Change Models: Managing the Evolving Role of the Budget Office Presenter: William A. Flexner

1. Change Models: Managing the Evolving Role of the Budget Office Presenter: William A. Flexner Flexner & Associates, Chapel Hill, NC NC Local Government Budget Association Summer Conference July 18, 2007

2. Creating Reality • First we shape our structures, then they shape us – Winston Churchill • The best way to predict the future is to invent it – Alan Kay • The best thing about reality is you get to make it up – Kimbal Wheatley • If you don’t know where you’re going, you’re going to get there anyway – Anonymous • If you don’t change directions, you’re going to get where you are going -- Anonymous

3. Have you ever used an anonymous opinion gathering device such as this? • No • Yes

4. Have you ever driven more than 30 MPH over the speed limit? • No • Yes

5. Did you ever lie to Mom? • No • Well, it wasn’t exactly a lie • Yes

6. What is the role of the Budget Office? The non-budget person might say… “The budget office translates an organization’s plans and policies into financial terms” Starting with this definition… How has the role of the Budget Office evolved over the past 10 years?

7. What Do We Mean: “Change Models”? Change: the transition that occurs when going from one state to another. Models: simplified representations used to explain the workings of realworld systems, processes or events. Applied to: Budget Office, entire organization, community and other organizations

8. Change Model # 1 “Pull Change”

9. In order to solve the Social Security System crisis, President Bush proposed the shifting up to 25% of retirement funds into Personal Savings Accounts.Can you support this solution? • No • Yes

10. In order to absorb 8,000 to 10,000 new students a year, the Wake County School Board is proposing to move a significant number of its schools to 12 month calendars. Can you support this solution? • No • Yes

11. Scholars at the “Phoenix Institute for Public Management” have proposed that Local Government Budget Offices stick with the knitting and focus only on budget preparation and not on any expanded roles. Can you support this solution? • No • Yes

12. Pull Change Communicated Accepted

13. Change Model # 2 “Starting Change”

14. Have you ever had a reallymessy office, garage or closet? • No • It wasn’t really messy • Yes

15. D x V x F > Rc Starting Change enVision a Better Future Resistance To Change Dissatisfaction With Present First Steps

16. Change Model # 3 “Adoption of Innovation”

17. Which of the following best describes you and an Apple IPod? • One of the first to buy it • Bought one early on, but only after talking with someone who already had one • Bought one, but waited until the technology and access to songs were proven • Am still investigating buying one, but not ready yet • Really have no interest

18. “BudgetAI” is a new software product combining artificial intelligence software with a national “local gov’t” budgeting database to reduce the time to produce a first draft of a city or county budget by 50%. Which of the following best describes your reaction? • Sign me up for the Beta version. I want it now • It sounds great but let me talk with someone who has it up and running • Show me that it really works in the real world and I’ll consider it • Not interested now, but send me updated information periodically • Really have no interest

19. Adoption of Innovation Chasm Sources: Everett M. Rogers, Diffusion of Innovation, 1962 Geoffrey Moore, Crossing the Chasm, 1991

20. Change Model # 4 “Grow or Die”

21. Return Effort Growth Curve 4. Limits 7. New Early Growth 3. Late Growth 6. New Startup 2. Early Growth 5. Decline 1. Startup Time Source: George Land, Grow or Die, 1973

22. Where is the China on this growth curve? 4 7 3 • Startup • Early growth • Late growth • Limits • Decline • New startup • New early growth 6 5 2 1

23. Where is the U.S. on this growth curve? 4 7 3 • Startup • Early growth • Late growth • Limits • Decline • New startup • New early growth 6 5 2 1

24. Where is YOUR Budget Office on this growth curve? 4 7 3 • Startup • Early growth • Late growth • Limits • Decline • New startup • New early growth 6 5 2 1

25. Change Model # 5 “Linking Strategy to Action”

26. Change: Linking Strategy to Action WW Where now /Where future WH What How WW Who/When

27. Change Model #6 “Setting Priorities”

28. Focus on the “Whats” Let’s say you have developed a list of Critical Success Factors (CSFs)…the “Whats” that will help you get to “Where” you are going • Aaaaa aa aaaaa aa B. Bbbbbbb bbb bbbbbb C. Ccc ccc ccc ccc D. Ddddd ddddd ddddddddd d E. E eeee eeeeeee eeee F. Fffff ffff ffffff ff ffff fff G. Ggggg gggggg ggg gggggggg H. Hhh hhhhhh h hhh I. Iiiiiiii iii iiiiiiiii iiiiiii J. Jjjjjjjjjjjj jjjjjjj jjjjjjjjjjjjjj How do you assess which ones are more important; how do you determine “what” to focus on?

29. Focus on the “Whats” High IMPORTANCE Low High CURRENT PERFORMANCE From Option Technologies Interactive, 1980s to present

30. Assessing the “Whats” High Opportunities C Strengths IMPORTANCE F A G J Emergents H B I E D Maintainers Gripes Overkills Low High CURRENT PERFORMANCE From Option Technologies Interactive, 1980s to present

31. Change Model #7 “Action Planning”

32. Focus on the “Hows” Whats (CSFs) Hows (actions) C F A G J H B Impacts Target key markets 2 Engage in P.R. 1 Train collections staff 2 Install new equipment 1 Install cost software 3 Use cost information 4 Reduce turnaround time 3 Develop incentive plan 1 Generate new ideas 1 Determine what works 1 From Hardaker & Ward, “Getting Things Done,” Harvard Business Review, 1987

33. Change Model # 8 “Creating an Adaptive Organization”

34. Which of the following would you prefer? Have someone… • Tell you what to do • Ask your opinion about what should be done

35. Traditional Participative Organizational Change AUTHORITY LEADERSHIP MANDATE (“Telling”) INFLUENCE (“Asking”) COMMITMENT (“Want To”) COMPLIANCE (“Have To”) TIME TIME & ENERGY PERFORM (“Meet Expectations”) PRODUCE (“Minimum Standards”)

36. Time Universal