Innovation in chains: focus decision-making outside the boundaries of the program organization

By Ruud Boot

This past year I had the pleasure of being program manager for an ambitious "bottom up" initiative for exchange and reuse of soil data (chain computerization) of government and network operators. Many parties were involved such as municipalities and provinces but also dozens of (semi)private companies. At the time of writing this post, the program has temporarily stopped: the principals are looking for a way to regain funding and participation. In this blog, I briefly reflect on events and how additional measures can help this program - and other similar programs.

Exchange and reuse of soil data (chain computerization) 
Governance of the program for chain/network innovations 
Decision-making processes for chain collaboration 
Autonomy of individual parties in program organization 
Challenges in chain/network innovations with market parties

Benefits and burdens

The benefit of the program to participants was both financial and qualitative. Inefficiency in work processes, unnecessary costs and a better information position were the main reasons for starting this initiative. For the government, the financial benefits were modest, while for the (semi)private companies they were decisive. The contribution to the costs was therefore distributed proportionally to the financial benefits. Only for 2016 were funds available for the program organization. Participation was voluntary, there was no legal requirement. A characteristic of the initiative is that the benefits for some depend on the participation by others, the so-called network effect. Another characteristic is that establishing a common platform and matching organization and management is only part of the burden. Each participating party must also invest in the necessary change in its own organization and systems.

Governance of the program

The program was governed by a program board in which all these parties had representation. These representatives contribute the knowledge, experience and viewpoint of their constituencies. Within certain preconditions, the program board can decide on the course and content of the program. What this program board is not about are the investments needed at each of the participating organizations, after all they are autonomous, and participation is voluntary. What this program board cannot decide on either are the resources needed to finance the program. Indeed, to a large extent, these must be raised from these same participating parties. Because of the plurality and autonomy of the participants, an unambiguous program sponsor is lacking.

The shore turns the ship

For a long time, the above situation did not pose a problem. Many endorsed the goal of the program strengthened by a further developed positive business case for the chain. Good progress was being made in cooperation with some of the stakeholders. It became increasingly clear what the data exchange and necessary platform was going to look like. The governance of the partnership was also taking shape. What also became clearer was the amount needed for actual realization (higher than initially expected) and the period for which funding was requested (longer than expected). There was also hesitation about participation; parties explicitly expressed that "the business case does not work for them" reinforced by the impression that others might feel the same way. As a result of the aforementioned network effect, the prospect became more unfavorable, confidence in cooperation crumbled. This vicious cycle could not be broken by the program board. Timely funding for 2017 and beyond failed to materialize and the program is now pausing while principals search for a solution. In fact, there is an impasse, no decision has been reached, neither positive nor negative.

Setting up decision-making outside the program organization

Of course, there are many factors that determine the situation that has arisen. In my opinion, the autonomy of the individual parties (no obligation, it is a "bottom up" initiative) combined with the lack of a communication and decision-making structure with which to decide with mandate on behalf of "all parties" is the Achilles' heel. This cannot be solved in the program board: it would be very strange that on one subject (the program) there could be a small delegation at odds with the existing coordination and decision-making structures to make binding decisions for very many stakeholders. So, the problem must be solved among the participating parties themselves, organized by target group/ constituency on the basis of an agreed process and decision-making model (unanimous, majority, etc.). Existing umbrellas, associations, working groups and the like, in which policy is now also tuned and decided to play an important role in this. 

Although the substantive dilemmas for this program were recognized early on, the consequence of the missing decision-making structure was recognized too late by the members of the program board. As a result, the conversation about the dilemmas remains in a relatively small group, it takes too long to achieve progress, room for doubt arises, and at some point, it is too late for a timely solution. 

Members of a program board must have the ability to fall back on a clear decision-making process among their constituencies that can be addressed sufficiently quickly. This gives them more authority on the program board and (self)confidence that they are acting on behalf of their target group. Therefore, my advice is that when a program organization is established for a similar initiative - even before a concrete problem arises - it should also identify or set up the decision-making processes needed to bring differences of opinion among the constituency to decision-making. These decision-making processes (and the requirements they place on the program board) should be known to all types of stakeholders at the program board. A program board can then formulate a common problem statement and solution direction where appropriate that meets the criteria for decision-making. Program board members can then present these to their own constituencies for advice and decision-making according to a known process and timelines. Then still a program can be terminated, but that is then the result of a decision and not something that happens to one. 

Not a unique problem

The dilemma outlined plays a role for more chain/network innovations (with or without ICT). Given the ongoing decentralizations in government, collaboration in chains and networks within the government and with market parties will only increase and with it the importance of a solution. The main challenge here is to arrive at a working method that matches the speed and decisiveness required by this type of program.

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