Transcript Document
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Architecture and Parameters of Capacity Development: Lessons and Practices from the Business and Institutional Sectors
Robert N. LeBlanc Paul Beaulieu July 5, 2011
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Objective of the Presentation
This presentation seeks to: • Identify the essential logic, approaches and strategies that are used by business and institutional sectors in the pursuit of capability and capacity; • Contextualise them with respect to the approaches used in TC and CD, and • Propose avenues for further research and policy development by the EC with a view to adapt business sector/institutional approaches and practices to TC.
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Fundamental Pillars of Business CD Related to Investment Processes
1 of 4 • Business Ecosystem Approach: the organisation and its objectives in relation to its internal and external organisational inter-dependencies.
• CD is done to reach “performance and business development targets ”: CD is not “potential”, but dynamic (“kinetic”). • • Hierarchy of Interconnected Capacities: alignment, “supply-chain of capacity” and seamless inter-relationship integration.
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Fundamental Pillars of Business CD Related to Investment Processes
2 of 4 • CD required depends on your development approach and business case/strategy: Isomorphic mimicry is therefore nonsense. Premium on adaptation and evidence-based management at all stages of CD. • Capabilities, as with products, transform and evolve along a lifecycle • Each capacity rests on specific groups of foundations: developing only a part of a capacity “meta-system” is counter productive. • Capacity requires continuous adaptation to environment and maintenance
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Fundamental Pillars of Business Investment Decisions (All, including CD)
3 of 4 • CD is specific to the “FOR WHAT”: There is no such thing as a generic capacity. Mapping and evaluation capacities are critical. • Soft capacities are enablers: they are not ends unto themselves (ex: leadership) • Detailed Transformation Strategy prepared . • Strategic and Operational capabilities are defined very differently, but together.
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Fundamental Pillars of Business Investment Decisions (All, including CD)
4 of 4 • CD investment is very closely monitored and constantly adjusted to meet targets .
• “In your face” accountability. • Redundancy and diversification as a guarantee against capacity erosion and (strategic) risk . • Both short-term and long-term needs (i.e. performance and strategy) require the acquisition of capacity .
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HOWEVER: Business Sector Still Learning
• The business and institutional sectors are still looking for better ways to design and implement CD • The dynamic capacity approach to business development (explained later) is driven by globalisation and competition.
• Under conditions of equal technological levels, operational capacity does not determine comparative advantage . Advantage is defined through the ability to quickly and strategically adjust “dynamic capacity”.
• Learning how to better incorporate social responsibility (ex. ethical investment, environmental stewardship)
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ARCHITECTURE OF CD in BUSINESS/INSTITUTIONAL CONTEXTS
CD OBJECTIVE: ACHIEVE PERFORMANCE TARGETS
9 DESIGN PARAMETERS
PERFORM ANCE CRITERIA
EXECUTION PROCESSES SUPPORTING CORPORATE PROCESSES
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Design Parameter: Finality Capacity for what?
Key Practices And Examples Lesson: BUSINESS / INSTITUTIONAL
• Specific and evidence-based contributions to the strategic advancement of the firm, ex.
Financial position, asset value Research, Positionning • Growth
Client-based service standards (UPS Canada); Efficiency gains at London-Toronto Stock Exchange
• Based on cost-benefit analysis of various alternatives.
• Compliance issues.
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Environmental safety regulations at Dow Chemicals
DEVELOPMENT
1. Contribution to Common good, public value. 2. Service delivery; 3. Governance.
BS always invests in CD as a means of achieving an evidence-based target. Development CD invests in a process associated with a less specific goal.
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Design Parameter: Organisational Focus: Capacity for Who
BUSINESS / INSTITUTIONAL DEVELOPMENT Key Practices And Examples
1. Business unit function (but never entire enterprise)
SAP:Monetary Authority Singapore;
1. Ministry at large (ex. SBS)
Road Transport (Uganda)
2. Specific function of firm with bordered responsibilities
Strategic Supply Partnerships at Bombardier Aerospace
2. Control or regulatory framework
Water sector in Djibouti (ONEAD)
Lessons:
3. Open to resource-based options other than Weberian bureaucratic hierarchy (wholly owned, professional resources to deliver)
Honda in Brazil
3. Technical implementation rarely the only focus
Min. Parcs-Costa Rica
The CD is always focussed on the organisational entity that is accountable for the achievement of some result (and its horizontal and vertical linkages). Influencing the policy or other environment(s) is also a corporate strategy and requires a separate focus
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Design Parameter: Scope of Required Change: What part of the org. needs CD?
Key Practices and Examples BUSINESS / INSTITUTIONAL
1. CD is targeted on an identifiable business unit.
Shell’s policies on the hiring of Nigeria-based managers and their need to perform
DEVELOPMENT
1. Focus is on higher level societal objectives (strategic), and “improvement overall” (operational).
• CIDA Honduras EFA focus on Ministry overall development; • Bangladesh water sector decentralisation CD and its institutionalisation of rent seeking. (Netherlands)
Lessons
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Design Parameter: Domain: What does the CD focus on?
Key Practices and Examples BUSINESS / INSTITUTIONAL
1. Develop the SPECIFIC through evidence-based performance specifications.
2. Adapt to, and with, the detailed specificities of other business units and clients with which CD will be dependent.
DEVELOPMENT
1. Develop the GENERIC
Basis of 5C, Djibouti NSA and CSO.
2. Generally self-contained, no overflow.
Min. responsible for rural development, Uganda
Lessons:
Always define CD in specific terms (specifications) and treat generic capacities as indirect effects. If not, there is no roadmap!
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Design Parameter: Level Strategic or Operational ?
Key Practices and Examples BUSINESS / INSTITUTIONAL
1. Focus on strategic capacity for dynamic fit with environment (note: not synonymous with the capacity to develop strategy)
DIAGEO Africa Division
2. Operational capacity is treated as a commodity
GlaxoSmithKline (and) Kenworth Trucks
DEVELOPMENT
1. Strategic level left to political apparatus
Dominican Republic education and health
2. Generally operational and self-contained
Min. responsible for rural development, Uganda
3. Goal of “Fitness” (technical and/or evolutionary) always a factor
Lessons:
Always define CD in specific terms (specifications) and treat generic capacities as indirect effects. If not, there is no roadmap!
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Design Parameter: Temporal Scope -Change by, and for When? Then what?
BUSINESS / INSTITUTIONAL DEVELOPMENT Key Practices and Examples
1. Relates to the profitability and investment cycles.
Drug research (ex. Pfizer)
1. For future service delivery
Vietnam public health agency (avian encephalitis)
2. Sustainability is a
sine qua non Programming at Electronic Arts
2. Likelihood of loss of champion
Many examples, common
Lessons:
3. Mainstreaming of future needs with a focus on continuous, sustained maintenance
Port of Djibouti (commercial to military)
3. Strategies short/mid-term, poor sustainability, No focus on maintenance)
SBS in education
4. Capacity phasing built-in, in house or outsourcing mix 4. Political cycle and vagaries
Non-professional public service in most countries
A temporally-defined capacity vision enables clearer definition of required results (for what?) and focuses monitoring and control.
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Design Parameter: CD Strategic Options
Key Practices and Examples BUSINESS / INSTITUTIONAL
There are options available: • Development (strategic and operational) • Acquisition (operational) • Contract-out (operational • Strategic partnerships (strategic and operational) All imply a loss of control but not strategy-making
DEVELOPMENT
Less options available Non-development options very rare.
Privatisation Very difficult to interact constructively (mutual adjustment) with NSA
Lessons:
If operational capacity is critical, consider other options beyound in-house development. Further References :
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Design Parameter: Change Agent Who calls the shots and is thus held accountable ?
Key Practice and Examples: Lessons: BUSINESS / INSTITUTIONAL
1. Normally the mgt. team of a business unit defined by its systems, processes and mandates/targets
DEVELOPMENT
1. Fuzzy accountability 2. Diffused authority 2. Business unit headed by a manager with authority.
3. Capacity perceived and treated as linear process 3. Change agents are not only there for a one-off CD effort 4. Concept of premature loading 4. Front-line operators/mgrs encouraged to propose changes to add value, quality 5. Cultural and other factors restrict ideas for change to sr. managers and political leadership Ongoing adaptation requires: a) authority and responsibility for CD as close as possible to “action” b) rapid response mechanisms and c) a long-term perspective.
Results of integration of Design Parameters:
Performance Criteria
18 Key Practices and Examples So What: BUSINESS / INSTITUTIONAL DEVELOPMENT
1. Defined specifically as performance targets and means of verification. 2. Clearly measurable, with baselines, contribution to corporate targets 3. Compare existing and expected 4. Rarely in terms of profit per se but in terms of growth, competitiveness and possibility of expansion.
1. Improvement of common good and creation of public value More or better service delivery (ex. access to schools); appropriate policy framework 2. Often stated in outcomes or impact terms that are not within the control of the CD effort; Ex. CSO participation in governance) Better to be specific about specific and evidence-based results and performance targets than vague about finality. Trust in the logic chain…
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Pre-Investment Effort
Key Practices and Examples Lessons: BUSINESS / INSTITUTIONAL
1. Detailed needs assessment based on performance. Plan and mgt. of plan; PeopleSoft Methodology for KPMG world clients; 2. Clear pre-conditions and foundation development: Board Approval for CD systems investments over 3 M € UQAM 3. Approvals and exec. ownership 4. Internal with external input; Suncor internal operations 5. Includes links: dependencies 6. Clear empowerment structure
DEVELOPMENT
1. General analysis based on ”impact” or social objectives Education reform Dom Rep 2. Performance standards not defined specifically Decentralisation in Uganda 3. CD design models in hands of non-expert upper management Water Sector Djibouti Poor or partial design cannot provide means to adjust to meet
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Execution Process: Monitoring, Evaluation
Key Practices and Examples Lessons: BUSINESS / INSTITUTIONAL DEVELOPMENT
1. Constant, On-going, targeted on requirements; baselines
CQVB investment funds for biotechnology innovation
2. Detailed information used to adjust plan to meet targets
Renewable energy technical capacity upgrades at US DOE
3. Multiple levels with central project management, tied to accountability and risk mgt.
Management Accountability Framework at Cdn Treasury Board.
1. Infrequent, used for progress reporting against original plan NSA grants programme in Nicaragua (see Sida report) 2. Evaluation is part of control USAID Environment Madagascar 3. Often done for external partners . No baselines See Sida report, ROM examples HOW is at least as important a corporate capacity as the WHAT!
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Execution Process: Productivity of CD
Key Practices and Examples Lessons: BUSINESS / INSTITUTIONAL
1. Once decided: Urgent and priority. Right-timing
Cell phone installation and regulation in India
DEVELOPMENT
1. Not considered specifically.
Dom Rep Education Reform Plan
2. All needed CD must take place; not partial
HydroQuebec integrated client service initiative
2. Partial, constrained by enabling events.
Uganda road authority waiting for regulations and unable to act on axle loads.
3. Productivity parameters part of design and is monitored
Various hospital applications such as Swiss health care institutions
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Productivity of CD process is a function of HOW and reflects priority and seriousness of client. See Pritchett on Capability Traps.
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Execution Process: Risk Management
Key Practices and Examples: Lessons:
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BUSINESS / INSTITUTIONAL
“What can go wrong?” is part of design, approval, monitoring.
International Red Cross disaster planning
DEVELOPMENT
1. Generic definitions with poor mitigation plans;
Report of EC Cour des Comptes Budget Support audit
2. Mgt. of risk is active and approvals for mitigation obtained quickly.
Food Inspection Agencies
2. No integration of risk and on-going monitoring, accountability; plans
Same as 1. above
3.
“Redundancy” and “requisite variety” part of redesign.
UPS Enterprise Support Services
3. Difficult to alter course of events in face of risk; no back-up Djibouti roads It takes great skill to manage the unknown; It also calls for the design of alternatives and options.
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Execution Process: Quality Management
Key Practices and Examples: BUSINESS / INSTITUTIONAL
1. Constant comparison between what CD is producing and the performance targets.
DEVELOPMENT
1. QA reference is unknown (What are targets?) 1. Internal QA capacity built into management structure.
2. No internal QA built-in 1. Interest in management against capacity erosion 3. Almost no regard to capacity erosion
Lessons:
Seeking to provide for competence and excellence is impossible without quality management
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Corporate Process: Partnerships as CD
Key Practices and Examples: Lessons: BUSINESS / INSTITUTIONAL
1. Manage WITH partners Agropur-NovaMilk Google
DEVELOPMENT
Manage internally with stakeholder’s input 2. Since enterprise does have all the capacity anymore, more sophisticated forms of control frameworks (incl. monitoring) are put in place Open innovation process in Honda in Brazil. Need to duplicate capacity (knowledge at least) for privatisation or Public Private-Organisations.
Often, it is more effective or efficient to ensure that capacity is in other organisations, and countries can deal with regulation and other tools.
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Corporate Processes :Leadership, Ownership and Empowerment
Key Practices and Examples: Lessons: BUSINESS / INSTITUTIONAL
1. Always clear through decision chain; 2. Future manager normally in charge of investment in CD - Direct motivation; 3. Clear accountability and known 4.
consequences; Concern of “ownership” never an issue. Inherent in mgt. as accountability/responsibility. 1 to 4. Cross-institutional agreement on CD; all affected orgs. buy into change, and help in adjustment; Leadership and mgt. are defined by firm and are clear.
DEVELOPMENT
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“Ownership” is a buy-in or support concept, not related to accountability; Metaphoric, not descriptive 2. Fuzzy accountability, unknown consequences. 3. Leadership generally affixed to political level. Unsecured;
IGAD CD, ECOWAS CD
4. Ability to lead affects speed/direction of devel.
Re: Pritchett on organisational collapse.
CD requires a great deal of internal capacity to manage CD; Predictability of leadership and accountability is pre-requisite.
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Corporate Processes : Mgt. of Internal and External Dependencies
Key Practices and Examples: Lessons: BUSINESS / INSTITUTIONAL
1. All through any capacity development effort, all internal dependencies are considered and adjusted.
2. All external dependencies are consulted and, if required, adjusted for harmonisation.
DEVELOPMENT
1. Mgt. of CD rarely goes beyond immediate target organisation.
2. Very limited influence on, and from, external dependencies. CD for performance must include all organisations, systems and processes that are involved.
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#1 of Critical 5-Points for Adaptation
Continuous readjustment via monitoring and evaluation
Proposal Effective CD requires constant adjustment on the basis of rigorous monitoring and evaluation of progress. Overly rigid adherence to original planning is counterproductive.
ADVANTAGE Enables an adaptation to real events and risks. Permits the grounding and anchoring of CD
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#2 of Critical 5-Points for Adaptation
CD as progressive and grounded in realistic targets
Proposal Capacity should be built progressively and in line with current stage of capacity (and not through fits and starts), then consolidated; it should be framed by result targets that are realistic, known and shared.
over time, ADVANTAGE Enables the on-going achievement of capacity challenges and a maturation process of acquired capacity.
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#3 of Critical 5-Points for Adaptation
Basis of CD is evidence-based performance
Proposal Clearly identify and approve the performance specifications that need to be acquired through CD. Specifications are based on rigorous analysis and baselines, and are constantly tested against progress. ADVANTAGE Forces a focus on the improvement of performance.
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#4 of Critical 5-Points for Adaptation
Proposal Only the specificities of the case at hand count. Anything else has to be adapted to that. Constantly validate hypotheses and models used for CD . ADVANTAGE Greatly facilitates accountability and improves the likelihood that stated performance targets will be met and will be sustainable.
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#5 of Critical 5-Points for Adaptation
Proposal Must invest not only in acquisition but also in on-going improvement and maintenance of capacity to meet current challenges.
Also, front-line operators and managers need to be part of ongoing CD and performance enhancement ADVANTAGE Creates an endogenous culture of on-going development of capacities. Places a focus on the auto-development of capacities.
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Four Priorities (steps) for EC action
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Put into place clear policies and protocols for supporting evidence and performance-based CD . Develop and invest in performance-based management systems (not the same focus as ROM). 2.
Rigorous and continuous monitoring and on-going evaluation for CD. Place accountability squarely in hands of DP , but get DEVCO operations manager much more involved . 3.
Establish (content) quality review mechanisms for CD design (ex ante); Gatekeeping function But mostly ...
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Four Priorities (steps) for EC action
BUT MOSTLY:
4.
• • •
Transfer to, and assist
needs. (2 nd DP to develop their ability to strategize, plan and manage their own CD order capacity) Models Certification for CD monitoring and evaluation Research And allow for real accountability including stopping of CD funding if M and E shows that it is not going to work. We believe that THIS last point is the key to BUSAN negotiations
The End? - - - or the Beginning?
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