ministry to invest in his projects as well. That METI and the Ministry of Agriculture were sponsoring different projects for different reasons was not an issue. In general, there was a lack of coordination between government institutions. A colleague of Hara’s commented, “Of course they are all stimulating innovation, but each ministry and level of government does that with their own perspective and objectives. They do not coordinate their policies.” Another of Hara’s associates explained, “Health and Welfare was focused on the existing health system and reducing the risks of innovation. METI, on the other hand, took everything as a matter of economic innovation.”20 Hara felt that he was free to pursue partnerships with whatever public agencies he thought would see enough value in his work to offer their support. Eventually, the prime minister’s cabinet became involved as well. The prime minister had launched an ambitious e-government agenda called e-Japan, which included health as one of its key issues. The goal of e-Japan was to establish an ultra-high-speed Internet networking infrastructure within five years.21 The reform agenda, coordinated by the cabinet office and headed by Prime Minister Koizumi, focused on assuring interoperability between IT systems and educating managers in health care and government about the benefits of innovations in medical informatics. Hundreds of millions of yen were allocated to develop medical informatics and to stimulate innovations in the health sector. Hara managed to attract funding from this program as well. 20. Mr. Yokoi, assistant professor of internal medicine and medical informatics, Kagawa University Hospital, personal interview with Jorrit de Jong, Shikoku, July 2005. Civil servant, Sanuki City Hall, Department of Health and Wellness, personal interview with Jorrit de Jong, July 2005. 21. Pharr (2001).

06-2262-5 CH 6:0496-6

9/7/12

2:46 PM

Page 70

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

70

Frontline Innovations

Continuous Pressure Despite his obvious successes, Hara felt that with every step he made, he had to work hard to convince all stakeholders over and over again. Even with funding and a rapidly expanding Step network, Hara and his fellow change agents remained cautious, going forward with vigilance. He had to continuously employ a multitude of arguments and build on the gradually expanding evidence of his projects’ utility. He felt that he frequently missed out on support and understanding. “People didn’t understand the concept. What’s the point of all the hassle? ‘Why bother?’ they said.” To obtain support, Hara mobilized all his connections. As vice president of a physicians’ association in the prefecture, he was well connected. “I don’t have anything to be proud of,” Hara said, but I have many friends. What I have achieved is thanks to those friends and despite the government. We have good relationships with the government of the prefecture, with the physicians association, and with each other in this hospital. We also have good contacts in Tokyo at the national government level and with the top of the national gynecologist association. Plus I have friends in the top of the companies that develop the applications. So I have contacts in many different worlds: medicine, politics, and business. Along the way, Hara also had to use “some pressure,” in his own words. Not everyone was eager to participate, despite his best efforts to get people on board. Hara once in a while appealed to some powerful friends to help him out. “For example, my former boss is still the president of the association of gynecologists, and he is a very influential man. In World War II, he used to select the kamikaze pilots for the army. People in the medical sector have respect for him and that helps with pushing our project and standards through.” Hara needed to draw on that authority. “You need some pressure. We used peer group pressure, but also government pressure. You have to be a devil and an angel. Reward and punish behavior. And you have got to realize that you need each other.”

Results Hara’s cautious but determined approach yielded success. Medical facilities even outside the island of Shikoku slowly but surely began implementing Hara’s innovations. HelloBaby eventually spread to the rest of Japan, all the way up to the first-rate Aiiku Hospital in Tokyo. That this particularly prestigious medical institution chose his innovation must have made Hara proud.

06-2262-5 CH 6:0496-6

9/7/12

2:46 PM

Page 71

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Medical Informatics in Japan

71

In 2006, at Aiiku Hospital, little Prince Hisahito, heir to the throne, was welcomed to the world by HelloBaby. Less than a decade after taking the first steps toward HelloBaby, Hara’s own Kagawa University Hospital boasted one laptop computer for each of the facility’s six hundred beds. A wireless network connected every laptop with both the internal server and the Internet. An electronic patient record system had been implemented. Nurses and doctors used almost no paper records to file medical information about their patients. On the internal server, nurses and physicians could enter, edit, and view all the necessary data about a patient’s past or present condition and about medications and treatments received. The introduction of this technology led to changes in other work processes. Nurses were able to do more of the intake, leaving doctors more time for diagnosis and treatment. Facility management changed as well; the supply chain (pharmacies, laboratories, home care, and so on) was redesigned and streamlined. Doctors could easily consult one another on difficult cases, so they did not need to be equally expert in all aspects of medicine. Waiting lists got shorter as logistics improved and administrative burdens diminished.

Strategy and Tactics How did Hara move forward? How did he secure funding, find and persuade users, and organize government support? Hara needed permission from superiors to develop his innovation. He needed the support and resources of hospital administrations and governmental bodies overseeing health care. Above all, he needed fellow practitioners to join his project. Without participating doctors, his information-sharing networks would be devoid of information. Finally, Hara needed money for every step along the way. His strategy for obtaining all these things comprised several distinct yet complementary elements.

Flexible Framing A first aspect of his strategic approach was his willingness to define his projects flexibly. Hara needed support and money from the government, but the fragmentation of responsibility for various parts of health care among many governmental agencies made concerted action difficult. Although policy agendas may have appeared to support straightforward application of Hara’s innovations, the government did not have the coordination necessary to implement his medical informatics programs in a systematic manner. However, the lack of a comprehensive and coherent governmental strategy did not bother Hara. He was more than happy to take advantage of funding and support from a variety

06-2262-5 CH 6:0496-6

9/7/12

2:46 PM

Page 72

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

72

Frontline Innovations

of agencies and levels of government to develop and refine parts of his overall initiative. He saw the lack of an overall governmental strategy as an opportunity. Hara proved to be a master in framing the conversations with his stakeholders to appeal to many departments with overlapping and sometimes conflicting policy goals. The budget constraints tied to these policies did not necessarily include—nor exclude—a software application like HelloBaby or an infrastructure like K-Mix. Hara’s framing was clever and convincing enough that some funds ultimately landed in his pockets. Creatively interpreting and translating budget proposals seemed to be a crucial asset in his case. Taken together, he was able to claim funds and use them for what he thought was necessary. Persuading government departments to adopt his innovations was one part of Hara’s framing challenge; winning over colleagues was another. This issue was particularly important to medical professionals, who were understandably cautious and not prepared to take risks with patients’ lives. Hara thus redefined the status quo as risky and his innovation as a risk-reducing solution. He suggested that if fellow physicians were sincerely interested in avoiding mistakes, they had to innovate. In other words, physicians who did not adopt his innovation would demonstrate an unwillingness to reduce risks. If they refused to participate, they could be seen as passive and indifferent to improvement. Such a reputation would be toxic for a professional in a risk-averse environment, so this framing put pressure on physicians to participate.

Taking Advantage of Multiplicity Hara knew how to work with the multiplicity of interests in his environment. He was aware of the strategic importance of getting a diverse set of stakeholders on board and equally aware that their various interests could not easily be aligned. Nevertheless, he continuously involved different parties to facilitate the development of his projects; he even set up his Step network to gradually invite many of them to participate. Hara did not aim to reduce the multiplicity in his environment. On the contrary, he consciously worked to expand the circle of stakeholders. In each prefecture, for example, he engaged the services of a different software vendor to test the system’s interactions with other systems already in place. He also engaged various facilities to house the hardware on which his system would run. Hara could have gone forward with a single server facility for the whole island of Shikoku, but he opted instead to put an exchange server in each region. By tactically choosing many vendors and servers, he chose a decentralized solution that brought him a greater number of allies with an interest in his project. Hara attributed his successes in persuading dissimilar stakeholders in his authorizing environment to buy into his projects to the fact that he had mul-

06-2262-5 CH 6:0496-6

9/7/12

2:46 PM

Page 73

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Medical Informatics in Japan

73

tiple specialties (gynecology and IT) as well as multiple social networks in various realms of society, including the medical, technology, private, and public sectors. He was able to use his various expertise and talents (a mix of political, administrative, managerial, technical, and medical skills) to deal with his stakeholders. He knew how to talk to them in a language they understood, while presenting a rationale they could subscribe to. Building on his own diverse background, he was able to frame the conversations with stakeholders in a way that made his projects meaningful to them in their own terms.

Incrementalism Another key aspect of Hara’s strategy was its incremental design. Hara was content to take small steps toward his ultimate goals, accepting limited progress. As he demonstrated the safety, effectiveness, and efficiency of each small step along the way, his fellow medical professionals were persuaded to continue to the next step. The applications he developed for specific fields of practice proved the utility of his ideas on a small scale. Once a target group of practitioners was on board, he could use their support and testimonials to leverage investments in the infrastructure at large (K-Mix). With the infrastructure in place, it was easier to convince larger and more reluctant target groups and stakeholders to join the project. Along the way, Hara thus gathered more and more evidence for the benefits of his innovations, building a track record of success that he could refer to in soliciting further support. An important aspect of Hara’s incremental approach was the design of a mechanism for moving forward. The small steps were not taken in isolation. They were connected. Hara began by building a small, useful application (HelloBaby) for a specific target group while envisioning a fruitful interplay of this particular application and a broader infrastructure. He created a twopronged mechanism: the development of the application created the demand for the development of an infrastructure for it. After the latter was in place, it was a logical step to develop a second application, because the infrastructure would seem rather empty with just one application up and running. Instead of pushing development in each of the two tracks, he arranged things in such a way that progress in one track drove progress in the other. Despite its success, this piecemeal strategy did not lead to full, official approval of his undertakings. Several officials that we spoke to expressed reservations about Hara’s innovations, despite being part of his network and more or less supportive of his work. Nonetheless, it seems that government officials, reluctantly and cautiously, gave him the benefit of the doubt. They were willing to stand by as Hara redefined his projects in terms of the objectives of their agencies and went on to use funds as he saw fit. He may not have always used

06-2262-5 CH 6:0496-6

9/7/12

2:46 PM

Page 74

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

74

Frontline Innovations

government funds precisely as the government intended, but he managed to avoid stepping on too many toes along the way and thus received just enough support to move forward.

Lying Low Another aspect of his strategy was a certain level of concealment. First of all, Hara was reluctant to communicate his big ambitions. He did not share his grand plans to radically alter the state of affairs in the medical sector in the whole of Japan. The one time he did so, in fact, he got burned. In 2000, having heard that METI was considering investing a huge amount of money in his program, Hara made a tactical mistake in proposing to make a national standard out of his system. (Hara himself even thought of an internationally recognized system.) “But METI didn’t go for it,” Hara said. “The national scale was too wide in their vision.” After the failure to attract investments for his grand plan, Hara never again tried to make such a big leap forward. As he moved from pilot projects into broader implementation, he continued to be cautious. Moreover, Hara developed parts of his IT projects deliberately under the radar. “If you ask [government officials] for permission first, you will never get it,” said Hara. “You have to confront them with results that they can’t say no to.” Especially in the beginning, he could not simply approach institutional partners directly, because he felt that his innovations would have been perceived as too risky. Therefore, much of his early activity was “a matter of confidence,” he told us. “Basically, the project was grounded on a gentlemen’s agreement in Kagawa.” Some officials of the prefecture were part of that agreement. “We had never done such a thing before,” a civil servant from the prefecture said. “[It] took some courage. We also hesitated to involve politicians. We didn’t do it; only later we told the politicians.”22

Conclusion Looking back at his achievements, Hara said, “Nobody told me to do this. I could have limited my work to this department at the hospital, but I consider it necessary and possible to make radical improvements. It has become a mission and a passion. In Japan, not many people want to take responsibility for innovations, because of the risk [of failure]. I felt, however, that I had nothing to lose. I reasoned, I am at the end of my career and I am a good gynecologist, so if I fail in informatics, I can still deliver babies.”

22. Civil servant, Kagawa Prefecture, interview.

07-2262-5 CH 7:0496-6

9/7/12

2:47 PM

Page 75

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

7

Relentless Incrementalism Financial Literacy Training for Newcomers in Canada

B

“

attling poverty,” quipped Peter Nares, “is like being stuck in Dante’s hell; you are doomed to endless tweaking with your screwdriver and it seems that it never gets any better.” Switching tones, becoming serious, he explained, “Poverty is such a complicated problem, and there are no simple solutions. And if you introduce an innovation, you have to hang in there to help it grow to scale within a horizon of twenty years.”1 Nares is a social innovator from Canada who helps people who are dependent on welfare stand on their own feet. In the 1970s he worked with low-income adolescents and children, which brought the reality of the poverty of others into his life. In the early 1980s he became involved in welfare policy advocacy for a provincial nonprofit organization. Through these experiences he became eager to forge solutions to poverty and saw public value in helping people to become entrepreneurial and economically independent. Nares believed that government policies and programs, rather than just providing welfare, should stimulate and facilitate saving and asset building, as well as promote self-employment. “For that, you have to start with a belief in the capacity of the poor,” he said. “You have to believe in people and be willing to invest in their capacities. That differs fundamentally from giving them a few bucks and wishing them the best.” Fueled by this belief, Nares set up his own nonprofit, Social and Enterprise Development Innovations (SEDI), in 1986. Since that time, SEDI has jump-started, tested, and scaled up innovations to help low-income earners become independent from welfare, gain access to the mainstream economy, and start their own businesses. 1. Peter Nares, former executive director, Self-Employment Development Initiatives, personal interview with authors, Toronto, December 2010.

75

07-2262-5 CH 7:0496-6

9/7/12

2:47 PM

Page 76

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

76

Frontline Innovations

Despite the complexities of his challenge, Nares has always been an ambitious innovator. He did not settle for individual projects and isolated successes; rather, he sought to effect large-scale socioeconomic change. To that end, Nares has lobbied government for amendments in policies, set up dozens of programs in collaboration with over 800 organizations in the public and private sectors, and created constituencies across Canada (and internationally). In doing so, he has incrementally built a network of agents, programs, and services that together provide low-income earners with opportunities to build a better future—an alternative structure that exists alongside government’s standard welfare policies. His organization functions as this network’s central hub. One recent undertaking that Nares incubated within this network was the Financial Literacy for Newcomers Project—the first of its kind in Canada. The project aims to acquaint low-income immigrants with the Canadian banking system and to help them make wise and informed decisions about money management, that is, to improve their financial literacy. “This is an essential skill,” explained Nares. “Whether you’re going to be starting a business, trying to save for your first home, or going back to school. . . . Whatever the asset purpose is, you’re going to benefit if you are financially literate.”

Flaws of Government Policy Just over 3 million—almost 10 percent of Canadians—lived on limited means in 2008.2 The Canadian government defines and treats poverty as an income problem—simply a lack of money, argued Nares. Framing the problem this way generates policy approaches that view solutions only in terms of income. “In the context of welfare, these approaches translate into determining how much people need to maintain the basic necessities of life and then providing them with just enough money to enable them to avoid destitution.” Nares believed that these policies did not help individuals move forward; they provided just enough income for survival but did not offer opportunities to save and build up some assets to invest in their future.3

Poverty and Welfare To become independent from welfare, in Nares’s rationale, people needed to have some assets, or at least the opportunity to build some assets. Poverty policy fails to acknowledge that “when families do not have enough assets, they lose their economic security and their ability to plan, dream, and trans2. This figure is computed using after-tax low-income cut-offs. This represents 9.4 percent of the population. Statistics Canada (2008). 3. Peter Nares, “Creating Assets for the Poorest among Us,” Toronto Star, June 20, 2003.

07-2262-5 CH 7:0496-6

9/7/12

2:47 PM

Page 77

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Financial Literacy Training for Newcomers in Canada

77

fer opportunities to future generations.” For example, Canadian provinces require applicants for social assistance to largely exhaust their own savings and assets before they can be eligible to receive benefits, essentially asking them to destroy one of the few means that could help them escape from poverty.4 In short, Nares concluded, “Welfare simply sucks the resources right out of you.”

Complex Money Management At the same time, low-income earners face an additional problem. Their money management is relatively more complex and demanding. “They have more struggles than middle-income earners,” said Adam Fair, the managing coordinator of the Newcomers Project, “and they’ve got relatively more to lose, because they have fewer resources to play with. Building wealth is about taking some chances and some risks in investing in what will bring you money. But you don’t have a lot of room to move if you’re low-income. You’re always living on the line, so you need to be as strategic with those resources as possible.”5 To be strategic, one has to make sense of the wealth of financial products that are on the market and make smart choices about investments in education, home ownership, and disability and retirement insurances. One has to understand taxes, rates, and fees. And one has to recognize flaws in financial products and set-ups for fraud. In short, one needs knowledge, skills, and confidence to make responsible financial decisions.6 Many poor Canadians are financially illiterate in this sense, according to Fair and Nares, and cannot afford an adviser to get appropriate advice.7 Thus many low-income earners are unable to become economically independent because the welfare policies that supposedly exist to help them in fact keep them trapped in a cycle of poverty. In addition, these earners often lack the knowledge, skills, and confidence to use the few resources that they might have in a strategic way that enables them to escape poverty. These are the key problems that Nares and his organization aimed to address.

Opportunities for Innovation What opportunities existed for Nares to address the problem of financial illiteracy? By the second decade of the twenty-first century, the so-called Great 4. Information available at Ashoka: Innovators for the Public (www.ashoka.org/pnares). 5. Adam Fair, managing director of the Financial Literacy for Newcomers Project at the Centre for Financial Literacy, personal interview with authors, Toronto, December 2008. 6. Financial literacy is here described in the phrasing of the Canadian Task Force of Financial Literacy. Task Force on Financial Literacy (2010). See also Stewart (2009). 7. TD Bank Financial Group (2010).

07-2262-5 CH 7:0496-6

9/7/12

2:47 PM

Page 78

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

78

Frontline Innovations

Recession and consumers’ role in the downturn had moved the issue to the center of public and political attention.8 A government task force concluded in 2010 that there was “a broad consensus among the private, public, and nonprofit sectors that financial literacy in Canada needs to improve.”9 In addition to that, said Nares, “the current economic hardship . . . is shaking up traditional thinking in many government institutions and in the private sector. . . . It’s very depressing in terms of the hardship on people, but it’s exciting in the sense that there is more space for being socially entrepreneurial now.”10 The government of Canada took a particular interest in the issue after the publication of alarming statistics showing that many Canadians—not just lowincome earners—did not make smart and balanced financial choices.11 For example, a 2010 report claimed that Canadians owed a record high of $1.48 for every $1 of disposable income.12 This was just one of many reports circulating around the time of the economic crisis that signaled that many Canadians were not living within their means.13 Widespread debt among middle-class households especially alarmed government, which could not function as a financial back-up for Canadians who failed to save for retirement and other long-term expenses.14 In 2009, after significant prodding from SEDI and other groups, the federal Ministry of Finance appointed a task force to propose a national strategy for improving financial literacy.15 The increased political attention created 8. OECD (2009); Rutledge (2010). 9. Task Force on Financial Literacy (2011b). 10. L. Chatterton, “Peter Nares and SEDI,” Spotlight (blog), May 25, 2009 (www.charity village.com). 11. “The recent turmoil in financial markets worldwide has emphasized the need for adequate consumer protection and financial literacy for long-term stability of the financial sector.” Rutledge (2010). 12. SEDI (2011b). 13. Statistics Canada found that nearly one-quarter of Canadians were weak in keeping track of their finances; more than one-third of surveyed Canadians indicated that they were either struggling or unable to keep up with their finances and not preparing for retirement. Ibid., p. 12. 14. At the same time the life expectancy of Canadians continues to rise, so government will be confronted with an increased population segment of elderly who will experience a lower standard of living. Williams (2007). 15. Nares not only lobbied for the establishment of the national Task Force on Financial Literacy but also made sure that the final recommendations of the task force explicitly included SEDI’s constituency. The strategy included recommendations such as the inclusion of financial literacy in the formal education system by all provincial and territorial governments. It was recommended that the task force provide recent immigrants with information and education through its existing settlement services, such as the Immigrant Settlement and Adaptation Program and the Language Instruction for Newcomers to Canada Program. Task Force on Financial Literacy (2011a).

07-2262-5 CH 7:0496-6

9/7/12

2:47 PM

Page 79

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Financial Literacy Training for Newcomers in Canada

79

fertile ground for Nares to push his financial literacy agenda and direct attention toward his constituency—the poor. “The government is mainly focused on broad-based Canadians,” he said. “That creates enough political interest to do something; the middle class is an important constituency. Our job is to make sure that [the policies that address the issue] are inclusive by design, so that when policy approaches are being structured as a response to the middle class, they are also useful to all income groups and the low-income population that we work with. So we’re more likely to get something for the poor if the middle class also benefits.”

Barriers to Innovation Nevertheless, some serious barriers to Nares’s innovative plans remained in place. First, it was not clear what the solution to the problem of financial illiteracy should look like. “There is an essential discussion in Canada going on,” said Gary Rabbior, leader of the Canadian Foundation for Economic Education. “Do you increasingly regulate and control behavior, for example, by taking on credit card regulations or mortgage advertising? Or do you try to find ways to affect individual behavior by making people more informed, more responsible to manage their finances on their own?”16 There was no scientific research to indicate what would constitute a sound approach to the problem. No one had identified what the correlations were between, for example, an educational experience and subsequent behavior. Second, increased attention in government circles did not mean that policies would change in practice. Pushing top-down solutions on the entire country through Canada’s highly decentralized governance structures was not feasible. The federal government’s powers are constrained; the regions (thirteen provinces and territories) are connected through the Charter of Open Federalism. Regional legislatures have exclusive jurisdiction in education, and they have their own systems, institutions, and ministers.17 The government of Ontario, for instance, decided in 2010 to integrate financial literacy into the province’s curriculum, but the limited mandate of the federal government did not allow nationwide implementation of such a curriculum.18 In the realm of economic policy, attempts to address financial literacy suffered from the 16. Gary Rabbior, president of the Canadian Foundation for Economic Education, personal interview with authors, Toronto, December 2010. 17. Council of Ministers of Education, Canada (2009). 18. SEDI’s Centre for Financial Literacy applauded the Ontario government’s move as a step in the right direction. “The province had done very little on this front so to see them jump to an announcement like this is great.” R. Luciw, “Ontario Schools to Teach Financial Literacy,” Toronto Globe and Mail, November 2, 2010 (www.theglobeandmail.com).

07-2262-5 CH 7:0496-6

9/7/12

2:47 PM

Page 80

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

80

Frontline Innovations

same problem: there was no agency with a strong national mandate.19 The Financial Consumer Agency of Canada, a federal regulatory body, was relatively weak (although Nares argued that its powers were growing). It had the mandate to strengthen financial literacy, as it oversaw financial firms’ compliance with consumer protection regulation, and it provided consumer education. However, the agency did not regulate securities and investment markets, which were under regional jurisdiction.20 Third, Nares and SEDI were part of a growing number of organizations that were active in the field of financial literacy—and that had a downside as well. “The increased attention is twofold,” noted Rabbior. On one side, there is more interest in what we [as nonprofits promoting financial literacy] do, and there is certainly increased opportunity for organizations in this field. There are now a lot of new players trying to play in the game; almost every week somebody else is doing something somewhere. So on the other side, it does impact the competition over resources: they don’t expand, but the competition becomes more intense.21 Thus despite the opportunities for innovation in improving financial literacy created by increased awareness, addressing the problem was challenging. There was no recipe for success available; there was no central (federal) authority with a substantial nationwide mandate to create financial literacy in education or economic policy, and there was heavy competition for the limited resources available. Within this fragmented institutional setting, “the issue of financial literacy can get tangled in a web of responsibilities between federal government and provinces,” said Robbin Tourangeau, an adviser to the Canadian Centre for Financial Literacy, “which can be hard to navigate for social innovators like Peter.”22

Innovation Process Peter Nares had worked since the 1980s to create opportunities for lowincome Canadians. Before founding SEDI in 1986, he was the program director of the Ontario Social Development Council, a nonprofit welfare advocacy 19. R. Trichur, “Task Force Aims to Turn Page on Financial Illiteracy,” Toronto Star, December 24, 2009 (www.thestar.com). 20. Williams (2007, p. 226). 21. Rabbior, interview. 22. Robbin Tourangeau, senior director of strategic initiatives of the Council of Ontario Universities and member of the Advisory Committee on Financial Literacy of the Centre for Financial Literacy, personal interview with authors, Toronto, December 2010.

07-2262-5 CH 7:0496-6

9/7/12

2:47 PM

Page 81

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Financial Literacy Training for Newcomers in Canada

81

organization. The deep recession of the early 1980s had produced significant unemployment in Ontario and Canada. When he took the job in 1982, Nares was tasked with developing responses that would provide solutions to the growing problem of unemployment and the associated social concerns. This mandate to develop ideas and solutions was the beginning of his career in social innovation. Nares saw the policy environment of the early 1980s as largely one of inertia. “Policymakers were stumped by the apparently intractable issues, such as structural adjustment in the manufacturing sector, associated with growing unemployment and with declining revenues. They were reluctant to invest scarce public resources in the development of untested responses. As a result, battle lines between the provincial government and traditional poverty advocacy were drawn, hardened, and little effort was being spent on developing creative solutions.”

A Born Entrepreneur For Nares, this combination of policy inertia and growing unemployment created an opportunity for innovation. He began looking for new ideas to help the unemployed back into the labor market. This led him to the United States, where he learned about a program to assist women on welfare start their own businesses. Encouraged by the promising results of the program, he imported into Canada the central idea that some unemployed and lowincome people could become more self-sufficient through self-employment or microenterprise and that training in business would improve their results. Under the auspices of the Ontario Social Development Council, Nares began to assess the merits of undertaking a similar approach in Ontario. This led to the development of a pilot project at three sites, called the Women’s SelfEmployment Centres, which was funded in 1986 for five years by the government of Canada. It was the first of its kind in the country.23 While Nares was developing this project, increasing numbers of unemployed people began on their own to explore the option of self-employment. This broader labor market dynamic caught the attention of policymakers, including provincial officials. This, in turn, provided more opportunities for Nares. In fact, in a very short time there was enough work to create a division within the Ontario Social Development Council, which Nares called Self-Employment Development Initiatives (SEDI). By establishing a separate division he took the first step toward the development of an autonomous organization. 23. It also resulted in the establishment of an enduring learning exchange relationship between SEDI and its sister organization in the United States, the Corporation for Enterprise Development.

07-2262-5 CH 7:0496-6

9/7/12

2:47 PM

Page 82

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

82

Frontline Innovations

Until 1995 SEDI functioned as a division of the council. It comprised three people plus a range of project personnel, the numbers of which ebbed and flowed according to the range of activities operating at any given time. With limited core resources, Nares and his colleagues continued to manage projects, build networks in all sectors, collect and analyze evidence, and advocate for policy changes at all levels of government that would enable the poor to be self-employed. By 1991 the hard work began to pay off. The division acquired a large contract with the Ontario provincial government, and the federal Self-Employment Assistance Program, which SEDI had lobbied hard for, was enshrined in legislation.24 At this point, SEDI had become larger than its parent organization, with annual revenues of over $2 million and a staff complement of twelve to fifteen people. It began the move to becoming an independent organization. This was a key strategic decision for Nares: by becoming its own organization, SEDI freed itself from the constraints of a traditional welfare organization and could pursue its own mission in its own entrepreneurial way.

Going for Scale Nares was a born entrepreneur, and innovation was his modus operandi from the beginning of his career. He was attracted by new approaches to tough persistent social issues and enjoyed the process of bringing new ideas to what he called “the social policy marketplace.” His organization began with a sole focus on the issue of self-employment and microenterprise. Over time, SEDI’s expertise in the practice of social innovation, combined with a commitment to incremental learning, enabled it to broaden its mission into new policy areas such as savings and asset building and financial literacy. The division developed its own vision on social innovation, which Nares described as “a process that identifies, market tests, and brings good socioeconomic policy ideas to scale.” In the first stage of this process, Nares and fellow change agents at SEDI identified new ideas and introduced them to “the market.” They tested those ideas through pilot projects to determine whether a demand for the idea existed. During the pilots, they gathered new evidence of what worked and what did not. 24. The program provided classroom training, personal mentoring, and a weekly allowance to help unemployed participants create their own employment. By 2005 more than 7,000 clients had started their own businesses, which generated more than $166 million in gross revenues. In this particular undertaking, SEDI worked together with seven community-based organizations: the YMCA, Centennial College, Jewish Vocational Services, George Brown College, Rexdale Micro Skills Centre, the Learning Enrichment Foundation, and the Toronto Business Development Centre.

07-2262-5 CH 7:0496-6

9/7/12

2:47 PM

Page 83

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Financial Literacy Training for Newcomers in Canada

83

The next step for Nares and SEDI was to move high-potential projects out of the experimental phase and take them to scale. “We think big,” said Nares. “We aim for large-scale socioeconomic change. For example, when we think about how to grow financial literacy we include every poor person in Canada.” Making such a broad impact required collaboration with parties in the public, private, and nonprofit sectors. So Nares looked to government for policy directions and resources, to the private sector for financial support, and to local nonprofits for leadership, knowledge, and the opportunity to execute projects in communities, because he would rather work through other grassroots agencies than set up a classic, task-oriented organization that would become a bureaucratic institution of its own. Through these various partnerships, Nares made third parties part of a network that aimed to enhance people’s capacities to escape poverty—not by asking them to fully subscribe to his organization’s mission but rather by asking them to contribute to a project, to speak up for the cause in a specific forum, to dedicate a certain pot of money, to change a particular policy guideline, or to deliver a single service. Taken together, these partnerships enabled SEDI to scale up some of its most promising innovations. An example of Nares’s think-big approach was learn$ave, a large-scale experiment that SEDI undertook between 2000 and 2009 in ten sites across Canada. This project provided matched savings to over 3,600 low-income Canadians. Canada’s department of human resources, matched each dollar that individual participants set aside in a special learn$ave account, usually at a rate of Can$3 for every Can$1 saved, to a maximum of Can$1,500 in personal savings for each participant. The participants saved over Can$3.2 million in total and generated Can$9.9 million in matched credits that were used for postsecondary education, job training, or starting a new small business. It was the largest demonstration of its kind in the world. Government was always a particularly important party for scaling up— leading to an ambivalent relationship with SEDI. Although he did not agree with its overall welfare policy, Nares needed government badly. “We always think in terms of policy,” he explained, “because in this country you can’t go to scale with an idea without government policy support. You need the funding and the regulation.” Nares thus continuously advocated for amendments in policy guidelines and budget definitions for his constituency. His advocacy led to the incorporation of a self-employment benefits program into national employment insurance legislation in 1990.25 In 2008 he was part of a broad effort to convince the federal government to introduce tax-free savings 25. SEDI (2005).

07-2262-5 CH 7:0496-6

9/7/12

2:47 PM

Page 84

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

84

Frontline Innovations

accounts (the interest earned on the account is tax exempt), an incentive that encouraged and allowed low-income Canadians, including participants in SEDI’s asset-building programs, to establish and grow their savings.

Zooming in on Financial Literacy Nares realized early on that financial literacy had to be included in SEDI’s programs “because teaching people how finances work can be an enabler for them to create wealth or to get out of poverty.” He saw it as a key component of SEDI’s savings- and asset-building and entrepreneurship initiatives, and he took care to separate the topic out when doing research on saving and asset building. As a result, SEDI’s research and program evaluations consistently directed special attention to the issue. Nares also continually introduced it as a topic worth exploring in conversations with his organization’s stakeholders. After years of research and talks, Nares began to seek some national attention for financial literacy. The economic downturn in 2008 pushed the issue higher on the public and political agenda—and the innovator decided to raise its importance in the public debate. Three conferences on the issue were organized by SEDI, in 2005, 2008, and 2011.26 The second was an international conference, hosted in cooperation with the Financial Consumer Agency of Canada and the Joint Forum of Financial Market Regulators and attended by 260 representatives from all sectors.27 Nares used this forum to call on the federal government to establish a task force on the issue. In 2008, when Nares felt the issue had a solid position on the public and political agenda, he launched the Canadian Centre for Financial Literacy (CCFL), in partnership with one of Canada’s largest banks, TD Canada Trust. The center was, in fact, a division of SEDI. Its aims were to perform research to improve programs and inform policy, to offer training and guidance to community organizations, and to help these organizations reach 230,000 end users within the first five years.

Newcomers Project In 2010 the CCFL launched the Financial Literacy for Newcomers Project, aimed at low-income recent immigrants.28 Research conducted by SEDI and 26. Policy Research Initiative (2005); Financial Consumer Agency (2008). 27. SEDI (2009b). 28. In 2010 there were approximately 4 million immigrants in Canada, and 974,000 of them were substantially worse off than the average Canadian. In other words, 974,000 of them were living below the low-income cut-off. SEDI (2011a, p. 2). “Low income cut-offs (LICOs) are intended to convey the income level at which a family may be in straitened circumstances because it has to spend a greater portion of its income on the basics (food, clothing, and shel-

07-2262-5 CH 7:0496-6

9/7/12

2:47 PM

Page 85

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Financial Literacy Training for Newcomers in Canada

85

the few other reports focusing on this constituency indicated that newcomers often lacked sufficient language skills to access information and advice and were unfamiliar with the workings of the financial system.29 Additionally, because recent immigrants lacked a sound credit history, they were pushed toward expensive banking services.30 “It’s like a race against time,” said Adam Fair. “Many immigrants come here with some resources, and they have a year, maybe two, to find a house, a job, get their kids set up, and learn the language. If they can’t do all that, they could find themselves in a situation where they have to liquidate their assets and could wind up on welfare.”31 However, there is a wide range of newcomers, added Nares. “Depending on where people are coming from, they can have acquired different skills, abilities, and experiences with different economic systems.” The project was set up according to the social innovation process that Nares had worked with all along. First, SEDI’s market test gathered evidence that indicated that an experiment in this field was indeed necessary. The organization published several reports noting that though recent immigrants often ran into financial troubles, many of them could, with a little training and support, succeed financially.32 With this evidence, the CCFL approached partners to help finance and executed a pilot—securing financial support from Citizenship and Immigration Canada, the federal department that regulates and facilitates the arrival and integration of immigrants, and relying on the operational capacity of three community organizations: the YWCA in Halifax, Woodgreen in Toronto, and SUCCESS in Vancouver.33 Having three sites allowed SEDI to collect data in a strategic way; it made comparison between the sites possible and generated a more solid body of evidence that could take contextual factors into account. ter) than does the average family of similar size. The LICOs vary by family size and by size of community.” LICOs are often referred to as poverty lines, but Statistics Canada (2008) insists they should not be seen this way; rather, they should serve as a tool to identify “those who are substantially worse off than the average.” Information available at the Statistics Canada website (www.statcan.gc.ca). 29. SEDI (2008b, p. 5). 30. TD Bank Financial Group (2010, p. 18). 31. Fair, interview. 32. SEDI (2008b, p. 5). 33. The YWCA in Halifax (www ywcahalifax.com) provides programs and services for women (such as help with employment, child care, and care for victims of domestic violence). Woodgreen in Toronto (www.woodgreen.org) consists of a group of community centers at twenty-four locations in Toronto; it offers a range of social services, such as help with housing, employment training, settlement work, and support to the homeless. SUCCESS in Vancouver (www.successbc.ca) is a multiservice agency in British Columbia, Canada, that aims to encourage integration of immigrants in Canadian communities. It offers social, employment, business, education, and health services.

07-2262-5 CH 7:0496-6

9/7/12

2:47 PM

Page 86

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

86

Frontline Innovations

The CCFL trained and supported the frontline workers at these three agencies in delivering financial literacy education to the newcomers. “So we were the hub,” said Fair, “and they were out there doing constant service that was free for anyone to attend.”34 The center also helped the organizations to embed financial literacy information and training within existing settlement services, as they had aimed to further implement them. The next step in the innovation process would be scaling up; the CCFL aimed to spread the initiative to other frontline organizations across Canada and to further involve agencies that functioned as information outlets for immigrants in the promotion of financial literacy (such as agencies offering settlement information, orientation, and employment-related services). So during the pilot, the CCFL and its three partners were investigating the possibilities for scaling up.

Concrete Results At the end of 2010 and early 2011, newcomers were put through a seven-hour course. They learned about budgeting, saving and saving products, basic banking operations, credit and credit products, debt management, credit ratings, the meaning of financial terms, and interacting with financial institutions.35 The pilot reached 2,341 newcomers (56 percent more than the initial target of 1,500). An independent research agency evaluated the program and concluded that clients significantly increased their financial knowledge. Participants improved their understanding of living costs and personal financial responsibilities and demonstrated increased confidence in dealing with financial institutions. “The information provided in the training is essential for successful settlement,” stated the report.36 There were unexpected outcomes: clients shared information with peers and family, and the program had a positive effect on newcomers’ job readiness. “One participant who completed the financial literacy course,” said Fair, “mentioned that some of his peers were often forced to take ‘survival jobs’ because they did not know the financial options available and had spent most of the money that they brought to Canada. This course helped him to choose a different path by creating a plan for how he would afford the education he felt was required to get a good job in Canada.”37 In 2011, after the pilot finished, the CCFL began working on bringing the program to scale. The work ahead will include advocating for nationwide financial literacy training for settlement workers; developing financial literacy 34. Fair, interview. 35. Elga Nikolova (2011). 36. Elga Nikolova (2011). 37. Fair, interview.

07-2262-5 CH 7:0496-6

9/7/12

2:47 PM

Page 87

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Financial Literacy Training for Newcomers in Canada

87

brochures for newcomers, to be included in standard welcome packages; and working with Citizenship and Immigration Canada to incorporate financial literacy in the curriculum of the language training for newcomers program. “The pilot has demonstrated,” concluded Fair, “that financial literacy is vital to the proper settlement of newcomers to Canada. SEDI is dedicated to ensuring that financial literacy is included in all aspects of settlement services, including language training, job search, and general support from settlement counselors.”38

Innovation and Improvement The evolution of the Newcomers Project was a textbook example of the SEDI approach: creating experimental pilots based on initial research and needs assessment, using the network to secure test locations, comparative analysis of success and failure at different sites, then designing a roll-out and bringing the project to scale. The project was, in essence, a capacity-building project for two target groups: immigrants and the organizations that served them. It was innovative in two respects. First, it contained a newly developed curriculum customized for recent immigrants. The Centre for Financial Literacy designed the workshops on offer from scratch, based on SEDI’s knowledge gained from previous programs as well as on (largely anecdotal) research on newcomers. The initial curriculum needed adjustments; the evaluation of the pilot, for instance, concluded that there was a need for various levels of programming to meet different abilities of participants. A second innovative feature concerned the project’s form. The training was delivered through grassroots parties rather than a classic task-oriented institution. The center worked through a range of community organizations inexperienced in this field of expertise and had to dovetail the training with existing services. In the near future, the language training centers for newcomers will start embedding financial literacy into their English-language courses. In other cases, SEDI’s partners will train new clients. “Some will be going outside of their own community to find new clients,” said Nares, “and tapping into other organizations’ constituencies. [The partners] are finding that the best way to reach newcomers is to find out where the [language instruction] services are, which are funded and already exist across the country.” The Newcomers Project improved services to immigrants in a number of ways. At the program level, it developed and refined the trainings (contents, design, delivery); at the community network level, it empowered local organizations to embed and execute the trainings (coordination, capacity 38. Fair, interview.

07-2262-5 CH 7:0496-6

9/7/12

2:47 PM

Page 88

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

88

Frontline Innovations

building); and at the policy level, it gathered information about the intervention’s effects, information that could be used in policy design and generally enhanced the understanding of the problem of financial illiteracy. From a wider perspective, the project also contributed to Nares’s continuing effort to build up an alternative network of agencies, programs, and services aimed at promoting economic independence among vulnerable groups in Canadian society. The Newcomers Project further strengthened SEDI’s network of over 800 agencies, as the project partners became further engaged. The project thus became another building block in SEDI’s ever-growing network to create widespread economic independence.

Strategy and Tactics As a social innovator developing programs, building an infrastructure, and influencing policy, Peter Nares faced a range of challenges and constraints. He addressed a virtually intractable and multifaceted problem that no single innovation could solve right away, if ever. He envisioned a poverty alleviation approach that fundamentally differed from the Canadian government’s take on the issue, while depending on the very same government for funding, regulation, and other kinds of support. He also had to gather support for innovations with little or no proof that they would succeed. He operated in a decentralized institutional setting that made top-down policy approaches impossible; even with the central government’s support, he had to convince a variety of stakeholders time and time again to support individual projects, as the political ambassadors Nares recruited to advocate SEDI’s ideas were regularly voted out of office.39

Systemic Change Nares could have concentrated on local singular project successes, but in thinking big he chose the more difficult path. This meant reaching high numbers of end users, implementing and scaling up innovations across Canada, creating a network of local organizations for implementation, and influencing government policy as much as possible to benefit his constituency. Nares’s ambition to create systemic change defined the composition and scope of his authorizing environment as well as his methods for gathering resources. Because the goals he sought to pursue were not always high on the policy agenda, Nares often had to wait for a policy opening. Though he had highlighted financial illiteracy as an issue at the end of the 1990s, he was not able 39. Nares intentionally did not align SEDI with any political party.

07-2262-5 CH 7:0496-6

9/7/12

2:47 PM

Page 89

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Financial Literacy Training for Newcomers in Canada

89

to get significant attention focused on the problem until a decade later, during the economic downturn.

Taking Small Steps Forward Three features of Nares’s strategy can be distinguished: he slowly leveraged his way forward, steadily built evidence, and steered toward smart scaling. The first consisted of patiently taking small steps forward and inviting stakeholders from all sectors to join him on parts of his course—an approach that he called “relentless incrementalism.” This strategic component was more or less a concession to the constraints in his environment. If it were up to him, he would have radically reformed welfare policies and promoted SEDI’s assetbuilding agenda; but in practice, battling poverty is “a nuanced business,” he said; policy was spread across a range of government departments and nonprofits, forcing Nares to be tolerant and to strive for small incremental accomplishments. “It’s leveraging, leveraging, strategic leveraging all the time.” He had to adjust to the pace of policymaking processes. “We look at innovations in policy terms, and it can take twenty years to achieve large-scale policy changes.” While Nares leveraged his way forward, he made sure that his stakeholders moved along with him, even if sometimes at a snail’s pace. Robbin Tourangeau described Nares’s approach as “creating circles and waves.” “Peter builds an alliance and knowledge. He doesn’t just come up with an idea. He always tests it, pilots it. He starts early on and extends along the way by adding more and more people to his core idea. He relentlessly continues working by building all these circles around him. It’s like concentric circles in the water. He keeps expanding circles of stakeholders until he gets waves going.”40 To create such circles and waves, Nares recruited people from various sectors and backgrounds. The Canadian Centre for Financial Literacy, for example, was set up as an advisory group, including representatives from business, the education sector, regulators, and community groups. He also convinced such stakeholders to advocate for his projects. After the first conference on financial literacy, for instance, he founded a national steering committee— once again consisting of prominent Canadians from various sectors—to help promote the topic on the public and political agenda by meeting with senior staff from the political, business, and public sectors, creating strategic alliances, submitting op-eds to newspapers, and encouraging community groups to speak with their clients and to participate in SEDI initiatives. The organizations that execute SEDI’s projects have also been included in Nares’s circles: the 40. Tourangeau, interview.

07-2262-5 CH 7:0496-6

9/7/12

2:47 PM

Page 90

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

90

Frontline Innovations

three partners in the Newcomers Project became advocates for financial literacy. “These three not only do financial literacy now,” said Fair, “but we can put these people in the forefront when we go to government. They have become a constituency that says that the issue is important, so it is not only SEDI who is saying that.”41 Nares’s tactical actions also involved staging events that brought important stakeholders together in the hope of securing their commitment to a project mission. By organizing conferences, he introduced ideas, generated media attention, and moved projects from the testing phase into a broader arena by exposing them to strategically important audiences. Key stakeholders were invited to the venues, and SEDI gave them active roles as keynote speakers. In 2011 after the Newcomers Project pilot was finished, SEDI organized a oneday forum with stakeholders from across Canada to explore ways to take financial literacy training for immigrants to greater scale. The program included not only discussion of lessons learned but also brainstorming sessions on multisector cooperation and creation of personal to-do lists of concrete actions that participants planned to take.

Building Evidence The lack of hard evidence indicating that innovations like the Newcomers Project would work made it difficult to secure much needed support from stakeholders in Nares’s authorizing environment. Because innovations are inherently untried, the second component of his strategy involved the accumulation and communication of proof of potential success. “You have to be credible,” Nares noted. “You need evidence to get through to government and the private sector as well. Good bureaucrats function based on evidence, and it’s very important to be able to produce that.” During this time, SEDI was constantly involved in research, and working with third parties for its program evaluations, to build a body of evidence.42 In 2008, when Nares felt sufficiently prepared to put the spotlight on the issue, SEDI published three studies on financial literacy.43 One study concluded that newcomers to Canada faced particular challenges in getting financial information, education, and advice but that what exactly their problems were and how these should be addressed were unclear. The evidence was, however, still 41. Fair, interview. 42. SEDI’s publications on saving and asset building can be found on their website (www.sedi.org). 43. Delivery Models for Financial Literacy Interventions: A Case Study Approach; Financial Literacy: Resources for Newcomers to Canada; and Financial Literacy: Resources for People with Disabilities (SEDI 2008a, 2008b, and 2008c).

07-2262-5 CH 7:0496-6

9/7/12

2:47 PM

Page 91

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Financial Literacy Training for Newcomers in Canada

91

anecdotal. So in 2011, after the Newcomers Project pilot had ended, SEDI published a follow-up report detailing the findings of the pilot program, building on the data and insights that already existed. To add to his credibility as an innovator—and in the absence of hard evidence that new programs would be successful and more effective than conventional ones—Nares adopted a multilayered strategy of building and presenting evidence. First, he modeled new projects on existing ones, reusing project formats that had proved successful. The design of the Newcomers Project was based on two models SEDI had developed in other undertakings. One of those, the coordination model, was tailor-made for pilot programs through local partnerships in Canada.44 Second, Nares relied on analogies with successful programs in related areas as secondary evidence. For example, he countered arguments that the poor could not save with evidence from the learn$ave program showing that, for the purpose of postsecondary education, the poor could and did save.45 Third, he gathered and used evidence of successful programs in other places. For example, in the early stages of introducing ideas, he relied on the experience and knowledge of his international network. “Many ideas, such as learn$ave, have already been tested out in the United States. Canada has a tendency to pay attention to U.S. ideas that are pretested in their market. So if you can attach yourself as a Canadian organization to other organizations abroad that do interesting things, that adds to your credibility.” Because Nares gathered all kinds of evidence, he explained, “we always have an answer. In that sense, our voice is clear.” This strategy gave Nares and SEDI a unique position as reliable knowledge brokers. Because his organization functioned as an intermediary between policy and execution and as a hub between the government, nonprofit, and private sectors, it had knowledge of and allies in many realms of society. “We work with people on the ground, and we position ourselves as adding value to the work on the ground and to the government,” Nares said. “For example, we can speak [to government] for people who actually deal with problems or for community organizers that work with them in delivering services. In that sense we occupy a unique space in Canada.” As a result, Nares managed to gain confidence from stakeholders 44. The core idea was that each partner organization would run a similar program so that data could be collected and compared, allowing SEDI to test whether a program was effective and to replicate it on a larger scale. To enable scaling up and further improvement, the Newcomers Project was evaluated by client feedback and evaluation surveys, in-depth interviews or focus groups with clients, and sometimes follow-up interviews exploring clients’ views on the impact of the program on their settlement, adaptation, and integration. 45. SEDI (2009a).

07-2262-5 CH 7:0496-6

9/7/12

2:47 PM

Page 92

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

92

Frontline Innovations

in his judgment and his ability to design, implement, and scale up projects successfully.

Smart Scaling Once Nares’s innovative projects had been successfully implemented, the challenge was to scale them up. The decentralized system of governance in Canada did not make that easy, but Nares turned that into an advantage. Because SEDI piloted various approaches and projects to alleviate poverty in many different places, Nares had a good sense of whom he could approach and for what role. Depending on the circumstances, he would choose pioneers, early adopters, or late followers. Pioneers—provinces or municipalities that agreed to fund or otherwise support a pilot project—enjoyed the credit for a project’s success. Given the rivalries between the regions in Canada, pioneers appreciated the recognition as forward-looking agencies. “Some provinces, particularly those who see themselves as progressive and reform oriented, want to be the first to pioneer a new idea, particularly if they feel that another province is also interested.” The early adopters benefited from a low risk of adopting the innovation and could build on the knowledge that had been gathered in the pilot projects. The third group, the late followers, ran a risk if they did not adopt the innovation. After all, no jurisdiction wanted to be seen as the last to implement a successful project. The tactic Nares used here was to capitalize on competition among the provinces. He was aware that Canada’s decentralized governance provided several entry points for discussion. If he failed to sell an idea to one province, he knew there might be others that were willing to listen. If one implemented an idea successfully, he realized, this could trigger others to follow suit. For example, if one regional government made exceptions to regulations restricting welfare recipients from saving, Nares pointed out that exception to others. As Adam Fair explained, Basically, what we are then saying is to one province, “Hold your traditional way of welfare; let us work on a ladder that bridges outside of it, let us get some evidence on the idea in a pilot. . . .” And if one government is willing to do so, we try to sell that idea to other provinces: “Look, in Ontario they did make an exception, so why don’t you?”46 Nares was careful in starting conversations with provincial stakeholders. Instead of pushing a new concept or a novel approach, he chose to build on existing discussions and issues familiar to his audience. Financial literacy was 46. Fair, interview.

07-2262-5 CH 7:0496-6

9/7/12

2:47 PM

Page 93

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Financial Literacy Training for Newcomers in Canada

93

one such entry point. The idea was easy to get on the agenda because it had such broad appeal. “Early on it was pretty obvious that it was something that anybody could identify with. Savings and asset building as a poverty alleviation strategy is a much tougher sell.” So financial literacy allowed Nares to talk to stakeholders—and in these discussions he sometimes introduced his broader agenda. “That’s why in 2001, for tactical purposes, we decided to advance financial literacy as a SEDI program priority separate from asset building and self-employment. And this resonated well.”

Redefining Budgets and Beneficiaries Attracting government funding was not always easy for Nares. He pursued a wide-ranging agenda that was not limited to just one policy field or government agency. His organization generated ideas through bottom-up work with frontline organizations, and those ideas often challenged predefined budget and policy definitions. In other words, SEDI operated horizontally, while government exercised its authority vertically, along functionally narrow defined lines. Consequently, not all SEDI’s activities were smoothly aligned with government budgets, and thus not all were easily funded. To address this problem, Nares often creatively reinterpreted the meaning of budget guidelines and redefined his own projects to match existing criteria. For example, there was a federal government strategy to support the voluntary sector. One of the recommendations was that government departments needed to be more connected to organizations [receiving grants] with respect to their strategic and policy needs. That was intended very broadly, largely meant as just language. We were aware of that clause, and we used it to get money for our policy work related to the learn$ave project. It pissed some people off, because it was an unintended consequence. Nares’s tactic also worked with private sector stakeholders. With regard to the Newcomers Project, he contacted banks. Finding common ground in conversations with these stakeholders was challenging. Generally speaking, Nares worked with a population that was not affluent and thus not interesting to many private companies. Serving the poor is simply not a bank’s mission. “Banks look at the domestic market and the market segments from a business perspective,” said Nares. “So when we say that a bank is interested in a market, it isn’t the folks that we are primarily working with necessarily. There’s a higher-end segment that they’re after.” Nares therefore defined the beneficiaries of the funds he was after as future customers. “Not all newcomers are poor. In fact, our immigration policy has a

07-2262-5 CH 7:0496-6

9/7/12

2:47 PM

Page 94

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

94

Frontline Innovations

clear set of guidelines for wealthy immigrants, who get fast-tracked into the country. Where there’s growth in banking, it’s going to be largely because of newcomers. They’re going to be their new customers.” His approach was successful: in 2010 SEDI secured unprecedented funding for financial literacy programs from the TD Bank Financial Group.47 The financial institution provided Can$14.5 million. The money was allocated to the Canadian Centre for Financial Literacy and to a new grant fund administered by SEDI. Through the fund, eligible community groups receive financial support for research, innovations, and the scaling up of current financial literacy training across Canada.

Conclusion By 2011, and after twenty-five years of work, SEDI had become a small but influential organization in Canada. It had worked with over 800 community groups and organizations across the country and introduced and run hundreds of initiatives in about twelve policy areas. In the same year, Peter Nares announced his retirement as the founding executive director of SEDI. As a senior Ashoka fellow for social innovation, he is now setting up an international network of asset builders. Over the course of twenty-five years the selfdeclared “relentless incrementalist” has made some important advances in battling poverty and unemployment in his home country. He may not have achieved all that he wanted—a large-scale policy shift to his asset-building agenda and full reform of conventional welfare policies—but in practice, Nares has successfully set up an alternative infrastructure for providing training and assistance to the population that he feels is failed by the conventional approach. In the process, he has made many small and larger interventions in the policy arena. “Financial literacy is seen as a vital skill people need to navigate their local economies; Canada has a learning bond to support postsecondary education for children from low-income families; we have a disability savings bond for low-income families with children with disabilities.” Overall, he adds, “welfare regulations now do not punish people as much around their savings or if they want to pursue self-employment as much as they did before we started our organization. We made and will continue to make significant steps. And we had some large and many small but not unimportant victories.”

47. SEDI (2010); Peter Nares, remarks at news conference, January 26, 2010 (www.sedi.org); TD Bank Financial Group (2010).

08-2262-5 CH 8:0496-6

9/7/12

2:47 PM

Page 95

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

8

Just a Tool? Implementing the Vulnerability Index in New Orleans

O

n an early morning in the beginning of 2008, outreach workers roused homeless people sleeping in the makeshift tent city that had sprung up under the Claiborne overpass near the historic French Quarter of New Orleans.1 The workers offered each of them a five-dollar gift card for a Subway sandwich in exchange for their participation in a medical assessment. The assessment was the vulnerability index—a person-by-person questionnaire about health conditions that often lead to death for those living on the streets. Many of those questioned agreed to have their photograph taken, which would help the outreach workers find and assist them later on. The workers delivered the results to Martha Kegel, the head of Unity of Greater New Orleans, a collaborative of organizations working to end homelessness in the New Orleans area. Kegel was shocked at what she saw: 41 of the 118 people who answered the questionnaire ran a high risk of dying in the short term if they continued to live outside. For a moment, Martha Kegel sat stunned in her office. Pained by the thought of these most vulnerable citizens lying in the camp that night, she decided to pull all forty-one off the streets, immediately. Her team scrambled to track down the people they had identified as being at risk and put them up in cheap hotel rooms. This was just a short-term solution: Kegel had to find In addition to the interviewees quoted in this chapter, respondents for this case study were Chandra Crawford, director of public policy of Unity; and an anonymous civil servant of the State of Louisiana. We would like to thank Kara Mergl of Common Ground for her help. 1. The U.S. Department of Housing and Urban Development defines the homeless as those living in abandoned buildings or houses without utilities, on the street, in cars, or in housing designated for the homeless and those being evicted by judicial process or by family or friends or being released by institutions with nowhere to go.

95

08-2262-5 CH 8:0496-6

9/7/12

2:47 PM

Page 96

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

96

Frontline Innovations

housing units as well as medical and mental health services for them; otherwise they would ultimately end up living—and dying—outside. Surprisingly, the vulnerability index itself turned out to be the key to preventing this outcome.

The Problem of Homelessness In 1998 it was estimated that at least half a million people in the United States were homeless. These people had a relatively high mortality rate. Research had shown that among the homeless, males, Caucasians, and substance abusers were more likely to die than females, nonwhites, and nonabusers, but exact causes and other significant characteristics that put individuals at risk were unknown.2 Some homeless people died in hospitals or shelters, but others died outside, unattended, in the streets. It was assumed that the latter mostly belonged to a group known as rough sleepers, who avoided shelters and institutionalized support and instead lived in doorways, alleys, bus terminals, and so forth. But because of limited systematic research on the topic, this was just a hypothesis. Organizations that provided support to the homeless (such as housing and medical services) had only a limited set of intervention strategies. They had no systematic means to identify the people most at risk of dying in the short term. Organizations generally prioritized clients on a first-come, first-served basis, offering services to those who had been on a waiting list the longest. Other times, subjective considerations determined who received services— for example, clients whose caseworkers had managed to bump them up to the front of the line. There was simply no objective tool that organizations could use to prioritize clients. Furthermore, there was no tool to translate and apply available scientific research and findings on the medical conditions that disproportionately lead to death for homeless people, resulting in “a gap between knowledge and practice,” according to a report put out by Common Ground, an organization based in New York City that works to end homelessness. Without a researchdriven basis on which to identify and treat those at greatest risk, medical practitioners who worked with the homeless had no means to explain or systematically prevent street deaths. This led, as the Common Ground report puts it, to “random ricocheting of an expensive population through emergency and acute public systems of care and treatment.”3 There was no systematic public health approach that could help end this situation and reduce mortality among homeless people. 2. Hwang and others (1998, p. 1454). 3. Common Ground (2008).

08-2262-5 CH 8:0496-6

9/7/12

2:47 PM

Page 97

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Implementing the Vulnerability Index in New Orleans

97

Innovation Process In the winter of 1998–99, the city of Boston experienced an unusually high number of street deaths. After the sixth case within just a few months, the general public and agencies that aimed to support homeless people grew concerned.4 Officials at the Massachusetts Department of Public Health convened a task force to answer public concerns about the wave of street deaths in Boston. The task force consisted of seventy-five people, enlisted from numerous government agencies, medical services, housing organizations, and interest groups.5 The task force was asked to come up with a strategy to prevent street deaths, and for that it first had to make sense of the cause of the phenomenon. Since there was no official tracking system or scientific knowledge that could provide insight into the cause of these deaths, one of the task force’s objectives was to gather data on street deaths. Members of the task force decided to investigate thirteen recent street deaths by reviewing death certificates and medical records.6 They discovered that all but one of the thirteen had suffered from chronic alcoholism, eight had suffered from severe and persistent mental illness, and all of them had multiple and chronic medical illnesses. The cause of death varied: some had died of hypothermia, trauma, or seizures, others had succumbed to chronic illnesses, such as diabetes and endstage liver disease. All of the deceased had received medical, psychiatric, or substance abuse services in the months preceding their death. Nine of them had visited emergency rooms or been hospitalized, and ten had received detoxification or rehabilitation services in the six weeks before their death.

Developing a Tool Based on these findings, Dr. James “Jim” O’Connell of Boston Health Care for the Homeless Program and Street to Home developed a risk factor profile to establish which homeless persons were at the greatest risk of dying within seven years. Homelessness itself was included in the profile as one of the risk 4. In the 1990s, among the estimated 230 homeless in the Boston area in the winter, there were approximately forty to eighty deaths annually, twenty-four to thirty of which occurred on the streets. The exact number of deaths in the winter of 1998–99 is unknown, but experts and journalists describe the situation as “a wave” of deaths. O’Connell and others (2005). 5. The agencies involved were the mental health, public health, welfare housing, and corrections departments. Other parties included were the Emergency Shelter Commission of the City of Boston; academic medical centers, detoxification units, and recovery programs; homeless advocates (such as Massachusetts Shelter); homeless persons; health care clinicians; state, city, and metropolitan transit authority police; emergency medical services, shelter providers, and street outreach workers; downtown neighbourhood associations; and researchers and evaluators from local universities. 6. O’Connell and others (2005).

08-2262-5 CH 8:0496-6

9/7/12

2:47 PM

Page 98

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

98

Frontline Innovations

factors. “The painfully obvious lesson for me has been the futility of solving this complex social problem solely with new approaches to medical or mental health care,” O’Connell said. “I dream of writing a prescription for an apartment, a studio, an SRO, or any safe housing program, good for one month, with 12 refills.”7 O’Connell believed that by asking a series of questions, he could identify the most vulnerable people living on the streets. The participants in the survey would be given points, according to the presence of certain conditions. The point system was plain and simple: the more points the homeless person scored, the higher the odds of his or her death in the short term. The indicators for high risk (a 40 percent mortality rate over seven years) were homeless for at least six months plus one or more of the following characteristics: —more than three hospitalizations or emergency room visits in a year —age sixty or older with cirrhosis of the liver —end-stage renal disease —history of frostbite —immersion trench foot or hypothermia —HIV/AIDS —trimorbidity of concurrent psychiatric, substance abuse, and chronic medical conditions8 In the years following its debut, the vulnerability index became known among peer organizations of Boston’s Health Care for the Homeless. The innovation made its way to Common Ground, the New York City–based outreach organization, which decided to further promote the index. “This simple and replicable tool,” stated an information sheet distributed by Common Ground to its fellow organizations, “rooted in solid scientific research, helps mobilize communities to act decisively, organize around individuals’ housing needs, and solve a seemingly intractable problem.”9 Common Ground’s president, Rosanne Haggerty, was so excited about the index that she spread word of its existence to her colleagues—including Martha Kegel from New Orleans.

Spreading the Innovation At that time, Kegel had been the executive director of Unity of Greater New Orleans, a collaborative of sixty nonprofit and government agencies (including Catholic and Protestant charities, the Salvation Army, shelters, and citizen 7. Quoted in Kanis (2008). 8. Common Ground (2008). 9. Kanis (2008).

08-2262-5 CH 8:0496-6

9/7/12

2:47 PM

Page 99

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Implementing the Vulnerability Index in New Orleans

99

initiatives and councils), for four years.10 Unity aimed to prevent and end homelessness by providing housing and additional services, such as case management assistance, employment services, mental health counseling, substance addiction treatments, legal services, and medical care. Unity was not just a coordinative unit for distributing tasks and funds among its members; it also employed outreach teams, case managers, and other frontline workers.When Martha Kegel heard of the vulnerability index from her colleague Rosanne Haggerty in the winter of 2007–08, she was not impressed. “Rosanne Haggerty said to me, ‘Why don’t you do this assessment to help clarify your thinking?’” Kegel recalled. But Kegel believed she had better things to do. Her organization was, she said, “exhausted.” It could hardly handle the situation that it was in. “Given our crisis down here,” she said, “doing another assessment tool when we already did assessments was not a priority.”11

Challenges in New Orleans What was the crisis Kegel referred to? Unity was trying to serve an unusually high number of homeless people. During Hurricane Katrina, in the summer of 2005, 80 percent of the city had been flooded. According to the New Orleans Index from the Brookings Institution, “107,000 occupied housing units were flooded, and an additional 27,000 sustained wind damage. All told, 71 percent of New Orleans’s occupied housing units were damaged, making the hurricane and its aftermath the largest residential disaster in U.S. history.”12 In 2008 the damage to residential properties was still huge, resulting in a “dramatic reduction” in the number of apartments available for lowincome public housing residents.13 Many buildings were not yet repaired or were set to be demolished. As a result, Unity estimated, between 6,000 and 11,000 people remained homeless (approximately 4 percent of the city’s overall population).14 10. The sixty-three organizations cooperating within Unity altogether provide the following services: outreach crisis line and information referral, case management, employment assistance, medical care, mental health services, day program, substance abuse treatment, HIV/AIDS services, domestic violence services, legal services, youth drop-in center, day care for children, transportation, and housing search. 11. Martha Kegel, executive director of Unity of Greater New Orleans, personal interview with authors, New Orleans, April 2010. All quotations not otherwise attributed are from this interview. 12. Liu (2008, p. 17). 13. Quigley (2007, p. 407). 14. R. Jervis, “New Orleans Homeless Swells to 1 in 25,” USAToday, March 17, 2008. (www. usatoday.com). The population of New Orleans was then estimated at 302,000, which was 70.1 percent of its pre-Katrina size. City of New Orleans Communications Department (2008).

08-2262-5 CH 8:0496-6

9/7/12

2:47 PM

Page 100

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

100

Frontline Innovations

Several government housing programs were in place, but these initiatives were not sufficient. Rent subsidy vouchers, better known as Section 8 vouchers, distributed by the Housing Authority of New Orleans, were not worth much with so few affordable housing units available after the storm. (For example, in 2008 data from the U.S. Department of Housing and Urban Development showed that of 6,735 damaged, formerly occupied multifamily units, only 940 were expected to be available by March 2009).15 The Permanent Supportive Housing program, created in 2005 by the Louisiana Recovery Authority, aimed to create 3,000 new housing units (plus services) for people with disabilities.16 This program also worked with vouchers; one voucher included a housing unit plus rental assistance, plus some medical services, but by 2008 it was still struggling to attract the necessary financial resources.17 The units that actually came through did so at a very slow pace.18 In the meantime, clients were put on a waiting list. Several temporary initiatives set up after Katrina, such as the Disaster Voucher Program and the Disaster Housing Assistance Program to assist displaced families in finding temporary or long-term rental housing, were set to expire long before all of those families could find and afford a stable housing situation.19 Although many homeless people were theoretically eligible for these programs, they were not always able to get on the lists. For example, many homeless people had criminal records and were thus ineligible. The federal Fair Housing Act included a section that allowed landlords to refuse prospective tenants with a criminal record—and many of the homeless were, because of their homelessness, “criminals.”20 Occupying an empty building, 15. U.S. Senate, Committee on Homeland Security and Governmental Affairs (2009). 16. The definition of disability included serious mental illness; addictive disorder; developmental disability; physical, sensory, or cognitive disability occurring after the age of twenty-two; disability caused by chronic illness; and age-related disability. Many of these conditions—but not mental illness, for example, were included in the vulnerability index assessment. 17. O’Hara (2010). 18. L. Celano, “Resources Scarce, Homelessness Persists in New Orleans,” New York Times, May 28, 2008. O’Hara is more positive: “The state anticipates [in 2010] that at least 600 of the 3,000 units will be created through this innovative PSH [Permanent Supportive Housing] approach which—because of the lower rents achieved through the Go Zone credits—costs less than the average Housing Choice Voucher subsidy. More than 30 percent of PSH units leased thus far have been provided by affordable housing developers who received federal Go Zone Low Income Housing Tax Credits to help rebuild the state’s shattered rental housing stock.” O’Hara (2010, p. 3). 19. After 2008, both programs would be prolonged, with the financial support of the stimulus package of the Obama administration. 20. A landlord could not refuse to rent to someone because of a disability, ethnicity, sexual orientation or other reasons protected by the Fair Housing Act. A prospective landlord, however, had the right to check a tenant’s background, including credit report and criminal

08-2262-5 CH 8:0496-6

9/7/12

2:47 PM

Page 101

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Implementing the Vulnerability Index in New Orleans

101

for example, was illegal. The homeless could also go to jail for trespassing. “Unfortunately,” added Kegel, “our city has a long history of police criminalization of homelessness.”

Lack of Resources Unity also faced a shortage of financial resources. It received $12 million annually in competitive Department of Housing and Urban Development funds, which it then distributed among its associated organizations. The funds were allocated for specific purposes, such as housing repair, housing plus services (such as medical care), homelessness prevention, and rapid rehousing. They also came with restrictions—for example, Unity was allowed to use specific funds for services in emergency shelters but not for the construction of these shelters. Unity was constantly looking for extra money, since these funds could not stretch nearly far enough to meet the demand for services and often did not pay for staff. In the winter of 2007–08, financial problems were particularly pressing because Unity had just finished a costly operation: moving 249 people from a tent city located at Duncan Plaza to low-cost hotels between November 21 and December 21, 2007. Without finances, Unity’s operational capacity was severely limited. The organization could serve only around 6,700 persons. Meanwhile, Unity was working with only 64 percent of its pre-Katrina housing capacity. Beds and spots in all its programs were filled as soon as they were vacated. The organization was also short staffed. “We have ten outreach workers,” said Kegel, “and it is a matter of thousands of needles being hidden in tens of thousands of haystacks.” With many homeless persons squatting in one or another of the 65,000 storm-damaged, abandoned buildings, her outreach workers struggled just to locate their clients.

Medical Conditions A third problem for Unity was widespread severe medical and mental conditions among its homeless clientele. The organization credited this to two causes. First, even before the storm there had been little health care available for the homeless outside of crowded emergency rooms. To make matters worse, the hurricane had damaged or destroyed many medical facilities, including trauma centers, which were not yet fully rebuilt. Second, these individuals could not fall back on extended family networks. With many New Orleans residents fleeing the city or losing their lives in the wake of the storm, background. A landlord was allowed to turn a prospective tenant down for bad credit or a criminal history.

08-2262-5 CH 8:0496-6

9/7/12

2:47 PM

Page 102

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

102

Frontline Innovations

such networks had ceased to exist. These conditions made it much more difficult for Unity to help. Its clients needed not only housing but also a wide range of health and social services that they could not afford because the hurricane and its aftermath left them unable to earn an income. A related problem concerned a specific condition that afflicted many homeless individuals: substance abuse. Many of Unity’s clients had alcohol and drug addictions. Unity depended on a variety of partner agencies to come forward with solutions, but some partners were not willing to offer support to drug- and alcohol-dependent homeless people. Some key partners, including government agencies, nonprofits, and the landlords with whom Unity worked to secure housing units in the private market, argued that homeless persons with substance abuse issues needed to get clean before they could be thought of as “deserving” a house. Kathleen North, the director of the Supportive Housing Registry at Unity, explained that recovery from addiction does not work like that: “You can’t stabilize an addict on the streets. But ’housing first’ is a hard sell, even among professionals and government officials.”21

Addressing Resentments To further complicate the situation, Unity had to deal with resentment and simmering anger on the part of the city’s residents about the problem of homelessness. The concentration of homeless people in New Orleans generated criticism; not everyone was prepared to contribute tax dollars for appropriate accommodations. The aversion was intensified by two campsites that homeless people had started to build in 2007, right in the heart of New Orleans. Unity had cleared the camp at Duncan Plaza in December 2007, but the other camp, called Claiborne, was a growing colony, hosting roughly 250 people a night, according to Unity’s estimates. They camped close to the famous French Quarter, where tourists could easily encounter them.22 The residents lived amid “raggedy tents, scattered mattresses, and rat-infested couches,” according to a local newspaper. There were complaints about the human waste and body odors, which residents could smell from blocks away. “I have no idea why we must pander to the homeless,” wrote an Internet commentator. “The smell of urine and body odor that surrounds their encampment under the Claiborne overpass is nauseating.”23 21. Kathleen North, director of the Supportive Housing Registry of Unity for Greater New Orleans, personal interview with authors, New Orleans, April 2010. 22. Tourism was an important industry for New Orleans. 23. Quoted in M. Carr, “Nagin: Bus Tickets for Homeless Just a Joke,” New Orleans TimesPicayune, May 16, 2008.

08-2262-5 CH 8:0496-6

9/7/12

2:47 PM

Page 103

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Implementing the Vulnerability Index in New Orleans

103

Such sentiments could influence decisions about the allocation of funds to Unity or about other necessary forms of support.24 Some residents considered helping the homeless to be a drain on public resources; it seemed unfair for the government to subsidize housing for the homeless while other residents struggled to pay high rent prices. In addition, making costly assistance like counseling and medical care available to the homeless at the expense of taxpayers who had to struggle on their own to pay for health insurance raised citizens’ ire. “I have seen 3 generations on the FREE TICKET,” wrote one commenter in an online newspaper forum. “Where does it stop? We give them free housing, education, food, and transportation. It needs to stop. Get off of your a** and go to work; I did.”25 So in 2008, when Martha Kegel heard about the vulnerability index, she had a lot on her plate. There was a shortage of affordable housing units in post-Katrina New Orleans. Thousands of people were homeless, many of whom had serious medical and mental conditions. Unity lacked the resources and the capacity to deal with the scale and complexity of the problem. There was no broad support from the New Orleans community for Unity’s activities, so the organization had to operate cautiously. Unity did not have a natural base of public support to build on, though it desperately needed the involvement of volunteers, landlords, politicians, government officials, and others to find solutions for its clientele. Kegel thought that trying out a new medical assessment tool called the vulnerability index was not a top priority. Despite her initial lack of enthusiasm, Kegel did decide to administer the assessment. “It was like, ‘Fine, why not?’” said Kegel. Unity’s outreach workers conducted the assessment for the first time at the Claiborne camp in February 2008.26 Of the 150 people approached, 118 participated; 32 persons had refused, and 2 had been unable to speak. Unity reported the following results from respondents: 24. For example, the researcher Bill Quigley mentioned in a journal article that in a suburb of New Orleans where the population was 93 percent white, an ordinance had been enacted to restrict home owners from renting out single-family houses “to anyone who is not a blood relative of the owner” without securing a permit from the government. Another example that Quigley gave was Jefferson Parish, also a mainly white suburb, that passed a resolution “opposing all low-income tax credit multi-family housing in areas close to the city, in an effort to stop the construction of a 200 unit apartment building on vacant land for people over 62 years and other Section 8 [subsidized] housing.” Quigley (2007, p. 414). 25. Anonymous, comment on K. Reckdahl, “Last ‘Residents’ Moved from Homeless Encampment at Claiborne Avenue and Canal Street,” New Orleans Times-Picayune, July 17, 2008 (www.nola.com/news). 26. The index was administered on February 20 between 6:00 and 9:00 a.m., and again on February 21 between 5:00 and 8:00 a.m. At that time, the outreach teams could locate homeless people, since many of them would leave their sites in the morning.

08-2262-5 CH 8:0496-6

9/7/12

2:47 PM

Page 104

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

104

Frontline Innovations

—80 percent had at least one disability. —31 percent had more than one disability. —19 percent were trimorbid (mental illness, physical disability, and substance addiction). —40 percent had a mental illness. —58 percent had substance addiction. —14 percent had heart disease. —10 percent had diabetes. —4 percent had HIV/AIDS. —4 percent had cancer. —3 percent had liver disease. —91 persons had visited an emergency room in the past three months. —75 percent had no health insurance.27 Confronted with these results, Kegel moved the persons at highest risk to cheap hotel rooms, but Unity did not have the cash to support her new patients. “How was I going to pay for it? I did not know!” said Kegel. She knew things would be difficult. She was well aware of the tight housing market, the politics, the sentiments in the city, and her own organization’s cash problems. Kegel, however, had made her move, and now she had to find a solution for her forty-one new clients. She was determined to give it her best shot.

Securing Support Because the assessment had demonstrated that her homeless clients were urgent medical cases, Kegel was armed with the evidence she would need to convince parties in the medical sector to jump in and provide funding. She argued that offering a roof over her clients’ heads was a medical necessity. “It doesn’t really even make sense to provide someone health care until they have housing,” she said. “Only when patients have housing do they have a refrigerator to put their medicine in. As a health care provider, you need to look at using your money to house people, because medical services aren’t even going to work if they don’t have housing.” With this argument, Kegel quickly managed to obtain $100,000 from the city’s health department (specifically, from the Health Care for the Homeless clinic) to pay for medical respite beds and other necessities for the new group of her forty-one most vulnerable clients.28 “There are always pots of money in government that [have objectives that] they are supposed to be used for,” she said. 27. Unity of Greater New Orleans (2008). 28. L. Wilbert, “Unity Scrambles to Move Homeless as City Plans to Clear Claiborne Camp,” February 28, 2008 (http://blog.nola.com).

08-2262-5 CH 8:0496-6

9/7/12

2:47 PM

Page 105

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Implementing the Vulnerability Index in New Orleans

105

This particular pot of money was not supposed to be used for this. At the same time, there was not any restriction for it being used for this purpose. This particular clinic had never used its money for medical respite beds, and it probably will not again, but it did because of the vulnerability assessment. It did because of the stark emergency nature of this many people stacked up like cordwood, and knowing that some of them were going to die if you didn’t get them out of there. The funds from the local health department were not sufficient to offer all forty-one patients permanent housing units. These clients were just the tip of the iceberg by Kegel’s estimate. She was also unable to provide all of the city’s most vulnerable with the housing units and services they needed. “We were exhausted,” Kegel said, “and overwhelmed by the people [who were pulled out of camp Duncan Plaza]. We also had camp Claiborne to clear—that was right in front of us. So it was just more than we could deal with, and we didn’t have any resources for those people at all.” She decided to begin simply identifying vulnerable people, in the hope that she could later follow up with substantial support. She started by administering the vulnerability index again while clearing Claiborne in early 2008. (City Hall had asked the organization to close this notorious camp as well, and in return it had promised to provide humanitarian support for the camp’s residents, so that they would be accomodated in temporary shelters and housing units.) The New Orleans Times-Picayune described the operation: A steady stream of vans shuttled the last people up Claiborne Avenue to the Salvation Army’s Uptown shelter, where caseworkers formally interviewed them and assessed their needs. . . . By Thursday at 7:30 a.m., the caseworkers had transported the 38 remaining people, most of them able-bodied and capable of working, said Mike Miller, an outreach worker who’d spent countless hours under the bridge cataloguing medical, substance-abuse and mental-health histories of the tent city’s residents.29 While the camp was being cleared, Kegel presented the results of this survey at a press conference, specially organized for the occasion. She wanted to make clear that the problem of homelessness in the area was still severe and persistent and to motivate media, landlords, and other stakeholders to step 29. K. Reckdahl, “Last ‘Residents’ Moved from Homeless Encampment.” New Orleans Real Time Metro News (blog), July 17, 2008 (www.nola.com).

08-2262-5 CH 8:0496-6

9/7/12

2:47 PM

Page 106

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

106

Frontline Innovations

forward and help out. She also wanted to counter some of the negative sentiments in the city with a strong humanitarian appeal. Furthermore, she and other Unity officials made the index an integral part of its operations. The survey would become Unity´s standard intake procedure, to be used not only during the clearance of the camp but also in the organization’s day-to-day intake procedures. In this way, Unity could continue to identify the most vulnerable clients while working to secure structural support, such as permanent housing units.

Ammunition for a Campaign Kegel used the results of the Claiborne survey for an important undertaking of the organization that was aimed at obtaining such permanent support. While outreach workers were busy clearing Claiborne, Unity representatives were in Washington, D.C., lobbying Congress to secure federal funding for housing units in Louisiana. The campaign aimed to convince members of Congress to allocate 3,000 vouchers to the state of Louisiana for permanent housing units for its homeless citizens with disabilities.30 The vouchers would include building operations ($70 million) as well as the costs of administration and a range of possible services and rent subsidies ($6 million combined). A broad Louisiana lobby coalition, in which Unity participated, was hoping that Congress would include the $73 million in a supplemental spending bill.31 The campaign, started two and a half years earlier, was now in its final stage.The vouchers were far from guaranteed. That the funds the Louisiana coalition requested were meant for rental assistance made it an unattractive deal for some policymakers. “It is always easier to get money for construction of housing, because it stimulates the economy,” said Steve Berg of the National Alliance to End Homelessness, an organization that worked with Unity on the lobby campaign. “But once you have built the house, the problems start. Very poor people cannot afford to live there, because the costs of operating the housing, keeping the lights on, and doing maintenance are too high.” Not everyone was easily convinced that the federal government should help out in these situations with rental subsidies. “In this country, you always run into people who argue that people without housing are not working hard enough.”32 Unity had two goals: first, to help obtain the vouchers in the first place, and second, to make sure that some of the vouchers, which were to be distributed 30. The definition of disability included mental and medical conditions. 31. Office of Senator M. Landrieu (2008). 32. Steve Berg, vice president for programs and policy of the National Alliance to End Homelessness, personal interview with authors, Washington, D.C., June 2010.

08-2262-5 CH 8:0496-6

9/7/12

2:47 PM

Page 107

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Implementing the Vulnerability Index in New Orleans

107

among various parts and agencies across the state of Louisiana, would go to its clients. “We were concerned that if we did not seek rent vouchers specifically for the homeless,” Kegel said, “they would not be able to access the vouchers, because they would be competing against people who could really fight for them. . . . Our clients are not really able to do much for themselves.” Because of the medical assessments in camp Claiborne, Unity now had the numbers at its disposal to demonstrate the urgency of its case. Kegel argued to decisionmakers in Congress that Unity was confronted with a huge number of demanding cases. In addition, she made the case to members of the Louisiana lobbying coalition that Unity´s clients were in most desperate need of the vouchers. She requested that 1,000 of the 3,000 vouchers that would be included in the bill go to Unity, as it cared for “the most vulnerable” people in the state. While lobbying for the vouchers, Unity fed the findings from the vulnerability index to members of the press. As Steve Berg explained, press coverage was crucial to the lobby effort; it would make the problem of homelessness visible. “We worked with the national media and television networks. Martha also worked with the local press, which helped to put pressure on the Louisiana delegation [in the House and the Senate] in D.C. to stay involved.”33 The New York Times followed up on these efforts. At the end of May 2008, after the Senate had passed a version of the bill that included the vouchers but before the House of Representatives would vote on a version of the bill that did not yet include the recovery package, the newspaper published an article about the situation in New Orleans and the findings of an unstipulated survey (which was, in fact, the vulnerability index): Outreach workers have found clients with cancer and colostomy bags, and one so disabled that he was unable to talk. . . . Unity has already moved 60 of the most vulnerable people from the camp to hotel rooms, paid for with a city health department grant, including a woman who is eight months pregnant and a paranoid schizophrenic who is diabetic and a double amputee. In the filth of the camp, the amputee’s stumps had become infected.34 About a month later, the same newspaper published an editorial dedicated to the “growing number of sick and disabled people who have become homeless” since Katrina. “Outreach workers have come across people suffering from severe mental disorders, as well as from cancer, AIDS, and end-stage kidney 33. Berg, interview. 34. Celano, “Resources Scarce, Homelessness Persists in New Orleans.”

08-2262-5 CH 8:0496-6

9/7/12

2:47 PM

Page 108

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

108

Frontline Innovations

disease,” read the column. “The lives of some of this country’s most vulnerable citizens—who were already abandoned once by their government—are at stake.” The editorial concluded that these people could be saved if only Congress would approve “a modest, $73 million in funding to house many of the region’s ill and disabled residents.”35 Ultimately, in June 2008, the House of Representatives approved a supplemental appropriations bill that included the vouchers.36 The Louisiana Office of Community Planning and Development then allocated the 3,000 vouchers for permanent housing to state agencies in the southern part of the state. The homeless in the New Orleans area were granted 752 of them (although Unity had asked for 1,000). Unity would have direct control over these vouchers.

Results After securing these vouchers, some things changed for the better for Unity. When Kegel decided to administer the vulnerability index, the resources of her organization had been exhausted. Katrina had left Unity with an exploding population of homeless people and a gutted support infrastructure that crippled the organization’s operational capacity. More people needed housing more desperately than ever before, and never before had there been so few places for them to go. One year later, the situation was somewhat improved. Kegel had been able to find funding for the first forty-one high-risk clients identified by the index. She had convinced the local health director to pay for their care, based on the findings of the survey. Moreover, Kegel had secured long-term support for part of the homeless population in New Orleans by obtaining a substantial number of permanent housing vouchers. In both developments, the vulnerability index had played an important role that Kegel had not foreseen.

Innovation and Improvements In what ways was the vulnerability index innovative? We can identify the novel aspects of the index along the three levels on which it helped Unity. First, the index was innovative as an administrative assessment of medical conditions at the case level. The survey proved to be a diagnostic tool that closed the existing gap between research and practice and enhanced Unity’s ability to determine the medical conditions of each of its clients—including their risk 35. “Helping the Katrina Homeless,” editorial, New York Times, June 9, 2008. 36. Obey and Committee on Appropriations (2008).

08-2262-5 CH 8:0496-6

9/7/12

2:47 PM

Page 109

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Implementing the Vulnerability Index in New Orleans

109

of dying in the short term. Unity caseworkers already knew that their clients badly needed help, but the index gave them more or less objective data that they could put to immediate use. The index’s point system (the higher the points, the higher a client’s chances of dying in the short term) allowed the organization to understand and communicate the urgency of their clients’ problems objectively and to help those most in need first. Second, the index became a valuable research tool on the community level. Unity used the research results to create a profile of the homeless population. For example, the organization concluded that there were three main groups of homeless in the Claiborne campsite at the time the first survey was administered: a group that had been homeless before Katrina (26 percent); a group that was homeless because of Katrina (60 percent); and recent arrivals (14 percent). The index thus provided numerical data about the size and nature of both the problem of homelessness and the problems afflicting the homeless population, although it is important to note that the assessment was based on self-reporting. However, when Unity followed up on the conclusions of the assessment, caseworkers had to gather official medical documents to prove their clients’ conditions. “Medical documentation is one of the first things that we seek,” said Kegel. Third, the index was innovative as an instrument for decisionmaking at the policy level. Unity implemented the index in a structural way. The assessment became part of the routine intake procedure and the principal tool for interventions, such as the distribution of the 752 permanent housing vouchers. The reason to implement the index was its perceived objectivity. Before the index was used, caseworkers essentially had to compete with one another, fighting to get the support that they believed their clients needed most. “Now, we can make more informed decisions about who gets priority treatment and who gets into housing first,” said Kathleen North.37 The index thus helped Unity resolve disagreements among its staff and overcome arbitrariness in its procedures. The index also helped the organization make more equitable decisions. The loudest voices among staff or clients did not automatically get priority anymore. The index could not make every decision easy, however. When two or more individuals had the same score, “staff members even argue harder.” The assessment tool also did not fully banish professional disagreement. “We still make decisions based on professional and human judgment. If a disabled addict has been raped a few times, we prioritize, even if she has zero points on the index.”38 37. North, interview. 38. North, interview.

08-2262-5 CH 8:0496-6

9/7/12

2:47 PM

Page 110

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

110

Frontline Innovations

Strategy and Tactics What key strategy and tactical actions supported Kegel’s objective to accommodate her clients in a sustainable way? Kegel used the innovation as an instrument to generate support and resources for the homeless of New Orleans.

Redefining Homelessness Her core strategy was to reframe the conversation about homelessness in terms of medical urgency. Based on the findings of the index, she was able to define the issue as a matter of life and death. This strategy allowed Kegel to make a strong humanitarian appeal that could motivate partners to jump in and act swiftly. An official of the nonprofit Common Ground, which has used the index to similar effect, captured the essence of this strategy: “We’re in a wrestling match, and we’re losing this fight. Highlighting how deadly homelessness is, is a way to pull people into this fight on our side.”39 Other conceptions of the problem of homelessness were not fully replaced by this definition. Homelessness continued to be treated as a socioeconomic housing issue and as a local post-Katrina problem in the inner city of New Orleans, as it had been before the index was first conducted in 2008. Kegel added a new definition to the already existing range of interpretations— expanding her organization’s basic value proposition by highlighting a new dimension of the public value that Unity produced. Next, Unity could present the findings of the assessment to its current stakeholders to justify its provision of services to the homeless. The index provides a means of measurement, and that increases the legitimacy of the work we do. It helps raise funding for the work we do. There are many more homeless people than is generally assumed, and many of them are in more serious trouble than people actually think. We do not have to beg as much as we used to anymore on a case-by-case basis; there is less negotiation needed to get people into housing.40 The assessment expanded the pool of resources that Kegel could access. Based on this new value proposition, Kegel generated as much support as she could get from a new stakeholder in the medical sector, persuading a local health care provider to allocate its resources to Unity’s clientele. 39. Kanis (2008). 40. North, interview.

08-2262-5 CH 8:0496-6

9/7/12

2:47 PM

Page 111

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Implementing the Vulnerability Index in New Orleans

111

Finally, Kegel turned to local and national press, through which the general public and decisionmakers who allocated resources could be reached. She and other Unity leaders targeted decisionmakers in the political realm—for example, lobbying for permanent vouchers on Capitol Hill. However, it was not only the vulnerability index that helped the campaign for vouchers succeed. According to Steve Berg, other issues were also key to the success. The strong commitment of the state’s senator Mary Landrieu and numerous calls and letters from Louisiana residents to key decisionmakers were also of great importance.41 However, Berg noted, the index certainly helped to make a strong argument to get parties on board. “That people were clearly very disabled, and that the funding was targeted, made it easier to make the case. The vulnerability index helped sell the idea; you can open people’s eyes about people dying in the streets. We also made clear that the more vouchers would end up in Unity’s hands, the better they could help to end homelessness.”42

Use of Quantitative and Qualitative Data A more specific tactical action by Kegel concerned the use of data generated by the index. Kegel worked with hard, numerical data about the size and scope of the problem as well as soft data on individual cases. Both played an important role. When the homeless population increased dramatically after Katrina, it was especially important for Unity to collect and provide as much numerical evidence as possible about the size and severity of the problem. Simultaneously, soft data about individual medical conditions revealed the personal human tragedy lurking beneath the statistics. Kegel made the data available in an accessible and appealing format. At Unity’s press conference during the clearance of Claiborne, Kegel presented the survey’s results in hard numbers and bold graphics (see figure 8-1). “We went around and showed it to folks,” Kegel said. “So it was a physically traumatic campsite on the street combined with the physically dramatic PowerPoint that we then put together.” With the availability of numerical data on the community level, Kegel had an inventory of data on those with serious medical and mental conditions and was thus capable of demonstrating how typical these conditions were. At the 41. Steve Berg observed, “Although we have used the vulnerability index a lot in our communication, the success was a combination of factors. For example, what helped was the fact that rebuilding the Gulf Coast was seen as a national effort, not as a contained, local concern. Congress had already put a lot of money in it, and if you spend a lot of money on a problem, you want it to be solved. Adding something extra is not a big deal. The Democrats had just taken control over Congress and they wanted to be seen as the party that could solve problems. So they wanted to get results down there.” Berg, interview. 42. Berg, interview.

08-2262-5 CH 8:0496-6

9/7/12

2:47 PM

Page 112

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

112

Frontline Innovations

Figure 8-1. Emergency Room Visits by Claiborne Encampment Residents a Percent 90 80 70 60 50 40 30 20 10

33 Vulnerable 69

Non-vulnerable

67 31 Population

Hospitalizations

Source: Unity of Greater New Orleans (2008), slide 27. a. Based on ninety-one reported visits in the past three months.

press conference during the clearance of Claiborne, she referred to general data about the group’s conditions while also pointing to specific individual cases. Unity had some success in reaching the public with these stories. After the conference, a local newspaper reported: Typical of the Claiborne camp was Warren Mays, 63, a small, toothless New Orleans native who arrived at the camp for the first time last night, [outreach worker Mike] Miller said. Mays has slept on porches and sidewalks around town for years, and his health has now worsened to the point where he carries a bag of prescription pills for everything from built-up fluid to mental illness. . . . On his wrists, four yellow bracelets documented a series of recent hospital visits: on July 6, 8, 14 and 16. As he got up, he looped his left arm around a crutch to prop him up as he walks, because he has shortness of breath. . . . In his right hand, he carried a yellowish plastic bag connected to a catheter, inserted earlier this week, he said.43

Sending Out an SOS Kegel also made a tactical choice to ring the alarm bell. In February 2008, Unity was preparing to clear the homeless camp at the Claiborne underpass, and Kegel felt that her organization and stakeholders were hardly up to the 43. Reckdahl, “Last ‘Residents’ Moved from Homeless Encampment.”

08-2262-5 CH 8:0496-6

9/7/12

2:47 PM

Page 113

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Implementing the Vulnerability Index in New Orleans

113

task. Furthermore, City Hall had not lived up to its promise to pay Unity in a timely manner for the clearance, and Unity had been forced to borrow money. Kegel had to go without salary for a while.44 Persuading others to act concretely and help clear the camp was a challenge. However, once the vulnerability index had identified forty-one individuals in dire need, Kegel was able to present the camp clearance to the city health department as an emergency situation. Kegel rang the alarm to motivate her own people, as well as other stakeholders, when it came time to clear camp Claiborne. She made others realize that there was indeed a serious crisis in New Orleans. “When you put it in terms of people about to die, it suddenly puts an urgency to it. But what the vulnerability index did for us was give us and others another impetus to treat that camp also as an emergency, even though we were exhausted.”

Making It Stick A third tactic was Unity’s move to integrate the vulnerability index into Unity’s intake procedures. Kegel thought that first and foremost the tool was helpful to the organization itself for interventions, and she also realized that it could help other individuals (such as landlords) and agencies that Unity relied on feel confident in the necessity of the organization’s work. Not only did Unity make the index part of its standard intake procedure, but it also rearranged its waiting list for permanent housing units accordingly. “The Permanent Housing Registry is, since 2008, based on the vulnerability index,” Kegel explained. “People are ranked not in order of when they applied or when we found them; they are ranked in order of how high they score on the index.” Although Kegel chose to continue using the index because of its usefulness as an objective instrument for intervention and targeting homeless individuals, the organization also used the index’s findings in appeals to stakeholders for support. “We shock people all the time,” said Kegel, “with the reality that we have got so many people waiting in our Housing Registry for permanent housing.” (In 2011 the Permanent Housing Registry listed 1,077 people.)45

Conclusion Homelessness in New Orleans remains a complex, intractable problem.46 The 752 permanent housing vouchers granted by Congress were no silver bullet. 44. K. Reckdahl, “City Hall Is Sitting on Cash for Homeless,” New Orleans Times-Picayune, January 19, 2008. 45. Unity of Greater New Orleans (2011, p. 3). 46. According to a report of Unity in 2011, “9,165 persons [are] meeting the [Department of Housing and Urban Development] definition of homelessness (including people facing imminent

08-2262-5 CH 8:0496-6

9/7/12

2:47 PM

Page 114

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

114

Frontline Innovations

In 2010 the size of the problem of homelessness was still daunting—the aggregate numbers had not changed much, and Unity continued to fight for support.47 “We can’t use all of the permanent housing vouchers,” explained Kegel, “because we’re so short staffed.” Caseworkers of government agencies assigned to help house Unity’s clients could not quickly process the vouchers because they had so many different problems to sort out. The case management was too demanding. As a result, people who were eligible for housing remained on the street. In fact, some people at the top of the waiting list could not be processed at all. They died while waiting. Nonetheless, Unity continued to work with whatever resources it could scrape together. The organization received a national Nonprofit Achievement Award in 2010.48 On receipt of the award, Kegel said that, indeed, the challenge was overwhelming. “But I think it is getting a little better because we are steadfastly working on it.” She added, optimistically, that the problem of homelessness can be solved. “I don’t want to see anyone living in abandoned buildings five years from now. I really believe that we can overcome this problem, but we really need everyone’s help.”49

eviction or discharge from institutions) in Orleans and Jefferson Parish on any given night. An additional 1,603 persons residing in Permanent Supportive Housing; 6,687 Core Homeless Persons—persons residing in places not meant for human habitation, emergency shelters, and transitional housing.” Ibid., p. 7. 47. For example, after the campaign for 752 vouchers had finished, Unity started lobbying in the state of Louisiana for $100 million “to create housing stock for the poorest and most vulnerable” and for another $35 million in additional vouchers designated for elderly homeless. 48. Awarded by the National Alliance to End Homelessness. 49. ABC 26 This Week, WGNO news report, July 22, 2010 (www.unityngo.org).

09-2262-5 CH 9:0496-6

9/7/12

2:50 PM

Page 115

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

9

Join the Club The Emergence of Alzheimer Cafés in the Netherlands With Marica Crombach

O

ne day in September 1997, fifteen bright green placards appeared in the hallways of the University of Leiden, Netherlands, bearing a peculiar message: Alzheimer Café. Arrows on the placards pointed in the direction of a lecture hall. Bère Miesen, a psychogerontologist at the university, had hung the signs in an effort to publicize his new idea: a venue designed to focus attention, in an unprecedented way, on the care given to those suffering from dementia. Although Miesen had not received any active support from the university—on the contrary, the institution wanted nothing to do with the initiative—he stubbornly proceeded. A mere twelve years later, Miesen’s Alzheimer Cafés had become a widespread phenomenon. After just three gatherings, the number of visitors had increased from seventeen to well over eighty a month. Thanks to national media attention, in the years that followed Alzheimer Cafés opened all over the country. By 2010 one could find an Alzheimer Café at more than 180 sites. In other countries, such as Belgium, England, Italy, and Greece, similar cafés were being erected. What began with a few cardboard signs and a lecture hall in 1997 had become a great success.

In addition to the interviewees quoted in this chapter, respondents on this case study were various coordinators of regional departments and people working at Alzheimer Cafés, including Hans van Viegen, November 4, 2010; Patty Broekman, December 1, 2010; and Corrie Rice, August 25, 2010, and September 8, 2010.

115

09-2262-5 CH 9:0496-6

9/7/12

2:50 PM

Page 116

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

116

Frontline Innovations

Growing Problem At the time of the founding of the first Alzheimer Café, dementia was a growing medical and social problem in the Netherlands. The aging of the population meant that an increasing number of patients were suffering from the disease. Additionally, improvements in health care practices had made identifying and recognizing dementia easier. By 2003 one in nine people who died in the Netherlands suffered from some degree of dementia, and it is expected that by 2050 over half a million people in the Netherlands will suffer from the disease.1 Even as the incidence of the disease was on the rise, Alzheimer patients and their partners found themselves increasingly isolated. In an atomized, increasingly virtual social environment, the physical or psychological limitations that often accompany old age often caused already fragmented social networks to shrink even further. To make matters worse, a taboo then surrounded dementia. In the early phases of the disease, many patients tried to hide their fears and the changes they were undergoing from both their partners and the rest of the world. Those afflicted with the disease frequently remained indoors, uncertain how neighbors and friends would react to their disease. A scarcity of information available for patients and their partners only reinforced the insecurity of people facing drastic changes in their lives. The fear and secrecy could grow into feelings of shame and insecurity, which in turn could result in more evasive behavior. Once family members begin to notice the psychological changes, they often did not know how to cope: how to talk about it with the loved one afflicted, what to say to their primary care physician, or how to face the ongoing changes already straining the relationship. In short, worries, shame, and a lack of knowledge stood in the way of asking for help for both patients and families. In the 1990s some initiatives did exist to provide care for those who were affected by Alzheimer disease, such as day care for those with dementia and discussion groups for their partners. The national organization Alzheimer Netherlands offered information to partners and caregivers about ways to cope and what services were available to them and their loved ones. But Miesen noticed that there were no venues that patients and their families could attend together. Miesen believed that, as their social network collapsed, people with Alzheimer’s and their partners lost a crucial support network. “I was concerned about those suffering from dementia. That includes not only patients but also their families. The challenges faced by them are actually 1. Meulen and Keij-Deerenberg (2003); Alzheimer Netherlands Foundation (2009).

09-2262-5 CH 9:0496-6

9/7/12

2:50 PM

Page 117

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

The Emergence of Alzheimer Cafés in the Netherlands

117

more difficult: someone loses their partner to dementia, even though that partner is still there. Family members are witnesses as the patient engages in a fight that is rigged from the outset.”2 A narrow medical outlook on the problem of dementia seemed to stand in the way of psychosocial approaches to treatment. Those working in the health care sector tended to talk about patients but not to them. Consequently, little of the support available focused on those with dementia and their partners as a couple. Furthermore, Bère Miesen was among the first to point out that there was not enough attention being paid to the questions and thoughts of the patients themselves when it came to the delivery of care with regard to Alzheimer disease. The working assumption was that patients were not fully aware of the process they were undergoing. Through his own academic research Miesen was able to show that those suffering from dementia were “most certainly aware of their inability to experience continuity in their lives.” As a result of this awareness, patients go through a grieving process: a psychological response to the disaster of losing control over their very own lives. “Dementia creates feelings of insecurity and instability; [those are] ingredients for depression or aggressive impulses.”3 For these reasons, Miesen argued, those suffering from dementia and their partners, simultaneously bystanders and victims, needed support in accepting what they were experiencing.

Innovation Process Bère Miesen wanted to do something about these problems. He wanted to focus attention on the psychosocial effects of the disease by giving those suffering from dementia and their partners a voice and offering them a place to discuss their experience of Alzheimer’s. At the end of the 1990s, he was trying to find a way to put his ideas into practice. At that time, Miesen was teaching a clinical and health psychology course at the University of Leiden that focused on the psychological trauma that accompanies diseases afflicting the elderly. Miesen proposed to the education committee (in charge of the curriculum) that part of the course focus on dementia as psychological trauma. His request was rejected: neuroscientific research and the biomedical aspects of the affliction of the mind were central to the curriculum. Miesen’s proposal did not fit this profile. 2. Dr. Bère Miesen, psychogerontologist, personal interview with authors, The Hague, March 2010. 3. Miesen, interview.

09-2262-5 CH 9:0496-6

9/7/12

2:50 PM

Page 118

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

118

Frontline Innovations

“I was disappointed and somewhat upset,” said Miesen. “Then I thought, ‘Whatever, I’ll just get the patients to come to the university themselves.’” He decided to organize a gathering in a lecture hall. He also decided not to involve the university in his plans: the university, in turn, chose not to interfere.4 “Miesen had always been more of a loner when it came to the day-to-day activities,” said a faculty member.5 Miesen contacted the Alzheimer Foundation South-Holland North, the regional branch of Alzheimer Netherlands.6 “The foundation knew many people suffering from dementia in the area and could help me reach my target audience,” he said.7 The foundation usually organized informational sessions and provided leaflets intended to inform and represent the interests of those who had dementia and their loved ones. While the national organization “primarily focused on large caregivers,” the regional branch “wanted more attention to be paid to the patients,” explained its chairwoman. When Miesen contacted her about recruiting guests, speakers, and making informational material available for his first Alzheimer Café, his request was received with great enthusiasm.8

The First Café Miesen expected the first gathering, in September 1997, to be a small event. He “had raised awareness about the café through local radio stations in Leiden and advertising in some door-to-door leaflets.” The university took no steps to promote or prevent the café meeting. The bright green signs whose black arrows led visitors to the lecture hall “were useful, and were meant to make people at the university stop and think for a moment. It was somewhat of an aggressive move.”9 Seventeen people attended the first café. Miesen took on the role of moderator (or “innkeeper”) to ensure that there was a clear program for all to follow. He interviewed a man who had dementia, then gave everyone a break, then opened the floor for a discussion with those present concerning their personal experiences and questions. The success of the meeting became apparent at the second event, a month later, which nearly doubled the attendance 4. Miesen, interview. 5. Psychology professor, University of Leiden, telephone interview with authors, Leiden, August 2010. 6. Financially, the organization received its support from the national foundation. However, it did have room to maneuver independently. 7. Miesen, interview. 8. Maria Ruijs, chair of South-Holland North, Alzheimer Foundation, telephone interview with authors, Voorhout, August 2010. 9. Miesen, interview.

09-2262-5 CH 9:0496-6

9/7/12

2:50 PM

Page 119

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

The Emergence of Alzheimer Cafés in the Netherlands

119

at the first. The following month, eighty people attended. By then, Miesen had fine-tuned his program to give it a clearer order and shorter “information blocks.” “I thought to myself, ‘All guests have to have a clear overview of what is going on and know what they are taking part in. And you have to speak to everyone [both those suffering from dementia and their loved ones].”10 As the year progressed, Miesen slowly but surely streamlined the cafés into a regular format. The program was divided into half-hour segments. Most of the time it included an interview with an expert, a patient, or a family member followed by a general discussion moderated by the innkeeper. The lineup created room for unstructured discussions, questions, and a drink or a cup of coffee.11 During this time, professional caregivers would walk around the room so they could be easily approached with questions.

A Public Relations Opportunity At the third Alzheimer Café, programming staff from the television station Teleac (Television Academy) showed up. Teleac, a division of the Dutch national public broadcasting system, had the mission to make knowledge widely available for a broad public through informative and educative programs. One of the programs Teleac produced was a series focused on health. “Within the series, various different serious diseases were discussed. There was one question that was central to each course: how can you learn to live with the disease?” explained Teleac’s editor, Marianne Spermon.12 The management at Teleac had decided to feature dementia in the series and had asked two editors to find a new and attractive program format through which to discuss the disease. When the editors caught wind of the Alzheimer Café, they were intrigued. “The ‘café’ element ensured that the disease was approached through the eyes of daily reality and avoided focusing on it with too much bombast,” Spermon said. Miesen’s approach aligned with the two primary criteria of the health program. “We wanted to transmit information while at the same time delivering the message that a patient with dementia is a normal human being.”13 When the editor proposed using the Alzheimer Café as the basis for their series, Miesen responded enthusiastically: “I remember thinking to myself: I’m not going to let this chance slip by.” He saw the series as an ideal public 10. Miesen, interview. Those present at the first meeting described the experience positively, according to Miesen. 11. The schedule was half-hour entrance, half-hour interview, half-hour break, half-hour discussion, half-hour time for coffee and drinks. 12. Marianne Spermon, Teleac editor, personal interview with authors, Leiden, March 2010. 13. Spermon, interview; Miesen, interview.

09-2262-5 CH 9:0496-6

9/7/12

2:50 PM

Page 120

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

120

Frontline Innovations

relations opportunity to raise awareness about the Alzheimer Café and his particular approach to the disease. In accordance with the series’ usual practices, Spermon then turned to Alzheimer Netherlands. Involvement of a patient organization was standard for each disease Teleac featured; it created a foundation for credibility and social acceptance. Additionally, “if the audience after a show still had questions, or wanted more information, Teleac wanted to ensure they had somewhere to go. That is why we went to the foundation and said, ‘This is the concept for the series, this is what we plan to achieve, and do you wish to partake?’”14

Reluctant Partners Alzheimer Netherlands was “a foundation, a fund for the sick, and a patient organization rolled into one,” explained its official, Herman Post. Its goals were primarily to educate and assist Alzheimer patients and their loved ones. The foundation received subsidies from various government agencies, especially the Ministry of Health, Welfare, and Sport, but government subsidies were less than 10 percent of all annual income. It relied in large part on gifts and contributions from third parties. “About 10,000 volunteers donate their time to collect donations annually,” added Post.15 From the outset the foundation was enthusiastic about being involved with the Teleac series. However, it was less enthusiastic about the proposed tone of the show, which seemed too lighthearted in the context of such a serious disease. For his part, Miesen was wary of Teleac’s plan to include the foundation. “I had not foreseen that Alzheimer Netherlands would be involved.” He feared that because of the foundation’s input, a more traditional, technical perspective would come to dominate the series and would detract from his focus on the psychosocial effects of the disease. Teleac, however, held firm: including the patient organization was a nonnegotiable feature of the series. Miesen resigned 14. Miesen, interview; Spermon, interview. “In that period viewer ratings played a much smaller role, as education of the target audience was the most important goal. The visuals did slowly have to become more appealing over time, but the content and support provided afterwards remained central,” explained Spermon (Spermon, interview). 15. Herman Post, head of the support and information department, Alzheimer Netherlands Foundation, personal interview with authors, Bunnik, 2010. The foundation was the only one of its kind and size in the Netherlands. Presently, there are fifty-two regional departments throughout the country that are supposed to look after the interests of people with dementia and their loved ones. All departments, including their boards, consist mainly of volunteers: this includes 1,500 people across the country and 40 paid personnel. To give a sense of the amount of money involved in the foundation’s work: in 2008 the foundation received a total of €7,514,301. The government’s contribution to this total was €615,429. Through its own fundraising—donations, gifts, money drives, and contributions—a total of €6,659,158 was raised. Alzheimer Netherlands Foundation (2009).

09-2262-5 CH 9:0496-6

9/7/12

2:50 PM

Page 121

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

The Emergence of Alzheimer Cafés in the Netherlands

121

himself to this demand. “Teleac wished to involve the foundation but agreed to go with my concept for the series, which was more important to me.”16 Spermon had to use all her negotiating skills to secure the foundation’s involvement. She asked the foundation to write a book about dementia entitled Living with Dementia, which would be published concurrently with the series on Alzheimer’s. “In this way they became participants in the program design,” she explained. The foundation, finally convinced that it would benefit from the series, agreed to cooperate with Teleac. “The series would become a platform whereby the association could spread its ideas to a wider audience, and above all guaranteed more name recognition and awareness about the disease. More attention for dementia would have a positive influence on the annual contributions.” Teleac took the task of financing for the program upon itself.17

Keeping Control From the start, Miesen attempted to retain as much control as possible. As production got under way, both Miesen and the editors pitched program concepts in meetings and even during tapings. “You have to fight for your breaking points,” the innovator said, “and give every now and then on the things that don’t really matter to you. It is important in the process to take the initiative during meetings, to clearly explain your plans.” He guaranteed his role as narrator in a contract, ensuring that he could monitor and shape both the form and content from up close. Teleac was sympathetic. “After all, the Alzheimer Café was his baby, his project,” said Spermon.18 Miesen would have liked to see the series named exclusively after his Alzheimer Café, but this proved to be a bridge too far for the management of Teleac. “A title such as The Alzheimer Café would leave too frivolous an impression,” thought Spermon. “After negotiations, we agreed on the title Living with Dementia, with a subtitle of The Alzheimer Café. The subtitle was very prominently in view during the introduction of the program; Bère had fought for that.”19

Expanding the Cafés Tapings at the Alzheimer Café took place during the second season (1998–99) of the series and were broadcast in 1999. The café concept quickly gained traction. “The Alzheimer Café spread like a wildfire all across the Netherlands,” said 16. Miesen, interview. 17. Spermon, interview. 18. Miesen, interview; Spermon, interview. 19. Spermon, interview.

09-2262-5 CH 9:0496-6

9/7/12

2:50 PM

Page 122

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

122

Frontline Innovations

Herman Post, an official of Alzheimer Netherlands.20 Individuals, regional Alzheimer’s associations, health care providers, and municipalities started their own Alzheimer Cafés. Those who took the initiative to create new cafés often contacted Miesen to gather more information. Miesen would try to explain the philosophy behind the café as best he could. Not all cafés followed Miesen’s ideas to the letter. Some were more specialized, aiming to assist informal caregivers in their delivery of care, for example. Others were more loosely structured, allowing the wishes of those in attendance to dictate content rather than following the standard format of the café. “Some cafés thought, ‘You ask, we deliver.’ That was not a good development. It is supposed to be an educational program that gets repeated,” said Miesen.21 As the cafés proliferated, Miesen felt that his ideas often disappeared into the background.

Cooperating for National Coordination Miesen was powerless to retain control over all the cafés. Answering every request for information and practical advice became a burden. Even as Miesen grappled with this problem, Alzheimer Netherlands was trying to retain oversight over all the cafés sprouting up and provide support for them. This was because the foundation was also being approached regularly by initiative takers. Despite their difficult relationship, Miesen and Alzheimer Netherlands decided to cooperate; both wanted to ensure the quality of the cafés and create a more unified national coordination of the concept. Alzheimer Netherlands had the manpower and financial means to fulfill the coordinative role, while Miesen had the knowledge to give form to the Alzheimer Café concept. When the foundation proposed establishing the Alzheimer Café as a trademark, however, Miesen, who saw the café as his own invention, chose to take care of the registration process with his new employer, Living Care Centre Haaglanden.22 “We weren’t really concerned about the registration,” said Miesen. “What we were concerned about was protecting quality and creating some leverage vis-à-vis Alzheimer Netherlands.” Alzheimer Netherlands 20. Post, interview. Alzheimer Cafés were also created abroad. One of the first countries to follow suit was Belgium, but other countries, such as England, Norway, Denmark, Luxembourg, and Greece, soon followed suit. Outside of Europe, cafés also exist in the United States. Even though they carry the same name as the Dutch variant, as far as form and content are concerned, cafés are not necessarily the same everywhere. 21. Miesen, interview. 22. The Living Care Centre registered the café on October 1, 2002, at a patent bureau. In April 2010, it handed over its registered trademark, “Alzheimer Café,” to the foundation. Bère Miesen and Alzheimer Netherlands are now co-owners of the label.

09-2262-5 CH 9:0496-6

9/7/12

2:50 PM

Page 123

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

The Emergence of Alzheimer Cafés in the Netherlands

123

accepted Miesen’s move. “The café was founded upon his initiative, after all,” said Post.23

Establishing Quality Criteria Miesen and the foundation put together a quality control list in 2004—an attempt to put Miesen’s theory into practice, combined with input from the foundation. The issues sought to set standards for Alzheimer Cafés: at least 5 percent of the guests at a café had to be people with dementia; a café had to meet at least ten times a year on a monthly basis; and during the meetings, psychosocial issues had to get more attention than medical issues. “It was a type of measuring rod whereby we could annually say, ‘That needs additional work, and that is going well.’” Additionally, Miesen and Alzheimer Netherlands created training courses for discussion leaders. The foundation hired him to provide a two-day training session each year. These training sessions, in combination with the quality control criteria, helped to ensure that the form and content of the Alzheimer Cafés remained consistent. “I can’t remain involved with the cafés forever, and that is why it is important that others can take over my work,” he said.24 In the years that followed, Miesen came to see his cooperation with the foundation in an increasingly positive light: “Alzheimer Netherlands is consistently expanding [its] vision. Not only are medical solutions put central, but support and psychosocial help are increasingly more important in the foundation’s vision.” The foundation was also positive about its cooperation with Miesen. “As the years progressed, the roles and responsibilities of Miesen and those of Alzheimer Netherlands became clearer and were put in proportion,” said a foundation official, who admitted that initially their cooperation was anything but smooth. Over time, tensions decreased as understanding of each other’s ways of working grew.25

Tapping into Government Funding When the cafés began appearing all over the country, financing them became a point of concern. In Miesen’s first café, the costs were negligible. The new cafés, on the other hand, did have structural costs: rent for locations, publicity, compensation for guest speakers, sound systems, and so on. The foundation’s annual contribution of €3,000 to each café covered a large portion of 23. Miesen, interview; Post, interview. 24. Miesen, interview. As of 2010, forty-one discussion leaders have been trained, and there are 105 Alzheimer Café volunteers. In the meantime, Miesen has also schooled seven trainers who themselves can now educate discussion leaders. 25. Miesen, interview.

09-2262-5 CH 9:0496-6

9/7/12

2:50 PM

Page 124

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

124

Frontline Innovations

these costs. Local sponsors would sometimes provide contributions as well or would take care of coffee and sandwiches. Some cafés were sponsored by a bank, an association like the Rotary Club, or the local flower shop. In 2008, however, concerned about drastic cuts to its yearly government subsidy, the foundation started working to ensure that the cafés were made part of the regional dementia networks organized by the Ministry of Health, Welfare, and Sport. A café that was included in these networks could receive government subsidy.26 Municipalities had to allocate funds to parties in the network according to the Social Support Act. This legislation, introduced in 2007, was meant to help a broad range of patients (including those suffering from Alzheimer’s) eradicate obstacles in and around the house, in local transportation, and in maintaining social contacts. Each municipality was required to guarantee facilities for patients and could therefore subsidize the local Alzheimer Café as long as it was part of an official regional network. “The Alzheimer Café neatly fit into the picture for [the Social Support Act] possibilities. Municipalities had the means to ensure that the café got a place in society.” To do so, the municipalities, which divided the subsidy moneys, had to know what the cafés were all about. Research from 2010 showed that few municipalities were aware of the social assistance options available for those dealing with dementia. Thus Alzheimer Netherlands worked hard to create contacts with the municipalities and encouraged those running Alzheimer Cafés to approach the municipalities themselves. To further this process along, Alzheimer Netherlands created a toolkit—a pamphlet stocked with tips on how the cafés could use the Social Support Act to their advantage. In December 2009 the foundation also sent a list to 6,000 local political parties, suggesting ten ways to improve care for those suffering from dementia and their next of kin. The document, entitled 10x Better Care for Dementia, included practical advice (for example, “Be aware of how many citizens have dementia”; “Actively find caregivers”) and information about the disease (for example, “Dementia is a fatal, regressive disease”). In 2010 the foundation conducted an inventory that documented the way Alzheimer Cafés were organized, financed, and programmed, with the aim of streamlining operations, improving quality, and providing continuity for the cafés. “We wanted to take firmer control over the reins,” said Post. “But not every regional department—through which the cafés are coordinated—was happy with this. Sometimes this was characterized as ‘meddlesomeness.’”27 However, the foundation believed a clear, solid position for the 26. The subsidy was good for two years, after which the café had to reapply. 27. Post, interview.

09-2262-5 CH 9:0496-6

9/7/12

2:50 PM

Page 125

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

The Emergence of Alzheimer Cafés in the Netherlands

125

Alzheimer Cafés would ensure structural support from the municipalities and permit optimal use of the financing made available through the Social Support Act. This alignment was also necessary because the sudden popularity of the café concept had inspired imitators in other medical communities, such as the MEE Café for people with physical handicaps and a café for those suffering from lung diseases. These venues differed in their mission statements and content, but the choice to call them cafés seemed to put them in direct competition for public funding with the Alzheimer Cafés.28 For Miesen, the search for government funding was good news. “Ensuring that the Alzheimer Café is there for patients and their partners in the future is important. From a broader perspective, it also is useful for health insurers.” Miesen thought that the café could help those with dementia and their caregivers learn to handle problems better themselves—potentially allowing patients to live in their own homes instead of costly nursing homes. All in all, Miesen was pleased with the initiatives undertaken, but he also anticipated a need for ongoing lobbying and advocacy to guarantee the future of the cafés.

Results and Improvements What was the result of the combined efforts of Miesen, Teleac, and the Alzheimer Netherlands Foundation? As of 2011 there were some two hundred Alzheimer Cafés—in community centers, restaurants, nursing homes, and cultural centers—all under the watchful eye of Alzheimer Netherlands. The average meeting draws about forty visitors. Outside of the Netherlands, Alzheimer Cafés have taken hold throughout western Europe, the United States, and Japan. The cafés have created a social infrastructure—a place where patients and their partners and loved ones can gather together and receive guidance as they move through the inevitable process of the disease. The cafés give a voice to those attending and offer a listening ear. They provide a safe and peaceful environment in which visitors can learn about dementia at their own pace. In the protective atmosphere of the café, people with dementia and their partners can talk frankly with each other and with professionals about care options.29

28. The foundation itself had no similar initiatives that would compete with the Alzheimer Cafés for Social Support Act subsidies. 29. For those whose dementia is more advanced, communication becomes much more difficult; active participation in discussions then decreases.

09-2262-5 CH 9:0496-6

9/7/12

2:50 PM

Page 126

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

126

Frontline Innovations

The cafés have also helped break the silence surrounding dementia. Dementia and all related topics can be discussed openly in the café, without shame. The café is “a gateway to regular care provision,” said Miesen. “Once visitors feel safe in the café, they begin to explore the disease and its repercussions. That way a beginning is made in finding control over the shocking changes they are undergoing and the processing can begin.” Finally, Alzheimer Cafés have improved access to information through their informal setting. “You don’t have to call a social worker or wait for a polyclinic—in the café you can directly speak to a physician,” observed one café coordinator. These are, indeed, the very improvements Miesen had in mind when he assembled his first café in 1997.

Strategy and Tactics What were the strategic challenges that confronted Miesen, and how did he deal with them? Initially, few obstacles stood in Bère Miesen’s way. His innovation did not particularly fit into the academic environment of Leiden University, and he did not succeed in reframing the scholarly discourse about Alzheimer’s as he’d hoped, despite the evidence he had gathered for his new approach. But despite its lecture hall origins, his café did not directly compete with the academic curriculum, which approached dementia differently. Miesen chose another playing field. As a social venue, his café was completely different in nature from the academic activities of his colleagues. Furthermore, no alternatives existed for his target audience at the time. Neither regional nor national Alzheimer foundations, which were the only parties focused on Alzheimer’s, organized similar initiatives. Miesen’s café was inexpensive, did not require large upfront investments, and was easy to scale up: local initiative takers found ways to finance cafés through local sponsors. The lack of regulations or restrictions made it simple for these initiators to expand Miesen’s innovation.

Creating Demand The only initial challenge Miesen faced was stimulating and organizing demand for his innovation. His sureness that there was a need for his venue and that it would add value to society was firm enough for him to put his idea into practice with virtually no budget. Over the subsequent months, he delivered the first evidence that indeed such demand existed among Alzheimer’s patients and their loved ones, thereby discrediting current approaches to Alzheimer’s, which treated the disease merely as a medical issue. He wagered

09-2262-5 CH 9:0496-6

9/7/12

2:50 PM

Page 127

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

The Emergence of Alzheimer Cafés in the Netherlands

127

that making the venue more visible would activate demand on a broader scale, and, indeed, publicity through collaboration with Teleac brought Miesen quickly into the scale-up phase of his innovation.

Sharing Coordination but Keeping Control With the scale-up under way, Miesen gradually developed an understanding that the game had changed. The rapid growth of Alzheimer Cafés created a demand for coordination, operational management, and structural guidance. Miesen now needed help from other stakeholders. Thanks to the diplomacy of Teleac editor Marianne Spermon, he found a partner in Alzheimer Netherlands to help coordinate the spread of his innovation. To ensure that resources remained available for the cafés, his new ally was willing to help secure funding through the Social Support Act. Miesen could have taken a different path: rather than creating the demand first and worrying about resources later, he could have first secured the resources and then looked for the stakeholders who would allow him to begin working on his innovation in earnest. Although Miesen did initially approach his university and the regional Alzheimer foundation, the support he found was minimal and not critical for the process as it unfolded. Instead, Miesen chose a path that suited his personality. Disinclined to thoroughly explore the institutional setting, he jumped in head first. He did not think about how to trigger or organize expansion; he grabbed the opportunity Teleac presented, knowing it would somehow catapult his innovation forward. During the scale-up phase, Miesen suffered from a “founding father syndrome.” Rather than busily creating incentives for other parties to adopt his innovation, he grasped the reins to maintain control of it. He did not concern himself with whether the other parties involved liked him. His collaborators were quick to call him persistent and stubborn. Miesen was focused on how he would manage his innovation. He was fortunate that Spermon was there to compensate for his lack of diplomatic skills. She invited a new, crucial stakeholder to the table; her mediation brought Alzheimer Netherlands into partnership with Miesen. Alzheimer Netherlands filled the gap in Miesen’s operational capacity, but the bickering between the two parties continued for several years, during which each tried to fight for its particular interests. Initially the foundation was hesitant to cooperate with the Teleac series, while Miesen attempted to fortify his position through such moves as securing a contract guarantee of his role as narrator for the program. Eventually Miesen came to realize that he needed the capacities of the foundation to expand his innovation further.

09-2262-5 CH 9:0496-6

9/7/12

2:50 PM

Page 128

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

128

Frontline Innovations

Rigorous Streamlining The last challenge Miesen faced was institutionalizing the innovation and, ultimately, guaranteeing structural resources for the diverse collection of local cafés. The foundation led the way in tackling this challenge. Miesen’s role in this process was limited, though his previous efforts to streamline other cafés to fit his concept paid dividends in this phase of the cafés’ development. It had already reduced variations among the local initiatives. To be eligible to tap into the government subsidy stream, initiatives had to fit a basic framework, and Miesen’s founding father syndrome had laid a solid foundation for this. In tapping into Social Support Act funds, Alzheimer Netherlands had to work with a fractured subsidy stream. The subsidies were given only on the local level, and the national foundation did not have the capability to file a request in every municipality. (The Netherlands consisted of 430 municipalities in 2010; Alzheimer Netherlands had only about fifty regional departments.) The foundation was proactive in creating demand for the subsidies, identifying where cafés were needed, strengthening streamlining efforts, and raising awareness among decisionmakers about the problems associated with Alzheimer disease and the value of Alzheimer Cafés in dealing with these issues.

Presenting the Problem In its communications to obtain funding through the Social Support Act, Alzheimer Netherlands consistently presented dementia not only as a growing medical problem but also as a social issue that affected patients and their caregivers. The foundation presented the value proposition for the cafés in a way that was easy to understand: it argued that dementia was a serious social problem and that the Alzheimer Cafés provided a solution to this problem. The cafés were presented as unique venues of great added social value. Through this framing, the foundation inadvertently mirrored Miesen’s unorthodox view of the phenomenon of dementia as a social and psychological problem. The foundation’s communication did not explicitly highlight the potential cost savings related to care, despite its political relevance at that moment. Since 2002, consecutive Dutch governments had been attempting to save on health care expenses by ensuring that people in need of care continued to live independently as long as possible, rather than being rushed into nursing homes.30 Presenting the cafés as a possibly cost-reducing measure would have 30. Almost three-quarter of all costs associated with dementia are incurred through nursing homes. Alzheimer Netherlands Foundation (2010).

09-2262-5 CH 9:0496-6

9/7/12

2:50 PM

Page 129

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

The Emergence of Alzheimer Cafés in the Netherlands

129

fit with the governments’ emphasis on self-sufficiency as well as the political expediency of cutting costs.31 This was communicated to the populace under the slogan, “Own responsibility.” The foundation decided not to embrace this mantra (it is unclear why not). In so doing, it missed an opportunity to frame the cafés as potentially money-saving projects.32

Conclusion Bère Miesen’s role in this last phase in the struggle for resources was limited. As of 2010, the center of gravity as far as control over the cafés was concerned had shifted almost entirely to Alzheimer Netherlands. As co-owner of the brand, Miesen had an ongoing role as adviser, coach of moderators, and provider of peer supervision for the cafés. “But the foundation has taken the coordinative role upon itself, and that is logical,” said Miesen. “I cannot remain involved with the cafés forever. You slowly must come to accept this reality. I slowly have to let go of the Alzheimer Café.”33

31. De Jong (2010). 32. Instead, the foundation chose to communicate a sense of urgency in its external communications, emphasizing the seriousness and the growing scope of the disease. 33. Miesen, interview.

09-2262-5 CH 9:0496-6

9/7/12

2:50 PM

Page 130

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

10-2262-5 CH 10:0496-6

9/7/12

2:51 PM

Page 131

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

part iii

Innovations in Governance

10-2262-5 CH 10:0496-6

9/7/12

2:51 PM

Page 132

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

10-2262-5 CH 10:0496-6

9/7/12

2:51 PM

Page 133

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

10

The Sun Kings The Emergence of Solar Energy in Germany With Peter Kasbergen

A

t the beginning of the year 2000, Hermann Scheer visited Gerhard Schröder, the German chancellor, in his office. On the desk between them lay the final draft of a new act—the Renewable Energy Act. It had already passed through parliament, and all it needed to come into effect was Schröder’s signature. Schröder knew that his approval would provide significant incentives for renewable energy production, which would fundamentally change the German energy market. And Scheer knew that fossil energy companies had been aggressively lobbying Schröder to prevent this from happening. In other circumstances, Schröder may well have refused to sign. But Scheer was one of the principal designers of the Renewable Energy Act. For his tireless efforts to promote renewable energy he had recently received the Right Livelihood Award, widely know as the alternative Nobel Prize. Despite the immense pressure from fossil energy companies, refusal to sign the Renewable Energy Act in front of Scheer was a move too bold. Schröder picked up his pen and signed. One of Scheer’s most far-reaching initiatives was his effort to stimulate solar energy production, particularly the 100,000 Roofs Program—a national subsidy program through which the German government successfully stimulated the construction of photovoltaic (PV) panels, popularly known as solar panels, on 100,000 roofs nationwide.1 In less than five years, the 100,000 Roofs 1. Photovoltaic panels consist of many interconnected solar cells (photovoltaic cells), that act as semiconductors, converting solar radiation into direct current electricity. For electricity supply, several PV panels are usually constructed alongside one another.

133

10-2262-5 CH 10:0496-6

9/7/12

2:51 PM

Page 134

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

134

Innovations in Governance

Program, combined with the new Renewable Energy Act, generated a sevenfold increase in solar energy production, laying the groundwork for the German solar energy market to become the second largest solar energy market in the world. Central to the case are two agents of change: Hermann Scheer, a member of parliament and a world-renowned advocate for renewable energy, and, to a lesser extent, his fellow MP Hans-Josef Fell.2 Both innovators worked on the 100,000 Roofs Program and its successor, the Renewable Energy Act.

A Complex Playing Field Scheer and Fell started designing the 100,000 Roofs Program in 1998 because they had become increasingly aware of the disadvantages of fossil energy. “Fossil energy sources are finite,” said Scheer. “They have caused international crises for decades and their prices will only increase. On top of that, they are at the root of the current climate change.”3 The environmental impact of fossil energy production was a major concern for both innovators. Fossil energy resources like coal, oil, and gas are nonrenewable resources because they take a very long time to come into existence. Fossil energy production effectively and definitively depletes the earth’s natural reserves. Wind, sun, and water can be used instead, as renewable energy sources, because turning them into energy does not reduce the supply of the energy source. Furthermore, fossil energy production causes pollution, including carbon dioxide emissions that can lead to climate change and global warming. In contrast, renewable energy production is environmentally clean; it causes no pollution, no climate change, and no global warming.4 Apart from the environmental effects of fossil energy production, Scheer and Fell were responding to a political and economic issue. Germany had grown increasingly dependent on foreign gas and oil; it imported two-thirds of its energy from gas- and oil-exporting countries. West Germany had already experienced the effects of the OPEC (Organization of Petroleum-Exporting 2. Scheer got most of the (media) attention, but we have included Hans-Josef Fell as his fellow innovator in this narrative because he played a significant role in the process as well. Generally, only Scheer is hailed in the media as the “Sun King,” but we feel that the label is relevant for Fell as well. Also, Michaele Hustedt, former MP for the Green Party, among others, played a significant role in the process of designing the 100,000 Roofs Program. We chose to include some quotes from her in the chapter, but we leave her out of the general narrative. 3. Scheer (2008). 4. M. Persson, “Duitsland maakt wel gebruik van de zon [Germany does use the sun],” De Volkskrant, March 28, 2009.

10-2262-5 CH 10:0496-6

9/7/12

2:51 PM

Page 135

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

The Emergence of Solar Energy in Germany

135

Countries) oil embargos during energy crises in 1973 and 1979. The initial response to the 1973 crisis had been an increase in state support for domestic nuclear energy production, but since the nuclear reactor explosion in Chernobyl in 1986, popular support for nuclear energy had been declining. With rising energy consumption on one hand and depleting foreign reserves of oil and gas on the other, Scheer and many others felt that more energy catastrophes loomed ahead.5

Barriers to Innovation Introducing solar energy to the market on a large scale could tackle these issues. The technology for such change was already available. But whoever wanted to address these problems had to face a cost issue: solar and other kinds of renewable energy production were still in a start-up phase and therefore relatively expensive. High costs for research and development (R&D) and for the production and installation of PV panels made solar energy production especially costly. The first PV panels were not yet very efficient, resulting in insufficient return on investment and reluctance among citizens to have panels installed on their roofs. Another obstacle to the large-scale introduction of solar and other renewable energy was what economists call market failure. Even if the costs of production were to decrease, producers would still be unable to compete with fossil energy companies that did not (and still do not) include the external costs of environmental damage and pollution in their energy prices. These companies offered energy at a price that solar energy producers could not (and still cannot) compete with in the energy market. For instance, citizens who installed PV panels would be unable to sell the surplus of PV-generated solar energy to grid operators, because the operators would have difficulty selling the expensive solar energy to other consumers. In short, there was little market for solar energy. While domestically produced solar energy theoretically had a huge potential to reduce dangerous emissions and also to reduce dependence on foreign fossil fuel producers, in practice, high investment costs and low consumer demand were barriers that would have to be overcome. Anyone who was eager to create a significant market for solar energy at the end of the 1990s faced myriad questions: How to create sustainable demand and supply for solar energy? How to encourage citizens to install PV panels on their roofs? How to create incentives for entrepreneurs to produce PV panels domestically? Last 5. Lauber and Mez (2004).

10-2262-5 CH 10:0496-6

9/7/12

2:51 PM

Page 136

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

136

Innovations in Governance

but not least, how to bypass what Scheer called “the monopolization of the energy supply by large power companies”?6

Institutional Setting These challenges had to be addressed in a complicated institutional setting. First, there was little government funding available for investments in alternative energy. Although the energy crises of the 1970s had created awareness about such energy sources, the German government had not responded with substantial investments in R&D for solar energy technology or subsidies for solar energy production. National energy policy offered subsidies only for domestic energy production from coal and for R&D in nuclear energy technology. The allocation of funds had everything to do with the dominant lobby of fossil energy companies, which had strong, historical ties to the Ministries of Economic Affairs and of Education, Science, Research, and Technology, according to Scheer. The lobbying power of solar energy companies, in contrast, was still inchoate, its advocates vastly outnumbered. The fossil energy lobby argued that any government funding for solar energy would be a drastic, irreversible distortion of the free market for energy. “The discourse of the advocates of fossil energy was dangerous and misleading,” Scheer argued. “Their only goal was to retain the monopoly on energy supply. They presented . . . manifest lies.”7 The constant lobbying to preserve the status quo led to political inaction with regard to solar energy and frustrated German solar energy entrepreneurs. Some emigrated to countries like Japan and the United States, where governments heavily stimulated solar energy production with subsidy programs and tax incentives. A German magazine reported on this development in 1996, quoting the national Minister of Education, Science, Research, and Technology, who called the arguments for government stimulation of solar energy “idiotic.” The article ironically pointed out that “the idiocy spreads worldwide.”8

Potential for Change Despite the obstacles, there was also some potential for change. Popular support for solar energy was growing, and several politicians had become receptive to the idea of transforming the energy market. The political debate 6. M. Blake, “Interview: Hermann Scheer, German Pioneer in Renewable Energies,” Christian Science Monitor, August 20, 2008 (www.csmonitor.com). 7. Quoted in I. Renson, “De dagen van de conventionele energie zijn geteld [The days of conventional energy are over],” De Tijd, October 10, 2009. 8. “Sonnenenergie vor dem Durchbruch? Solarenergie, ja bitte,” Der Spiegel, July 22, 1996.

10-2262-5 CH 10:0496-6

9/7/12

2:51 PM

Page 137

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

The Emergence of Solar Energy in Germany

137

became more constructive as two strands became gradually intertwined. On one hand, a broadening sense of the necessity of environmental protection made the problem seem increasingly urgent. On the other, increased awareness of the possibilities of alternative sources of energy (other than nuclear) to cope with this problem made a solution seem within reach. Furthermore, government interference with the energy market was not completely unthinkable, for there had been some political action in the past. In 1988 the West German parliament had passed the so-called Electricity Feed-In Act.9 The legislation aimed to force grid operators and electric utilities to connect renewable energy producers (such as citizens with PV panels on their roofs) to the grid and to buy (with priority over fossil energy) their expensive renewable energy at feed-in tariffs set by the government. However, the ruling administration had not immediately accepted the legislation. It had set up a limited 1,000 Roofs Program, with an expiration date, in an attempt to limit the parliamentary initiative to this number of households. Only after pressure from parliament in the early 1990s did the administration agree to fully implement the act.10 As a result of the 1,000 Roofs Program and the Electricity Feed-In Act, the installation of PV panels became financially attractive to citizens. A subsidy from the program reduced the investment costs of installing PV panels. The benefits of producing solar energy for personal use and feeding any surplus into the grid compensated consumers for their (subsidized) PV panel investment costs. But when the 1,000 Roofs Program ended in 1995, as planned, the market for PV panels dried up. The Electricity Feed-In Act alone provided sufficient financial incentives for producing wind energy, but the feed-in tariffs for solar energy proved too low to generate large-scale production. In retrospect, Hans-Josef Fell qualified the 1,000 Roofs Program as “an R&D program, rather than a market-creation program.”11 Still, the experiment had shown that a PV subsidy program was politically feasible, and it suggested that an accompanying feed-in act could help stimulate large-scale installation of PV panels. In 1998 it looked as if solar energy could go one of two ways: either the status quo would persist and solar energy would remain a marginal phenomenon or the conditions for introducing PV panels on the market would change. Innovators could build on popular support and past experiences and try to capitalize on the growing political receptiveness to change. But they were also 9. Electricity Feed-In Act is a translation of the German phrasing Stromeinspeisegesetz. 10. Wüstenhagen and Bilharz (2006). 11. Hans-Josef Fell, member of parliament, personal interview with authors, Berlin, May 2010. All quotations not otherwise attributed are from this interview.

10-2262-5 CH 10:0496-6

9/7/12

2:51 PM

Page 138

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

138

Innovations in Governance

up against huge opposing forces, and history had taught them that any structural and lasting change would require an equally profound adjustment of the institutional framework. Scheer and Fell managed to do just that.

Innovation Process If any change agents could initiate the 100,000 Roofs Program in 1998, they would have been Hermann Scheer and Hans-Josef Fell. Scheer first got involved in renewable energy in the late 1970s, as a young researcher, when he wrote about the potential of renewable energy as an alternative to nuclear energy. In 1980 he was elected to parliament for the Social Democratic Party (SPD) and from that day forward worked tirelessly on the issue of renewable energy. His style was different from that of most politicians; he focused on long-term solutions rather than political fads. He was characterized by fellow politicians as a “party rebel, neither party elite nor a backbencher; simply the energy expert.”12 Scheer was also a public entrepreneur. In 1988, for example, he founded the nonprofit Eurosolar to advance renewable energy through structural change. In 1994 Scheer’s Eurosolar awarded its first European Solar Prize to HansJosef Fell, member of parliament for the Green Party, for his efforts to stimulate solar energy production at the local level. Fell, a member of the city council of Hammelberg, had become an expert in renewable energy as well as an advocate of a local act that enabled local governments to stimulate solar energy production in the same way as the feed-in act. By guaranteeing solar energy producers a set price (through the feed-in tariff) for their PV-generated energy and having all energy consumers pay equally for the difference between the set price and the actual market price, the act spread the additional costs of green energy over the entire population of consumers of energy. In other words, there was a cross-subsidization from fossil energy consumers to green energy producers—not through taxes but through a regulated price-setting mechanism. “On my initiative, Hammelberg became the first municipality in the world to implement such an act,” Fell said. “This experience taught me valuable lessons on how law-making and the energy market work. . . . I was convinced we had to repeat these efforts at the national level.” By 1998 a total of twenty local governments in Germany had copied Fell’s so-called costcovering compensation act. 12. J. P. Hein, “Der Windmacher,” Welt Online, April 14, 2008 (www.welt.de); C. Schwennicke, “PD linke: Freiheit nach Bedarf,” Der Spiegel, December 2008.

10-2262-5 CH 10:0496-6

9/7/12

2:51 PM

Page 139

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

The Emergence of Solar Energy in Germany

139

Scheer and Fell both advocated solar energy, Scheer at the national level and Fell at the local level, where a bottom-up solar energy movement gradually spread. However, the fossil energy lobby and an unhelpful conservative government prevented any structural change. “Then something of great importance happened. In October 1998, the federal elections resulted in a first time ever parliamentary majority for an SPD–Green Party coalition. Scheer was reelected, and I became a member of parliament for the first time.” The election victory gave Scheer and Fell the opportunity to make a bold move.

Capitalizing on the Election Result How did the 1998 election victory of the SPD–Green Party coalition open the door to the development of solar energy? After sixteen years of conservative CDU/CSU (Christian Democratic Union and Christian Social Union of Bavaria) governments, a new ruling coalition, much more hospitable toward renewable energy, took over. The SPD had several champions of renewable energy among its members of parliament, and the Green Party had the “green” agenda at the core of its existence.13 “We knew that we had to act quickly,” Fell recalled. “Many MPs were now open to the idea of stimulating renewable energy, but nobody knew how. This allowed us to frame the discussion.” Before the election race of 1998, Scheer and Fell had already had many discussions about the best way to stimulate solar energy production. Scheer— who, as an MP, had no executive power—wanted to press for the launch of a 100,000 Roofs Program. This was a subsidy program to encourage 100,000 citizens to install PV panels on their roofs. Scheer was convinced that this would provide an immediate boost to market creation for solar energy; the figure of 100,000 would have large symbolic value.14 Fell, on the other hand, wanted to go for a renewed and updated version of the Electricity Feed-In Act of 1991 but felt that this would be much harder to push through parliament than a “simple” subsidy program. “Soon after the election victory, I learned that a Renewable Energy Act was a foreign idea to most MPs,” said Fell, “and there was no way I could fit it into the SPD–Green Party coalition treaty.” This, together with Fell’s status as a new MP, made it more difficult to get support for creation of a new act. However, Hermann Scheer, a veteran MP (since 1980), managed to have his idea for a 100,000 Roofs Program explicitly mentioned in the SPD–Green Party coalition 13. Other SPD members of parliament with significant influence were Dietmar Schütz and Volker Jung. 14. The figure of 100,000 was twice as high as the figure that Greenpeace had previously proposed.

10-2262-5 CH 10:0496-6

9/7/12

2:51 PM

Page 140

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

140

Innovations in Governance

treaty.15 “Despite our different preferences, Hermann and I were equally aware that swift follow-up action to the idea of a 100,000 Roofs Program would be needed,” said Fell. Ultimately, for pragmatic and political reasons, they decided to push first for a program, not the act.

Hammering Out the Details There was no time to waste. Fell recalled several critical meetings with Scheer to hammer out the details of the new 100,000 Roofs Program: “We even met during the annual carnival festivities, because there was a great sense of urgency. I knew that citizens who supported renewable energy had awaited this moment for years.” There were, however, three specific issues that the innovators had to deal with. “First, we had to arrange for the administrative details,” said Fell. “The second issue was convincing a majority of our fellow MPs of the benefits of this program. And third, we needed to find a way to fund the subsidy program.” The innovators decided that subsidies would best be distributed indirectly, through reduced-interest loans. Local banks played a role in this system, as well as the state-owned promotional bank KfW (Kreditanstalt für Wiederaufbau), which assists the German federal government in achieving its environmental and climate policy aims. Individual citizens, foundations, and associations of home owners and tenants could apply for a reduced-interest loan with their local bank to fund the installation of PV panels. After approval of the application by the local bank, the KfW would supply the reduced-interest loan (in practice, a no-interest loan). The subsidies, in the form of these interest reductions, would be the main budget allocation. The KfW was a natural partner for the innovators, because it had sufficient capacity and experience with similar programs. And the KfW was fully willing to cooperate.16 The second issue—convincing the MPs of their parties—posed a serious challenge to the innovators. Fell had a relatively easy task; the transition to renewable energy was one of the leitmotifs of his party. However, MPs were tied to their regional constituents, and Scheer’s party, the SPD, traditionally 15. The exact text in the coalition agreement was: “Die neue Bundesregierung wird eine zukunftssichere, umweltverträgliche und kostengerechte Energieversorgung sicherstellen. Erneuerbare Energien und Energieeinsparung haben dabei Vorrang; dazu gehört auch ein 100,000-Dächer-Programm.” (The new national government will secure an energy supply that is future proof, environmentally friendly, and cost adequate. Renewable energy and energy saving will have priority; a 100,000 Roofs Program belongs to that ambition.) Gruene Partei (1998). 16. Verena Köln, adviser in product development, KfW Bankengruppe, personal interview with authors, Berlin, May 2010.

10-2262-5 CH 10:0496-6

9/7/12

2:51 PM

Page 141

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

The Emergence of Solar Energy in Germany

141

had a lot of voters from industrial areas, who were not too keen on solar energy. Scheer was fortunate to receive valuable help from two influential fellow MPs from the SPD. “These two MPs sat in key positions within the parliament,” explained a fellow MP, “because they both had a seat on the energy committee and the economic committee. They convinced skeptical MPs, as well as voters from industrial constituencies, by pointing to the economic benefits of the 100,000 Roofs Program, like future job opportunities in the solar energy sector.”17 That was a welcome message to many constituents, who had experienced little economic improvement since German reunification in 1989. Despite the coalition building, some opponents of the 100,000 Roofs Program would not give an inch. The innovators expected no help from the Ministry of Economics, which historically had been entangled with the interests of German fossil energy companies. This entanglement was personified in the newly installed minister of economics, who had previously held an executive position in the fossil energy sector.18 “Wherever he could,” said Fell, “[the minister] would slow down any initiative for stimulating solar energy production.” Another MP from the Green Party described how the minister delayed the process: “Every document that left the Ministry of Economics had first passed the desks of the fossil energy companies. Sometimes they sent us proposals where the fax number of one of the fossil energy companies was still visible at the top of the paper. It was a total mix-up of interests.”19 Scheer and Fell quickly concluded that designing and implementing the program would have to be an exclusively parliamentary effort. This was highly uncommon in German politics. Furthermore, they found a way to work around the minister of economic affairs. “Scheer was a friend of the [SPD] finance minister,” Fell explained, “and the finance minister was supportive of his cause. Scheer was therefore able to personally secure a budget for the program, bypassing the Ministry of Economics and working directly with the Finance Ministry.” This proved a simple but very effective way to cope with the third issue Fell identified: funding the subsidy program. But even after the three issues had been tackled, general resistance remained high. 17. Rolf Hempelmann, member of parliament for the Social Democratic Party, telephone interview with authors, May 2010. 18. The newly installed minister was the independent politician Werner Müller, who had previously held high positions within the fossil energy companies RWE and VEBA (which later merged into E.ON). After serving his ministerial term, in 2002 he went to work for the German coal-producing company RAG. 19. Michaele Hustedt, former member of parliament, Green Party, personal interview with authors, Berlin, May 2010.

10-2262-5 CH 10:0496-6

9/7/12

2:51 PM

Page 142

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

142

Innovations in Governance

Dealing with Resistance Inside the parliament, the members of the conservative party factions (CDU/CSU) and the liberal Free Democratic Party (FDP) had no interest in cooperating with the innovators. While in power, they had barely stimulated renewable energy, and their attitude toward the 100,000 Roofs Program continued this stance. A fellow SPD member of parliament explained that it was impossible to convince these parties to support the 100,000 Roofs Program. “[Their] general announcement was, ‘Whatever you do, we will turn it back as soon as we regain power.’”20 Outside of the parliament, the fossil energy companies were, as expected, opposed to the 100,000 Roofs Program. They tried to influence public opinion by printing ads in national newspapers that played down the potential of renewable energy, and they aggressively lobbied politicians to block any reform. According to a Green Party MP, “The fossil energy companies were at war with us, and all means were allowed. It was a combination of fury and contempt. The fossil energy company also laughed at us with our silly ideas about renewable energy.”21 Despite the resistance, the innovators swiftly moved forward. They successfully put the program to a vote in parliament, and on January 1, 1999, the 100,000 Roofs Program was officially launched. Although this might qualify as a historical moment, the start of the pioneering program did not get much media attention. Nevertheless, after years of discussing, dreaming, and hard work, the Sun Kings finally had pulled it off. But would the program deliver? Would it create a sustainable market for solar energy?

First Results The willing cooperation of two parties outside the realm of government was crucial to the success of the 100,000 Roofs Program. First, there had to be entrepreneurs willing to start producing and installing PV panels. Equally important, there had to be enough citizens willing to apply for a reducedinterest loan and to install PV panels on their roofs. There were several promising indicators: high popular support for solar energy, a successful 1,000 Roofs Program in the early 1990s, and the bottom-up movement of twenty municipalities with cost-covering compensation acts. However, “In practice, [the program] was taken up slowly at first,” said Fell, “although we had expected that many citizens were awaiting [it].” Several 20. Hempelmann, interview. 21. Olivier Krischer, member of parliament, Green Party, personal interview with authors, Berlin, May 2010.

10-2262-5 CH 10:0496-6

9/7/12

2:51 PM

Page 143

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

The Emergence of Solar Energy in Germany

143

issues can explain the slow start. Few citizens knew about the program, and those who tried to enroll had difficulties with the bureaucratic application procedure. The local banks that were to disburse the reduced-interest loans had no experience with them and little incentive to learn, because they made little money from them. And many citizens were simply not yet confident that the investment costs of PV panels would be covered by the benefits of using solar energy personally and selling surplus energy back into the grid. “When you start a subsidy program,” said a Green Party MP involved in the initiative, “the market and society need some reaction time. Entrepreneurs and citizens must make investments. A subsidy program makes people wonder, ‘Will the subsidy not be cut later on? Will my investment be safe?’”22 To hasten adoption of the program, the innovators took several immediate measures. They organized public relations campaigns to promote the 100,000 Roofs Program among citizens, and they reduced the administrative burden of the application procedure. They met with local banks to encourage them to provide the reduced-interest loans and organized training sessions for local bank employees about handling the loans. And they made the reducedinterest loans more financially attractive to citizens by remitting payment of the last installment (approximately 12.5 percent of the total loan). This resulted in a rise of the subsidy rate from 20 percent to 30 percent of PV panel installation costs.23 These instant improvements, among others, led to a fourfold increase in program enrollment after the first year.

Structural Breakthrough The 100,000 Roofs Program was rapidly implemented and represented a significant first step in stimulating solar energy production. However, the two innovators were more ambitious. “When Hermann convinced me about the priority of the 100,000 Roofs Program,” Fell said, “I, in turn, made him a bet that the 100,000 Roofs Program alone would not provide enough impulse for large-scale solar energy production. I argued that a renewable energy act would be needed to really create a market in solar energy production.” Indeed, Scheer and Fell came to realize that the 100,000 Roofs Program would not provide enough structural incentive to create a sustainable solar energy market. There was a significant obstacle to stimulating the solar energy market at that moment: “Some citizens now had a PV panel on their roof,” explained a member of the Green Party who was involved in the program. “But they could not feed the surplus of generated solar energy back into the grid, because the 22. Hustedt, interview. 23. Gerhard Stryi-Hipp, former managing director of Bundesverband Solarwirtschaft, telephone interview with authors, May 2010.

10-2262-5 CH 10:0496-6

9/7/12

2:51 PM

Page 144

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

144

Innovations in Governance

grid operators were not obliged to accept it. It was clear that this was a problem to solve.”24 Thus in the spring of 1999, the innovators turned their attention toward designing an act that would lead to a broader institutional arrangement. Their Renewable Energy Act would work in a manner similar to the Electricity FeedIn Act of 1991: grid operators would be obliged to buy energy from renewable energy producers at prices set by the government (feed-in tariffs) for at least the next twenty years. All energy consumers would pay an equal part of the difference between the feed-in tariff and the actual market price.25 The feed-in tariffs would be adjustable and decrease over time to create incentives for more efficient renewable energy production. In this way, the Renewable Energy Act would create secure, long-term incentives to produce renewable energy efficiently. Fell and Scheer started to gather support for their new plan. The Renewable Energy Act would be a major political move with far-reaching consequences. The innovators, however, found it relatively easy to find support for it. The 100,000 Roofs Program had acquainted politicians with the idea of concretely stimulating renewable energy production. The innovators could build on this notion while gathering support. In addition, a member of the Green Party noted, “When [politicians] give a push to something [you propose], you have to follow up on your actions.”26 In other words, once politicians have given the go-ahead, they are eager to get results. Whether to make some additional investments to get promised results is a relatively simple call. Furthermore, the 100,000 Roofs Program had proved a success; it showed that renewable energy production indeed resulted in job creation and new economic possibilities. For this reason, important stakeholders, such as the association of the investment goods industry and the metalworkers union, had given their support to the innovators’ efforts. However, plans for the Renewable Energy Act met fierce resistance from the usual opponents, especially the fossil energy companies and grid operators. They filed a lawsuit with the European Court of Justice, arguing that the new act would entail illegal state sup24. Krischer, interview. 25. Rheinisch-Westfälisches Elektrizitätswerk (RWE) had (unconsciously) strengthened the cause for the Renewable Energy Law by demonstrating that the demand for solar energy remained marginal if consumers were offered a choice between conventional energy and solar energy. Around the time of the 100,000 Roofs Program, RWE ran a PV program called Umwelttariff (environmental tariff): consumers could voluntarily pay 0.2 Deutsche Mark extra per KWh and RWE added another 0.2 Deutsche Mark, which it invested in new technology. After three years, 15,000 out of a total of 2 million RWE customers made use of this program. That amounts to less than 1 percent of all RWE customers. Jörg Rummeni, environmental manager, RWE, personal interview with authors, Berlin, May 2010. 26. Hustedt, interview.

10-2262-5 CH 10:0496-6

9/7/12

2:51 PM

Page 145

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

The Emergence of Solar Energy in Germany

145

port to renewable energy producers and thereby unfairly disrupt the free market. The European Court of Justice, however, denied the claim.27

Booming Market The Renewable Energy Act came into effect on April 1, 2000, while the SPD– Green Party coalition was still in power.28 It gave confidence about the sustainability of their investments to citizens who had installed panels on their roofs. “The secret of the arrangement is security,” said Scheer. “Whoever installs a PV panel on his roof this year knows what the revenues from the generated electricity will be for the next twenty years. On top of that, there is no maximum to the amount of money to be made.”29 Furthermore, funding stemmed not from general appropriations of government but from subsidies shared among all electricity consumers. This meant that in practice, the funding would not be exposed to direct budget cuts. As a result, the market for PV panels and solar energy boomed. The number of applications for the 100,000 Roofs Program increased every year, and the rising demand kept pace with the necessary financial resources. Money did not run out.30 A representative of a fossil energy company acknowledged the program’s appeal: “I understand why people put a solar panel on their roof. It makes more money than putting the money in a savings account—and it makes for a good image if everyone can see you have a panel on your roof.”31 The 100,000 Roofs Program officially ended in 2003, but the SPD–Green Party government revised the Renewable Energy Act in 2004 and temporarily heightened the feed-in tariff for solar energy to compensate for the end of the 100,000 Roofs Program. This prevented the German solar energy market from coming to a halt again, as had happened in 1991. Instead, the market has continued to grow.

Innovation and Improvements The beginning of this chapter describes the 100,000 Roofs Program as a bold initiative to stimulate renewable energy production that ultimately became part of an “innovative institutional arrangement.” What was this arrangement all 27. Hermann Scheer had no illusions about fossil energy companies: “Do you want to ask E.ON [the biggest German fossil energy company] to make the transition from fossil energy to renewable energy? Impossible. That’s like asking the mafia to help fight organized crime.” 28. “Renewable Energy Act” is a translation of the German term “Erneuerbare-EnergienGesetz.” 29. Quoted in Persson, “Duitsland maakt wel gebruik van de zon.” 30. H. von Suhr, “Geld von Gates,” Der Spiegel, May 29, 2000. 31. Rummeni, interview.

10-2262-5 CH 10:0496-6

9/7/12

2:51 PM

Page 146

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

146

Innovations in Governance

about? It consisted of four elements. The first was the 1998 subsidy program (100,000 Roofs) that effectively kick-started solar energy production. The 100,000 Roofs Program provided direct and concrete incentives for both citizens and entrepreneurs. The second element was the Renewable Energy Act of 2000 that provided structural and long-term incentives to produce and consume renewable energy. The act also broke the power of grid operators to prevent renewable energy producers from feeding their energy into the grid. The third element was the set of financial constructions underlying the subsidy program and the act. The subsidy program—essentially consisting of the disbursement of reduced-interest loans for installing PV panels—was financially efficient and effective. It was efficient because existing banking structures were used for administrating the subsidies, and it was effective because the applicants had a stake in employing the reduced-interest loans. Both the act and the subsidy program were financially sustainable, although in different ways. The subsidy program was never subject to budget cuts because the distribution of subsidy payments over the whole period of loan installments made for a relatively small annual budget. The act, on the other hand, ensured that all energy consumers would proportionally share the costs for the feed-in tariffs over the next twenty years.32 The overall outcome of the arrangement was the creation of a significant, long-term, and growing market for renewable energy production. This outcome has both an economic and a psychological dimension. Economically, renewable energy became serious business in Germany. Solar energy companies steadily grew and competed for more efficient production techniques. Psychologically, the national mentality toward renewable energy changed dramatically. First, the critics had been outmaneuvered. “It is not feasible anymore to claim that renewable energy is a silly idea and will never have a significant share in the energy mix,” said a representative from the German fossil energy company RWE.33 Second, the political establishment embraced solar energy. “While renewable energy used to be laughed at as a ‘hobby for idealists,’” wrote the minister of the environment (who took over the energy 32. There were two other innovative aspects to the subsidy program. First, the total financial volume of the program was very high compared with the existing market at the start of the program. Second, the subsidy program provided an annually growing loan budget, so the program facilitated market growth. Together with the aforementioned aspects, this led to a huge increase in installed solar power capacity. The total capacity of solar power installed in Germany was 10 megawatts in 1998, while in the year 2003 alone 145 megawatts of solar power capacity were newly installed. 33. Rummeni, interview.

10-2262-5 CH 10:0496-6

9/7/12

2:51 PM

Page 147

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

The Emergence of Solar Energy in Germany

147

portfolio from the minister of economic affairs in 2002), “it has quickly become an increasingly important economic factor in Germany.”34

Concrete Results How did the institutional arrangement address the problems concretely? The 100,000 Roofs Program lowered the costs for citizens to have PV panels installed on their roof, while the Renewable Energy Act guaranteed a specific and calculable return on investment for the next twenty years. This was an effective solution to the cost issue, creating citizen demand for PV panels and, thereby, a market for PV panels. The combination of the 100,000 Roofs Program and the Renewable Energy Act also proved to be an effective way to combat market failure, because it put solar energy–producing citizens in a position to compete with fossil energy producers. It did not do so in the most straightforward sense, by forcing fossil energy producers to include the external costs of environmental damage and pollution in their energy prices. Instead, it financially aided the solar energy producers, whose more expensive production techniques do not come with these external costs, and it forced grid operators to buy the (still expensive) solar energy at rates set by the government. This way, the innovative institutional arrangement created a supply of solar energy from citizens with PV panels on their roofs and leveled the price of solar energy and fossil energy for consumers, creating a market for solar energy. By these means, the innovative arrangement helped solve the two major aims that had preoccupied Scheer and Fell: to boost Germany’s energy independence and to reduce environmentally damaging fuel emissions. By 2010 Germany’s solar energy sector produced 55 percent of all solar energy worldwide, which went a long way toward dispelling worries about Germany’s dependence on imported gas and oil.35 The increase in clean solar energy production meant a decrease in toxic emissions: carbon dioxide emissions, for example, have dropped by more than 20 percent since 1990.36 German solar energy is now serious business. “If people are faced with a gigantic problem and have the feeling there is no solution, it creates apathy and nihilism,” said Scheer. “Each year in Germany we have 3,000 megawatts 34. “Anfangs meist noch als ‘Hobby für Idealisten’ belächelt, haben sich die erneuerbaren Energien zu einem für Deutschland zunehmend wichtigen Wirtschaftsfaktor entwickelt.” Quoted in Bundesministerium für Umwelt, Naturschutz, und Reaktorsicherheit (2011, p. 5). 35. A. Waldermann, “Climate Change Paradox: Wind Turbines in Europe Do Nothing for Emissions-Reduction Goals,” Spiegel Online, October 2, 2009 (www.spiegel.de). 36. OECD and International Energy Agency (2007).

10-2262-5 CH 10:0496-6

9/7/12

2:51 PM

Page 148

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

148

Innovations in Governance

of new renewable generation coming on line. And this brings hope to many people that this gigantic problem can be solved.”37

Strategy and Tactics In the process of working toward an innovative institutional arrangement, Hermann Scheer and Hans-Josef Fell faced tough challenges, including outright hostility to change within the institutional setting in which they had to work. Market conditions, legislation, and regulation all favored fossil energy production and consumption, and the political discourse was dominated by a powerful fossil energy lobby. What strategies did they employ to generate operational capacity and legitimacy and support from their authorizing environment for the creation of a sustainable market for solar energy?

From Outsiders to Establishment When Scheer started to work on renewable energy as an MP during the 1980s, the issue was mostly advocated by the popular environmentalist movement and mostly ignored by the political establishment. This was partly owing to the influence of the fossil energy lobby, but the outsider position of the environmental movement, which had no established lobby and little political representation, did not help either. Furthermore, according to Scheer, “The historical error of the German environmentalist movement is that it suffered from an inferiority complex. They always presented modest figures about the possibilities of renewable energy, while they are justified in making bolder statements. The vanguard of the renewable energy movement has to question the legitimacy of so-called experts, who are really on the payroll of the big fossil energy companies.”38 Scheer was convinced that his case for renewable energy was strong. His message has always been that “renewable energy does no harm to the environment, there is an endless domestic supply of it, and the complete transition from fossil to renewable energy is realistically possible within decades.” But to transform that message into concrete action, he had to move from the outside position into the establishment. Hence, Scheer’s approach was, in his own words, “always discuss matters from a superior position.”39 The same was true for Hans-Josef Fell. By 1985 he had already built an ecological house that ran entirely on renewable energy. It was a novelty and a rarity, and Fell won several prizes for it. He was truly at the 37. Blake, “Interview: Hermann Scheer.” 38. Hermann Scheer, personal interview with the authors, Arnhem, May 2009. 39. Scheer, interview.

10-2262-5 CH 10:0496-6

9/7/12

2:51 PM

Page 149

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

The Emergence of Solar Energy in Germany

149

vanguard of the environmental movement, but he too had to move from the outsider position into the establishment. Formally, Scheer and Fell became part of the establishment when their parties formed the government coalition in 1998. Informally, however, they had both worked on the issue for such a long time and with such vigor that they had built up a track record and expert status—not only as politicians but also as social entrepreneurs (both had set up and run nonprofit organizations) and had become established experts who enjoyed even international fame. Moreover, they had built a national and international network of politicians, scientists, journalists, nonprofit organizations, labor unions, industrial associations, lobbyists, and solar energy entrepreneurs. From this network, they could mobilize forces to aid their cause. For example, the labor unions and industrial associations began to actively promote solar energy production when the number of jobs in the solar energy sector started rising. Thus Scheer and Fell ultimately managed to set up a strong lobby for their cause.40

Structuring the Appeal Another tactic of the innovators concerned their communication. That solar energy does no harm to the environment was sufficient reason for environmentalists to support the innovators’ cause. But to attract other parties, Scheer and Fell felt that they had to frame the conversations differently. They made their message more concrete (less idealistic) and cut it up into diversified messages for specific target groups. Their core message contained some general arguments: solar energy could have a significant share in the energy mix; market introduction would be necessary to achieve this; and as solar energy production spread, costs would come down to make solar energy competitive with fossil energy. The innovators differentiated their core approach to make it suitable for specific target groups, such as PV-panel entrepreneurs and industrial labor unions and associations. They attracted the first group—PV-panel entrepreneurs—by arguing that there was money to be made if an institutional rearrangement could create a robust and long-term market for solar energy. In this way, they connected the rationale of environmentalism with the logic of entrepreneurship.41 40. Jörg Rummeni, environmental manager of RWE, a fossil energy company, told us that “Hermann Scheer’s idealist message must be looked at skeptically, for what he really has done is set up a very powerful lobby for solar energy companies.” Rummeni, interview. 41. This worked perfectly in cases like the previously mentioned company SolarWorld. That company was founded by the pragmatic entrepreneur Frank Asbeck, who left his armored vehicle business to his brother to start producing PV panels on a massive scale.

10-2262-5 CH 10:0496-6

9/7/12

2:51 PM

Page 150

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

150

Innovations in Governance

The framing of the conversation with the second target group—industrial labor unions and associations—was different. Since their innovations could allow unknown renewable energy companies to enter the market, the change seemed threatening to some industrial labor unions and associations. After all, they were strongholds in the existing energy sector and were comfortable with its old, familiar composition. The innovators’ message to them was that a solar energy market made economic sense because it would create a new industry and new employment opportunities. “You have widespread economic benefits, not concentrated in the hands of oil-producing countries and a few energy companies but distributed within the region,” said Scheer. “It promotes new industrial jobs and broad ownership.” In their initial message, they explicitly characterized solar energy production not as a replacement for fossil energy production but as a complement to it.42

A Diverse Coalition for Change With their differentiated messages, the innovators offered various incentives to support their cause and, from early on, continuously drew parties and actors into their policy network. They created a coalition for change, which included politicians, solar energy entrepreneurs, and solar energy associations (lobbies) but also conventional associations such as the German Engineering Federation and the metalworkers union. The innovators knew their friends and enemies well and could work around the latter if need be. For example, when the innovators realized that the minister of economic affairs was hostile to their plans for the 100,000 Roofs Program, they made the tactical choice to go straight to the finance minister to secure the budget. In this way, the innovators made smart use of the division within the German government. The innovator’s coalition of change also extended vertically. “The majority of German citizens had a favorable stance toward renewable energy,” said Fell, and that stance also transformed into concrete action. Some twenty municipalities, including some with a conservative administration, had adopted cost-covering compensation laws to make the transition to renewable energy at the local level. We worked closely with a popular renewable energy movement at the local and regional level. I come from the region of Bavaria, where more than 100 [nongovernmental organizations] in the field of renewable energy organize events and congresses and lobby for renewable energy. 42. Scheer, interview.

10-2262-5 CH 10:0496-6

9/7/12

2:51 PM

Page 151

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

The Emergence of Solar Energy in Germany

151

Citizen activists demanded a Renewable Energy Act from their federal representatives (the German electoral system ties representatives to local constituents). Activists at the local level, who signed petitions for a 100,000 Roofs Program and helped market it, were also instrumental to the innovators’ effort.

Getting Noticed Scheer and Fell were involved in a continuous public relations effort. As noted, the 100,000 Roofs Program got little media attention at the outset. The innovators felt hindered by the reluctance of the media to cover success stories in the field of renewable energy. “Only specialized magazines reported about it,” said Fell. “Major newspapers like the Frankfurter Zeitung did not cover it, let alone television networks. When the media did cover something involving renewable energy, 90 percent of their coverage was negative.” Fell suspected that this bias might have to do with media advertisement income from fossil energy companies. Fell and Scheer worked their way around the media by doing a lot of lectures and other kinds of personal appearances (for instance, at conferences) and organizing through the Internet. During those appearances, they tirelessly tried to correct information spread by critics and put it in the “right” perspective. For example, they countered the claim that renewable energy could never reach more than 4 percent of the total energy mix by emphasizing that sun rays supply the earth daily with 15,000 times more energy than the total consumption of nuclear and fossil energy. (In defending the perceived high costs of the Renewable Energy Act, the innovators stressed that the monthly cost of this act to the average energy consumer was about 20 euros, while subsidies on coal production added up to 70 euros per citizen.)

Two-Step Approach The innovators were working on substantial change. The long-term problems that they addressed (climate change and energy dependency) were big, but the solutions that they proposed were also significant: they would eventually lead to a reform of the energy sector. Making the transition from fossil energy to renewable energy meant radically changing the energy mix. And putting solar panels on citizens’ roofs implied radically decentralizing energy production, whereas centralizing energy production had been key to bigger profits for fossil energy companies. Hermann Scheer himself admitted that “in the end, solar energy is about redistributing ownership.”43 According to him, 43. Scheer, interview.

10-2262-5 CH 10:0496-6

9/7/12

2:51 PM

Page 152

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

152

Innovations in Governance

the main obstacle to change was the conventional power structure, being the monopolization of the energy supply by large power companies and the legal framework that was designed to protect their interests. The innovators knew that the fossil energy companies foresaw the eventual consequences of energy sector reform. They also knew that proposing radical measures all at once would set them up for huge resistance and possibly defeat. They had learned from the 1,000 Roofs Program and the Electricity Feed-In Act that a subsidy program could be the stepping-stone to an expanded feed-in act and that together they could be an effective combination—that to create a real market for solar energy, entrepreneurs needed high volume (much more than 1,000 roofs) and long-term guarantees, and that a feed-in tariff must be set high enough to make solar energy lucrative in the long term. The innovators built on these lessons. They knew that they had to propose measures tactically: first the 100,000 Roofs Program, then the Renewable Energy Act.

Trapping the Opposition To get critical stakeholders on board, the innovators used a different tactic at each step. Their initial call to opponents of their plan focused on the finite terms of the 100,000 Roofs Program. “Because solar energy production is skyrocketing, you can see that the total consumer costs to pay for the feed-in tariffs are rising,” said a Green Party MP who worked with the innovators, “which is exactly what the critics were afraid of. Our answer was, ‘Okay, then we’ll design a limited 100,000 Roofs Program.’ That idea appealed to critics. But at the same time we made sure the program would be of such size that it would significantly stimulate industrial production of PV panels. That was our tactic.”44 So the innovators first talked critical stakeholders into taking a modest step but made sure to follow it with a leap forward. The second tactic to get critics to support this leap—the implementation of the Renewable Energy Act—was the gradual decrease of the feed-in tariffs. Opponents of their plan would never have agreed to steady, long-term subsidizing of green energy; that would be perceived as an unjust distortion of the free market for energy. The innovators hence incorporated a decrease of the subsidies into their plan. They could claim that it was all just temporary and argue that the size of the feed-in tariffs would periodically decrease, implying a gradual decrease in what critics saw as distortion of the market. Moreover, in doing so, they aimed for an extra side effect: the decrease could stimulate solar energy producers to gradually lower their costs to track with the otherwise rising costs for consumers, thereby strengthening their market position. 44. Hustedt, interview.

10-2262-5 CH 10:0496-6

9/7/12

2:51 PM

Page 153

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

The Emergence of Solar Energy in Germany

153

This provision would force solar energy producers to gain efficiency to bring costs down and achieve the same net result.

Conclusion In 1996 Hermann Scheer and Hans-Josef Fell’s plea for renewable energy was barely heard. They were simply overpowered by the strong lobby of fossil energy companies. Critics at the time dismissed their idea of a 100,000 Roofs Program as “eine Kriegserklärung an die Vernünft” (a declaration of war to reason).45 By 2010 there were over 500,000 PV-panel installations in Germany and some 250,000 people employed in the solar energy sector. Germany was the biggest solar energy market worldwide, and Scheer and Fell had become known as Sun Kings.46 Of course, not everything had changed. Despite its significant production increase, solar energy still constituted only 1 percent of the total German energy mix.47 Furthermore, solar energy production remains costly, and consequently, so do the feed-in tariffs for solar energy. But solar energy has secured a permanent place in Germany’s energy market. The legal framework created a sustainable mechanism for continuous development and expansion of renewable energy. The minister of the environment stated in 2009 that he aimed to achieve a 30 percent share of renewable energy by 2020.48 In 2011 the German chancellor decided to phase out nuclear energy, which was perceived as a drastic decision that will make the country more dependent on, among others, renewable energy sources. In short, the future for solar energy in Germany looks . . . sunny.

45. “Sonnenenergie vor dem Durchbruch? Solarenergie, ja bitte.” 46. Renewable Energy Policy Network for the 21st Century (2010). 47. F. Dohmen, N. Klawitter, and W. Reuter, “Revolt of the Sun Kings: Solar Industry Fights to Save Subsidies,” Spiegel Online, April 22, 2010 (www.spiegel.de). 48. Bundesministerium für Umwelt, Naturschutz, und Reaktorsicherheit (2011).

11-2262-5 CH 11:0496-6

9/13/12

3:35 PM

Page 154

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

11

Change on Steroids Public Education in New Orleans

W

alking into a classroom at College Prep Charter School in New Orleans, Louisiana, a visitor is immediately aware that this is not a typical American public high school. The first striking thing is the sight of tall, older kids studying alongside their younger classmates. The principal, Ben Kleban, has organized classes around students’ ability, so that they get instruction that responds to their immediate needs. Another striking feature is the quietness of the place. Tennis balls on the legs of the furniture silence the clatter and shuffling of chairs and desks. When students switch classes, they walk in a long row over a line taped to the floor. Talking is not allowed. College Prep’s status as a charter school gives its principal full authority to make decisions regarding class configuration and student rules. A charter school is a more or less independently run public school, paid for with tax dollars.1 It receives government funds on a per-pupil basis and is free of charge to parents. With a charter agreement from an official education agency, a wide variety of individuals and organizations—nonprofits, companies, universities, educators, parents, or other education entrepreneurs—can run a school. In exchange for strict performance accountability, the state grants more operational flexibility to charter schools than to traditional public schools. “We manage our In addition to interviewees quoted in the chapter, other respondents for this case study were Larry Carters, president of the United Teachers of New Orleans, and Neerav Kingsland and Maggie Runyan-Sheva, New Schools for New Orleans. All interviews were conducted in New Orleans, April 2010. 1. For the state’s definition of charter school, see www.doe.state.la.us/divisions/charters/key _concepts.html (Louisiana Department of Education 2012).

154

11-2262-5 CH 11:0496-6

9/13/12

3:35 PM

Page 155

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Public Education in New Orleans

155

own budget, curriculum, and activities,” explained Kleban. “We also hire and fire teachers and staff.”2 College Prep Charter School is part of a broader phenomenon visible all over America, and nowhere is this trend in public education more noticeable than in New Orleans. In the 2010–11 school year, approximately 70 percent of all students in New Orleans were enrolled in charter schools, making it the first city in the nation with a majority of students in charter schools. The exceptionally high number of charter schools in the city—fifty-one and counting—makes New Orleans “the country’s leading laboratory for charter-school experiments.”3 Four years earlier, College Prep and most of its fellow charter schools did not exist at all. In 2005 only 9 of approximately 125 public schools in the New Orleans district were charters. This proportion was typical of many urban school districts in the country. For the most part, school governance in Orleans Parish followed traditional patterns. A central local school board operated and oversaw most education institutions in the school district. Within just a few years, however, the public education system underwent a profound transformation as governance shifted away from local school boards and charter schools proliferated. Many news outlets have reported these dramatic changes since Hurricane Katrina hit the city in August 2005, but exactly how did this extraordinary education landscape come to be? What happened before and after the hurricane to enable this profound reform? Central to this chapter is one agent who was helping to lay the groundwork years before the levees broke. Leslie Jacobs, one of the early architects of systemic change, was there from the beginning, especially as a member of the state Board of Elementary and Secondary Education (BESE), known to Louisianans as “Bessie.” She cocreated the novel institutional setting—what she calls “the civic architecture of support.” “My mission was to improve student achievement and give them an opportunity for a better education,” said Jacobs.4

2. Ben Kleban, principal, College Prep Charter School, New Orleans, personal interview with authors, New Orleans, April 2010. 3. Cowen Institute for Public Education Initiatives at Tulane University (2011b, p. 6; 2010b, p. 1); Abramson (2006). 4. Leslie Jacobs, former member of the Louisiana State Board of Elementary and Secondary Education, personal interview with authors, New Orleans, April 2010. All quotations not otherwise attributed are from this interview.

11-2262-5 CH 11:0496-6

9/13/12

3:35 PM

Page 156

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

156

Innovations in Governance

Failing School System In the 2004–05 school year, Anthony Amato, the eighth superintendent of New Orleans schools to take the reins in seven years, was trying to live up to his promise to improve test scores and root out corruption. Though he had some successes (standardizing curriculum, reducing absenteeism by nearly 30 percent), like his predecessors he found that the corruption, mismanagement, simmering racial tensions, and fierce resistance to meaningful reform that pervaded the school system were beyond his power to repair. Amato tendered his resignation in April 2005.5

Bankruptcy of the School Board In that year, it had also become unmistakably clear that the local school board, the Orleans Parish School Board (OPSB), could not handle the job of educating the roughly 65,000 students enrolled in the city’s 127 public schools.6 The board was formally in charge of running all public schools. Members of the board were elected with a mandate to make decisions about school- and system-level issues, such as curriculum, budgeting, and staffing.7 The OPSB operated under a collective bargaining agreement with the United Teachers of New Orleans, an organization that protected the rights and benefits of teachers. The union was a powerful stronghold; in 2005 it had 7,500 members, consisting of teachers and support workers.8 The OPSB had an accumulated debt burden of $265 million. Worse, it could not account for $71 million in federal funds that had been disbursed to the school board.9 Corruption in the school system was rampant. In 2004 agents of the Federal Bureau of Investigation occupied offices in the school district’s headquarters to keep an eye on the board’s operations, and in December of that year, the bureau charged eleven employees with criminal offenses, including bribery, extortion, fraud, and racketeering. “The OPSB was politicized, and the central office dysfunctional,” said Jacobs. “Systemic incompetence is harder to fix than corruption, and New Orleans had both.” 5. Newmark and de Rugy (2006). 6. The city government wanted change desperately but was more or less powerless; state law prohibited city hall from interfering with the local school system. 7. The school board received local, state, and federal funding. The total budget for the parish’s schools was based on a formula called the minimum foundation program. The board levied local taxes for education, received an appropriation from the state legislature based on the formula, and received federal funding through title programs supporting specific educational purposes. Cowen Institute for Public Education Initiatives at Tulane University (2010b). 8. Some were retirees. 9. Boston Consultancy Group (2007, pp. 8, 9).

11-2262-5 CH 11:0496-6

9/13/12

3:35 PM

Page 157

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Public Education in New Orleans

157

In June 2005, the state hired Alvarez & Marsal, a New York–based turnaround company, to take over the board’s affairs. The company found that payroll checks were frequently inaccurate or bounced; that the database used for payroll and finances was badly corrupted; that the district had not received a clean audit in several years; and that the accounting department had, in fact, no accountants. As a consequence of pervasive mismanagement, “schools were filthy and in disrepair, often lacking basic supplies such as blackboards and toilet paper.”10 When Alvarez & Marsal presented its major findings at the beginning of the undertaking, a local newspaper reporter had one clear conclusion: “This is a mess.”11

Low Performance Level In 2005 New Orleans accounted for fifty-five of the state’s seventy-eight worst schools.12 The overall population that the school district served was not affluent. Three-quarters of the district’s public school students were eligible for free lunch—a standard that points to the low income of students’ households.13 In comparison, only 40 percent of all school-age children in New Orleans qualified for free lunches, indicating that the public schools served the vast majority of the city’s poor population, while students from more affluent families attended private schools. In 2004–05 the standard achievement test in Orleans Parish public schools showed that over half of those taking the test (in the 4th, 8th, 10th, and 11th grades) lacked ”basic” competence in math and English.14 In fact, 65 percent of all students were not performing at grade level.15 In the same year, 63 percent of public schools in New Orleans were deemed “academically unacceptable” by Louisiana’s own accountability standards.16 A landmark report of the Boston Consultancy Group captured the situation (in 2003–04) by stating that “for every 10 students who enroll in the public high schools in New Orleans, fewer than 6 will make it to graduation—and only 2 will enroll in college.”17 By the summer of 2005, Orleans Parish school district faced significant financial, managerial, and operational problems. It faced bankruptcy, leadership was failing, the overall student performance was the worst in the state, and the school buildings were falling apart. 10. Alvarez & Marsal (2007, p. 1). 11. S. Ritae, “This Is a Mess,” New Orleans Times-Picayune, July 24, 2005. 12. A. Nossiter, “Crises Multiply at Schools in New Orleans,” Seattle Times, April 19, 2005. 13. Childress (2008, p. 2). 14. Newmark and de Rugy (2006). 15. Recovery School District (2011, p. 2). 16. Boston Consultancy Group (2007). 17. Boston Consultancy Group (2007).

11-2262-5 CH 11:0496-6

9/13/12

3:35 PM

Page 158

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

158

Innovations in Governance

Innovation Process Leslie Jacobs was on the Orleans Parish School Board from 1993 to 1996. “It was in serving on the school board that I came to fully appreciate the lack of pressure on the OPSB to take action in the face of failure,” she said. Despite available data showing that students failed to attend class and failed to graduate, no penalty was imposed, and government and other officials had no way to address the problem. In 1996 Jacobs joined the state Board of Elementary and Secondary Education. This board had the authority to make policy decisions about the state’s public education system.18 It also had the power to approve new schools and close failing schools.19 As a member of BESE, Jacobs worked exclusively with the governor and a team of officials with the goal of putting in place a new school accountability model. “My goal was not to take over the Orleans Parish schools,” said Jacobs. “I believed in creating external pressure to force elected officials and the school board to make hard choices if there were failures. Because doing nothing was not an option any longer.” In 1999 the board launched the Louisiana Student and School Accountability System. Jacobs was its principal architect. The new system shifted the focus of accountability from the performance of district school systems to the performance of individual schools.20 Before 1999 the state board released aggregated data, which looked at the performance of all students in the district but did not report on individual school performance. Now every public school would received a score and a performance label. The boards and superintendents of individual schools had to start answering for how they were performing and why. “But we were not designing a ‘gotcha’ system,” said Jacobs. “We designed a system with performance and growth in mind.” The 18. The board annually set the parameters for the minimum foundation program, the formula used to determine legislative appropriations to public schools. 19. A school system in Louisiana had to meet BESE’s standards of educational adequacy, and all school principals had to submit an annual report. Mirón (2008, p. 239). 20. Based on the accountability system assessment scores, each school received a school performance score based primarily on student achievements. “In 1999, scores ranged from 0 to 150 and above, with 100 indicating that a school had met the 10-year goal of the average student score at basic and 150 indicating that a school had met the 20-year goal of the average student score at proficient.” The initial objective was for all schools to reach the state’s goals. Public Affairs Research Council of Louisiana (2004). “Education Week ranked Louisiana 5th out of the 50 states in its annual Quality Counts Survey (2003) for the State’s significant efforts in the standards and accountability initiative. This is the second year that [the Louisiana accountability system has] ranked within the top five states in this category. The Princeton Review ranked [the]testing program 7th in the nation (June 2002).” Louisiana Department of Education (2003).

11-2262-5 CH 11:0496-6

9/13/12

3:35 PM

Page 159

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Public Education in New Orleans

159

state now could identify failing schools and focus remediation efforts on what were called “academically unacceptable” schools.21

Taking Schools Away Beginning in 1999, the school accountability system started identifying school performance and highlighting the academically unacceptable schools. Jacobs reported on the efforts to help these schools improve during annual presentations to four committees of the state legislature (two House and two Senate education and financial committees). But as she repeatedly told the legislature, the efforts had not paid off. Committee members began to realize that the schools were not making any progress. “Year after year, despite giving the OPSB extra money and technical assistance,” said Jacobs, “its schools remained the lowest performing in the state.” She conveyed this message repeatedly to the legislature, and eventually, legislators began to consider a new approach. Jacobs then became one of the key leaders in crafting new legislation that would alter the situation. She came up with a plan to take failing schools out of the system and give them a fresh start. (While the state could require a district to reconstitute a school, it did not yet have the constitutional authority to take a failing school away from a local school district and oversee its operations directly.)22 To enact this plan, a constitutional amendment would be necessary. Such an amendment would require a two-thirds vote from the legislators in each house as well as approval by a majority of voters in a statewide election (which usually took place a year after legislative approval). “It was a huge step,” said Jacobs. “I spent months lobbying legislators to pass the legislation and then worked to build statewide support, including meeting with editorial boards of newspapers, doing radio talk show interviews, and running a direct mail campaign to educate voters.” In 2003 Jacobs’s efforts paid off. The state legislature and voters granted BESE explicit approval to take over public schools that had failed for four or more consecutive years. More precisely, from that point on BESE could take control of the chronically failing schools and transfer them to a new state-run agency called the Recovery School District (RSD). The RSD could either operate these schools itself or grant charters allowing others to take over. “The word recovery referred to recovery from academic failure,” explained Jacobs. 21. “When we were designing the accountability model, one of the biggest areas of contention was what to call a failing school,” recalled Jacobs. “The educators did not want to call it failing, because the school was doing other things well, like keeping kids safe and providing meals. So we had to call it ‘academically unacceptable.’” 22. A school district had to submit a reconstitution plan for any failing school to BESE for approval. The board could remove funding for that school and in practice force it to close.

11-2262-5 CH 11:0496-6

9/13/12

3:35 PM

Page 160

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

160

Innovations in Governance

The RSD was modeled, in my mind, after bankruptcy law. When a business is in Chapter 11 bankruptcy, a court allows it to make sweeping changes to help the business survive. When academically bankrupt schools entered the RSD, they were removed from the control of the local school board, [including] its central office, its policies, [and] its contracts (including the collective bargaining agreement). . . . Inside the RSD, the new school operator was left with the building, the students, and the money to educate the students—and was given a fresh start. The OPSB and United Teachers of New Orleans had opposed this legislation and campaigned against it but were unable to stop its passage.23 Over the course of 2004 and 2005, the RSD took five schools away from the OPSB that had been identified as failing and granted all of them charters. Although more schools were eligible for takeover, BESE could not find more qualified charter operators to run the institutions. “We realized that we did not have enough quality charter applicants,” said Jacobs. “New Orleans was going to need to home-grow more charter school operators.” But before Jacobs had the opportunity to work on this challenge, Hurricane Katrina made landfall and drastically altered the course of events.

Responding to Hurricane Katrina In August 2005, Hurricane Katrina devastated the city of New Orleans. The storm displaced tens of thousands of students and teachers and ruined school facilities on a massive scale. Only 20 of the approximately 120 school buildings in the city were more or less usable after the storm. It was estimated that 10,000 students would return to the area on short notice, and that in the next few years this number, as well as the composition of the area’s population, would change dramatically.24 An educational disaster loomed. Faced with the enormous damage, the local school board stated that it would not be capable of reopening schools for the 2005–06 school year. The OPSB fired almost all of its employees, including 4,000 teachers and administrators, because it did not have money to keep paying them.25 No open schools simply meant no work. The storm, combined with the paralysis of the school 23. “In October 2003, over opposition from the Orleans Parish School Board, voters in the state approved a constitutional amendment, by a 60 to 40 percent margin, allowing the state to assume control of public schools that received an ‘academically unacceptable’ rating four years in a row, applied retroactively so that failing New Orleans schools could be taken over sooner.” Newmark and de Rugy (2006, pp. 15). 24. Hill and Hannaway (2006, pp. 1, 3). 25. Holley-Walker (2007, pp. 128, 136); Cowen Institute for Public Education Initiatives at Tulane University (2008, p. 10).

11-2262-5 CH 11:0496-6

9/13/12

3:35 PM

Page 161

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Public Education in New Orleans

161

board and the union, presented an opportunity for innovators like Jacobs; schools needed to be restarted, and she and other reformers did not want to reopen the schools in what Jacobs called “the same tradition of failure.”

Creating New Charters Several interventions happened in rapid succession. On September 30, the federal government allocated a grant of $20.9 million to Louisiana to help reopen damaged charter schools, create new charters, and expand existing charter schools.26 Money for rebuilding the old system was not forthcoming. A large proportion of New Orleans citizens had fled the city on both temporary and permanent bases, and local school board taxes dried up. These federal charter funds provided an incentive for the OPSB to convert existing schools to charters, for these funds could replace the lost local revenues. The board moved quickly to charter twelve existing schools in October with the help of the federal grant. On October 7, Louisiana governor Kathleen Blanco signed an order to waive parts of the state’s charter school law, including the necessity that a newly converted charter school be approved by the school’s faculty and parents. The waiver removed potential obstacles to scaling up.27 The law, for example, required a vote of the faculty and either students or parents to convert an existing school to a charter. Since the city was evacuated and schools were closed, there was no way to hold a vote. Blanco suspended the requirement. The waiver also allowed the OPSB to approve twelve charter schools— already relatively high-performing schools that were located on high ground.

New Legislation In the meantime, a drastic takeover was in the making. “I went to the superintendent, Cecil Picard, in Lafayette,” Jacobs told us, “and I said, ‘This is how we take the rest of the schools over: let’s change the definition of failing school and require BESE to take over the schools.’” The plan was to change RSD legislation to allow the state, rather than the OPSB, to reopen the schools. Jacobs started working with State Superintendent Cecil Picard and the legislature to amend the existing RSD legislation.28 They acted fast. There was no time for lengthy deliberations about the future of public education. Jacobs’s initiative resulted in legislation that would be approved in a special session of the legislature in November 2005. Act 35 expanded the definition of a failing school laid out in the 2003 legislation that established the 26. U.S. Department of Education (2005). 27. Gewertz (2005). 28. Gewertz (2005).

11-2262-5 CH 11:0496-6

9/13/12

3:35 PM

Page 162

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

162

Innovations in Governance

Recovery School District. The new legislation was passed in a chaotic setting in which residents remained dispersed, school buildings sat empty, and hundreds of initiatives, from rebuilding the levees to actually getting the water out of the city, swirled around the state capital. The congressional act defined failing schools as those that scored below average on the state’s standardized tests and that operated in school systems declared to be in “academic crisis,” a phrase that referred to “any local system in which more than thirty schools are academically unacceptable or more than fifty percent of its students attend schools that are academically unacceptable.”29 At that time, only schools in Orleans Parish fell into this category. The newly amended law required the state board to take over chronically failing schools in the parish; the 2003 law had merely given the BESE the option to do so. The result of this government takeover was a new institutional patchwork. Under this regime, 107 public schools formerly under the control of the local school board (the OPSB) were transferred to the Recovery School District. The RSD was suddenly responsible for operating 112 academically unacceptable schools, including the five schools that it had already taken over.30 Act 35 also took away the OPSB’s chartering authority; going forward, only BESE would have the right to charter a school in New Orleans. “If we had not passed the constitutional amendment in 2003 that allowed for the creation of the RSD,” said Jacobs, “we could not have taken this action in 2005. The RSD creation required both constitutional and statutory changes. A constitutional amendment must be voted on by the citizens and could not have been passed until 2006 or 2007, and we would have lost our opportunity.” As a result, the OPSB shrank dramatically in size. The board would continue to operate only four traditional public schools directly and oversee twelve charter schools. According to Jacobs, it was impossible to take away all the schools from the elected board. “We needed to leave the OPSB enough schools to withstand a constitutional challenge; the school board is a constitutionally confected entity. If we had taken all its schools away, the board would have challenged the constitutionality of Act 35.” Within just months following Katrina, the state had seized control over 107 of the 127 public schools in the city.31 The change could not be hindered by vested interests. The OPSB was simply too weak to put up a fight. So was the teachers union, whose membership had dwindled as a result of evacuation 29. Recovery School District (n.d.). 30. Boston Consultancy Group (2007, p. 10). 31. Officially, the OPSB had sixteen schools (four traditional and twelve charters) and two “schools” for incarcerated youth. According to Jacobs, “At that time, there was never a clear count, and a ‘school’ is hard to define. Some were programs with site codes.”

11-2262-5 CH 11:0496-6

9/13/12

3:35 PM

Page 163

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Public Education in New Orleans

163

and the OPSB’s ensuing layoffs.32 At the same time, it was unclear what to expect from the state’s takeover. As one journalist wrote in The Atlantic, this was “the fastest makeover of an urban school system in American history— and a patchwork non-system of bewildering complexity and bewitching promise.”33

Attracting New Partners This patchwork, however, did not immediately deliver quality education on a large scale. “We were not ready to take this many schools over this fast,” said Jacobs. “Schools were still just empty buildings. Katrina gave us no planning time; we had to work on turning around failing schools while rebuilding a city. When schools began opening in January 2006, there were not enough buildings, no books, no housing for teachers, no bus drivers, no buses.” Jacobs and her colleagues had to start mobilizing resources and support for the RSD schools fast, because evacuated families with children would be returning to the area.34 Moreover, they had to mobilize quality charter applicants: in 2006 only six of forty-four applicants would be approved by BESE; the rest did not meet the standard. The first task was to recruit and enlist human capital. “No one was on the ground in 2006,” said Jacobs. One crucial player that she identified early on was the emerging nonprofit organization New Schools for New Orleans, founded in April of that year by Sarah Usdin.35 The nonprofit would become an important intermediary for third parties, such as foundations, channeling 32. Teachers would have to reapply for their old jobs, if they still existed, or for a position at one of the new charter schools, which were free to manage their own application procedures and contracts without input or pressure from the union. 33. Waldman (2007, p. 2). 34. The RSD struggled with multiple problems, including vacant positions in its own organization, damaged school facilities, lack of basic school supplies, and a shortage of security guards and teachers. Making matters worse, the agency had problems with bureaucratic procedures that hindered access to funds. The only redeeming feature was that funds did come through. The RSD’s problem thus shifted from a cash shortage to the challenge of accessing the money and finding the right entities, such as skilled principals and experienced charter organizations. Boston Consultancy Group (2007, p. 12); S. Saulny, “Rough Start for Effort to Remake Faltering New Orleans Schools,” New York Times, August 21, 2006. For example, a federal restart grant, part of the Hurricane Education Recovery Act, allocated $196 million to schools in New Orleans. The Federal Emergency Management Agency (FEMA) pledged $241 million for repairs to school facilities. However, the FEMA funds would be paid out at a very slow pace. By June 2008, Orleans Parish had received less than half of the FEMA funds obligated to them. Cowen Institute for Public Education Initiatives at Tulane University (2010b, p. 18); Audit Services (2008); Boston Consultancy Group (2007, p. 17). Liu and Plyer (2009, p. 15). 35. Usdin was the former executive director of Teach for America in Greater New Orleans.

11-2262-5 CH 11:0496-6

9/13/12

3:35 PM

Page 164

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

164

Innovations in Governance

money into New Orleans education.36 “[New Schools for New Orleans] was the first on the ground,” said Jacobs, “and it would own the ‘real estate of human capital.’” In the same year, Jacobs, Sarah Usdin, and the Louisiana Department of Education worked to bring Teach for America and the New Teacher Project back to the city.37 Whereas in other cities these organizations had contracts with the school board, in New Orleans contracts went instead to the intermediary that Jacobs helped start: New Schools for New Orleans. Usdin’s organization secured the support of both Teach for America and the New Teacher Project for the 2006–07 school year. In the following years, New Schools for New Orleans, Teach for America, and KIPP (a national charter school organization) became what Jacobs called “the anchor tenants of reform.” The new institutional framework and the presence of these organizations in the area attracted other education entrepreneurs from around the country, eager to make their mark on the New Orleans school system. Some exceptional people moved into New Orleans, like Ben Kleban of College Prep Charter School. Kleban had been a teacher in Philadelphia when he decided to get a master’s in business from Harvard “because I thought I had the most added value as a good manager of a charter school.”38 When Katrina hit, he said, “I just found myself drawn to this once-in-a-lifetime shot.”39 The clean slate left by the storm amounted to an open invitation for people like Kleban. “It was a Wild West, really,” he said. “But most people who came to the scene did so with the right attitude and motivation.” With the help of all these players, the Recovery School District became better able to fulfill its mission.40 Over the course of years, it reorganized as well as reopened numerous schools under charter agreements authorized by BESE.

36. Childress (2008, p. 6). 37. Teach for America and the New Teacher Project are both nonprofits. The first enlists school teachers—often talented recent college graduates—to temporarily teach in low-income areas; the second helps urban school districts recruit and train teachers and staff challenged schools. Working together with Governor Blanco, Jacobs and Usdin also managed to convince New Leaders for New Schools to come to New Orleans. 38. Kleban, interview. 39. Kleban, quoted in S. Ritae and D. Simon, “A Proven Superintendent and a Hotshot Group of Educators Are Inspiring Others to Bring Their Skills to New Orleans,” New Orleans Times-Picayune, May 26, 2007 (www.nola.com). 40. Kleban, interview. In 2007 the new state superintendent of schools succeeded in attracting an ambitious new leader for the RSD: Paul Vallas, a former Chicago and Philadelphia schools chief known as a vigorous reformer. His leadership was crucial for the RSD’s success.

11-2262-5 CH 11:0496-6

9/13/12

3:35 PM

Page 165

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Public Education in New Orleans

165

Innovation and Improvements By 2009–10 a new institutional arrangement had emerged in Orleans Parish. This included roughly two public school systems, each with both traditional and charter schools.41 A school’s position in this arrangement determined how it received funding and which agency would hold it accountable for performance. “I can’t tell you I envisioned this system,” said Jacobs. “This happened fast in response to Katrina, based on the groundwork that already had been laid out. But it was not a linear process; it was at times very chaotic, especially post-Katrina.” The new institutional arrangement included an accountability system focusing on individual school performance; new relationships between state agencies, school districts, and schools; a mix of school systems; and the coproduction of public education by various sectors in society. The first element, a new accountability system, made it possible to sanction the failure and encourage the success of specific institutions.42 It was a game-changing performance measurement system that fundamentally altered the terms of accountability for public schools in the state. Previously, the school system as a whole was held accountable for the performance of all the schools within a district. Second, new relationships were established between the state of Louisiana, the state and local agencies that operated and oversaw the schools, and the schools themselves. The power of the local school board and its allies in the teachers union was broken down, and the state strengthened its grip on the schools. Third, a mix of public school systems allowed for the coexistence of two types of schools, run and overseen by various educational agencies. This mix was a break with the past; five years earlier, only one traditional public school system existed. Finally, the public and nonprofit sectors coproduced public education. This was a novelty compared with many other public school systems and a dramatic shift from the years before the RSD and Katrina, when the government was the provider of public education in the school district. The innovation improved the responsiveness of the system. Despite the diffuse power structure, the new system of schools became more alert to problems—and could do more to address them—than the system it replaced. The 41. In practice, there are more school systems in place; this is a simple depiction. In 2010 there were more than eighty-eight schools and 39,877 students enrolled (excluding alternative and juvenile detention schools). Cowen Institute for Public Education Initiatives at Tulane University (2011a). 42. The Louisiana Educational Assessment Program and the federal accountability program (No Child Left Behind) have been streamlined.

11-2262-5 CH 11:0496-6

9/13/12

3:35 PM

Page 166

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

166

Innovations in Governance

accountability regime made it easier to identify problems, and the five-year charters and three-year performance reviews for all charter schools allowed BESE to act on possible problems and revoke charters, if necessary. The preKatrina system, dominated by the OPSB, had proved to be too deeply mired in mismanagement and internal disputes to respond to even the heaviest pressure to improve the situation.

Concrete Results In the 2010–11 school year, sixty-eight RSD schools were open in New Orleans, including forty-six charters. The OPSB was responsible for sixteen public schools, including the twelve that had been chartered in October 2005. Thus most of the public schools in New Orleans were charters, most of which were under the auspices of the Recovery School District. (There were 40 percent fewer students than there had been before Katrina. Almost 27,000 students were enrolled in the RSD schools, almost 91 percent of whom were eligible for free lunch.)43 The number of the schools by type was subject to change, because the RSD aimed to reopen all the traditional public schools under its temporary auspices as independently run charter schools. All charters had a five-year contract and were subject to a three-year review by their authorizing agency. The review determined whether the charter agreement would ultimately be renewed or revoked.44 Thus a new institutional framework was, and still is, in place, but the number of schools of each type will vary over time. After the drastic makeover, the scores of New Orleans public schools in performance tests still seriously lagged behind national and state averages. However, their overall performance had improved significantly and outpaced average state gains.45 Some of the indications of improvement were as follows: —The combined district performance score of all public schools increased from 56.9 points for OPSB students in 2004–05 to 75.4 points for students in RSD and OPSB schools combined in 2009–10.46 —The percentage of students performing at grade level on state tests increased by 17 percentage points, from 35 percent in 2004–05 to 52 percent in 2009–10. 43. Recovery School District (2011). 44. Cowen Institute for Public Education Initiatives at Tulane University (2010a). 45. Recovery School District (2011, pp. 5, 6). 46. The district performance score considers all students, all tests, and all performance levels and is calculated as if all public school students in New Orleans attended one school. Recovery School District (2011, p. 3).

11-2262-5 CH 11:0496-6

9/13/12

3:35 PM

Page 167

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Public Education in New Orleans

167

—The percentage of failing schools (K–12) dropped, and fewer students were attending such schools. While approximately 62 percent of the student population in 2004–05 attended failing schools, only 12 percent did in 2009–10.47 —Two-thirds of students attending public high schools in 2004–05 were enrolled in failing schools. By 2009–10, the share had shrunk to 31 percent. —The annual rate of school drop-outs decreased by 50 percent over 2004–05.48 The charter schools were themselves doing well: the test scores of the state’s accountability program demonstrated that they outperformed the noncharters.49 A Stanford University research report on the 2008–09 school year highlighted Louisiana as one of five states in which charter schools scored significantly higher than the traditional public schools in math and reading.50 Other research indicated that the RSD was doing especially well: RSD schools made progress much faster than other districts in the state. For example, between 2007 and the 2010–11 school year, the proportion of students in this district scoring “basic” at grade level increased from 23 to 48 percent.51

Strategy and Tactics What were the major challenges facing Jacobs, and what strategies and tactics did she employ to create the new institutional arrangement?52

Redefining School Failure To turn up the heat on leaders of failing schools in New Orleans, Jacobs and her allies devised a strategy that involved redefining academic failure and recognizing it as an effect of particular schols rather than of an entire system. By implementing a statewide accountability program that assessed individual school 47. Failing schools were those with a school performance score below 60. 48. Recovery School District (2011). 49. Comparison between charters and traditional public schools is difficult. Charters, for example, serve relatively fewer special needs students and have a cap on their enrolment; some charters have selective admission policies, while traditional schools take in students throughout the school year. 50. Center for Research on Education Outcomes (2009); A. Fenwick, “Charter Schools Rise in New Orleans after Hurricane Katrina,” USNews.com, December 23, 2009 (www.usanews.com). 51. A. Vanacore, “New Orleans Public Schools Make Gains in State Test Scores,” New Orleans Times-Picayune, May 24, 2011 (www.nola.com). 52. Many important change agents were involved in the shift toward charter schools; they operated across all sectors of society and in all levels of government. Ben Kleban, the principal of College Prep, was one of many visionaries and entrepreneurs who came to the city to help rebuild the schools. Sarah Usdin, the founder of New Schools for New Orleans, was a key player in the nonprofit sector; Louisiana governor Kathleen Blanco, Paul Vallas (head of the

11-2262-5 CH 11:0496-6

9/13/12

3:35 PM

Page 168

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

168

Innovations in Governance

performance, they made it possible to identify failing institutions and to focus remediation efforts. Although the accountability framework identified failing schools, exposed them to the public, and funneled resources to them, it did not by itself improve the performance of the schools or the behavior of their leaders. What did change, however, were the public and political conversations about public education. The scores gave Jacobs a springboard for reframing these conversations; she could now start talking with representatives of government and other stakeholders about which schools were actually failing rather than about general failure of whole school districts. She could now frame the conversation differently, by identifying individual institutions. “The accountability system gave us the ability to talk about failure in ways that people could get. It personalized that failure.” The performance scores also gave state and local media sufficient information to question local school leadership. The media could now ask a superintendent what he or she intended to do about the failing school. However, the media at this time were not focused on the issue. Recognizing that their cause could be furthered if the media were to urge school leadership to take action, Jacobs and colleagues went on the road across the state of Louisiana to meet with newspapers.53 “We did media outreach about the accountability model and how it worked and educated them about the right way to look at the information.” This tactic had the potential to mobilize new parties with a stake in change: parents and communities. Jacobs originally designed the statewide accountability system with the hope that it would spur people into action. “We started defining what a failing school was and putting the individual data out before the people.” Seeing the names and locations of failing schools, the public will could be mustered to put pressure on school leadership. This was Jacobs’s original hypothesis, but the tactic did not fully succeed. “People had given up hope,” she explained. Parental and community pressure in New Orleans did nothing to move the school board to turn around failing schools. More radical measures were called for. Jacobs went on to redesign the institutional framework of public education at a more fundamental level by spurring the creation of the Recovery School District.

Recovery School District board), state superintendents of schools Cecil Picard and Paul Pastorek, Carole Wallin (deputy superintendent at Louisiana’s Department of Education), and Robin Jarvis (the first Recovery School District superintendent) were central reformers in the public sector; and many other agents of change made a mark along the way. 53. Jacobs worked at this time with officials in the Department of Education in Louisiana.

11-2262-5 CH 11:0496-6

9/13/12

3:35 PM

Page 169

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Public Education in New Orleans

169

Working toward a Tipping Point Jacobs now faced two challenges: first, to redesign the institutional framework to successfully improve school performance, and second, to establish legitimacy and gather support for the new plan in the authorizing environment. With regard to the first challenge, Jacobs’s goal was to separate individual schools from the disastrous governance in Orleans Parish before starting to transform them. “The fundamental innovation here was rethinking how to address urban school failure by taking schools away from the system and giving them a fresh start. This innovation was in place before Katrina, and it was tied to the school accountability model.” Initially, the Recovery School District took over only five schools. Jacobs, however, had a tipping point in mind. “I thought after creating the RSD that it would take seven to ten years to reach a tipping point,” said Jacobs. “Five really good schools weren’t going to tip [the scale], but when you all of a sudden have thirty [new charter] schools [performing well], that’s a point where people will say, ‘I will no longer put up with the existing public school system’s failure.’ My goal was to get it to the tipping point. In 2005 [when Katrina hit] we were still working toward creating this momentum.” The second challenge was to convince others to endorse the plan. Since the innovation in governance required a constitutional amendment, statewide support was needed—from legislators, media, advocacy groups, and constituencies. Jacobs had already been involved in a continuous conversation with many of these stakeholders. The efforts of Jacobs and her colleagues since the accountability system had gone into effect in 1999 had paved the way to introduce more sweeping changes. The outreach work to publicize the new accountability system and the continuous reporting back on the lack of improvement of schools to the legislature had built up the political will to take action. Jacobs did not have to start her conversations with stakeholders from scratch, but she significantly intensified her ongoing efforts to convince all these parties to support the new legislation.

Moving from Crisis to Opportunity In the direct aftermath of Katrina, the challenge for Jacobs and her fellow change agents was to seize the opportunity presented by the crisis. The hurricane had swept away the public school system in New Orleans. Leadership was weak, financing nonexistent, buildings were damaged, teachers were gone, and kids were returning to the area. The Orleans Parish School Board proclaimed that it was simply not capable of reopening the schools on short notice. Jacobs

11-2262-5 CH 11:0496-6

9/13/12

3:35 PM

Page 170

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

170

Innovations in Governance

realized that this presented an opportunity and persuaded others to perceive the situation similarly. School reformers, such as Superintendent Cecil Picard, convinced government actors like Governor Blanco to act swiftly. The case for the state’s takeover of the schools could be justified by the school performance data already available and by the ongoing conversation about school failure, as well as by the argument that, as Jacobs put it, “the OPSB was acting as dysfunctionally post-Katrina as they had acted pre-Katrina.” She and fellow change agents used the political realities and legal framework already in place to build on the legislation that had created the RSD and further expand the charter school framework. “Preparation met opportunity,” said Jacobs. “We had done a lot of preparation. What Katrina allowed us to do was to put this change on steroids.”

Attracting Human Capital Once the new institutional framework was in place, Jacobs concentrated on making the new system functional and sustainable by generating operational capacity. She knew that lasting change would depend not only on a good institutional framework but also on capable people who would actually use the new structure to fund, operate, and manage the RSD schools. Jacobs’s role shifted from designing governance frameworks to attracting human capital. “The charter schools are not going to be better than traditional public schools unless you have better people,” she said. “Human capital is the number one thing. We’ve married two things: an environment that supports quality human capitalists with quality human capital. Doing one without the other will not succeed. If you get these high-quality principals, but you put them in the structure where their hands are tied, they can’t excel. So you have to get the talent, and you have to free the talent.” Jacobs focused on finding the right people to manage, fund, support, and operate the RSD schools. She realized that to make the change actually work and prevent falling back to the traditional model of a centralized school district she would have to work fast. “The whole mindset in this country is centralized districts. The logical thing would have been a well-run central model with a good central office. So we were swimming upstream. What we proposed had never been done before.” While assembling and enabling an influx of motivated and skilled personnel, Jacobs also stayed on as a member of BESE until 2008 to help the board resist pressure to turn back the legislative changes. The reform had to withstand the test of time, which it did, through three governors and two parties in power. Jacobs, Usdin, and other change agents put out the call for national charter organizations to come to New Orleans and for foundations to help finance the

11-2262-5 CH 11:0496-6

9/13/12

3:35 PM

Page 171

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Public Education in New Orleans

171

schools and the nonprofits that supported them.54 The essence of their appeal was that the massive need in the devastated area was in fact an opportunity to succeed. Because the challenges were so daunting, the chance to make a difference was very real. And if many people joined in, the likelihood that lasting change would happen was high. Jacobs presented New Orleans as an attractive place for adventurous teaching professionals, social entrepreneurs, and education philanthropists. “We got New Leaders for New Schools [a non-profit that trains principals for work in underperforming schools] to come here,” said Jacobs, “because of our appeal about the sizable impact that they could have. ‘If you train forty school leaders,’ I said to them, ‘you’re going to be able to have school leaders in half of the schools.’ So part of the pitch that I made to all these educational, entrepreneurial people is, ‘Why don’t you all get in the same city? We have the scale; we will welcome you and prove that your models can work.’”

Creating Synergy Jacobs persuaded these new players to work together. The patchwork of organizations and individuals that were active in New Orleans education could very well have led to chaos and confusion and thus to a public outcry to turn the schools back to a centralized district. There was no well-organized infrastructure in place, and the institutional framework, still in its infancy, was far from being effective and sustainable. It was not clear who was going to do what. Jacobs guided individuals and organizations toward a more synergistic model that was “not people competing with each other and duplicating efforts. There was no time or money to waste.” She tried to convince them that a well-functioning system would come not only from creating great schools but also from viewing themselves as part of a larger picture. For example, she strongly urged them to come up with a common enrollment process. If each school had its own timeline for applications and lotteries, parents would get confused and protest. “I put it together very early and took it to BESE and a multitude of organizations to get them to approve it. So all of the schools had the same timeline and [used] the same application.”

Conclusion Leslie Jacobs was the architect of the new governance framework and a vocal advocate for better education. The transformative change that she envisioned was about ideas and execution, about seizing the moment and long-term 54. Jacobs supported New Schools for New Orleans with a personal donation; the organization initally secured $500,000 in seed capital. In December 2007, it received a grant of $10 million, partly from the Gates Foundation. Childress (2008).

11-2262-5 CH 11:0496-6

9/13/12

3:35 PM

Page 172

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

172

Innovations in Governance

commitment, about endurance and agility. As an agent of change before and after Katrina, Jacobs tried to bring about transformation by combining investment in governance with investment in human capital. Thus Jacobs was active as a pre-Katrina architect and as a post-Katrina “opportunity creator” in a back-and-forth process between redesigning the governance structure and empowering people to populate it. Over time, she started to make herself dispensable. “I funded pieces and convinced people. I identified problems and put a little cash up the first year and made it [eventually] sustainable without me.” By 2011, while she was thinking about her exit strategy, public education in New Orleans was not “good” yet, compared with other cities and other states, but it was improving. Whether the new arrangement in place today amounts to the spectacular transformation the innovator envisioned remains to be seen, but the prospects are certainly promising. “There are still issues regarding the funding of special needs kids, alternative education, and enrollment procedures,” said principal Ben Kleban of College Prep. “Schools remain underfunded, and the students and their parents do have huge challenges in life. We are not quite there yet, but I am confident that these issues will be addressed: the system is fair, it is responsive, and it works.”55

55. Kleban, interview.

12-2262-5 CH 12:0496-6

9/7/12

2:51 PM

Page 173

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

12

The Value of Values Higher Education in Virginia

W

“

e wish to establish in the upper country of Virginia, and more centrally for the State, a University on a plan so broad and liberal and modern, as to be worth patronizing with the public support, and be a temptation to the youth of other States to come and drink of the cup of knowledge and fraternize with us.”1 So wrote Thomas Jefferson, the third president of the United States (1801–09). Jefferson had a dream of establishing a university for all Americans—even the poorest. According to Jefferson, enlightened, welleducated citizens were essential for the proper functioning of the newly created American states. The more educated their citizenry, the better these states could develop and manage their affairs without having to bow to the pressure of the English or other potential overlords. Jefferson eventually realized his dream: after his presidency he gathered funds through donations from his wealthy friends, oversaw the construction of a campus, put together a curriculum, and recruited the first professors. In 1825 the University of Virginia opened its doors. Since its founding, the University of Virginia has made a name for itself. Its undergraduate schools are especially well known for their educational programs. The university was named the second best public university in the In addition to interviewees quoted in this chapter, other respondents for this case study were Arthur Garson, executive vice president and provost, University of Virginia; Gowher Rizvi, vice provost for international affairs; Charles Fitzgerald, senior associate vice president for principal relationship development, University of Virginia. Interviews were conducted in Charlottesville, February 2009. This chapter is based on a case study report, Waarde voor je Geld (2009), prepared for a lecture series at the Hogeschool Arnhem Nijmegen and TiasNimbas Business School, University of Tilburg. 1. Randolph (1856, p. xx).

173

12-2262-5 CH 12:0496-6

9/7/12

2:51 PM

Page 174

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

174

Innovations in Governance

United States in 2009 and 2010 by U.S. News and World Report and for two consecutive years the nation’s “best-value” public university by the Princeton Review, offering the best combination of affordability and a high-quality education in the United States.2 The combination of “phenomenal faculty,” “intelligent students,” and “extraordinary academics” put the University of Virginia ahead of the competition.3 The quality and affordability of the school are the result of decades of careful planning and management. To ensure the sustainability of high-quality and affordable education, the university’s leadership decided in 2002 to initiate an innovative administrative arrangement. Through the Restructuring Act, the university and two of the Commonwealth of Virginia’s other higher education institutions became much more operationally autonomous than most other public colleges. A University of Virginia administrator called the restructuring “one of the main turning points in the history of our institution.”4 Why did the university need to redefine its relationship with the Commonwealth of Virginia? What were the goals, and what were the results? Which strategic and tactical choices contributed to the end result?5

The Need for Reform According to the administration of the University of Virginia, the innovation process was already well under way before official meetings began.6 For years, the university’s intense relationship with the government had been problematic. As a public institution, the university was essentially a state agency; it received state subsidies and thus was bound to regulations and laws that were not in effect for private institutions. All the dollars that flowed from the commonwealth to the university had to be thoroughly accounted for. It was the government, not the university, that decided how the university’s budget should be constructed. The government also had a say in how the university’s finances were managed. As a result, the university was not allowed to invest any money that it had received from the state. Expenditures also had to 2. See University of Virginia (2012). 3. USAToday (2009). 4. Leonard Sandridge, executive vice president and chief operating officer, University of Virginia, personal interview with authors, Charlottesville, February 2009. 5. University of Virginia administrator, personal interview with authors, February 2009. 6. “It is also fair to say that the restructuring did not just happen. We had been working almost twenty years; it started with small incremental gains in autonomy, for instance, writing the checks in Charlottesville instead of in Richmond. Over a period of twenty years we got more and more decentralization.” Sandridge, interview.

12-2262-5 CH 12:0496-6

9/7/12

2:51 PM

Page 175

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Higher Education in Virginia

175

be accounted for.7 The school had to follow the same multitude of regulations that the state government did, which resulted in costs and delays. For example, government regulations often added years to the schedule of building projects—so many years that, according to the university administration, millions of dollars were wasted in the process. In this and many other instances, governmental bureaucracy often stood in the way of efficiency.8

Political Developments The institution also had to keep a close eye on political developments in Virginia. Shifting political winds meant that higher education did not always have the same priority on the political agenda, a reality that had direct impact on the school’s budget. The constant uncertainty around the size of state budget appropriations made creating a long-term budget difficult. Economic developments in the state also resulted in fluctuations in the university’s budget. “The real problem in Virginia is . . . the volatility of appropriations, which surge during economic booms and collapse during recessions. Such volatility makes it difficult for university administrators to plan ahead,” said a university administrator in 2004.9

No Grip on Tuition Fees The University of Virginia also had to deal directly with the state government when it came to making decisions about tuition and fees. The state tried to ensure that Virginia residents enjoyed the maximum benefit from the university’s educational opportunities. Tax dollars that flowed from Virginians to the university were supposed to benefit the state’s taxpayers and their children. While the university administration controlled tuition and fee rates on paper, in practice the state had the final say.10

7. Sandridge, interview. 8. Leslie and Berdahl (2008, p. 13). 9. Couturier (2006, p. 7). 10. This was because the General Assembly (the combined Virginia House of Delegates and Senate) was supposed to sign off on the final number. The academic institution was allowed to collect tuition and fees but then had to give the monies to the state, which would then allocate funds. “Theoretically and legally, the institutions’ boards had (and have) the authority to charge tuition at rates they alone establish. Practically speaking, tuition receipts have been deposited in the state treasury for reappropriation to the institutions. This practice has given the legislature effective control because it could choose to reappropriate as much or as little of these funds as it wished. If an institution raised tuition beyond a politically tolerable amount, it risked losing a test of wills over how much it would actually receive in its nongeneral appropriation.” Leslie and Berdahl (2008, p. 316).

12-2262-5 CH 12:0496-6

9/7/12

2:51 PM

Page 176

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

176

Innovations in Governance

In deciding how much tuition should be charged, the government was far from consistent.11 According to the vice president for management and budget, Colette Sheehy, “We would regularly encounter unexpected periods during which tuition was either frozen, a ceiling was established, or—in one year— tuition was even lowered because the governor believed Virginia public higher education had become too costly.” Without any authority over one of the most important components of its budget, university administrators were uncertain how to plan ahead. “Others decided what we could ask for,” said Sheehy. “The governors and legislatures decided how high tuition could be.”12

Decreased Funding The university could perhaps tolerate heavy state interference as long as the state kept directing a healthy flow of capital to the university. However, this primary source of income on which the University of Virginia depended was decreasing at a rapid rate. In 1990 around 34 percent of the total budget came from state contributions to the academic division;13 by 2004 the state’s contributions covered less than 15 percent of the costs.14 “The state was no longer supporting the University of Virginia as it had before,” said former university president John Casteen III, “and the reduction of state appropriations to public higher education was a major problem for us, as well as for other institutions. Most of the public universities were poorly financed; the state had been underfunding for over twenty years.”15 Interaction with governmental bureaucracy weighed heavily on the university, which had to compete in the education market with other top-ranking national universities. The school’s relationship with the state tipped the playing field; its competitors were private institutions not bound by the same laws and regulations. In recruiting faculty, the university could not offer competitive salaries; multiple rounds of state budget reductions left no money for salary increases. Private institutions were able to lure away potential University of Virginia faculty with more attractive deals. University leadership felt that the school was at a disadvantage in a fierce competition.16 11. “Every year between 1994–1995 and 2004–2005, tuition was capped, frozen, or rolled back, including a 20% rollback in 1990–2000.” Couturier (2006, p. 3). 12. Colette Sheehy, vice president for management and budget, University of Virginia, personal interview with authors, Charlottesville, February 2009. 13. The academic division encompasses all schools and operations but excludes the medical center and the university’s College at Wise. 14. Breneman and Kneedler (2006); Clark and d’Ambrosio (2006, p. 56). 15. John Casteen III, former president, University of Virginia, telephone interview with authors, August 2010. All quotations not otherwise attributed are from this interview. 16. Jaschik (2006).

12-2262-5 CH 12:0496-6

9/7/12

2:51 PM

Page 177

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Higher Education in Virginia

177

Despite all these challenges, however, the university was still a healthy financial institution. The school had an AAA credit rating from the major credit-rating agencies.17 Thanks to a substantial private endowment and income from its medical center, it was an overall robust and reliable institution.18 “We have a broad range of revenues that are very predictable,” said Leonard Sandridge, the executive vice president and chief operating officer of the university. “Tuition, state tax dollars, and endowment distributions: those three mainly allow us to do what we do.”19 Still, the government hold on the school undermined its efficiency and future prospects, and university administrators became increasingly eager to restructure the relationship.

Innovation Process The school’s administration believed that more autonomy would allow the university to save money and revitalize management and operations. Administrators thought that structural reforms were necessary. “It was especially important that our board of visitors should be allowed to decide what tuition should be,” said administrator Sheehy.20 That would enable the administration to plan ahead and make the institution less vulnerable to a volatile political environment. This ambition did not come from nowhere. During the 1990s, the University of Virginia had been able to guarantee certain freedoms for itself in a piecemeal way. Legislation had been introduced to reduce state regulation in several areas of university functioning that the state was not supporting financially. “About one of these changes was made per year,” said Casteen. Along with other administrators, he thought the time was ripe to make a leap forward. “Let’s go for the big change,” summarized Sandridge, “so that everybody understands that it is the board of visitors, not the state, which governs the university.”21

Aiming for Structural Change The university’s leadership found two allies to support its ambitions: Virginia Tech and the College of William and Mary. “We thought other public institutions 17. The three major credit agencies were Fitch, Standard & Poor’s, and Moody’s. This rating assesses the financial sustainability and reliability of potential borrowers. In 2009, for example, the University of Virginia sold $250 million in construction bonds to support nineteen building projects—an undertaking that was made possible and backed by their AAA rating. 18. In 2010 the University of Virginia had the fifth largest endowment of all public universities in the United States. 19. Sandridge, interview. 20. Sheehy, interview. 21. Sandridge, interview.

12-2262-5 CH 12:0496-6

9/7/12

2:51 PM

Page 178

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

178

Innovations in Governance

could benefit as a result of the same changes, regardless of the relationship with the state that we had already negotiated,” said President Casteen. The administrations of the three institutions put together a proposal in 2002 that sought to thoroughly reorganize their relationship with the state government. They were striving for a new, autonomous status as commonwealth chartered universities—a legal charter status similar to one that applied to some municipalities and cities in the United States.22 This construction would give the three institutions much more autonomy than they previously had. Key elements of their proposal were as follows: —The three universities (currently operating as state agencies) would be chartered and reclassified as political subdivisions of the Commonwealth of Virginia. —The universities would be granted flexibility over operational management (such as procurement and personnel). —The universities would be granted the authority to set their own tuition and fee rates and to hold and invest certain revenues. In exchange for this new status, the institutions would receive less monetary support from the state. The University of Virginia was willing to take a 10 percent reduction in state funding in exchange for more freedom. “We offered them that they could pay us less,” said Sandridge.23 Peter Blake, a government official, recalled, “The institutions volunteered to forgo up to 10 percent of ‘future incremental appropriations’ from the state, funds that could be redirected to other institutions to enroll more students. In exchange, they proposed that they be granted ‘full authority and responsibility’ to ‘set prices for their services and products.’”24 This proposal should have suited the state, which was in the midst of a financial crisis. “The biggest state budget crisis in half a century has forced [Governor] Warner and the . . . legislature to slash nearly $6 billion out of the $51 billion two-year budget. The cuts have fallen heavily on state-supported colleges and universities, leaving them short an estimated $385 million a year,” summarized a local news source in 2003.25 The university administration thought it was offering the state an excellent deal.

22. Local government in a charter city operates under a charter agreement that allows it to exercise authority over specific municipal affairs. Noncharter cities, or general-law cities, are bound by the state’s general law. 23. Quoted in Couturier (2006, p. 9). 24. Blake (2006, p. 30). Peter Blake was deputy secretary of education (2002–05); he served as secretary of education under Virginia governor Warner. 25. Quoted in Couturier (2006, p. 6).

12-2262-5 CH 12:0496-6

9/7/12

2:51 PM

Page 179

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Higher Education in Virginia

179

Building Support The schools began lobbying key players in the state government for their charter initiative in 2002.26 They approached legislators and other decisionmakers to explain their plans and gauge support for them. They did not have an overall strategic plan worked out; they were simply taking a stab at trying to implement change without any guarantee of success. “You don’t know until the political moment what your possibilities are,” said Casteen. “In a legislative process in which you try to persuade the General Assembly to change the law, you don’t win or lose until you do it, and it is hard to know why you won or lost.” To their surprise, lawmakers and administration officials turned out to be open to a change of course. “We had thought that we would have to deal with a hostile environment,” said Casteen, “but there was more unanimity about the need to change the relationship [than expected]. I remember that I went out to see the legislators in various parts of the state in their home offices, and we were probably a year into the process of discussion when it became clear that we actually did have a majority among the legislators. We, and others, had overestimated the opposition.” Furthermore, the universities’ proposal did not stir up the traditional conflicts between conservatives and moderates in the General Assembly. Conservatives were expected to embrace the concept of cutting bureaucracy and red tape, reported a local newspaper, “while moderates and liberals would be easily convinced of the argument that the universities were underfunded by the state.”27 For the University of Virginia, “it became a matter of trying to figure out how the state could meet its obligations that it could no longer afford,” said Casteen. In 2004, in response to the initiative, the legislature appointed a committee to examine the administrative and financial relations between higher education institutions and the state and to negotiate with the institutions. At that time, administrators at the University of Virginia began to realize they had a good chance of succeeding.

Putting the Word Out In September 2004 the University of Virginia organized a public briefing about the charter campaign. The presentation emphasized that the institution did not aspire to attain private status. “It’s anything but an attempt to 26. Couturier (2006, p. 8). 27. M. Hardy, “3 Colleges Plan for More Freedom,” Richmond Times Dispatch, October 13, 2004.

12-2262-5 CH 12:0496-6

9/7/12

2:51 PM

Page 180

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

180

Innovations in Governance

become a private university,” said President Casteen at that time, explaining that the school wanted to become a publicly chartered university. At the same time, the language of the initial proposal was rather hostile to government. “It was indeed antistate,” acknowledged Casteen, “in the way that the government was operating at that time. But, surprisingly so, others agreed with this.” In his address, Casteen said the proposal was not revolutionary but common sense. The proposed agreement would allow the school to set tuition based on market rates, because, he argued, tuition had been underpriced for fifteen years.28 Leonard Sandridge further specified the financial benefits of a charter agreement with the example of expensive construction delays caused by red tape. A charter status would result in “dollar savings” on these types of projects, he said.29 A sample agreement presented at the press gathering outlined the financial consequences of a charter agreement with concrete calculations. Because a dramatic budget crisis dominated the public debate in those days, the school relied on a well-worn frame, embedding its commonsense proposal in the context of statewide financial problems.

Going for a Bigger Picture It seemed that University of Virginia administrators had touched on a topic that inspired others to join the conversation. Also in 2004, a broad public debate emerged about the future of higher education in general. In this debate, Virginia governor Mark Warner played an important role. He began to form his own ideas about what changes were needed and to interject them into the negotiations with the universities. He did not want to accept their agenda as a given; representatives of the state should be able to formulate the goals and guarantees that they want to see implemented, he argued.30 “There’s no question in my mind that the charter university approach is probably in the best 28. C. Santos, “Charter Plan Opposed by Protesters on Campus,” Richmond Times Dispatch, October 2, 2004. 29. A. Petkofsky, “Colleges Aim to Revamp System,” Richmond Times Dispatch, September 10, 2004. 30. Warner’s office organized five meetings of representatives from the private, educational, and political sectors. The purpose of these meetings was to consider the importance of public higher education, especially in light of the developments in the region in relation to the state’s budgetary crisis. After these meetings the results were discussed among key players in government. The following questions were central in this process: “In exchange for greater autonomy, what should the state expect from its institutions of higher education? How can institutional plans be tied to state-wide needs and expectations? How can the state evaluate institutional performance in meeting the state’s goals and objectives? What incentives can the state provide to encourage desirable institutional behavior?” Blake (2006, pp. 31).

12-2262-5 CH 12:0496-6

9/7/12

2:52 PM

Page 181

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Higher Education in Virginia

181

interest of the institutions,” he said. “But what it needs to be weighed against is whether it’s also in the best interest of the state.”31 Following the governor’s lead, numerous legislators decided that it was indeed proper to consider the interests of other public education institutions in the process. The debate in Richmond, the state capital, thus began to center around changes for all public higher education institutions. The main question became how these institutions—despite their various scales and diverse relationships with the state—could benefit from systemic change. As the debate expanded in scope throughout 2004, a number of parties got involved. Peter Blake described the situation in Richmond as follows: Legislators had their hands full trying to reconcile competing interests. The College of William and Mary, Virginia Tech, and the University of Virginia wanted elements of the original chartered universities’ initiative to remain intact. The other institutions wanted to gain as much administrative autonomy as they could. Government agencies wanted to hold on to their authority. Legislators wanted to make sure they still retained control over issues such as access and affordability (among other things, they worried about the impact of rising tuitions on Virginia’s prepaid tuition program). Employee groups wanted to protect their salaries, benefits, and working conditions.32

Generating Criticism In the course of this process, the administrators who had initiated the debate began to encounter some criticism of their original plan. “Fairly early, we discovered that the term charter was problematic with the legislation,” President Casteen said. “In most states charters are actually in state statutes in the law. In Virginia, they weren’t, and the term itself became a problem.” Some legislators associated the term with too much autonomy. They feared that as a charter, the University of Virginia would be allowed to push tuition fees through the roof, making the flagship institution, of which so many Virginians were proud, inaccessible for citizens of the state. Thus, they argued, the General Assembly should retain control of the school’s budget. A related fear was that as a charter institution, the University of Virginia would become too elitist and would not do enough for Virginians with low 31. R. Becker, “Virginia Colleges Looking to Trade Funds for Freedom,” Chicago Tribune, January 10, 2005. 32. Blake (2006, p. 31).

12-2262-5 CH 12:0496-6

9/7/12

2:52 PM

Page 182

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

182

Innovations in Governance

incomes. “Skeptics inside the academy and out feared Charters were but a cover to raise tuition to ‘market rates’—i.e., to Ivy levels. Many wondered whether the program would lead to complete privatization,” a local newspaper reported.33 Leaders of other Virginia colleges involved in the public debate helped fuel concerns about elitism. Some of them feared that the charter proposal would reduce the role and the political and socioeconomic influence of their schools. “We need to look at the big picture before we go the other way to a two-tier education system,” said a member of another school’s governing board.34 Many public college leaders were not opposed to the charter plan but did not see any benefits for themselves in the initial proposal. “A lot of the state’s universities could not qualify for the charter status,” explained Casteen. Those institutions had no reason to help in the beginning. We proposed a kind of independence that would only benefit those that actually were financially stable, and it would not help universities that had no prospect of becoming that strong financially. They also did not have the scale to handle finances, personnel transactions, and buildings that we did. Those colleges acknowledged that the proposal eventually would not do for them what it would do for larger institutions. However, the most virulent resistance came from within the university. The university’s staff union rallied against the proposed charter legislation. If the schools ceased to be state agencies, the union argued, members could lose a wide range of state benefits.35 The union was concerned about personnel changes, alterations in the policy concerning conditions of employment (such as compensation and benefits), and the likely outcome of a two-tiered staff structure separating those already employed from those hired after the charter ratification. 33. “Charter Colleges,” editorial, Richmond Times Dispatch, March 3, 2005. An example of this was the ability of the university to manage receipts from tuition, fees, research, and sponsored programs funds by itself. Additionally, the University of Virginia was granted independence with regard to acquisitions, standardization, and daily operations in the field of information technology. Without interference from the state, decisions could be made in each of these areas. A final example was the power to implement a new human resource management system with a more efficient hiring process and a more flexible system through which to recognize and reward both staff and faculty, which included merit-based compensation. Ibid. 34. Quoted in M. Hardy, “Leaders Contest Charter Proposal,” Richmond Times Dispatch, October 26, 2004. 35. The University of Virginia had initially proposed that the employees of their chartered institutions would be public employees but not state employees. M. Childress, “Faculty Senate OKs Position Statement on Charter,” Inside UVa Online, January 14, 2005 (www.virginia. edu/insideuva/2005/01/charter_statement.html).

12-2262-5 CH 12:0496-6

9/7/12

2:52 PM

Page 183

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Higher Education in Virginia

183

The Administrative Response In response to these concerns, the school was prepared to drop the term charter. “Early on, we realized that we should stop pushing this term,” said Casteen, “because it was not clear to the politicians what the term meant. Having dropped the term, we found it easier to talk about ‘restructuring’ the relationship, as opposed to ‘chartering’ the universities.” Additionally, in reaction to discussions concerning elitism, the university introduced a comprehensive financial support program for low-income students, called AccessUVa, in 2004; $16.4 million from the school’s private fund was reserved for this program.36 AccessUVa was to consist of various types of grants, scholarships, and loans. Not only the poorest students but also those from financially strapped middle-class households would be eligible for full or income-dependent support. “We consider it important to be an institution that any student can afford to attend, regardless of his or her economic reality,” said Sandridge about the creation of this program. The resistance of the staff union faded away without too much effort. “The person who was organizing the union had tried to persuade employees that the state would protect them, that the state was their friend,” said Casteen. “However, in the year 2002, the state found itself short several billion dollars in its revenues, and it had to do something to reduce the cost of government. The reductions that were made [in consecutive years] happened to be in the universities. The state reduced appropriations, including salary appropriations. So in the end, employees simply found no advantage in participating in the protest.” Some of the concerns over elitism would disappear as well, thanks to the university’s willingness to incorporate the interests of other educational institutions. “Once the group of universities involved began to expand to other universities,” said Casteen, there was simply a loss of opposition. An example here was the [Virginia] Community College System. This system has a single administration and several colleges. That system became very interested in what we were doing, because it had the capacity to do what we were trying to accomplish, but it was not as sound financially as the University of Virginia. We were in the position of being able to broaden the language in the proposal so that this system could benefit by it. One potential adversary disappeared with that change. It did not hurt anyone, and it benefited the community colleges.” 36. Becker, “Virginia Colleges Looking to Trade Funds for Freedom”; Sandridge, interview.

12-2262-5 CH 12:0496-6

9/7/12

2:52 PM

Page 184

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

184

Innovations in Governance

Restructuring Act The proposal to restructure Virginia’s entire public education system was officially put on the agenda in 2005. On April 6 the Restructured Higher Education Financial and Administrative Operations Act passed with bipartisan support.37 However, despite the appearance of an easy vote, the bill, according to its chief sponsor, was “the product of an intense collaborative effort.”38 The Restructuring Act included these key provisions: —All institutions would remain state agencies. —All of Virginia’s public colleges and universities could participate in one of three tiers designed to allow specific degrees of autonomy. —The institutions in the third tier would gain the most autonomy; in exchange, they had to submit a six-year plan, including a proposal for tuition and fee rates. —It was reaffirmed by the government that the institutions could set tuition and fee rates.39 Not every idea initially put forward by the University of Virginia and its allies was left intact. The legislature rejected their offer to reduce annual government subsidies. That had been the core of their original charter proposal; it was based on the principle of “less funds, more freedom.” “We did not, and do not, see it as the state’s responsibility to take care of us,” said Sandridge, “but the General Assembly didn’t take our offer.” Additionally, the University of Virginia’s request to set tuition independently was not granted in its entirety. The legislators did not wish to fully relinquish their power in this area. They did grant the institution a more favorable construction: the university would be allowed to collect and manage tuition by itself. The legislature retained its final say over the price of tuition but would intervene only if the school raised tuition by too much. As a result, setting tuition would remain “the only area in which the state can influence us in a dramatic way,” explained Sandridge. “The tuition and the in-state, out-of-state mix are the political tools that they still have.” 37. Restructured Higher Education Financial and Administrative Operations Act (2005) (http://leg1.state.va.us); M. Schluss, “College Bill Lands on Warner’s Desk,” Roanoke Times, February 22, 2005. 38. T. Whitley, “Charter University Bill Gaining,” Richmond Times Dispatch, February 2, 2005. 39. “Technically, however, the Level I section of the legislation does not actually say anything about the boards of visitors having the authority to set tuition, and technically it doesn’t need to. It is already state law that the institutional boards of visitors have the authority to set their own tuition and fees. . . . This legislation can be characterized more as a reassertion, a reaffirmation, and a reminder to the Legislature that the boards of visitors have tuition-setting authority.” Couturier (2006, p. 30).

12-2262-5 CH 12:0496-6

9/7/12

2:52 PM

Page 185

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Higher Education in Virginia

185

Despite these differences, all parties involved approved of the final bill. In 2006 President Casteen concluded, “The passage of this important legislation is grounds for optimism about the future of higher education in our state, and especially about the future of the University. . . . Within this new framework, we will carry Jefferson’s early vision of the University forward while preserving the character and quality that make this institution unique among its peers.”40

Concrete Results What concrete changes were made in the relationship between the state and the University of Virginia? The university gained greater autonomy with regard to its operations in the areas of finance and accounting, the acquisition and disposition of real estate, information technology, the procurement and management of surplus property, capital construction, and human resource management. How the institution managed its affairs and its day-to-day operations in each of these areas the university, for the most part, could decide on its own, as long as the outcomes were in order. The university confronted a future ripe with possibility.41 Before these benefits would be granted, the institution had to prove that it was independently viable—that it had a functioning administrative infrastructure, a reliable multiyear planning process, and sound financial management. By the end of 2005, the school had met all of these conditions to the satisfaction of the legislature.

Articulated Demands Under the guidance of Governor Warner, the state articulated the outcomes that it wanted to see in return for this newly granted autonomy. These were codified in a special section of the text of the act, called the “State Ask,” which stated what the commonwealth expected from its higher education institutions. In theory, these goals could be pursued by all public universities in the state as part of their mission; in practice, only the University of Virginia, Virginia Tech, and the College of William and Mary would be able to fully reach them and therefore to achieve the highest available degree of autonomy. Eleven goals were initially stated:42 —access to higher education, including meeting enrollment demand —affordability, regardless of income 40. K. Valenzi, “U.Va.’s ‘Grand Experiment’ Begins,” UVa Top News Daily, June 19, 2006 (www.virginia.edu). 41. K. Valenzi, “U.Va.’s ‘Grand Experiment’ Begins,” UVa Top News Daily, June 19, 2006 (www.virginia.edu). 42. Later, a twelfth was added concerning public safety.

12-2262-5 CH 12:0496-6

9/7/12

2:52 PM

Page 186

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

186

Innovations in Governance

—provision of a broad range of academic programs —maintenance of high academic standards —improved student retention and progress toward a timely graduation —development of uniform articulation agreements with community colleges —stimulation of economic development and, for those seeking further autonomy, assumption of additional responsibility for economic development in distressed areas —increased externally funded research and improved technology transfers, where appropriate —active engagement with K–12 institutions to improve student achievement —a viable six-year financial plan —adherence to financial and administrative management standards43

More Accountability, Less Red Tape Many accountability measures were written into the final version of the legislation. The idea that was key to the initial charter proposal (less funding, more freedom) was replaced by another: more accountability, less red tape. The deal now was that if institutions could meet the stated goals, they would be offered certain incentives, such as greater authority in operational management. To enforce this deal, the state needed metrics that would render progress toward these goals quantifiable. The State Council of Higher Education for Virginia was tasked with creating indicators along which performance vis-à-vis the state’s desired outcomes could be measured and evaluated. In the fall of 2005, the council developed a set of institutional performance standards, a scorecard consisting of thirty-seven performance indicators that the institutions had to meet.44 The management agreement between the state and the institutions was not a permanent contract. The institutions were asked to create a proposal in the form of a six-year plan that would be open for discussion with the parties that exercised oversight. Because one General Assembly could not tie the hands of a future one, the institutions would have to submit a new plan for debate and affirmation every six years. The plans were to include academic, financial, and admission plans that outlined tuition and fee estimates as well as enrollment projections.45 Additionally, the State Council of Higher Education for Virginia was to carry out an annual performance review of the insti43. K. Asher, “Gov. Warner Approves, Amends Legislation Granting Public Colleges and Universities Greater Independence,” UVa Top News Daily, April 1, 2005 (www.virginia.edu). 44. State Council of Higher Education for Virginia (n.d.). 45. Office of the Governor (2005).

12-2262-5 CH 12:0496-6

9/7/12

2:52 PM

Page 187

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Higher Education in Virginia

187

tutions, which would result in a more or less continuous dialogue between the institutions and the state.

Innovation and Improvements The innovation encompassed a new institutional arrangement, made up of a new law, a revitalized sense of public value, a new accountability system, and a new playing field. The first element of the arrangement was the Restructuring Act, which allowed a greater level of independence for specific education institutions provided they were able to meet certain demands. The second element referred to the reconception of the dimensions of public value that all parties (state and schools) stood for and wanted to see delivered. The discussion concerning the restructuring process had forced a wide range of actors to reconsider their notion of what constituted a good and just public education system. The state government, for example, had to openly and explicitly formulate its goals rather than bury them in procedural laws and regulations. In this process, the original intent behind existing law in the policy area had to be rediscovered. The State Ask component of the law was the final result in this process. The third element was the new accountability system, requiring that the institutions make their intentions known up front by submitting a six-year plan. On the basis of the proposal, the institutions and the state would begin a discussion. In the words of the researcher Lara Couturier, who wrote a landmark study of the restructuring process, these conditions could be characterized as “a clear articulation of the state’s needs and goals (the State Ask), backed up by accountability for performance, [that] now precedes any benefits ceded to the colleges.”46 Because the government had to clarify and quantify its goals, there was a new and improved accountability framework in place for institutions of higher education. The new playing field, the final innovative element, refers to the opportunity for all of the commonwealth’s public institutions of higher education to acquire a different status; they could now negotiate a deal with the government, whereas before the innovation process took place, their position in the system was fixed. The new legislation affected all fifteen of Virginia’s four-year higher education institutions and twenty-three community colleges, each of which could now climb to the next of the three tiers to become more independent of the state.47 46. Couturier (2006, p. 41). 47. Leslie and Berdahl (2008, p. 315).

12-2262-5 CH 12:0496-6

9/7/12

2:52 PM

Page 188

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

188

Innovations in Governance

The overall improvement that this arrangement sought to make was in the relationship between the universities and the state itself. Rather than trying to direct processes, the government would now focus on outcomes. Rather than instructing the institutions beforehand in how they should achieve the desired results, the state would now check to see whether the universities had delivered what was asked of them. The dialogue about these issues between the school and government would be a discussion based on comprehensive sixyear plans rather than a constant tug of war between universities and legislators concerning tuition rates and fees.

Strategy and Tactics When Governor Warner broadened the terms of the debate to include the state’s entire public higher education system, the university administration accepted the shift in scope. Rather than view the revised agenda and goal as a threat, the administrators made the choice to act as constructive partners so long as the new terms did not jeopardize their plan to expand the school’s operational autonomy. The university, which Governor Warner had accused of operating in a vacuum, showed that it was prepared to participate in talks involving the interests of all Virginia’s public colleges and universities. Thanks to this adaptive strategy, University of Virginia leadership not only kept the change process in motion but also allowed the state’s valuearticulating process to run its course. The university did not hinder this process; instead, its administration agreed to work with and consider the input of third parties, thereby allowing for both co-ownership of the arrangement and the articulation of public value that derived from the broadened process. Consequently, the final public value proposition of the institutional arrangement was aimed not merely at increasing autonomy for the university and its two allies but also at improving public higher education throughout the commonwealth. Because the administrators had no preconceived action plan or timetable, and because President Casteen understood that there was no way to predict what would happen in the legislative process, the university could tactically react in a flexible manner along the way—dropping the term charter, for example, and introducing a new financial aid program to help low-income students. The leadership understood that while the new agenda meant a lengthier, more complex and muddled process, it was not necessarily a detriment to the university. Moreover, the scope of the process ultimately could add value and, perhaps, sustainability to the outcome.

12-2262-5 CH 12:0496-6

9/7/12

2:52 PM

Page 189

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Higher Education in Virginia

189

Dealing with Emerging Stakeholders A related factor was the administration’s willingness to deal with emerging stakeholders whom Governor Warner had invited to participate in the debate. Initially, the school’s leaders targeted the stakeholders narrowly. They aimed to build support among key decisionmakers, such as the members of the General Assembly. The broadened scope of the change initiative, however, meant that academic, business, and legislative leaders also aspired to give form to the restructuring process. The university’s relatively exclusive initial target group of overseers was thus turned into a wide group of stakeholders.48 The involvement of third parties ultimately produced a bill that was more popular than the leadership at the University of Virginia had anticipated. “Opening the legislation to other colleges later in the process led to interventions by a number of different stakeholders, all of whom brought their own ideas and opinions to the table,” concluded Couturier.49 The proposal that emerged from this process passed almost unanimously in both the House of Delegates and the Senate—an event that rarely happened in Virginia. The chancellor of Virginia’s community college system told the Richmond Times Dispatch that the Restructuring Act would benefit not only the three public institutions that initiated the changes but other public schools as well: “This is a very, very good bill. It is good for William and Mary, good for the University of Virginia, good for Virginia Tech, good for Virginia Western Community College, good for J. Sargeant Reynolds Community College.”50

Crafting Common Language Another strategically important consideration concerned the reframing of the public conversation about the change. The University of Virginia had to develop new language. In its first iteration, the charter initiative had a language problem. It contrasted the undesirable status of a state agency plagued by government interference, lethargy, and unnecessary costs with the idea of a chartered university, which could enjoy freedom, cost savings, and opportunity. However, the term charter did not catch on. The university’s leadership was astute and flexible enough to distance itself from this language early in the process and to work with stakeholders to find a common language that would satisfy everyone involved. This tactical decision had good results. Two other terms became important in this process. The first was restructuring. Legislators and university administrators agreed that the word clearly 48. Couturier (2006, p. 56). 49. Couturier (2006, p. 56). 50. Whitley, “Charter University Bill Gaining.”

12-2262-5 CH 12:0496-6

9/7/12

2:52 PM

Page 190

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

190

Innovations in Governance

signaled that the changes sought would constitute a long-term, fundamental change. At the same time, no constricting end goals were decided on. After all, despite the long-term implications of the word, no long-term, fixed goals were set at this stage, as the parties involved were still negotiating what these goals should be. Public institution was the second term that got attention in the course of the development process. The University of Virginia administrators thought it was an acceptable alternative to state agency. The term implied that the institution would remain mindful of the interests of the commonwealth and had no plans to privatize itself. As the debate broadened, and all parties made strong points about what was best for the commonwealth and its schools, the language they used to express themselves shifted to reflect the values they felt were at stake in the negotiations.

A Mission Reaffirmed The new frame for the proposed changes departed significantly from the one that underlay the 2004 press briefing, which defined the choice to launch a bid for charter status as common sense and rational decisionmaking. At the briefing, university representatives made the case that it was financially compelling, especially in times of budget crisis, to grant the university more freedom.51 In the end, the argument that framed the proposed changes as a rational and prudent exchange gave way to an assertion that a restructured relationship between the state and its higher education institutions would be in the best interest of realizing a public mission. The bridging discourse that emerged ultimately resonated with the historic mission of the university. The identity of the school, after all, had been intertwined with a broader public cause from its first breath. The university’s founder, Thomas Jefferson, argued that enlightened, well-educated citizens were vital to the proper functioning of the newly created American states. His university was to be, above all, a public institution that served public goals. “The university was founded as a national public institution,” a university official said. “Think back to the context of then: a very young republic, a young democracy. . . . Jefferson had clear intentions in mind. The University of Virginia is unique in that sense; there is no other institution like it. This public mandate has to be cherished by the institution, by the alumni, and by the faculty. It might sound cliché, but we are still concerned here with deeply felt values.”52 51. Although the term public institution was used during this 2004 presentation, it was not prominent. 52. Michael Clarke, executive director, McIntire School Foundation, personal interview with authors, Charlottesville, February 2009.

12-2262-5 CH 12:0496-6

9/7/12

2:52 PM

Page 191

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Higher Education in Virginia

191

Discovering Shared Values A final aspect of the university’s strategy concerns the alignment of the developing discourse with ideas of public value. The dimensions of public value underlying the State Ask section of the Restructuring Act were, more or less, already at the core of the school’s historic mission. The public values that Jefferson had in mind in founding the school largely coincided with the public interests the state existed to advance, including equal access to higher education. The state insisted that the University of Virginia remain affordable for poorer students from the commonwealth, just as Jefferson had envisioned. The state also wanted the university to be accountable for strengthening the Virginia community as an employer, education institution, and motor for prosperity. Again, this was in line with the convictions of the university’s founder. Both school and government had an obligation to Virginia’s citizens and the state’s most famous founding father to support these and other public values that were expressed in the legislation. For these reasons, the university made it known from the start that it wished to remain a public institution. Going private was not an option.53 “It’s extremely difficult to imagine this university, of all universities, wanting to sever its links to the public. Thomas Jefferson made the judgment in his time, as I think our board has made it in our time, that despite the inadequate level of support, that state link is absolutely essential to the identity of the institution and the work that it does,” said President Casteen in 2005.54 In this case, shared values led to a successful conclusion at the negotiating table in Virginia. Both the state and the university were trying to create a new relationship, a process that ran more smoothly because the parties rediscovered shared, fundamental values.

Conclusion To credit the success of the institutional innovation in its entirety to shared values would go too far. A healthy dose of realism was also at work. The government, and especially the governor, was fully aware that even though the state had high ambitions with regard to higher education, it did not have much to offer financially. The state faced a budgetary crisis and simply could not meet its obligations, even while the university continued to produce the state’s desired outcomes. Hence in governmental circles there was a clear understanding that the bureaucratic demands on the University of Virginia 53. Milligan (2006). 54. Quoted in Becker, “Virginia Colleges Looking to Trade Funds for Freedom.”

12-2262-5 CH 12:0496-6

9/7/12

2:52 PM

Page 192

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

192

Innovations in Governance

did more to hurt than help realize these goals. By holding the institution to the letter of the law, it in fact was working against the spirit of both the university and the rules and regulations created to guide its operations. “Most of the informed legislators said, ‘Look, this is a large organization. It is a $2 billion a year business. We don’t have people in Richmond who can manage that any better than the people in Charlottesville,’” said administrator Leonard Sandridge. “So they said, ‘Let’s have a compromise. Let’s be very clear what we expect from you. . . . In return we will let you have flexibility and freedom in these administrative and oversight rules.’ I don’t think it was focused on the money; it was an attempt to allow us to be as good as we can be.” How good the University of Virginia can be, the centuries-old school will have to prove in the future—in a thoroughly rejuvenated institutional arrangement.

13-2262-5 CH 13:0496-6

9/7/12

2:52 PM

Page 193

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

13

The Cat out of the Bag Institutional Reform in Denmark Klaartje Peters

I

n October 2002 the annual opening session of the Folketing—the Danish parliament—was convened. In his address to the parliamentarians, Prime Minister Anders Fogh Rasmussen focused more attention on administration problems than on anything else. To the surprise of many, he announced that the government planned a major administrative reform: “The existing municipal structure in Denmark is now more than thirty years old, and the government feels that it is time for a critical review of the current system. Therefore, the government will appoint a Commission on Administrative Structure this week to investigate whether the existing system lives up to the requirements of a modern welfare state.”1 At the time, experts regarded the likelihood that administrative problems in Denmark would result in system reform as minimal. Too many interests The author works as a researcher and author in the field of politics and governance. Her current research focuses on political and public decisionmaking, both at the national and the subnational level; policy evaluation; and regional and local governance. She holds a Ph.D. In addition to the interviewees cited in this chapter, other respondents for this case study were Ulrik Kjær, professor of political science, Syddansk Universitet, Odense; Otto Larsen, former director, Amtsråds Foreningen, and members of the Commission on Administrative Structure; Per Okkels, director of Danish Regions; Lene Holm Pedersen, Danish Institute of Governmental Research; Kirsten Hoo-Mi Sloth, Ministry of the Interior and Health; and Michel Weber, Department of Administrative and Political Coordination, Kommunernes Landsforening. These interviews were conducted March–April 2008 and June 2010. Especially important were conversations with Poul Erik Mouritzen, professor of political science at the University of Southern Denmark at Odense, his book Reforming Local Government in Denmark: How and Why? and Annemieke van Dam’s research for her master’s thesis, Could the Little Mermaid Survive in Dutch Waters? 1. Strukturkommission (2004, p. 5).

193

13-2262-5 CH 13:0496-6

9/7/12

2:52 PM

Page 194

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

194

Innovations in Governance

were aligned against reform, and too many barriers would have to be overcome. But in 2004 the Danish national government managed to push a drastic administrative reform through the parliament. Three years later, a new administrative structure went into effect. This reform was at the same time a centralization and a decentralization: central and local government together stripped the counties of most of their tasks and finances and divided these up among themselves. As a result, since 2007 the Danish public system essentially consists of two powerful governmental levels with a thin layer separating them. The results were remarkable for their scope and thoroughness; there are few examples of democratically governed countries in which an entire level of government is successfully stripped of both its responsibilities and its means. How did this far-reaching reform process come about, and how did its proponents manage to succeed in gathering operational capacity, legitimacy, and support? What problems did Denmark have with regard to its administrative structure? Why were these problems so entrenched? How was the impasse broken? A specific cast of characters played leading roles in this process: Johannes Due, the chairman of the Commission on Administrative Structure; Lars Løkke Rasmussen, the minister of the interior and health; and Peter Gorm Hansen, the director of Kommunernes Landsforening (KL), the established lobby organization of the Danish municipalities. From their individual positions, these players were ready to perform when they saw an opportunity arise during the summer of 2002. Through great timing, selecting the right allies, acting tactically in various arenas, and smart framing of the debate about the reform, these players managed to make a subsequent innovation possible.

The Administrative System In 2002 the Danish administrative system consisted of three layers: national government, 13 amter (counties), and 271 kommuner (municipalities), the latter two collectively called local government. The Danish constitution specifically guarantees the existence of local government: “The right of local government to autonomously govern under the supervision of the State is guaranteed by law.”2 The Danish system was heavily decentralized. Counties and municipalities together spent 56 percent of all governmental expenditures. They were the main executors of the welfare state, providing health care, education, social policy (such as care for the elderly, youth, and children), and social security. The importance of decentralized government could 2. Constitutional Act of Denmark, sec. 82.

13-2262-5 CH 13:0496-6

9/7/12

2:52 PM

Page 195

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Institutional Reform in Denmark

195

also be deduced from the fact that it collected its own taxes. The largest part of its revenue came from income tax; the municipalities on average collected about 20 percent of taxable income, while the counties collected an average of 11 percent.3 The administrative system had remained essentially unchanged since 1970, when an extensive reform took place. Various tasks were decentralized to municipalities and counties, the financial system was transformed, and the number of local governmental bodies was drastically reduced, from approximately 1,200 to 275 municipalities and from twenty-four to fourteen counties. This process, especially with regard to municipalities, was painful for much of the Danish populace. In the ensuing years, nobody in Denmark wanted to contemplate any new changes to the administrative structure. “It is important to realize that for years even just talking about an administrative reform was like political suicide for Danish politicians,” said a Danish journalist. “The big reform of 1970 had caused a lot of emotions. My parents, for example, lived in a village of around 1,000 people in those days, and they fiercely resisted the merging [into] a new municipality of 6,000 or 7,000 inhabitants. They strongly feared the loss of identity. So, thirty years later, nobody in Danish politics wanted to start a fight for a lost cause.”4

Problems in the System Despite the unwillingness to consider reforms, problems did exist in the revised administrative system. A 2004 report of the Commission on Administrative Structure contains an analysis of the situation in 2002.5 According to this report, many municipalities and counties were too small to deliver the services for which they were responsible. Small municipalities experienced much higher costs per inhabitant and could not offer their citizens the service choices that were provided by larger municipalities. Additionally, smaller municipalities were unable to benefit fully from the advantages of information technology and digitalization. The counties, tasked with delivering health care services in Denmark, had difficulty planning and organizing this sector because of their small size. “The counties have all built their own little kingdoms,” as the Danes liked to say. According to Johannes Due, the chairman of the Commission on Administrative Structure, “Every hospital in Denmark wanted to treat all diseases. But there was a growing demand for more specialized treatments, which 3. Figures for spending and municipalities’ revenue are for 1998. Committee of the Regions (2001, pp. 80, 83). Figures for counties’ revenue are for 1998. Amtsråds Foreningen (2007). 4. Hanne Fall Nielsen, journalist, Jyllands-Posten, personal interview with authors, Copenhagen, March 2008. 5. Strukturkommission (2004, pp. 14–18).

13-2262-5 CH 13:0496-6

9/7/12

2:52 PM

Page 196

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

196

Innovations in Governance

they could not meet. The quality of treatment was below expectations. For complex diseases, like cancer, you need highly specialized professionals and equipment.”6 A second problem concerned the division of tasks and powers within government. Because many tasks were distributed among several administrative levels, there was a lot of overlap, and it was sometimes unclear to both citizens and government who was responsible for what. In various policy domains, the different administrative institutions operated without much coordination.7 This, too, resulted in an insufficient and inefficient delivery of public services to citizens. Particularly in the region of Copenhagen, a large number of small municipalities made coordination and consensus in the areas of health care, transportation, and regional planning difficult. Critics called this complicated administrative reality “fat government.” A close look at the health care system serves to illustrate the weak position of the counties. In the 1990s Denmark, like many other Western countries, encountered problems with its health care sector. Although Denmark was doing well compared with other countries, health care costs were rising each year, and there was much complaining about the quality of health care. Due spoke of “a pampered society.” “It was a ‘dilemma of richness,’” said KL director Peter Gorm Hansen. “People told horror stories about the terrible things that happened in hospitals, and these stories determined reality. They might have been untrue, but if citizens and the press are worked up about them all the time, it becomes a very real problem for politicians.”8 Whatever the exact nature and extent of the problems, the counties were held responsible for every problem in the health care sector.

Failed Attempts to Reform In response to these problems, in 1994 the national government created the Greater Copenhagen Commission, but because of the political reality in the parliament, the commission’s recommendations were not heeded. “It was a commission that consisted of only civil servants,” said Hansen. In their report they presented two options: a big Copenhagen region or a smaller one with more autonomy for the other municipalities. The Social Democratic government was in favor of the bigger Copenhagen option, but all other political par6. Johannes Due, chairman of the Commission on Administrative Structure, 2002–04, personal interview with Jorrit de Jong, Copenhagen, April 2005. 7. Strukturkommission (2004, pp. 15–17). 8. Johannes Due, personal interview with authors, Copenhagen, April 2008; Peter Gorm Hansen, director of the KL and member of the Commission on Administrative Structure, personal interview with authors, Copenhagen, March 2008.

13-2262-5 CH 13:0496-6

9/7/12

2:52 PM

Page 197

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Institutional Reform in Denmark

197

ties—who considered Copenhagen a social-democratic region—were in favor of a smaller Copenhagen. And so the decisionmaking process was stuck. The report was released in the morning and shot down in the afternoon. This was a serious defeat, very embarrassing for the government. In 1996, shortly after this failure, the national government decided to call into being the Public Sector Task Commission—a “face-saving measure,” according to Hansen—to address the entire distribution of tasks and powers between the various administrative layers in Denmark.9 Hoping to resolve partisan differences, the twenty-five-member commission was composed of representatives from all political parties. However, with Social Democrats and liberals resisting changes to the system, the commission failed to come up with a unified recommendation. For these parties, which provided most of the local and regional politicians, changes to the local and mid-level administrative system were difficult to accept. Changes would mean that many of their own politicians stood to lose their jobs at the local and municipal levels. Johannes Due was appointed chairman of the commission. For him it was clear from the start that the minister of the interior and health, Lars Løkke Rasmussen, did not want reform. I was told by the permanent secretary of the minister that is was a very serious job, this commission. “It will take you more than two years,” he said, “but it is very important.” And I understood the message very well: the expected defeat should not be visible before the next elections. So . . . it was clear that we would not be able to make a success of this commission. Politicians will never bargain inside a commission like this. They were backbenchers, so they had their instructions not to bend. The only possible outcome was the advice to keep the status quo.10 The subtext of the commission’s conclusion in 1998 that the interadministrative division of tasks was “efficient” and “robust enough” for the future was that, while an agreement was impossible, this would not be the end of the discussion. (Interestingly, Chairman Due, who oversaw his commission’s failure, would be allowed to lead the 2002 Commission on Administrative Structure. After all, he was familiar with stalemate.) As a result of the deadlock, at the end of the 1990s discussions began to take place in municipal circles concerning the future of local government. The larger municipalities initiated the debate about redistributing tasks between municipalities and counties. The smaller municipalities, which had their hands full carrying out their 9. Due, interview, 2008; Hansen interview, 2008. 10. Due, interview, 2005.

13-2262-5 CH 13:0496-6

9/7/12

2:52 PM

Page 198

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

198

Innovations in Governance

administrative tasks, steered clear of these discussions. The issues remained undecided a while longer. When the government of Anders Fogh Rasmussen began its term in 2001, it had no plans to reform the Danish administrative system. Reforms had not been an issue during the campaign; nothing was mentioned in the party programs nor in the political agreement between the liberals and the conservatives, who formed the coalition government. Indeed, in June 2002 Rasmussen’s minister of the interior and health, Lars Løkke Rasmussen, stated that “the government has no plans of changing the municipal structure.”11 According to high-ranking bureaucrats in the Ministry of Finance, reform of the administrative system had been briefly discussed during the first few months of the new cabinet but then abandoned. It was decided that the political risks were too great.12 Furthermore, throughout the 1990s the political differences among parties concerning this issue remained insurmountable. Everyone remembered the Danish population’s fierce resistance to the 1970 administrative reform, as well as the two recent failed attempts at reform. Changing the system seemed difficult and unlikely.

The Innovation Process In the summer of 2002 a unique opportunity presented itself. First, the elections of 2001 were a definitive break with the past. Venstre (the liberal party) became the largest party (since 1920, this had always been the Social Democrats), and the radical right-wing Danske Folkeparti made tremendous electoral gains, giving the parties of the right a majority in parliament for the first time in history. The Social Democrats, who had been in power since 1993, had to make way for a minority coalition of Venstre and the Conservative Party, who ruled with parliamentary support from the Danske Folkeparti.13 In the summer of that year, the chairman of the largest Danish employers’ association—a member of the Conservative Party—gave an interview to the Berlingske Tidende newspaper. “This country is too small to have 13 counties and 271 municipalities,” he said.14 His words came as no surprise; the party had long held that it was time to do something about the problem of fat govern11. Quoted in Mouritzen (2007, p. 18). 12. Agnete Gersing, former top civil servant, Ministry of Finance, and member of the Commission on Administrative Structure, personal interview with authors, April 2008. 13. Until the 2001 elections, the political landscape in Denmark was relatively stable, with four main, traditional parties: the Social Democrats, the liberals of the Venstre Party, the Conservative Party, and the Social Liberals. In 2001 the right-wing, anti-immigration Danske Folkeparti suddenly became a serious player in the field. 14. Hansen, interview.

13-2262-5 CH 13:0496-6

9/7/12

2:52 PM

Page 199

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Institutional Reform in Denmark

199

ment, beginning with abolishing the counties. But this time things were different. Many politicians were on vacation at the time of the interview, including the strong Venstre leader, Prime Minister Anders Fogh Rasmussen.15 The Venstre spokesperson for local government could not be reached for comment, and, without consulting any of her fellow party members, a young member of parliament for the Venstre Party took her chance. In a newspaper she seconded the chairman’s comments and implored the government to take action. This set off a chain reaction, as other parties felt compelled to state their positions as well. The debate over administrative reform had taken off and would only grow in intensity over the ensuing months. “The issue had dominated the papers in the summer; it had become a big thing in the summer, an issue that everybody talked about,” said a former top civil servant. Or, according to Johannes Due, “Like we Danish say: ‘The cat was out of the bag.’”16 When Prime Minister Rasmussen returned from vacation, it was clear he could not ignore the debate that had developed during the summer. In August, Rasmussen’s Venstre Party made a fruitless attempt to end the debate, but too late.17 After much debate within the party and the cabinet, the decision was made to create yet another commission. On October 1, 2002, in his State of the Union address at the opening of the Danish parliamentary year, Prime Minister Rasmussen announced a state-sponsored Commission on Administrative Structure, a risky move that surprised many. What was the prime minister trying to achieve in establishing this commission? Did he want to avoid dealing with the topic, or did he actually see room for reform? Nobody knew for sure. Most of the civil servants involved thought the prime minister was undecided. “The only purpose he had at that moment,” said a former top civil servant closely involved in the process, “was to install the commission and then wait and see. He, like the minister of finance, was very much aware of the possible trouble that a new reform could bring, and he wanted to leave it completely open as to what the outcome would be.” Whether a politician as experienced as Rasmussen would maneuver like this, without knowing where he was going, is debatable. According to a journalist at one of Denmark’s largest newspapers, “The step was taken to get rid of the whole thing. In all the time that it would take for the commission to complete its work, the facts on the ground could change drastically, resulting in the public focusing on very different issues.”18 Others believed exactly the opposite. As Johannes Due argued, 15. Anders Fogh Rasmussen later became the secretary general of NATO. 16. Gersing, interview; Due, interview, 2008. 17. Bundgaard and Vrangbæk (2007). 18. Gersing, interview; Nielsen, interview.

13-2262-5 CH 13:0496-6

9/7/12

2:52 PM

Page 200

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

200

Innovations in Governance

It is certain that for the prime minister, installing the commission was not just a way to get the debate out of the way. If that had been his purpose, he would not have spent the first three pages of his speech on the first of October on this subject! Also, when you consider the time given to the commission—that is, fifteen months—you can see that from the beginning the plan was to finish in 2004, so that there would still be time to adopt new legislation before the next national elections.19

Preparing for the Commission In September 2002, Johannes Due heard about the new commission. “I then actually did something very ‘un-Danish’: I phoned the minister of finance and offered myself as chairman.”20 Due had good contacts in national government. He had worked as a permanent secretary before becoming chief executive officer of one of Denmark’s largest health insurance providers. “I said, ‘You need someone who knows the game and the topic and who can deliver quickly.’” At that time, the Ministries of the Interior and Health and of Finance were busy laying the groundwork for the Commission on Administrative Structure. There was much political discussion about the composition of the commission. The opposition in parliament wanted a politician to be chairman, something the government categorically refused; previous failure had demonstrated that politicians should be kept out of the commission. Eventually, Due was made chairman again. Due was certain his extensive public and managerial experience, at both central and local government levels, and his great contacts earned him the position: “I knew the system and the system knew me.”21 Also on the commission were two municipal secretaries; four high-ranking civil servants of the national government; three independent experts; and the directors of the KL and ARF (Amtsråds Foreningen), which represented the municipalities and the counties, respectively, at the national level. The KL and ARF were among the most powerful interest groups in Denmark. They were consulted in all policy domains and in all stages of the policy process. For the national government, KL and ARF support was of the utmost importance. In a political culture heavily based on consensus, having the support of both organizations made parliamentary consideration of new regulations easier and guaranteed that all municipalities and counties loyally implemented and executed national laws and regulations.22 19. Due, interview, 2008. 20. Due, interview, 2008. 21. Due, interview, 2005. 22. Mouritzen (2007, p. 13).

13-2262-5 CH 13:0496-6

9/7/12

2:52 PM

Page 201

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Institutional Reform in Denmark

201

Work in Progress At the end of 2002, the Commission on Administrative Structure began its work. The atmosphere was professional and relaxed; members, who had known one another for a long time, traded jokes. Despite the friendly atmosphere, however, differences quickly became apparent. From the beginning, the counties found themselves pushed into a defensive role. The commission seemed to focus on finding evidence of problems with the existing administrative system, especially hospital management, the ARF representative noticed. But he claimed that evidence of mismanagement was difficult to find because it did not exist. “At some point during the process, I mentioned to one of the civil servants in the commission that this search for proof of things going wrong reminded me of the work of Hans Blix, the Swedish diplomat and [United Nations] arms inspector who had become famous because of his search for weapons of mass destruction in Iraq. I said that he had been unable to find these weapons simply because there weren’t any, as became clear afterward. But the civil servant warned me, ‘There weren’t any weapons, but they went to war anyway!’”23 The divisions within the commission were reflected in the seating arrangements. One of the expert members recalls, At one side of the table was the seat of Chairman Due. Next to him sat the bureaucrats of the national government. In front of him were the defenders of the municipalities. Together they formed a strategic triangle, a triangle of power. Seating arrangements had never been discussed or mentioned beforehand, they just arose. The division symbolized the dominant positions. . . . There was one key moment when the dominant position of the municipalities was clearly noticeable. After a few months, during a meeting the delegates of the municipalities showed up late. We waited fifteen minutes; the chairman did not want to start without them.24 One particular point of discussion kept the commission busy for a while. Would large-scale municipal amalgamation have negative consequences for local democracy? Would larger bureaucratic units increase the distance between citizens and politicians? Over the course of 2003 it became clear there 23. Bo Johansen, director, County of Arhus and deputy member of the Commission on Administrative Structure, personal interview with authors, Arhus, March 2008. 24. Poul Erik Mouritzen, professor of political science at Syddansk Universitet, Odense, and member of the Commission on Administrative Structure, personal interview with Jorrit de Jong, Odense, May 2005.

13-2262-5 CH 13:0496-6

9/7/12

2:52 PM

Page 202

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

202

Innovations in Governance

was a way out. Independent commission member Poul Erik Mouritzen, a professor of political science, was concluding a study on the relationship between local democracy and municipality size that showed that, in many respects, there was no difference between democracy in large and in small municipalities. This allowed the commission to suggest that increasing the size of municipalities could be the way out in all reform models that were presented in the report. “Politically, the study effectively, albeit unintentionally, removed the major argument of the opponents of an amalgamation reform that democracy would suffer,” Mouritzen commented later.25 Several important players decided to take action outside the realm of the commission’s deliberations, including Johannes Due. “I knew from the start that it wouldn’t be enough to find facts, develop models, and deliver a report. The unofficial purpose of the commission was to convince the outside world— Danish citizens and politicians, especially at the local and county level—that change was inevitable.”26 Hansen and Due visited many municipalities and counties across Denmark in the course of 2003 to discuss the work and the findings of the commission. The message they wanted to get across was that most municipalities and counties were too small to perform their tasks effectively, and the status quo could not continue. They stuck to their theme through fierce and emotional public meetings. The KL director made maximum use of his position, even though his organization and board remained divided to its core, with the larger and smaller municipalities unable to agree on the desired size of municipalities. “The representatives of ARF made some jokes about how difficult my position was with a divided board, but I told them, ‘Wait and see; this situation enables me to say what I feel is needed.’”27 At the same time, the minister of the interior and health, Lars Løkke Rasmussen, also traveled around the country, visiting local politicians and municipalities to discuss the necessity of reform. Rasmussen was an ambitious politician representing a new generation within the Venstre Party—sometimes called the “new public management generation,” that focused on creating more efficient government. He began his career at the county level. Some guessed that this was where his dislike for the counties originated. Whatever the case, he took the lead in the discussion of administrative reform in Denmark, even as Prime Minister Rasmussen seemed to withdraw from the debate, leaving it up to his colleague to make the government’s case. Whether the prime minister was afraid of failure or just preoccupied with other affairs remained unclear. 25. Mouritzen (2007, p. 30). 26. Due, interview, 2008. 27. Due, interview, 2008; Hansen, interview.

13-2262-5 CH 13:0496-6

9/7/12

2:52 PM

Page 203

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Institutional Reform in Denmark

203

Meanwhile, the commission continued its work at a good pace. As the deadline approached, the tempo increased. The coalition arguing for reform, consisting of Chairman Due, KL director Hansen, the municipality representatives, and the civil servants, appeared to hold the winning hand. Their plans, however, threatened the counties and the smaller municipalities. The ARF representatives, realizing that the counties were becoming increasingly isolated, tried to come to some agreements with their KL colleagues but to no avail. In an attempt to prevent total disaster for the counties, they focused their efforts on trying to get at least one model favorable to them presented in the final report. Somewhere in this time period, it became clear that both Chairman Due and the civil servants in the commission had received instructions from the ministers of the interior and health and of finance to restrict themselves to presenting various models for reform rather than make specific recommendations. The national government wanted its hands free. This development particularly disappointed the three independent experts. In an emotional and heavily confrontational meeting in November 2003, the civil servants, who had clear instructions from Minister of the Interior and Health Rasmussen, ultimately got their way: the final report made no recommendation on any of the six models for reform the commission had developed. The expert members had to be satisfied with a minority statement in the report, in which they clearly anticipated a decision to strengthen municipalities and reduce the importance of the counties.

Decisionmaking Time In January 2004 the final report of the commission was presented in a large sports hall in a province far away from the political center of Copenhagen. Later, many people admitted it was an exceptional meeting, enhanced by the peculiar location. An atmosphere of change hung in the air, according to some present. “I was presenting the commission report at the meeting in Jutland,” said Due, “together with the minister of the interior. All municipality and county mayors were there. We saw movement that day; mayors were going home, thinking and saying, ‘This is for real.’”28 Besides an extensive analysis of the existing problems, the report contained an overview of six potential models for administrative reform, with various divisions of tasks between the different administrative layers and different sizes of administrative units. The models presented are described in figure 13-1. 28. Thorkil Juul, top civil servant, Ministry of Interior and Health and member of the Commission on Administrative Structure, personal interview with authors, Copenhagen, March 2008; Due, interview, 2008.

13-2262-5 CH 13:0496-6

9/7/12

2:52 PM

Page 204

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

204

Innovations in Governance

Figure 13-1. Models of the Commission on Administrative Structure

Present

More No in the changes counties

Less to the counties Direct Indirect Indirect No electric 1 2 counties to counties

State

Regions

1 3

8

8

6

>20,000 >20,000

>30,000

Local

5

5

>30,000 >30,000 >30,000 inhab.

Local inhabitants Source: Due (2006).

The presentation of the report signaled a new phase in the reform process. In January, February, and March 2004, Lars Løkke Rasmussen and members of the commission visited meetings across the country during which local politicians and citizens voiced their opinions on the report. At the same time, behind the scenes, the Ministries of the Interior and Health and of Finance were hard at work preparing the government’s proposal. A small group of civil servants, managed by Lars Løkke Rasmussen, wrote the proposal; other ministries and ministers were not involved in the process until the final stages.29 Rasmussen had a clear preference for one of the six models, the broad municipality model (the middle option of the seven models in figure 13-1). This model increased the size of municipalities significantly and transferred many new tasks from the counties to the municipalities but maintained the direct elections at county level. On April 27, 2004, the national government presented its proposal, Det Nye Danmark (the New Denmark). It was a more radical plan than most expected, including members of Venstre and their Conservative coalition partners.30 The government had chosen the broad municipality model and modified it significantly. Counties were to be abolished and replaced with five regions. The 29. Bundgaard and Vrangbæk (2007). 30. Bundgaard and Vrangbæk (2007), p. 509.

13-2262-5 CH 13:0496-6

9/7/12

2:52 PM

Page 205

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Institutional Reform in Denmark

205

regions would not collect their own taxes and had only one main responsibility—health care. The radical proposal took everyone by surprise31—especially the counties and ARF. “We had definitely underestimated the risks for the counties,” said the ARF representative.32 As his deputy said, “Maybe it was somewhat naive, but we didn’t see it coming. We were feeling safe.”33 As proof of this naiveté, various people involved recounted how Lars Løkke Rasmussen’s remarks at the yearly county congress may have foretold these changes; in his speech he addressed only one topic: health care. “I was there that day and I realized, when talking to people from the counties, that they still didn’t see the danger,” said one of the civil servants of the Commission on Administrative Structure.34 On the day the government presented its proposal, before the political discussion had even begun, the Dansk Folkeparti declared its full support for the government’s plan. This set the tone for the negotiations that followed. In keeping with Danish tradition, the government sought the support of the opposition—especially the Social Democrats and their large rank and file at the local and regional level—for its plans. In the months that followed, intense negotiations took place between the government parties and the opposition, led by the Social Democrats. The Social Democrats played hardball, breaking off negotiations and ultimately withdrawing from the talks altogether. No agreement with the opposition could be reached. At the end of June, the agreement between the coalition parties and the Dansk Folkeparti was presented and brought to a vote in parliament. The coalition had won; the die had been cast.

A Municipal Marriage Market In 2004 and 2005 the national government worked hard to bring about the dozens of legislative changes necessary to make the administrative reform possible. In the summer of 2004, before this process was completed, all Danish municipalities received word from Copenhagen that those with fewer than 20,000 inhabitants had until January 1, 2005, to find partners to merge with. If they did not voluntarily make such arrangements, the national government would step in and do it for them. The local politicians had no choice; Mouritzen described their situation as “a gun in front of their head.”35 Financial incentives 31. Mouritzen (2007, p. 21). 32. Otto Larsen, former director of ARF and member of the Commission on Administrative Structure, personal interview with authors, Copenhagen, March 2008. 33. Johansen, interview. 34. This quote is anonymous at the request of the interviewee. 35. Mouritzen (2007, p. 25).

13-2262-5 CH 13:0496-6

9/7/12

2:52 PM

Page 206

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

206

Innovations in Governance

were also provided: the municipalities could keep whatever they gained from the synergy effect.36 In the second half of 2004, a unique decisionmaking process could be observed in Danish local government. The Danish compared the merging process to a marriage market, with the media reporting on “proposal attempts,” “finding future partners,” or “marriage conflicts” between neighboring municipalities. All of this took place under enormous time pressure. By January 1, 2005, almost all small municipalities had successfully completed the so-called voluntary merging process.

Innovation and Improvement The decisionmaking process that took place between 2002 and 2005 led to a sweeping administrative reform that took effect on January 1, 2007. The concrete changes were as follows: —The thirteen counties were abolished and replaced by five regions. —The five new regions would be mainly responsible for delivering health care. —The regions were not allowed to collect their own taxes but would be financed by both central government and the municipalities. —The number of municipalities was reduced from 271 to 98. This caused the average municipality size to rise from 20,000 to 55,000 inhabitants, but many newly merged municipalities were much larger than this.37 —The municipalities would provide services that previously had been the responsibility of the counties, including some health services, social policy, employment policy, education, specialized education, culture, maintenance of roads, nature and the environment. —Many other county tasks, such as county roads and some responsibilities in the fields of social services, education, employment, and culture, were transferred to the national government. What improvements did the reform aim to effect? The official objective was to improve the delivery of public goods and services, with a long-term ambition “to maintain and develop a democratically governed public sector with a sound basis for continued development of the Danish welfare state.”38 The national government justified the reform by arguing that citizens deserved better public services, especially in the field of health care. 36. Brunschot and Fraanje (2007, p. 10). 37. Government of Denmark (2005, p. 16). 38. Government of Denmark and the Danish Peoples Party (2004, p. 5).

13-2262-5 CH 13:0496-6

9/7/12

2:52 PM

Page 207

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Institutional Reform in Denmark

207

What particular problems did the reform aim to address? Denmark’s administrative structure of small municipalities and small counties led to inefficient and suboptimal performance in several key policy areas, including health care and social policy. Responsibility for certain tasks was distributed across different decentralized administrative levels, leaving responsibility in many areas unclear to both citizens and authorities. The question remains as to how big the problems really were and whether the administrative structure was to blame for them—and whether changing it so drastically would prove to be the solution. No consensus on these questions existed among those directly involved in the process. As one of the county representatives said, “Nowhere in the report will you find the arguments for taking away all tasks but the hospitals from the counties!”39

Strategy and Tactics A combination of administrative problems and a fortuitous sequence of events in the summer of 2002 created a unique opportunity for reform. A group of innovators stepped up to the plate—especially Johannes Due, Lars Løkke Rasmussen, Anders Fogh Rasmussen, and Peter Gorm Hansen—to make reform a reality. What were their strategies and tactics?

Getting Things Going In creating the commission, Prime Minister Anders Fogh Rasmussen and his namesake at the Ministry of the Interior and Health, Lars Løkke Rasmussen, embraced the opportunity that arose in the summer of 2002 to set the reform process in motion. Finding the policy window slightly ajar, they gave it a firm shove to ensure it would remain wide open. Both men had just entered the cabinet in 2001 and had agreed that the new Liberal-Conservative government was not going to burn its hands on the issue of administrative reform in Denmark. However, when the public debate over reform took off in the summer of 2002, they seized the opportunity. We do not know for sure whether Prime Minister Rasmussen actually meant to break the system wide open. Appointing the commission led by Due could just as easily have been a maneuver used to avoid dealing with a difficult issue, hoping that it would disappear from the agenda.40 However, most observers think that both men wanted real change. Commission chair Due said, “I think that Lars Løkke Rasmussen has been interested in getting this discussion going for two reasons: partly, Lars has been critical of 39. Johansen, interview. 40. Schulz, Van Twist, and Geveke (2008, pp. 102–03).

13-2262-5 CH 13:0496-6

9/7/12

2:52 PM

Page 208

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

208

Innovations in Governance

the role of the counties on the basis of his past position as a county mayor; and partly because Lars is very engaged in reforming the public sector—and I think that you have to understand the entire involvement of the Venstre leaders in this matter as an involvement in rationalizing the public sector.”41

Strategic Casting Lars Løkke Rasmussen especially made sure that the right people were involved in key positions. He managed to keep partisan differences out of the commission negotiations. Johannes Due, who had been chairman of the previous Public Sector Task Commission, strongly advised the minister in this respect. Political stalemate among all the major party politicians had sunk his previous commission, so the new commission included the main interests in the administrative structure but no politicians. As a strategic trio, Lars Løkke Rasmussen, Johannes Due, and Peter Gorm Hansen made the administrative reform become reality, with the minister of the interior and health pushing reform forward through Due, Hansen, and other capable civil servants who formed the commission secretariat. Lars Løkke Rasmussen—who is now prime minister of Denmark—had a longstanding reputation as a capable player and a political animal, and his role should not be underestimated. As one former member of the commission said, “The minister was like a choreographer; he arranged the movements of the dancers. He was a director of a theatre piece, a fantastic political leader.”42 As the process unfolded, Rasmussen’s choice of “dancers” proved apt. He chose a powerful chairman and successfully kept politicians out. Though Johannes Due had offered himself for the position, much maneuvering had to take place behind the scenes before Minister Rasmussen could appoint him as chair. Due had extensive managerial experience at the local level and, more important, like Rasmussen he favored reform. This made him an undesirable candidate in the eyes of the opposition, but from Rasmussen’s perspective he was an excellent choice. Additionally, making Mouritzen a member of the commission turned out to be most fortunate. As an expert in local governance in Denmark, he was able to use his research on the quality of local democracy to ease the commission’s fears that larger municipalities would compromise service to citizens.

Creating Support Within the commission, both Due and Hansen framed the discussions about the problems that needed to be addressed in a way that advanced their plans 41. Quoted in Bundgaard and Vrangbæk (2007, p. 501). 42. Mouritzen, interview.

13-2262-5 CH 13:0496-6

9/7/12

2:52 PM

Page 209

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Institutional Reform in Denmark

209

for reform. They presented a scientifically supported analysis of administrative problems and convincingly described the inefficiencies and other issues resulting from parallel functions and tasks at different administrative levels. In linking the desire for improved delivery of public services to the problem analysis, they were able to make a water-tight case for reform. Furthermore, Mouritzen’s large-scale study helped Due and Hansen keep the age-old debate over whether larger municipalities hurt democracy off the table. Due and Hansen also took crucial steps to advance the reforms outside of the commission. Together with Lars Løkke Rasmussen, they mentally prepared local politicians and civil servants for the coming changes. Furthermore, because of their experience with previous attempts at reform and their knowledge of local government, they knew that a good report alone was not enough. They had to make sure that there would be support at the time of publication. Each of them took full advantage of his mandate to build support for the changes, delivering the message that reform was necessary and inevitable to stakeholders across the country. Their persistence and strategic communication ensured that no one was surprised by the content of the commission’s report when it was released in January 2004. Both politicians and citizens accepted the findings as a fait accompli and were prepared for the big changes to come.

Power Politics Johannes Due was not afraid to engage in power politics to remove potential obstacles to change. Within the commission, Due and Rasmussen’s civil servants got their way in almost everything. For example, they decided to present six different models for the structure of the public sector instead of only one preferred model, ensuring that Prime Minister Rasmussen and the cabinet would have their hands free to select their own preference. This put the expert members who had argued for the presentation of more specific recommendations under strong pressure. Furthermore, during the course of the commission’s deliberations Due and his fellow reformers outmaneuvered the counties’ representatives, leaving the counties increasingly isolated—although for decades the municipalities and the counties had been strong allies. The reform-minded chair and the civil servants formed a coalition with Hansen and other municipal (KL) representatives while the counties stood by, helpless. Only on release of the report in 2004 did the counties realize how cleverly Due and Rasmussen had managed to drive a wedge between them and their natural allies in municipal government. Neither ARF nor the KL had an interest in centralization, but with Due steering the debate, they never found an opportunity to form a unified

13-2262-5 CH 13:0496-6

9/7/12

2:52 PM

Page 210

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

210

Innovations in Governance

force against it. Instead, the national government and the municipalities allied with one another to prey on the counties, stripping them of virtually all their responsibilities (except for the hospitals, a responsibility that no one wanted). Less visible than isolating the counties, but just as effective, was the marginalization of the smaller municipalities—more specifically, of the politicians representing the smaller municipalities. Their objections to reform, fed by the fear of losing their jobs, were effectively kept out of consideration. This process occurred not so much within the commission itself as at the local level and within the KL. Peter Gorm Hansen walked a tightrope—not only in discussions with his own association and board but also in his visits to municipalities all over Denmark. He emphasized that reform and larger municipalities were inevitable and, moreover, that change would be good for local government and its position vis-à-vis the central government and those darned counties. (Again, Mouritzen’s research effectively nullified the objection that larger municipalities would be less democratic.) Through these means, Hansen managed to unify the rank and file of the municipal government, allowing the commission to ignore the weak protests of some mayors and politicians of smaller municipalities. At the Ministry of the Interior and Health, the clever strategist Lars Løkke Rasmussen handled the complicated process of merging the municipalities with a bold power play that combined financial incentives and enormous time constraints to force the municipalities to take on the merger process themselves. The threat that the national government would interfere if the municipalities could not find merging partners was ever present. Mayors, politicians, and citizens, thus pushed into action, virtually completed the unique, large-scale, “voluntary” merging process within six months.

Conclusion The administrative reform that took place in Denmark in 2007 was exceptional for its scope, its structural character, and the speed and ease with which it was implemented. But the decisionmaking process that preceded these changes was even more remarkable and could be seen as the real innovation. A deadlocked situation, which appeared hopelessly impenetrable to everyone involved, was suddenly broken in 2002. Smart and strategic operating by some key players resulted in a remarkable administrative reform.

14-2262-5 CH 14:0496-6

9/7/12

2:52 PM

Page 211

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

part iv

Conclusion

14-2262-5 CH 14:0496-6

9/7/12

2:52 PM

Page 212

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

14-2262-5 CH 14:0496-6

9/7/12

2:52 PM

Page 213

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

14

Innovating Strategically

A

keen observer of strategy and tactics in sixteenth-century politics, Niccolò Machiavelli, wrote, “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.” This cautionary lesson applies just as well to twenty-first century social innovators. The agents of change featured in the case chapters of this volume faced similar challenges in initiating, managing, and sustaining change in the public sector. Advocates of the status quo pose threats to innovation in a number of ways, and often it seems that the odds are tilted heavily against the change makers. The goal of this book is to analyze and formulate an understanding of how exactly people with novel ideas succeed in securing the resources and support needed to innovate. To be successful, innovators need to understand and anticipate the reception of their ideas and actions. The worst error an innovator can make is to assume that everybody shares the innovator’s excitement about his or her wonderful innovation. Indeed, the exact opposite seems to be true. Innovators in the public sector must operate strategically by continuously scanning the environment for obstacles, threats, concerns, and dissent while carefully creating momentum for their innovations.

Basic Challenge How, then, do social innovators deal with the challenges of making change? We started out by establishing that all social innovators, though they operate under different circumstances, face similar strategic challenges. They have to

213

14-2262-5 CH 14:0496-6

9/7/12

2:52 PM

Page 214

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

214

Conclusion

obtain permissions, endorsements, and resources from influential stakeholders—parties that have a stake in the success or failure of their undertakings. Following Mark Moore’s conceptual framework of strategic management in government, we broke down this challenge into separate parts in chapter 2. The first part consists of securing legitimacy and support in one’s authorizing environment—the wide range of parties that exercise authority, enhance legitimacy, and give or withhold support to the innovation. The second part is building sufficient operational capacity, such as money, staff, technology, and other necessities, to actually execute a plan. The final part of the challenge is to craft and present a compelling public value proposition to stakeholders in the authorizing environment—to put the innovation in context, communicate the concept, and paint a picture of the value that the innovation would add—to demonstrate that the project is worthy of support. In other words, all agents of change have to reimagine what is permissible, doable, and valuable.

Cases To better understand how exactly social innovators pull it off, we initially gathered a broad selection of cases. We looked for examples in which innovators had demonstrated the ability to generate the legitimacy, support, and resources necessary to change practices in the public sector within a decade or so. Given our goal of rich exploration, we further diversified the selection based on geography, policy area, and the nature of the innovation. We ultimately examined eight cases, conducting semi-structured interviews and document analysis, which allowed us to depict in detail (that is, with thick descriptions) how the innovators had assessed and overcome their challenges. During our research we looked for variables and patterns—not to explain the causal relationship between strategy on one hand and success of an innovation on the other (because there are simply too many variables involved to adequately do so) but to better understand how the innovators managed the process of change. This selection led us to four frontline innovations created for and by professionals in immediate contact with clients or beneficiaries (presented in part 1). Professor Hara in Japan not only rolled out his application for perinatal care but also developed a digital infrastructure for sharing medical information on a larger scale. Peter Nares in Toronto made smart use of raised political awareness during the recent economic downturn to generate support for his programs to help low-income earners stand on their own feet. Martha Kegel, the director of an organization that aims to end homelessness in New Orleans, conducted a medical assessment, the vulnerability index, which

14-2262-5 CH 14:0496-6

9/7/12

2:52 PM

Page 215

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Innovating Strategically

215

enabled her to expand her organization’s regular resource base. And Bère Miesen, an innovator in the field of geriatrics, piloted the Alzheimer Cafés in the Netherlands for people with dementia and their caretakers—ultimately resulting in more than 180 venues nationally and abroad. A second group of innovators (introduced in part 2) operated at higher levels of democratic governance and public management. Their efforts to make change were focused on institutional structures rather than operational practices. We called their work “innovations in governance.” Hermann Scheer and Hans-Josef Fell in Germany introduced legislation to create market incentives for solar energy production, keenly working around the powerful fossil energy lobby that had the nation’s chancellor in its pocket. The University of Virginia successfully wrestled off the tight control of the state’s bureaucracy to obtain more operational autonomy in creating value for its students and the Commonwealth of Virginia. Leslie Jacobs designed a new accountability system in pre-Katrina New Orleans to make individual public schools more responsible for their own success or failure and helped introduce the sweeping charter school reform after the hurricane struck. Finally, Johannes Due and fellow change agents in Denmark set in motion a surprisingly quick and radical administrative transformation, focused on reducing costs and improving services, that put a whole tier of government—the counties—out of business.

Findings Our exploration helped us identify three clusters of strategies and tactics that the innovators frequently used. All of them, except for Miesen in the Netherlands, carefully crafted their case for change (chapter 3). To discredit the status quo, they gathered data showing that current practices were inadequate, cautiously selecting what (and what not) to discredit and whom (and whom not) to insult, and painted an attractive picture of a brighter future. In the absence of hard evidence that their innovation would deliver tangible results (innovation implies uncertainty), they leveraged evidence of initial success, creatively using indirect or circumstantial evidence to support their case. They were also clever alliance builders: they befriended individuals and institutions that could boost the credibility of their plan or could work with them as competent change agents—a strategy that we call “the social construction of credibility.” All innovators also found ways to prompt progress: they triggered actions and behaviors among stakeholders to set or keep in motion the innovation process (chapter 4). In examining the cluster of strategies to prompt progress, we distinguish between managerial acumen in general and process design in

14-2262-5 CH 14:0496-6

9/7/12

2:52 PM

Page 216

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

216

Conclusion

particular. Some innovators deliberately locked in their authorizing environments through smart planning. Others managed the leap of faith that they asked their stakeholders to take, telling them just enough about their ambitions to make their involvement interesting but not so much to risk upsetting them. The innovators also found opportunities in critical events, including crises, such as the earthquake in Kobe, Japan, and Hurricane Katrina as well as more ordinary ones, such as parliamentary elections. After identifying these opportunities, they used the attention of particular stakeholders to explore with them how they could take responsibility for solutions to the current crisis. To keep the change process in motion, some of them created mechanisms that pulled change forward not only by investing in one singular innovation but also by influencing the system in which it was embedded. We also painted a picture of how innovators managed the meaning of their work (chapter 5). Innovators framed their conversations with stakeholders in their authorizing environment—strategically structuring discussions for the purposes of sense making, attributing meaning to situations, creating commitment for new ideas—and crafted appealing public value propositions worthy of support. The change agents were flexible in the ways they presented their innovations. Some capitalized on the fragmentation of their institutional environment by tailoring proposals to each party individually, even stirring up competition among them. Others shifted frames over time, adopting a new course to gather support, when they found that their initial framing of their innovation had lost its appeal and capacity to create appetite for change. Looking back at all the strategies and tactics we identified and examined, we believe three key issues emerged out of our research: —Innovation is as much about designing and managing a process as it is about developing and implementing an idea. Both tasks require proper attention, skillful handling, and continuous evaluation. In many of the cases we investigated, the lines between the innovation and the innovation process got blurred. In hindsight one might wonder whether it was a collaborative process that enabled the introduction of a particular innovation or the innovation that enabled the process. —Innovation may be intended to produce positive outcomes and mutual gains, but it also produces negative outcomes and unilateral losses. Change almost always implies loss to some stakeholders; and neglecting that fact is neither effective nor respectful. People are attached to the way things are—professionally, financially, and emotionally. To praise the benefits of the innovation in one realm without acknowledging the loss in another is to miss an opportunity to make the innovation more broadly accepted and sustainable. An

14-2262-5 CH 14:0496-6

9/7/12

2:52 PM

Page 217

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Innovating Strategically

217

innovator who is sensitive to the destructive aspects of innovation will be less surprised by the inevitable passive and active resistance. —Innovation is an art that requires exceptional situational awareness and political and managerial skills as well as strategic and tactical insight. The innovators featured in this book paid considerable attention to these key issues— sometimes consciously and explicitly, sometimes unconsciously and implicitly. Like any art, innovation probably requires a certain talent, just as succeeding and excelling in that art requires a certain amount of luck. At the same time, talent can be developed, and an innovator can prepare to create and take advantage of opportunities. Therefore, we believe it is both possible and helpful to learn from the leadership, successes, and failures of social innovators.

Innovating Responsibly We have refrained from exercising judgment about how innovative, valuable, or desirable these innovations actually were. That does not mean that we do not have normative ideas about them or that we would not be interested in the actual outcomes of the process. It means that in this particular project we chose to present a Machiavellian analysis of social innovation, focusing on how the individuals, determined to bring about transformative change in the public sector, pulled it off. Agents of change, when successful, can have a major impact on the lives of citizens. They can significantly change public services at the front line as well as institutional arrangements at the governance level. While innovators undoubtedly have the best of intentions and sacrifice a lot on behalf of the public interest, much of what they do involves working under the radar, influencing the perceptions of stakeholders and the public, and taking risks with public money or state authority. Most of the innovators we investigated showed a strong sense of responsibility with regard to operating in the public sphere, where certain values and norms apply. They knew that part of their success depended on manipulating the situation, and for that very reason they understood their obligation to uphold certain values: inclusiveness, responsiveness, and accountability. The question is whether the innovators perceived this to be a moral obligation or merely an instrumental one. Were the strategic considerations and tactical moves of the social innovators we studied rooted in deontological or in utilitarian principles? Most innovators are keenly aware that their credibility and support may only last as long as their latest project. Failure in a major innovation might mean the end of their career. There is always a personal drive to gain as much legitimacy as needed, as it provides them with some protection. At the same

14-2262-5 CH 14:0496-6

9/7/12

2:52 PM

Page 218

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

218

Conclusion

time, the social innovators we met did not go through all the trouble of making change for their own sake alone. Absent a sense of public spirit, they would not have bothered. But however public spirited an innovator’s intentions may be, determining what is publicly valuable is a highly normative matter. Whether introducing a certain innovation creates added value to the public will depend to a large extent on whom you ask. And the more people you ask, the more complicated that conversation will be, as more perspectives, interests, and positions enter the debate. Because an important role of social innovators is to structure and manage this process, certain responsibilities come with the system of democratic governance in which they operate. Innovators must ask themselves and their collaborators a number of questions regarding their intellectual, political, and moral responsibilities as they pursue their ideas in the public sector. —Intellectual responsibilities: Have we thought through the nature of the challenge and actively tested our assumptions? How do we know that our innovation is a good idea? Are we looking for disconfirming evidence and listening closely to dissenting voices? How do we know whether we are on the right track? Have we established feedback mechanisms? Is the process reversible enough to accommodate changing circumstances and preferences yet not so reversible that it would jeopardize sustainability? —Political responsibilities: Are we including all affected stakeholders in our process of exploration and deliberation? How open and inclusive do we need to be? Knowing that innovation will always be destructive as well as creative, to what extent do we need to worry about others beyond the support we need to succeed? Are we creating ownership for the solution and the process? Have we made an assessment of the political risks, not just to ourselves or to the project but to others as well? —Moral responsibilities: Are we sensitive to the moral values of the stakeholders and to the public at large? If we are pushing the boundaries, are we respectful of the sense of violation or loss we are inflicting on others? Are we true to our own beliefs yet not too stubborn to change our minds if conditions so dictate? Are we addressing, rather than avoiding, conflict and disagreement? Are we clear about the costs and benefits of the innovation and how they will be distributed? Are we honest about the risks we are taking on behalf of our organization and the public at large? These three clusters of responsibilities are neither mutually exclusive nor exhaustive. And they are not limited to innovators: public managers aspiring to create public value would acknowledge the importance of these responsibilities in carrying out their task. However, for social innovators, who are in the business of bringing about systemic change through their disruptive innova-

14-2262-5 CH 14:0496-6

9/7/12

2:52 PM

Page 219

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Innovating Strategically

219

tions, these responsibilities have an even heavier weight. In the absence of structures and processes that guide the behavior of innovators, and in the twilight zone of entrepreneurship and accountability, innovators are enabled by strategic and tactical skills, but they are guided by principles. For innovators to be really successful, not simply in terms of effectiveness but also in terms of legitimacy, they must be responsible intellectually, politically, and morally.

Further Questions Even when social innovators take into account all these responsibilities, their innovations still represent a threat to those who would prefer to leave things as they are. Social innovators, simply by proposing new ideas, discredit the status quo, disturb power equilibriums, disrupt established practices, and generally create consternation of one kind or another. They push individuals and institutions out of complacency and put them in a position that they may perceive as a lose-lose situation: if they resist, they are seen as conservative naysayers; if they accept the challenge, they share responsibility for the risks associated with the innovation. And then they must contend with the issue of status, ego, and reputation. Is supporting another person’s innovation that dramatically improves outcomes not tantamount to admitting that one’s own ideas have become obsolete and one’s past efforts have been inadequate? Surely it takes a certain amount of confidence—and selflessness—to welcome innovations. The public sector is not the same as the world of private sector entrepreneurship, where the Schumpeterian notion of creative destruction is recognized as an inevitable force triggered by the free market mechanism. In the public sector, there is a certain built-in inertia that stems from the institutionalization of products, services, and entitlements. This means that even if politicians and public managers want to embrace innovations, they might be held back by a system that is disposed toward continuity, stability, and compliance with previous commitments. In other words, though Machiavelli was certainly right about the challenges of being an agent of change, we should not underestimate the challenges of dealing with agents of change. At the receiving end of public sector innovation, there are strategic dilemmas and tactical challenges galore. If we take a step back from the perspective of the change agent and look at the bigger picture of transformation in the public sector, we see other levels of analysis that are essential to understanding change—or the lack thereof. First of all, we can look at organizations and their role in initiating and implementing innovation. Is it possible to institutionalize innovation itself and make it common practice in a public sector organization? If so, what would

14-2262-5 CH 14:0496-6

9/7/12

2:52 PM

Page 220

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

220

Conclusion

such an organization look like in terms of its policies, structure, and culture? Second, we could look at jurisdictions and ask under what conditions crossorganizational and cross-sector innovations emerge. What does an innovative municipality, state, or country look like? How does it govern its innovation processes? How does it address the fragmentation of authority and operational capabilities and the conflicts of interest? Another approach to studying innovation in the public sector would be to look at powerful ideas and how they spread. What explains the rapid dissemination of one idea and the slow response to another, equally exciting plan? How general or specific does an idea have to be in order to be replicable? How can jurisdictions distinguish the essential elements of an innovation from the more peripheral details? Is replicating as many successful practices as possible a more sensible approach to innovation than investing in homegrown innovative capabilities?

Increasing Urgency These questions, and more, are being asked around the world. At a time when many governments are coping with fiscal crisis, there is an unprecedented need to see how service levels can be maintained with less money. Governments and their partner organizations are figuring out how to be more effective, efficient, and equitable—especially with a decreasing tax base. There has always been an interest in social innovation, but at times it has seemed to be a nice hobby on the side, not necessarily crucial to the core business of governments. Now times have changed, and social innovation faces one of two fates: to be rejected as an unaffordable luxury or to be embraced as a last hope to deal with widening fiscal gaps. Because of the compelling need to innovate, there is also need to study innovation. With this book we hope to have made a meaningful contribution to the larger puzzle of public sector innovation. Examining the strategies and tactics of agents of change may help us understand the dynamics of innovation in practice. As we have argued, it is not a complete picture, and it is biased toward individuals and their action perspectives. But it is a practical and realistic depiction, and it offers a much-needed perspective that complements the institutional analysis of government performance. We have presented flesh-and-blood people who worked their hardest to deal with the complex challenges and ambiguous realities of the twenty-first century public sector. As politicians and citizens alike have grown skeptical of the broad strokes of public sector reform, protesting that it takes too long and that there is little evidence that it really works, we need to look at what individuals can do to make a change from within. Conceptualizing the work of social innovators in

14-2262-5 CH 14:0496-6

9/7/12

2:52 PM

Page 221

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Innovating Strategically

221

the context of the public sector is a first step on the path of scientific examination, but it can already have practical value for those who are aspiring to innovate and for those who are already in the thick of it. Therefore it is important that, parallel to the academic study of social innovation in pursuit of generalizable truths, we continue to facilitate learning in and from practice. Besides the pursuit of scientific knowledge, we need to keep sharing experiences, make sense of successes and failures, and borrow, tweak, and experiment with the ideas, strategies, and tactics of others. In presenting this book we hope to share some of the lessons we learned from observing, documenting, and analyzing the actions of individuals who became agents of change. We have been fascinated by the ways in which ambitious innovators succeeded in bringing about change without necessarily having complete information, full certainty, and a lot of formal power. We are intrigued by their skillful maneuvering and well-intentioned manipulations. And we hope that the lessons drawn from their endeavors encourage others in the important work ahead.

14-2262-5 CH 14:0496-6

9/7/12

2:52 PM

Page 222

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

15-2262-5 References:0496-6

9/7/12

2:53 PM

Page 223

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

References

Abramson, L. 2006. “For Charter Schools, New Orleans Is Citywide Lab.” Morning Edition. NPR. October 3. Albrow, M. 1970. Bureaucracy. London: Pall Mall Press. Alvarez & Marsal. 2007. “Weathering the Storm: A Case Study on the Rebuilding of New Orleans Public Schools.” Thought Leadership White Paper. February (www. alvarezandmarsal.com). Alzheimer Netherlands Foundation. 2009. Annual Report (www.alzheimer-neder land.nl). ———. 2010. Cijfers en feiten over dementie (Figures and facts about dementia). June 10 (www.alzheimer-nederland.nl). Amtsråds Foreningen. 2007. Danish Regions (www.arf.dk). Audit Services. 2008. Final Audit Report for the Louisiana Department of Education. January 31. Washington (www2.ed.gov). Behn, R. D. 1988. “Managing by Groping Along.” Journal of Policy Analysis and Management 8, no. 3: 643–63. Blake, P. 2006. “Restructuring Relationships in Virginia.” Change 38, no. 1: 26–33. Borins, S. F. 1998. Innovating with Integrity: How Local Heroes Are Transforming American Government. Georgetown University Press. Boston Consultancy Group. 2007. The State of Public Education in New Orleans. Report prepared for the Greater New Orleans Education Foundation, the Cowen Institute for Public Education Initiatives at Tulane University, and the New Orleans City Council Education Committee. June (www.coweninstitute.com). Breneman, D. W., and H. L. Kneedler. 2006. “Negotiating a New Relationship with the State: The Virginia Experience.” New York: TIAA-CREF Institute. Brunschot, A. van, and R. Fraanje. 2007. “Hervormingsproces Deense Centrale Overheid” (Danish central government reform). Openbaar bestuur, no. 4: 7–13. Bundesministerium für Umwelt, Naturschutz, und Reaktorsicherheit. 2011. Erneuerbare Energien in Deutschland, 1990 bis 2007 (Renewable Energy in Germany from 1990 until 2007). Berlin: BMU, Referat Öffentlichkeitsarbeit.

223

15-2262-5 References:0496-6

9/7/12

2:53 PM

Page 224

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

224

References

Bundgaard, U., and K. Vrangbæk. 2007. “Reform by Coincidence? Explaining the Policy Process of Structural Reform in Denmark.” Scandinavian Political Studies 30, no. 4: 508–09. Center for Research on Education Outcomes. 2009. “New Stanford Report Finds Serious Quality Challenge in National Charter School Sector.” Press release. June 15 (http://credo.stanford.edu). Childress, S. 2008. Rebuilding the New Orleans Public Schools: Turning the Tide? Teaching Case 9-808-045. Harvard Business School. June. City of New Orleans Communications Department. 2008. “Twenty Important Facts on the Recovery of New Orleans Post-Katrina and on the Subsequent Flooding.” Press release. April 3 (www.neworleansonline.com/pr/releases/). Clark, R. L., and M. d’Ambrosio. 2006. The New Balancing Act in the Business of Higher Education. Cheltenham, U.K.: Edward Elgar. CNW (Canada Newswire). 2010. “TD Financial Literacy Grant Fund Calls for Applications from Community Groups for Millions in Grants.” Press release. June 1 (www.newswire.ca). Committee of the Regions. 2001. Regional and Local Government in the European Union: Responsibilities and Resources. Luxembourg: Office for Official Publications of the European Union. Common Ground. 2008. Innovation 20 in 20: Researching Risk, Ending Homelessness. Report. New York: Common Ground. Council of Ministers of Education, Canada. 2009. Education Systems of Canada (www.educationau-incanada.ca). Couturier, L. K. 2006. Checks and Balances at Work: The Restructuring of Virginia’s Public Higher Education System. San Jose: National Center for Public Policy and Higher Education. Cowen Institute for Public Education Initiatives at Tulane University. 2008. The State of Public Education in New Orleans: 2008. April (www.coweninstitute.com). ———. 2010a. Charter Schools in Louisiana. April (www.coweninstitute.com). ———. 2010b. The State of Public Education in New Orleans: 2010; Executive Summary. March (www.coweninstitute.com). ———. 2011a. The State of Public Education in New Orleans. March (www.cowen institute.com). ———. 2011b. The State of Public Education in New Orleans: School Finances. March (www.coweninstitute.com). Crozier, M. 1964. The Bureaucratic Phenomenon. University of Chicago Press. Dam, A. van. 2007. “Could the Little Mermaid Survive in Dutch Waters?” Master’s thesis, Dutch School for Public Management, The Hague. De Dreu, E., B. J. M. Emans, and E. van de Vliert. 1992. “The Influence of Own Cognitive and Other’s Communicated Gain or Loss Frame on Negotiation Behavior.” International Journal of Conflict Management 3, no. 2: 115–32. Dees, J. G. 1998. “The Meaning of Social Entrepreneurship.” Duke University, Fuqua School of Business. October 31 (www.redalmarza.com). De Jong, J. 2010. Een Aardig Begin (A good start). The Hague: Ministerie van Binnenlandse Zaken. De Jong, J., and G. Rizvi. 2008. The State of Access: Success and Failure of Democracies to Create Equal Opportunities. Brookings.

15-2262-5 References:0496-6

9/7/12

2:53 PM

Page 225

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

References

225

Due, Johannes. 2006. PowerPoint presentation presented at experts meeting, Strategies of Democratic Reform in International Perspective. The Hague. October 12. Economist Intelligence Unit. 2010. From Silver to Gold: The Implication of Japan’s Ageing Population. Report prepared for GE. London. Elga Nikolova, E. 2011. Financial Literacy for Newcomers: Final Evaluation Report. Toronto: e-NOVA Consulting. May. Etzioni-Halevy, E. 1983. Bureaucracy and Democracy: A Political Dilemma. Rev. ed. London: Routledge and Kegan Paul. Fahs, M. S. 1993. “Japan’s Universal and Affordable Health Care: Lessons for the United States?” Paper prepared for conference, Making Universal Health Care Affordable: How Japan Does It? New York: New York University and the Japan Society. April 30. Feltman, E. A. 2009. “Suing Doctors in Japan: Structure, Culture, and the Rise of Malpractice Litigation.” In Fault Lines: Tort Law as Cultural Practice, edited by D. M. Engel and M. McCann, pp. 210–33. Stanford University Press. Financial Consumer Agency. 2008. Moving Forward with Financial Literacy: Synthesis Report on Reaching Higher; Canadian Conference on Financial Literacy. Montreal (www.jointforum.ca). Friedrich, C. J., ed. 1958. Authority: NOMOS I. Harvard University Press. Gewertz, C. 2005. “New Orleans Adopts Plan for Charters.” Education Week 25, no. 8: 19–20. Golden, O. 1990. “Innovation in Public Sector Human Services Programs: The Implications of Innovation by ‘Groping Along.’” Journal of Policy Analysis and Management 9, no. 2: 219–48. Goldsmith, S. 2010. With Gigi Georges and Tim Glynn Burke. The Power of Social Innovation: How Civic Entrepreneurs Ignite Community Networks for Good. San Francisco: Jossey-Bass. Government of Denmark. 2005. The Local Government in Brief. Copenhagen: Ministry of the Interior and Health. Government of Denmark and the Danish People’s Party. 2004. Agreement on a Structural Reform. Copenhagen: Ministry of the Interior and Health. Gruene Partei (Green Party). 1998. Aufbruch und Erneuerung: Deutschlands Weg ins 21; Jahrhundert. Koalitionsvereinbarung zwischen der Sozialdemokratischen Partei Deutschlands Und BÜNDNIS 90/DIE GRÜNEN (Departure from the old: Germany’s road to 21st century; Coalition agreement between the Social Democratic Party and Alliance 90/The Greens). October 20 (www.boell.de). Hajer, M. A. 2009. Authoritative Governance: Policy-Making in the Age of Mediatization. Oxford University Press. Hill, P., and J. Hannaway. 2006. The Future of Public Education in New Orleans. Report in the series, After Katrina: Rebuilding Opportunity and Equity in New Orleans. New York: Urban Institute. January (www.urban.org). Holley-Walker, D. 2007. “The Accountability Cycle: The Recovery School District Act and New Orleans’ Charter Schools.” Connecticut Law Review 40, no. 1: 125–63. Hommels, A., and T. M. Egyedi. 2010. “Beyond the ‘Point of No Return’: Constructing Irreversibility in Decision Making on the Tetra Standard in Dutch Emergency Communication.” International Journal of IT Standards and Standardization Research 8, no. 1: 28–48.

15-2262-5 References:0496-6

9/7/12

2:53 PM

Page 226

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

226

References

Hwang, S. W., and others. 1998. “Risk Factors for Death in Homeless Adults in Boston.” Archives of Internal Medicine 158, no. 13: 1454–60. Jaschik, S. 2006. “The Eroding Paycheck.” Inside Higher Education. April 24. Kanis, B. 2008. Vulnerability Index: Prioritizing the Street Homeless Population by Mortality Risk. Handout. New York: Common Ground (www.jedc.org/forms/ Vulnerability%20Index.pdf). Kim, L. 1997. Imitation to Innovation: The Dynamics of Korea’s Technological Learning. Harvard Business School Press. Kotter, J. P. 1996. Leading Change. Harvard Business School Press. Kruiter, A. J., and others. 2008. De rotonde van Hamed: Maatwerk voor mensen met meerdere problemen (Hamed’s roundabout: Customized solutions for people with multiple problems). The Hague: Nicis Institute. Lauber, V., and L. Mez. 2004. “Three Decades of Renewable Electricity Policies in Germany.” Energy and Environment 15, no. 4: 599–623. Lefebvre, R. C., and L. Rochlin. 1997. “Social Marketing.” In Health Behavior and Health Education, 2nd ed., edited by Karen Glanz, F. M. Lewis, and B. K. Rimer, pp. 384–402. San Francisco: Jossey-Bass. Leflar, R. B., and F. Iwata. 2005. “Medical Error as Reportable Event, as Tort, as Crime: A Transpacific Comparison.” Widener Law Review 12, no. 1: 189–226. Leslie, B. D., and R. O. Berdahl. 2008. “The Politics of Restructuring: Higher Education in Virginia, a Case Study.” Review of Higher Education 31, no. 3: 309–28. Libbey, M. G. 1994. “Reengineering Public Innovation.” Public Productivity & Management Review 18, no. 2: 163–217. Lipsky, M. 1980. Street-Level Bureaucracy: Dilemmas of the Individual in Public Services. New York: Russell Sage Foundation. Liu, A. 2008. The New Orleans Index. Brookings. January (www.brookings.edu/ research/reports/2011/08/29-new-orleans-index). Liu, A., and A. Plyer. 2009. The New Orleans Index: Executive Summary. Brookings (www.brookings.edu). Louisiana Department of Education. 2003. 2001–2002: Louisiana State Education Progress Report. Baton Rouge, March 2003. ———. 2012. Charter Schools (www.louisianaschools.net). Meulen, A. van der, and I. Keij-Deerenberg. 2003. Sterfte aan dementie (Mortality attributable to dementia). The Hague: Centraal Bureau voor de Statistiek (www. cbs.nl). Milligan, J. 2006. “A League of Its Own.” Virginia Business Magazine. December (www.gatewayva.com). Mirón, L. 2008. “The Urban School Crisis in New Orleans: Pre- and Post-Katrina Perspectives.” Journal of Education for Students Placed at Risk 13, nos. 2–3: 238–58. Moore, M. 1995. Creating Public Value: Strategic Management in Government. Harvard University Press. ———. Forthcoming. Recognizing Public Value. Harvard University Press. Mouritzen, P. E. 2007. “Reforming Local Government in Denmark: How and Why?” Món Local Studies Paper. Barcelona: Centre for Local Innovation. Mulgan, G. 2007. Ready or Not? Taking Innovation in the Public Sector Seriously. London: Nesta Provocation Series. April (www.nesta.org.uk).

15-2262-5 References:0496-6

9/7/12

2:53 PM

Page 227

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

References

227

Mulgan, G., and D. Albury. 2003. “Innovation in the Public Sector.” Working Paper. London: Cabinet Office Strategy Unit (http://webarchive.nationalarchives. gov.uk). Nadler, D. A., and M. L. Tushman. 1989. “Organizational Frame Bending: Principles for Managing Reorientation.” Academy of Management Executive 3, no. 3: 194–204. Newmark, K. G., and V. de Rugy. 2006. “Hope after Katrina.” Education Next 6, no. 4: 12–21 (http://educationnext.org/hope-after-katrina/). Obey, D., and U.S. House Committee on Appropriations. 2008. “Emergency Supplemental Funding for Iraq, Afghanistan, Veterans, Workers, and Midwest Disasters.” Press release. June 19 (http://appropriations.house.gov). O’Connell, J. J., and others. 2005. “A Public Health Approach to Reducing Morbidity and Mortality among Homeless People in Boston.” Journal of Public Health Management Practice 11, no. 4: 311–16. OECD (Organization for Economic Cooperation and Development). 2009. Financial Literacy and Consumer Protection: Overlooked Aspects of the Crisis; OECD Recommendation on Good Practices on Financial Education and Awareness. Paris. June (www.oecd.org). OECD and International Energy Agency. 2007. Energy Policies of IEA Countries. Paris. (www.oecd-ilibrary.org). Office of the Governor. 2005. Governor Warner Announces Amendments to Higher Education Restructuring Bill. March 31 (www.virginia.edu). Office of Senator M. Landrieu. 2008. “Senate Committee Passes Supplemental Bill with $8.7B Landrieu Package for Gulf Coast Recovery.” Press release. May 15 (www.landrieu.senate.gov). O’Hara, A. 2010. A Katrina Success Story: Louisiana’s 3,000 Unit Permanent Supportive Housing Initiative. Boston: Report of the Technical Assistance Collaborative. February 26 (www.tacinc.org). Pan, Z., and G. M. Kosicki. 2001. “Framing as a Strategic Action in Publication Deliberation.” In Framing Public Life, edited by S. D. Reese, O. H. Gandy Jr., and A. E. Grant, pp. 35–66. Mahwah, N.J.: Erlbaum. Pharr, S. J. 2001. “In the Eye of the Storm: For Japan, a Lost Decade and After.” Harvard Magazine. November–December, pp. 37–39 (http://harvardmagazine .com). Policy Research Initiative. 2005. Why Financial Capability Matters: Synthesis Report on Canadians and Their Money; A National Symposium on Financial Capability. Report prepared for the National Symposium on Financial Capability. Ottawa. June 9–10 (www.fcac-acfc.gc.ca). Pollitt, C., and others. 2004. Agencies: How Governments Do Things through SemiAutonomous Organizations. Basingstoke, U.K.: Palgrave Macmillan. Public Affairs Research Council of Louisiana. 2004. NCLB: A Steep Climb Ahead. Baton Rouge: Report prepared for the Cowen Institute for Public Education Initiatives at Tulane University. July (www.coweninstitute.com). Quigley, W. P. 2007. “Obstacle to Opportunity: Housing That Working and Poor People Can Afford in New Orleans since Katrina.” Wake Forest Law Review 42, no. 5–6: 393–418.

15-2262-5 References:0496-6

9/7/12

2:53 PM

Page 228

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

228

References

Randolph, J. W. 1856. Early History of the University of Virginia, as contained in the letters of Thomas Jefferson and Joseph C. Cabell. Google e-book. (http://books. google.com). Recovery School District. 2011. Louisiana’s Turnaround Zone: Answering the Urgency of Now. Brochure. Baton Rouge (www.louisianaschools.net). ———. n.d. Information at a Glance. Baton Rouge (www.rsdla.net). Renewable Energy Policy Network for the 21st Century. 2010. Renewables 2010: Global Status Report. Paris. Rutledge, S. L. 2010. Consumer Protection and Financial Literacy: Lessons from Nine Country Studies. Policy Research Working Paper 5326. Washington: World Bank. June. Schulz, M., M. Van Twist, and M. Geveke. 2008. “Besturen in commissie: Verklaring van een fenomeen” (Administration in Committee: Explanation of a phenomenon). Beleid en Maatschappij 45, no. 3: 94–106. Schumpeter, J. A. 1942. Capitalism, Socialism, and Democracy. New York: Harper. SEDI (Social and Enterprise Development Innovations). 2005. The Self-Employment Employment Benefits (SEB) Program in the City of Toronto: A Unique Public/Private Sector Approach to Building Toronto’s Economy. Report. Toronto (www.sedi.org). ———. 2008a. Delivery Models for Financial Literacy Interventions: A Case Study Approach. Toronto. Spring (www.sedi.org). ———. 2008b. Financial Literacy: Resources for Newcomers to Canada. Toronto. Spring (www.sedi.org). ———. 2008c. Financial Literacy: Resources for People with Disabilities. Toronto. Spring (www.sedi.org). ———. 2009a. Independent Living Accounts: Leaving Homelessness in the Past. Report. Toronto (www.sedi.org). ———. 2009b. “Reaching Higher: Canadian Conference on Financial Literacy Publishes Its Final Report.” Press release. Toronto. March 25 (www.sedi.org). ———. 2010. News Conference to Announce That TD Will Commit $14.5 Million to SEDI for Financial Literacy. Press release. Toronto. January 26 (www.sedi.org). ———. 2011a. Financial Literacy for Newcomers. Final report. February. Toronto (www.sedi.org). ———. 2011b. “SEDI Urges Ottawa to Make a Significant Investment in the Task Force on Financial Literacy’s Recommendations.” Press release. Toronto. February 9 (www.sedi.org). Smith, S. R., and M. Lipsky. 1993. Nonprofits for Hire: The Welfare State in the Age of Contracting. Harvard University Press. State Council of Higher Education for Virginia. n.d. Institutional Performance Standards Definitions. Richmond (http://research.schev.edu). Statistics Canada. 2008. Income of Canadians, 2008 (www.statcan.gc.ca). Stewart, D. 2009. “Finance Ministers Meeting Task Force on Financial Literacy.” PowerPoint presentation to finance ministers meeting. Whitehorse, Canada. December 18 (www.financialliteracyincanada.com). Stone, D. A. 1984. The Disabled State: Health, Society, and Policy. Temple University Press. Strukturkommission (Commission on Administrative Structure). 2004. Recommendation of the Commission on Administrative Structure: Summary. Copenhagen.

15-2262-5 References:0496-6

9/7/12

2:53 PM

Page 229

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

References

229

Swanborn, P. G. 1994. Methoden van sociaal-wetenschappelijk onderzoek (Methods of social-scientific research). Meppel, Netherlands: Boom. Task Force on Financial Literacy. 2010a. Leveraging Excellence: Charting a Course of Action to Strengthen Financial Literacy in Canada. Ottawa. February (www.financial literacyincanada.com). ———. 2011a. Canadians and Their Money: Building a Brighter Financial Future. Report. Ottawa. December (www.financialliteracyincanada.com). ———. 2011b. Leveraging Excellence: Charting a Course of Action to Strengthen Financial Literacy in Canada. Ottawa. February (www.financialliteracyincanada .com). Tatara, K., and E. Okamoto. 2009. “Japan: Health System Review.” Health Systems in Transition 11, no. 5: 1–164. TD Bank Financial Group. 2010. Dollars and Sense: The Urgent Need for Lifelong Financial Literacy. Brochure (www.td.com). U.S. Department of Education. 2005. “Louisiana Awarded $20.9 Million No Child Left Behind Grant to Assist Damaged Charter Schools, Create New Charter Schools: Funds to Be Used to Expand Classrooms for Students Displaced by Hurricanes.” Press release. September 30 (www2.ed.gov/news). U.S. Senate. Committee on Homeland Security and Governmental Affairs. 2009. Far from Home: Deficiencies in Federal Disaster Housing Assistance after Hurricanes Katrina and Rita and Recommendations for Improvement. Special report by the Ad Hoc Subcommittee on Disaster Recovery. February (http://biotech.law.lsu.edu/ blaw/FEMA/DisasterHousingInves.pdf). Unity of Greater New Orleans. 2008. “Post-Katrina Homeless Camps in New Orleans.” PowerPoint presentation. New Orleans. July 29 (www.unitygno.org/ PressConferenceClaiborneEncampmentSurvey.ppt). ———. 2011. Homelessness in New Orleans: The Big Picture. Report. June 13. University of Virginia. 2012. Facts at a Glance (www.virginia.edu/Facts/Glance_ Rankings). USAToday. 2009. Best Value Colleges for 2009 (www.usatoday.com). Van de Ven, A. H. 1986. “Central Problems in the Management of Innovation.” Management Science 32, no. 5: 590–607. Van de Ven, A. H., H. L. Angle, and M. S. Poole. 1989. Research on the Management of Innovation: The Minnesota Studies. New York: Ballinger/Harper & Row. Waldman, A. 2007. “Reading, Writing, Resurrection.” The Atlantic. January–February 2007 (www.theatlantic.com). Weber, M. 1976. Wirtschaft und Gesellschaft. Tübingen, Ger.: J. C. B. Mohr. Weick, K. E. 1979. The Social Psychology of Organizing. Boston: Addison-Wesley. ———. 1995. Sensemaking in Organizations. Thousand Oaks, Calif.: Sage Publications. Williams, T. 2007. “Empowerment of Whom and for What? Financial Literacy Education and the New Regulation of Consumer Financial Services.” Law and Policy 29, no. 2: 226–56. Wilson, J. Q. 1989. Bureaucracy: What Government Agencies Do and Why They Do It. New York: Basic Books. World Health Organization. 2005. “Japan Establishes Programs to Address Medical Errors.” Excerpt from Pacific Bridge Medical’s Asian Medical e-Newsletter 4, no. 9 (December 2004) (www.who.int).

15-2262-5 References:0496-6

9/7/12

2:53 PM

Page 230

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

230

References

Wüstenhagen, R., and M. Bilharz. 2006. “Green Energy Market Development in Germany: Effective Public Policy and Emerging Customer Demand.” Energy Policy 34, no. 13: 1681–96. Yin, R. K. 2003. Case Study Research: Design and Methods. 3rd ed. Thousand Oaks, Calif.: Sage Publications. Zuurmond, A. 2008. “Bureaucratic Bias and Access to Public Services: The Fight against Non-Take-Up.” In The State of Access: Success and Failure of Democracies to Create Equal Opportunities, edited by Jorrit de Jong and G. Rizvi, pp. 148–66. Brookings.

16-2262-5 Index:0496-6

9/13/12

4:04 PM

Page 231

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Index

AAA credit ratings, 177 AccessUVa, 183 Accountability in education, 158–59, 165–66, 186–87 Act 35 (Louisiana act on failing schools), 161–62, 164 Agriculture Ministry (Japan), 49, 65–66, 69 Aiiku Hospital (Japan), 57, 70–71 Alcoholism, 97, 102 Alvarez & Marsal (company), 157 Alzheimer cafés in Netherlands, 115–29; control of, 121–22, 127; demand for, 126–27; expansion of, 121–22; first café, 118–19; government funding for, 123–25; and growing problem, 116–17; innovation process for, 117–26; national coordination for, 122–23; partners in, 120–21; presentation of problem of, 128–29; and public relations, 119–20; quality criteria for, 123; results and improvements for, 125–26; strategy and tactics for, 126–29; streamlining of, 128 Alzheimer Foundation South-Holland North, 118 Alzheimer Netherlands, 116, 118, 120–21, 122–25, 127–29 Amato, Anthony, 156 Amtsråds Foreningen (ARF), 200, 201, 203, 205, 209 The Atlantic on New Orleans schools, 163

Authorizing environments: and stakeholders, 24; in strategies and tactics, 13, 14, 16, 214 Bankruptcy of school boards, 156–57 Banks: and immigrant population, 93–94; and 100,000 Roofs Program, 140, 143 Berg, Steve, 106, 107, 111 Berlingske Tidende (newspaper) on Danish government, 198 BESE. See Board of Elementary and Secondary Education Blake, Peter, 178, 181 Blanco, Kathleen, 161, 170 Blix, Hans, 201 Board of Elementary and Secondary Education (BESE): and accountability, 158; and charter schools, 161–62, 164, 166; and legislative changes, 170; and school reform, 155, 159–60; and synergy, 171 Borins, Sandford, 6, 8 Boston, homelessness in, 97 Boston Consultancy Group, 157 Boston Health Care for the Homeless Program, 97, 98 Broad municipality model, 204 Brookings Institution’s New Orleans Index, 99 Bureaucracy, principles of, 9–11

231

16-2262-5 Index:0496-6

9/13/12

4:04 PM

Page 232

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

232

Index

Bureaucracy: What Government Agencies Do and Why They Do It (Wilson), 7–8 Bureaucratic disentitlement, 8–9 Canada. See Financial literacy training in Canada Canadian Centre for Financial Literacy (CCFL), 80, 84, 85–86, 87, 89, 94 Canadian Foundation for Economic Education, 79 Capacity-building projects, 87 Casteen, John, III, 176, 177–80, 181–83, 185, 188, 191 CCFL. See Canadian Centre for Financial Literacy Charter of Open Federalism (Canada), 79 Charter schools and initiatives: and higher education, 178, 179–83, 184, 186, 188, 189; and public education, 154–55, 161, 162, 163–67 Citizenship and Immigration Canada, 85, 87 Claiborne (New Orleans), homeless camp sites in, 102–03, 105, 106, 107, 109, 112–13 Climate change, 134 College of William and Mary, 177–78, 181, 185, 189 College Prep Charter School, 154–55, 164 Commission on Administrative Structure, 193, 194, 195, 197, 199–205, 208–09 Common Ground, 96, 98, 110 Community colleges, 183, 187, 189 Community Planning and Development Office (Louisiana), 108 Conservative Party (Denmark), 198–99 Continuity, regulation of, 9 Coordination models, 91 Corruption, 40, 156–57 Couturier, Lara, 187, 189 “Creative destruction,” 6, 219 Credibility, social constructions of, 30–31, 215 Credit ratings, 177 Critical events, 35–38, 216 Crombach, Marica, 115 Dansk Folkeparti, 198, 205 Decentralization of government structures, 194–95

Decisionmaking in institutional reform, 203–05, 206, 210 De Jong, Jorrit, 8 Dementia. See Alzheimer cafés in Netherlands Denmark. See Institutional reforms in Denmark Disaster Housing Assistance Program, 100 Disaster Voucher Program, 100 Documentation, formalization of, 10–11 Drug abuse. See Substance abuse Due, Johannes: and Commission on Administrative Structure, 201–03; and critical events, 35; discrediting of status quo, 26–27; as innovator, 215; and institutional reform, 194, 195–96, 197, 199–200, 207–09; and prompting progress, 32; on public services, 36 Duncan Plaza (New Orleans), homeless camp sites in, 102 Early adopters, 92 Economic Affairs Ministry (Germany), 136, 141 Economy, Trade, and Industry Ministry (Japan), 68–69, 74 Education. See Charter schools and initiatives; Community colleges; Higher education in Virginia; Public education in New Orleans Education, Science, Research, and Technology Ministry (Germany), 136 Education Department (Louisiana), 164 Egyedi, Tineke, 42 E-Japan agenda, 69 Elderly people, health care costs for, 59. See also Alzheimer cafés in Netherlands Electricity Feed-In Act (Germany), 137, 139, 144, 152 Electronic Data Interchange, 65 Elitism in higher education, 181–82, 183 Emergency room visits, 112 Entrepreneurship, 81–82, 149 European Court of Justice, 144–45 European Solar Prize, 138 Eurosolar, 138 Expert officialdom principle, 10 Fair, Adam, 77, 85–86, 87, 90, 92

16-2262-5 Index:0496-6

9/13/12

4:04 PM

Page 233

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Index Fair Housing Act (U.S.), 100 “Fat government,” 196, 198–99 FDP (Free Democratic Party), 142 Federal Bureau of Investigation, 156 Feed-in tariffs, 152 Fell, Hans-Josef, 134, 137–40, 141, 142–44, 147–51, 153, 215 Finance Ministry (Canada), 78 Finance Ministry (Denmark), 198 Finance Ministry (Germany), 141 Financial Consumer Agency of Canada, 80, 84 Financial Literacy for Newcomers Project, 77, 78, 84–88, 90–91, 93 Financial literacy training in Canada, 75–94; budgets and beneficiaries in, 93–94; entrepreneurship in, 81–82; evidence for, 90–92; focus on, 84; and government policy, 77–77; improvement in, 87–88; and innovation barriers, 79–80; and innovation opportunities, 77–80; and innovation process, 80–88; and money management, 77; and poverty, 76–77; results for, 86–87; scaling up of, 82–84, 86–87, 88–89, 92– 93, 94; strategy and tactics for, 88–94; and systematic change, 88–89 Fossil energy, 134, 135, 147 “Founding father syndrome,” 127 “Frame adoption” techniques, 52 “Frame bending” techniques, 52 Frankfurter Zeitung on solar energy, 151 Free Democratic Party (FDP), 142 Fujitsu (software vendor), 67 Functional specialization, 9–10 German Engineering Federation, 150 Germany. See Solar energy in Germany Global warming, 134 Government funding for Alzheimer cafés, 123–25 Greater Copenhagen Commission, 196–97 Great Recession, 77–78 Greece, Alzheimer cafés in, 115 Green Party, 26, 138, 139, 141–42, 145 Haggerty, Rosanne, 98, 99 Hansen, Peter Gorm, 194, 196–97, 202–03, 207, 208–10

233

Hara, Kazuhiro: and critical events, 35, 37; and exit plan, 43; and HelloBaby, 3; as innovator, 5, 14, 20, 214; and leaps of faith, 34; and medical informatics, 58, 60–61, 62–74; and multiplicity, 49; and path dependence, 39–40; and progress, irreversability of, 39; and public value proposition, 15; and “serial framing,” 49; and status quo, discrediting of, 26; and success, evidence of, 28; and tracks of innovation process, 40–41 Health, Welfare, and Labor Ministry (Japan), 65 Health, Welfare, and Sport Ministry (Netherlands), 120, 124 “Health Care IT Grand Design” (Health, Welfare, and Labor Ministry, Japan), 65 Health care reform: in Denmark, 195–96, 205, 206–07. See also Medical informatics in Japan HelloBaby: and authorizing environment, 14; creation of, 3; as innovation, 20; and medical informatics, 57–58, 59, 63–64, 65–66, 67, 70–72; and path dependence, 39. See also Medical informatics in Japan Hierarchy in organizations, 10 Higher education in Virginia, 173–92; accountability in, 186–87; administrative response in, 183; big picture of, 180–81, 182; common language for, 189–90; criticism of, 181–82; demands on, 185–86; funding for, 176–77; improvement in, 188; innovation process in, 177–88; mission of, 190; political developments in, 175; promotion of, 179–80; reform, need for, 174–77; and Restructuring Act, 174, 184–87, 189, 191; results for, 185; stakeholders in, 189; strategy and tactics for, 188–91; structural change in, 177–78; support for, 179; tuition fees, 175–76, 180, 181–82, 184, 188; values in, 191 Homelessness. See Vulnerability index in New Orleans Hommels, Anique, 42 Housing, 100–01, 106–07, 108, 109, 113–14 Housing and Urban Development Department, U.S., 100, 101

16-2262-5 Index:0496-6

9/13/12

4:04 PM

Page 234

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

234

Index

Housing Authority of New Orleans, 100 Human capital, 163, 170–71, 172 Hurricane Katrina (2005): and homelessness, 108, 109; and housing, 99–100, 101; as opportunity for change, 170; response to, 160–61; and school system, 156, 163 Immigrants, financial literacy for, 84–87, 90, 93–94 Incrementalism, 28, 30, 73–74 Industrial associations, 149, 150 Informatics. See Medical informatics in Japan Information technology (IT) for medical information, 59, 60–63, 71, 74 Innovation preparations, 24–31; credibility, social construction of, 30–31, 215; indirect evidence in, 29–30; leveraging evidence of success, 24, 27–31, 215; and small successes, 28–29, 31; status quo, discrediting of, 24, 25–27, 31, 215 Innovations, making sense of, 44–54; and conversations, 45–48, 53–54, 216; and framing, 48–50, 54, 216; and speaking with authority, 50–52; and stakeholders, 52–53, 54 Institutional reforms in Denmark, 193–210; in administrative system, 194–98; and Commission on Administrative Structure, 193, 194, 195, 197, 199–205, 208–09; decisionmaking in, 203–05, 206, 210; failed attempts at, 196–98; improvement in, 206–07; innovative process in, 198–207; key people in, 208; and municipalities, 205–06, 209–10; and opportunity for change, 207–08; politics of, 209–10; problems in, 195–96; reform conditions, 36; strategy and tactics for, 207–10; support for, 208–09 Internet: and E-Japan, 69; and health care access, 60, 71; and health care costs, 59; and solar energy promotion, 151 Irreversability of progress, 39–43 IT. See Information technology (IT) for medical information Italy, Alzheimer cafés in, 115

Jacobs, Leslie: and critical events, 35; and exit plan, 43; as innovator, 215; and operational capacity, 14–15; and path dependence, 40, 42; and progress, irreversability of, 39; and progress, prompting of, 32; and public education, 155, 156–57, 158–65, 167–72; and stakeholder involvement, 37; and status quo, discrediting of, 27 Japan: Alzheimer cafés in, 125; solar energy in, 136. See also Medical informatics in Japan Jefferson, Thomas, 173, 185, 190, 191 Joint Forum of Financial Market Regulators, 84 J. Sargeant Reynolds Community College, 189 Kagawa Prefecture (Japan): funding support from, 66–67; health care access in, 60 Kagawa University Hospital (Japan), 71 Kasbergen, Peter, 133 Kawashima, Kiko, 57 Kegel, Martha: and critical events, 35; and evidence gathering, 25–26; as innovator, 214–15; and “serial framing,” 49; and speaking with authority, 51–52; and stakeholder involvement, 37; and strategy, 16–17; and vulnerability index, 95–96, 98–99, 101, 103–14 KfW (Kreditanstalt für Wiederaufbau), 140 KIPP (charter school organization), 164 KL. See Kommunernes Landsforening Kleban, Ben, 154–55, 164, 172 K-Mind application, 66 K-Mix platform, 39, 66, 67, 72 Kobe earthquake (1990), 37, 66 Koizumi, Junichiro, 69 Kommunernes Landsforening (KL), 194, 200, 202–03, 209–10 Kosicki, Gerald, 45–46 Kotter, John, 38 Kreditanstalt für Wiederaufbau (KfW), 140 Landrieu, Mary, 111 Language skills and training, 85, 87 Late followers, 92 Leading Change (Kotter), 38

16-2262-5 Index:0496-6

9/13/12

4:04 PM

Page 235

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Index

235

Leaps of faith in innovation, 33–35, 216 Learn$ave, 83, 91, 93 Libbey, Meryl, 45 Lipsky, Michael, 8 Living Care Centre Haaglanden, 122 Living with Dementia (Alzheimer Netherlands), 121 Louisiana Recovery Authority, 100 Louisiana Student and School Accountability System, 158–59 Low-income populations, financial literacy and, 75–79, 94

Microenterprises, 81 Middle classes, financial literacy and, 75–77 Miesen, Bère: and Alzheimer cafés, 115, 116–23, 125–29; and conversations, 47; and critical events, 35; as innovator, 215; and status quo, discrediting of, 26 Miller, Mike, 105, 112 Money management, 77 Moore, Mark, 13–14, 15, 19, 50, 214 Mortality rates, 96 Mouritzen, Poul Erik, 202, 205, 208–09 Multiplicity in innovations, 49, 72–73

Machiavelli, Niccolò, 213, 219 Malpractice, medical, 61, 62 Market failures, 135, 147 Massachusetts Department of Public Health, 97 Mays, Warren, 112 Media attention: and Alzheimer cafés, 115; and failing schools, 168, 169; and medical errors, 61–62; and solar energy, 151. See also Teleac Medical informatics in Japan, 3, 57–74; access issues in, 60; and Agriculture Ministry funding, 65–66; concealment in, 74; and Economy, Trade, and Industry Ministry funding, 68–69; exposure, threat of, 61–62; flexibility in, 71–72; fragmentation and inefficiency in, 58–59, 62–63; harmony, threat to, 62; and health care costs, 59; and incrementalism, 73–74; innovation barriers, 60–63; innovation process in, 63–71; K-Mix and K-Mind, 66; multiplicity in, 72–73; and network expansion, 64; pressure in, 70; and professional autonomy, 61; results in, 70–71; and risk aversion, 61, 72; shortcomings of, 58–60; and Step network, 68, 69, 70, 72; strategy and tactics for, 71–74; support for, 64–65, 66–67; technology, enthusiasm for, 63. See also HelloBaby Medical malpractice, 61, 62 MEE Café, 125 Mental illness, 97 METI. See Economy, Trade, and Industry Ministry (Japan)

Nares, Peter: and critical events, 35, 38; and financial literacy training, 75–85, 87–94; and government support, 48; and indirect evidence, 30; as innovator, 214; and leaps of faith, 33–34; and “parallel framing,” 49; and stakeholder involvement, 52–53; and success, evidence of, 28 National Alliance to End Homelessness, 106 Netherlands, civil servants in, 11. See also Alzheimer cafés in Netherlands Newcomers Project. See Financial Literacy for Newcomers Project New Leaders for New Schools, 171 New Orleans. See Public education in New Orleans; Vulnerability index in New Orleans New Orleans Index, 99 New Orleans Times-Picayune on Claiborne homeless camp, 105 New Schools for New Orleans, 163–64 New Teacher Project, 164 New York Times on homelessness, 107–08 Nonprofit Achievement Award, 114 North, Kathleen, 102, 109 Nuclear energy, 135, 153 Det Nye Danmark (New Denmark) proposal, 204–05 O’Connell, James, 97–98 100,000 Roofs Program, 41, 133–34, 137–38, 139–47, 150–52, 153 Ontario, financial literacy in, 79 Ontario Social Development Council, 80–81 Operational capacities, 13, 14–15, 214

16-2262-5 Index:0496-6

9/13/12

4:04 PM

Page 236

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

236

Index

Organization of Petroleum-Exporting Countries (OPEC), 134–35 Orleans Parish School Board (OPSB), 156–57, 158, 159–61, 162–63, 165–67, 169–70 “Own responsibility” slogan, 129 Pan, Zhongdang, 45–46 Parallel framing, 49 Path dependencies, 39–40, 42 Peer review in medical sector, 61 Performance reviews, 186–87 Permanent Housing Registry, 113 Permanent Supportive Housing program, 100 Peters, Klaartje, 193 Photovoltaic (PV) panels: costs of, 137, 147; and entrepreneurs, 149; installation of, 139, 142–43, 145, 153; production of, 133, 152 Picard, Cecil, 161, 170 Pioneers in innovation, 92 Pollution, 134, 135 Post, Herman, 120, 122, 123, 124 Poverty, welfare and, 76–77 Princeton Review on University of Virginia, 174 Progress. See Prompting progress Prompting progress, 32–43; and critical events, 35–38, 216; and exit plan, 43; and innovation process tracks, 40–42, 43; and irreversability, 39–43; and leap of faith, 33–35, 216; and path dependence, 39–40, 42; situations and responses in, 36–37, 215–16 Public and private spheres, distinctions between, 10 Public education in New Orleans, 154–72; accountability system in, 158–59, 165–66; and charter schools, 154–55, 162, 163–67; crisis and opportunity in, 169–70, 172; and human capital, 163, 170–71, 172; and Hurricane Katrina, 156, 160–61; improvements in, 165–67; innovation process in, 158–67; legislation for, 161–63; partners for, 163–64; performance levels in, 157, 166–67; results for, 166–67; and school board bankruptcy, 156–57; and school

failure, 156–57, 159–60, 167–68; strategy and tactics for, 167–71; synergy for, 171; tipping point for, 169 Public Sector Task Commission, 197, 208 Public value propositions: and conversations, 46, 216; Moore on, 50; as strategies and tactics, 13, 15–16, 214; support for, 54 PV panels. See Photovoltaic panels Rabbior, Gary, 79–80 R&D (research and development), 135, 136 Rasmussen, Anders Fogh, 193, 198, 199–200, 202, 207 Rasmussen, Lars Løkke, 194, 197, 198, 202–05, 207–09, 210 Recovery School District (RSD), 159–62, 163–64, 166–67, 168–69, 170, 171 Reforms, institutional. See Institutional reforms in Denmark Renewable energy. See Solar energy in Germany Renewable Energy Act (Germany), 133–34, 139, 144–47, 151, 152 Research and development (R&D), 135, 136 Responsibilities in social innovations, 217–19 Restructured Higher Education Financial and Administrative Operations Act (Virginia), 174, 184–87, 189, 191 Richmond Times Dispatch on Restructuring Act, 189 Right Livelihood Award, 31, 51, 133 Risk aversion, 61, 72 Rizvi, Gowher, 8 Rotary Club, 124 Rough sleepers, 96 RSD. See Recovery School District Rural areas, health care access in, 60, 65–66 RWE (fossil energy company), 146 Sandridge, Leonard, 177, 178, 180, 183, 184, 192 Savings accounts, 83–84 Scaling up: of Alzheimer cafés, 126, 127; and charter schools, 161; of financial

16-2262-5 Index:0496-6

9/13/12

4:04 PM

Page 237

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

Index literacy training, 82–84, 86–87, 88–89, 92–93, 94 Scheer, Hermann: and authorizing environment, 14, 16; and credibility, social construction of, 31; and critical events, 36; and exit plan, 43; and indirect evidence, 29; and innovation process tracks, 40–42; as innovator, 5, 20, 215; and leaps of faith, 34; and managing meaning, 44–45; and “parallel framing,” 49; and path dependence, 42; and progress, irreversability of, 39; and public value proposition, 15; and solar energy, 3–4, 133–36, 138–41, 143–45, 147–52, 153; and speaking with authority, 51, 52; and stakeholder conversations, 46; and status quo, discrediting of, 26; and success, evidence of, 28 Schröder, Gerhard, 133 Schumpeter, Joseph, 6, 219 Scorecards for higher education institutions, 186 SEDI. See Self-Employment Development Initiatives; Social and Enterprise Development Innovations Self-employment, 81–83, 93, 94 Self-Employment Assistance Program, 82 Self-Employment Development Initiatives (SEDI), 81–82 Serial framing, 49–50 Sheehy, Colette, 176, 177 Shinno, Hisahito, 71 Social and Enterprise Development Innovations (SEDI), 75, 78, 80, 82–85, 87–94 Social Democratic Party (SPD, Germany), 138, 139, 140–42, 145 Social Democrats (Denmark), 196–97, 198, 205 Social innovations: challenge of, 213–14; definition of, 4–5; obstacles to, 5–11; questions for, 219–20; reality of, 11–12; responsibility in, 217–19; success in, 4–5; urgency in, 220–21. See also specific case studies (e.g., Solar energy in Germany) Social Support Act (Netherlands), 124–25, 127, 128

237

Solar energy in Germany, 3–4, 133–53; appeal of, 149–50; change, coalition for, 150–51; change potential in, 136–38; details of, 140–41; and election results, 139–40; improvements in, 145–47; innovation barriers, 135–36; innovation process for, 138–45; institutional setting for, 136; market for, 145; opposition to, 152–53; outsiders and establishment in, 148–49; playing field for, 134–38; problems in, 134–35; public relations for, 151; resistance to, 142; results for, 142–43, 147–48; strategy and tactics for, 148–53; structural breakthrough for, 143–45; two-step approach to, 151–52 Solar panels. See Photovoltaic (PV) panels SPD. See Social Democratic Party Spermon, Marianne, 119–20, 121, 127 Stakeholders: and authorizing environment, 14, 24; choosing of, 36–37; conversations with, 45–48; and credibility, social construction of, 31; and critical events, 36; definition of, 13; and frame flexibility, 48–49, 50; and higher education, 189; involvement of, 52–53, 54; and leaps of faith, 33–35; personal commitment of, 42–43; and status quo, discrediting of, 25 Stanford University, 167 State Ask section of Virginia’s Restructuring Act, 185, 187, 191 State Council of Higher Education for Virginia, 186–87 Status quo, discrediting of, 24, 25–27, 31, 33, 215 Step network, 68, 69, 70, 72 Stone, Deborah, 8 Strategies and tactics, 13–23; for Alzheimer cafés, 126–29; and authorizing environment, 13, 14, 16, 214; and case selection, 19–23; for financial literacy training, 88–94; and goals of study, 17–19; for higher education, 188–91; and innovation terms, 22; for institutional reform, 207–10; for medical informatics, 71–74; and operational capacity, 13, 14–15, 214; for public education, 167–71; and public value proposition, 13, 15–16, 214; for

16-2262-5 Index:0496-6

9/13/12

4:04 PM

Page 238

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

238

Index

solar energy, 148–53; and thinking in action, 16–17; for vulnerability index, 110–13 Street deaths, 97 Street to Home, 97 Subsidy programs for solar energy, 146, 152 Substance abuse, 97, 102 SUCCESS (community organization), 85 Successes: leveraging evidence of, 24, 27–31, 215; small, promoting of, 28–29, 31 Supportive Housing Registry, 102 “Survival jobs,” 86 Tactics. See Strategies and tactics Taxes, 195, 206 TD Bank Financial Group, 94 TD Canada Trust, 84 Teach for America, 164 Teleac (television station), 119–21, 125, 127 Telemedicine, 60, 67 10x Better Care for Dementia (Alzheimer Netherlands), 124 Tourangeau, Robbin, 80, 89 Tuition fees. See Higher education in Virginia Unemployment, 81 Unions, 46, 149, 150, 182, 183 United Kingdom, Alzheimer cafés in, 115 United States: Alzheimer cafés in, 125; Learn$ave in, 91; solar energy in, 136; welfare programs in, 81 United Teachers of New Orleans, 156, 160 Unity of Greater New Orleans, 17, 95, 98–99, 101–04, 106–14 University of Leiden, 47, 115, 117–18, 126 University of Virginia, 25, 26, 35, 49–50, 173–92, 215. See also Higher education in Virginia

U.S. News and World Report on University of Virginia, 174 Usdin, Sarah, 163, 170 Value propositions. See Public value propositions Venstre (Danish political party), 198–99, 202, 208 Virginia. See Higher education in Virginia Virginia Community College System, 183 Virginia General Assembly, 179, 181, 184, 186, 189 Virginia Tech, 177–78, 181, 185, 189 Virginia Western Community College, 189 Vouchers for housing, 106–07, 108, 109, 113–14 Vulnerability index in New Orleans, 95–114; alarm bell for, 112–13; and campaign ammunition, 106–08; challenges for, 99–101; data for, 111–12; and homelessness, 95–114; improvements for, 108–09; innovation, spreading of, 98–99; innovation process for, 97–109; integration of, 113; and medical conditions, 101–02; and resentments, 102–04; resources, lack of, 101; results for, 108; strategy and tactics for, 110–13; support for, 104–06; tool for, 97–98 Warner, Mark, 178, 180–81, 185, 188, 189 Weber, Max, 9 Weick, Karl, 45, 50 Welfare, 76–77, 79, 81 Whistle blowing, 61–62 Wilson, James Q., 7–8 Women’s Self-Employment Centres, 81 Woodgreen (community organization), 85 Worldwide Web. See Internet YWCA, 85 Zuurmond, Arre, 9

Agents of Change

Copyright 2012, Sanderijn Cels, Jorrit de Jong, and Frans Nauta

strategy and tactics for social innovation

While governments around the world struggle to maintain service levels amid fiscal crises, social innovators are improving citizen outcomes by changing the system from within.

“To be successful, social innovators need to be not only passionate, smart, and agile but also reflective and sensible—capable of adapting to their bureaucratic environment even as they seek to reshape it. They must have the proper attitude and sufficient courage to change the status quo and the skills and determination to do so in a constructive manner. They have to anticipate the resistance that changes may provoke and adequately adapt to anything that might compromise the plan. To successfully maneuver through the institutional obstacles, innovators need to combine the deep strategies of chess masters with the quick tactics of acrobats. This book asks the question, how do social innovators actually do it?” From the Introduction 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 is academic director of the Innovations in Government Program at the Ash Center for Democratic Governance and Innovation, Harvard University, and is coeditor (with Gowher Rizvi) of The State of Access (Brookings/Ash). FRANS NAUTA is professor of Public Sector Innovation at HAN University, a prominent speaker and consultant on innovation, and author of The Prime Minister’s Innovation Platform (forthcoming). ASH CENTER FOR DEMOCRATIC GOVERNANCE AND INNOVATION Cambridge, Mass. www.ash.harvard.edu BROOKINGS INSTITUTION PRESS Washington, D.C. www.brookings.edu Cover image courtesy of iStockphoto Cover design by Nancy Bratton Design

Agents of Change

In Agents of Change, Sanderijn Cels, Jorrit de Jong, and Frans Nauta offer compelling stories, lively illustrations, and insightful interpretations on how innovators, social entrepreneurs, and change agents are dealing effectively with powerful opponents, bureaucratic hurdles, and the challenges of securing resources and support.

cels / de jong / nauta

nvoice ect,

.4375” spine

6”

6”

sanderijn cels

6”

jorrit de jong

frans nauta

Agents of Change

strategy and tactics for social innovation