Getting Serious about Stakeholder Analysis

1. Getting Serious about Stakeholder Analysis Piloting Political Science Methods in World Bank Operational Work

2. Why Do We Need Stakeholder Analysis? • Experience suggests many Bank-supported reforms fail because of low client commitment • Understanding the dynamics of potential support and opposition for different policy measures can help reformers design programs that will “work” politically

3. What If? Gorbachev had developed a strategy to defuse opposition to his program to transform political and economic structures in the USSR? Hillary Clinton had been able to manage friends and foes in her efforts to push radical reform on health care in the U.S.? George Bush had analyzed stakeholder positions before going to a vote in the UN Security Council on the war in Iraq? Could Stakeholder Analysis have changed history…..???

4. Stakeholder AnalysisBackground • Potential winners and losers of policy reforms can actively influence reform outcomes • To account for role of politics, Bank has performed intuitive analyses of stakeholder preferences • Need for more systematic political stakeholder analysis • Pilot studies conducted by EASPR using the Expected Utility Stakeholder Model

5. Stakeholder AnalysisObjectives of Pilot Study • Operationally useful analytic tool that factors politics into Bank’s understanding and design of interventions • Insights to help Bank staff make informed decisions about operational priorities • Share modeling findings with country clients (subject to comfort level of country and regional management)

6. Stakeholder AnalysisEast Asian Pilot Program Pilot Program Analyzed Politics of High Profile Governance Issues in 2 East Asian Client (Low and Middle-Income) Countries Country A (Low-income): Anti-corruption (Broad reform initiative plus customs and procurement reform) Civil Service Pay and Employment Reform Country B (middle-income): Anti-corruption (Broad reform initiative plus customs, procurement, and revenue reforms)

7. Stakeholder AnalysisOperational Questions for the Bank What was the likelihood of movement on desired governance reforms? Which reform areas should Bank emphasize or de-emphasize in its programs? Which actors were pivotal in reform process? How should the Bank position itself in the reform process and debate?

8. Stakeholder AnalysisWhat the Model Can Do • Identify stakeholder positions on policy reform, weigh their potential influence and assess the strength of their commitment • Simulate round-by-round negotiations to gauge whether proposed reforms are feasible as designed • Determine possible strategic options for optimizing reform levels using knowledge about political dynamics

9. How the Model WorksData Collection Process • Interviews with country experts • Explain context and relationships related to reform issues • Define reform steps in order of difficulty • Describe stakeholders and place them along this continuum according to their preferences • Not opinions or predictions • Cross-checked for internal consistency and comparability

10. How the Model WorksData Components • Defined policy issue • Steps in the reform process • List of stakeholders with an interest in the policy outcome and those with a veto • Each stakeholder’s initial bargaining position • Relative power of each stakeholder on this issue • Salience of issue to each stakeholder

11. How the Model WorksSimulation Bargaining Process • Stakeholders try to influence each other to secure an outcome they see as favorable • Model provides a round-by-round simulation of prospective political bargaining • Predicts how key stakeholders will shift their positions • Assesses the level of consensus in support of a particular outcome

12. How the Model WorksDetermination of Expected Outcome • Objective assessment of likely outcome for a reform issue • Extent of reform to be attained • Level of support for this outcome • Model can estimate effect of different initial stakeholder positions on likelihood of reform success and level of policy consensus

13. Stakeholder influence = stakeholder resources * stakeholder salience Opposite extreme stakeholder position Extreme stakeholder position Stakeholder A position Stakeholder C position Stakeholder B position Round x: Stakeholder positions and influence are analyzed to determine the winning outcome based on each stakeholder’s expected utility. Iteration Model goes through risk propensity, stakeholder perceptions, policy proposals, and stakeholder policy shifts to simulate bargaining process. Outcome forecast, predicted timeframe Negotiations stop if stakeholders see no further gains from continuing discussions

14. Case Study – Country AMacro Anti-corruption Agenda • Corruption a high profile issue • Prime Minister • Veto player • No reforms without PM approval • Adopting a cautious approach to reform • Government has outlined a broad anti-corruption strategy a Basis for issue definition

15. Country A – Anti-CorruptionStep One: Defining the Issue

16. Country A – Anti-Corruption Step Two: Positions and Influence

17. Country A – Anti-Corruption Step Three: Bargaining Dynamics

18. Country A – Anti-Corruption Step Four: Anticipated Outcome Domestic support for reform is too limited to expect substantive progress on the overall agenda.

19. Country A – Anti-Corruption Step Five: Potential for Further Reform • Re-analyzed using various donor starting positions above and below current positions • Results suggest that changes to current Bank policy would be unproductive • Can get PM to agree to higher reform, but not without lowering domestic reform consensus

20. Case Study – Country ACustoms Reform • High priority for reform • Pervasive corruption • Low capacity • Government has initiated customs reform, including draft customs code • Prime Minister desires a slow and steady approach – favors quiet consultations with key stakeholders

21. Country A – CustomsStep One: Defining the Issue Policy Steps of the Reform Process 160 Implement Modern Customs Authority 120 Streamline Customs Administration 70 Strengthen Anti-Smuggling Task Force 60 New Customs Code to Parliament 25 New Customs Code to Council of Ministers 5 Upgrade Computers & Telephones 0 No Reform

22. Country A – CustomsStep Two: Positions and Influence

23. Country A – Customs Step Three: Bargaining Dynamics

24. Country A – Customs Step Four: Anticipated Outcome Pro-reform stakeholders pressure PM to move agenda forward. New customs code and strengthened anti-smuggling measures likely.

25. Country A – Customs Step Five: Potential for Further Reform • Re-analyzed using various donor starting positions above and below current positions • Results suggest that changes to current Bank policy would be unproductive • Can make small gains in policy outcome by pushing for most comprehensive reform target (modern customs authority) • But only at the cost of societal consensus

26. Case Study – Country ASummary • Despite comprehensive anti-corruption agenda, little domestic support for more than cosmetic reform • More potential for progress in specific, targeted interventions (i.e. customs reform) • Resources not best spent on general anti-corruption initiatives

27. Benefits of the Model (1)Why We Liked It • Wide applicability • Has been used to analyze a diverse set of negotiated issues from business to economics to politics • Can be applied to broad range of Bank issues – not just governance • Track Record of Accuracy • More accurate than traditional methods using expert opinion (approximately 90% in real-time prediction of thousands of cases since 1981)

28. Benefits of the Model (2)Tighter Approach than Existing Methods • Structured format for data collection • Offers more systematic results than expert opinions or predictions • Facilitates clear definition of the issues and the scale of potential outcomes • Provides consistent format to summarize experts’ views of current power structure • Allows quantification of estimates, enabling scientific analysis and comparison across experts

29. Benefits of the Model (3)Analysis is Nuanced –Permits Small Calibrations in Bank Policy • Dynamic analysis – Can estimate how bargaining behavior will play out over time • Predicts the types of coalitions that may form in support of different levels of policy reform (e.g. not just thumbs-up or down on first-best solutions; can help steer support to small but significant steps along the way) • Allows dual analysis of a macro issue along with its component policy parts for better reform targeting (e.g. broad anti-corruption or specific procurement measures)

30. Limitations of the Model (1)What We Didn’t Like • Garbage in, garbage out a Quality of data collection is critical • Shortage of qualified experts on some issues • Need for in-depth country knowledge greater than expected • Access to country-based informants awkward; extensive interviews required with busy people

31. Limitations of the ModelWhat We Didn’t Like • Ability to forecast has not yet been tested for Bank-related policy issues • Operational utility depends on close alignment with country program tasks • No in-house capacity to run the model • Works best on narrowly focused issue; commonly confronted Bank problems often multivariate, complex

32. Internal Challenges to Mainstreaming this Approach • Fear of leaks – Worry that explicit material will get out in country or international press • Questions of access within the Bank: How closely held should results be and at what hierarchical level? • Lack of comfort, familiarity with methods, jargon from political science • Uncertainty about what to do with findings • Funding political stakeholder analysis is low priority when competing with traditional Bank tasks • Questions about how to fit stakeholder analysis into Bank knowledge and operational cycle (CAS, projects, AAA, one-off initiative)

33. Seriously Getting SeriousNext Steps • Establish framework within country and regional operations for ongoing application of these techniques) • Embed this tool in broader field-based, political analysis approaches • Pilot studies on additional countries/issues • Develop in-house modeling capacity • Assess further experience, including accuracy of forecasts and recommendations