Change Leaders Share Lessons of Resiliency

This Capstone session, the very last of the two-day 2006 Excellence in Government conference, featured five senior government executives who were catalysts for change at their respective organizations. They shared lessons learned on how to overcome bureaucratic inertia, make change sustainable over the long haul, and improve organizational performance. In summary, these change leaders agreed that the right investment over the long-term yield tangible results.

The panel featured Admiral James Loy, former Deputy Secretary of DHS and head of the TSA, now at the Cohen Group; Dave Mader, former Assistant Deputy Commissioner of IRS who is currently a principal at Booz Allen Hamilton; Thomas Modly, Deputy Undersecretary of Defense for Financial Management at the DOD; Jacqueline Myers, Associate Deputy Chief of Business Operations at the Forest Service; and Ronald Sanders, chief human capital officer for the Director of National Intelligence.

Here’s Dave Mader on his experience at the IRS:

The IRS’s transformation began with the formation of a Congressional committee to study the restructuring of the IRS. The concern was that the IRS had lost touch with its customers – the citizen taxpayers. In other words, the IRS had become overly concerned with a sole performance metric: revenue dollars.

The last major change at IRS had been in 1950. At that time, concern over corruption led to a mandate for just one political appointee at the IRS—the commissioner. This was good because the organization was immune from political influence, but bad because it became an insular place that failed to attract new ideas.

The recent restructuring at the end of the last decade achieved two things:
- Fulfilled a need to rethink tax administration and remodel along the types of tax filers—small businesses, individuals, multinational corporations, etc. In the process, the IRS drove through a series of personnel reforms—administrative, personnel, technological—that played out over a two-year period.
- Established a five-year term for the IRS commissioner, as opposed to the prior average of about 2 years.

Lessons Learned:
- Continuity of leadership and the vision of a leader are extremely important. The IRS transformation would have been impossible without the leadership of then-Commissioner Charles Rossotti.
- Forging agreement on the objectives of transformation among all stakeholders was critical. With broad consensus among the key stakeholders (including Congress, OMB, and the organization itself), the IRS was able to focus on the two key elements of its mission: customer satisfaction and productivity.

Ron Sanders on Transforming the U.S. Intelligence Community:

Sanders argued that leading transformation requires rewriting the organization’s genetic code, and that this must be done through personnel and human capital.

In the national intelligence directorate, the challenge was to “connect the dots” among the hundreds of thousands of intelligence personnel, civilian and military, that fulfill the intelligence’s mission. Earlier failures to do so were clearly stated in the Report of the 9/11 Commission. So DNI’s challenge is to integrate the various intelligence “tribes” (Sanders noted that this is how they call themselves), despite the fact that the DNI does not have chain of command authority over each individual tribe.

In this situation, the DNI has relied on the intelligence community’s overarching sense of mission. Sander noted that commitment to the job on the part of intelligence professionals is palpable, and extremely powerful. Here are six tools for effecting change at DNI:
- Vital signs: Find out where you are before you decide where you need to be. Compare yourself to the rest of the federal government and see where you stand.
- Vocabulary: Change the vocabulary of the whole organization to speak the same language. Net-centricity is one example of this flattening in place of the old chain of command hierarchy.
- Vectors: Documents such as the National Security Strategy and performance agreements ensure execution of the mission.
- Viruses: Change the migration patterns of the “tribes” and make sure they marry. Towards this end, the department recently instituted new joint-duty requirements for flag officers (to be phased in over 3-4 years). The requirements are “a hard line in the sand,” but it will make change a reality.
- Values: Embed core values into human capital systems. DNI is achieving this by making accountability of personal performance, integrity, and other core values part of the organization competency models.
- Virtual Villages: DNI now publishes the analytic Yellow Pages for the analytic community, which enables information-sharing.

Tom Modly on business transformation at the DOD:

Tom Modly opened with an example of how DOD has successfully transformed its war-fighting mission: electronic health records and health care, which have produced major improvements caring for battlefield casualties.

But the DOD’s business mission has not kept up with its war-fighting mission. DOD realized this a long time ago, but the focus became on getting clean financial audit. Unfortunately, no one was passionate about financial audits. One of Modly’s central arguments is that change leaders have to use the things that organizations are passionate about to enable and sustain change.

At DOD, there are 4,000 plus business systems, and almost none of them are interoperable. Long-term, sustainable transformation requires distribution throughout the organization—it cannot all be concentrated with one person. DOD’s transformation is a 10-15 year exercise, at the least.

Jacqueline Myers on lessons learned at the Forest Service:

Business process transformation at the Forest Service included three major elements: financial management; human resource management; IT transformation. Each area had dozens of offices wit everyone doing things their own way. In practice achieved results in natural resource management, but failed in business process management.

Here are some of Myers’ lessons learned from the Forest Service business process transformation:
- Engage with stakeholders. Make yourself available to them. This engagement is continuous and requires a lot of energy, so you will need to be ready.
- Performance accountability is essential. You must be able to prove to people that even though things are different (and maybe a little more difficult at first), improvements are being made and things are getting better.
- Don’t be afraid of independent review. Getting a view from an outside audience, whether another agency or a NAPA-like organization, can be very helpful.
- Daylight information: Bad information is not bad, because now you have information that you didn’t have before.

Here’s Admiral Loy on leading change at Homeland Security:

Admiral Loy began by noting that change and management of change is really hard – this is a key first acceptance factor. Second, you need the capacity to develop and articulate a message to your stakeholders that is consumable.

Loy restated President Eisenhower’s three elements of leadership:
- Native ability: this is your genetic make-up, and you can’t do much to change it.
- Opportunity: Opportunity is serendipitous, so make the most of it.
- Knowledge of your craft: Put your energies into this, because this is the element of leadership you have the most control over.

In two years, the Transportation Security Agency hired 60,000 employees at 341 worksites and revolutionized the supply chain for a wide range of training requirements, products, and business processes. On top of that, it was a “fishbowl” environment in which they were under extreme national attention and the expectation was failure.
Yet over a period of two budget cycles, the newly-constituted Department of Homeland Security went from 19 business processing centers down to just two. Loy stated that his time at TSA and then as Deputy Secretary at DHS were “the longest four years of my life.”

And highlights from the Q&A:

How do you handle resistance to change?

One way is to do an informal market segmentation.
- One-third of the organization has the capacity to be change agents.
- One-third isn’t sure which way to go.
- One-third is active resistors.

The key is to focus on the first two-thirds—especially the middle third that isn’t sure whether to participate in change or resist it.

At an organization like DOD, folks look up to the leader. Establish alliances with these change agents and make them highly visible.

Another important step is to involve the widest range of organizational stakeholders in designing the changes and new business processes. Doing so will help validate the design process, and in the process you will have enlisted new change agents.

On the question of the DHS reorganization, Admiral Loy argued that legislative oversight has not made kept up with executive branch changes. For example, there are 87 committees and subcommittees that have some partial jurisdiction over DHS. This has created inefficiency on the legislative side.

On dealing with change exhaustion:

Fatigue, whether from change or from routine work, is going to happen in the government. It is a major challenge. So there must be an inspiration piece that speaks to the nobility of the work.