Navigating the Fiscal Crisis: Tested Strategies for Local Leaders
What did we Ask? What defines the current crisis? What has worked in previous efforts? Which organizations cope better? Why innovation is critical? How can local governments contribute to the recovery?
Deeper and Different Than the Last 50 Years Housing Market Auto and Financial Services Manufacturing and Exports Service and Retail Even Energy is Impacted All Levels of Government All Sectors of the Economy None of Us Have Experienced Before
Deeper and Different Sales Tax Property Tax State Government Transfers Capital Markets – Public and Private Pension and Other Investment Funds
Lessons from the Past Tax cuts have less impact than cash investments. Investment in capital projects is better than support for operating costs. Continue projects with low versus high operating costs. Block grants speed recovery compared to competitive grants.
Lessons From the Past Cutback Management? Across the Board Cuts Freezing the Workforce Or Strategic Management? Predict the Decline Focus on Core Mission Educate the Public Long Term Savings, Not One Time
Contributing to Recovery Maintain Spending, Don’t Cut Revenues Avoid Across the Board Cuts Don’t Cut Capital Projects With Low Operating Costs Avoid Random Hiring Freezes Lead Inclusively Draw on Ideas from All Sectors
Opportunity in Crisis Improve the Organization Resize or Restructure Develop New Partnerships Focus on Community Priorities Proactive, Not Reactive Embrace the Future’s Possibilities
So What Have We Seen? 3 Strategies: Hunker Down All Expenditures are Equal – Lower Tide, Lower All Boats Transformation – “What If,” Not “Why Me”
CRISIS IS AN OPPORTUNITY RIDING ON A DANGEROUS WIND
Who Copes Best in Hard Times? Strong Management Capacity Targeted and Flexible Spending Choices Revenue Diversity Have a Long Term Financial Plan Maintain Adequate Reserves Fees for Service Reflecting Cost of Delivery Educated Stakeholders Adaptive but Resolute Organization
Promoting Constructive Change Cut Quickly, Avoid Delay Long Term View Core Mission, Highest Priorities Innovation and Continuous Improvement Manage Revenues, Not Just Expenditures Organizational Design and Processes Employee Stewardship Embrace Inevitability, Stick With It Communicate with Stakeholders
What do Transformed Governments Look Like? Anchored Around Purpose, Mission & Values Risk Tolerance Profile – Innovation Matters Understand the Brutal Facts but Focused on the Possibilities Not the Problems Engaged with all Stakeholders See a Path to a Desirable Future that others don’t Individuals & Organizations Use Both Left and Right Brain
Areas of Innovation Top 22 in 2004 (Joshua Franzel, Review of Policy Research, 2008) Managerial/Administrative (3), e.g., 3-1-1 Technological (10), e.g., web portal, video streaming, online GIS, online transactions/applications, wifi, online training Area-Specific (9) Emergency coordination Traffic photo Hydrogen fuel cells LED signals and smart signs Monitoring traffic flows Crime technology-shoe wear Natural storm water runoff control Affordable housing Public-private partnerships in parks
Areas of Innovation-Current Thoreson and Svara, Municipal Year Book 2009 Sustainability Youth advancement Law enforcement and technology Health and wellness Business process reform E-gov Organizational improvement Succession planning and regeneration Citizen participation /engagement Community renewal Cities and schools
Correlates of Innovation Wealthier and larger organizations Sunbelt Cities/counties without unions Cities/counties with public pressure for change Cities/counties competing with other governments Democratic vote Council-manager form cities/counties Correlation does not mean causation. What’s happening on the inside to convert these conditions or overcome these conditions to produce innovation?
Six Qualities Linked to Innovation Leadership Creativity Internal Collaboration External Partnerships Community Connections Results Focused “I’m happy to give you innovative thinking. What are the guidelines?”
Innovation: #1 Key Qualities Leadership: Elected Officials At the Top In the Middle Organization-wide Unselfish - Shares: Credit and Recognition Level 5 leaders Looks to the Next Generation to Sustain
Creativity Unleashing the potential Not Satisfied with Status Quo Look for ideas elsewhere Working on Multiple Fronts Allows for Failure Constantly Revising and Changing Breakthrough and Incremental Innovation: #2 Key Qualities
Innovation: #3 Key Qualities Internal Collaboration Unusual Non-Hierarchal Teams Diverse teams Disrespect the Silos Staff are Supported & Heard Members Want to Be There
Innovation: #4 Key Qualities External Partnerships Public, Private, NGO Not Quid Pro-Quo Know How to Disagree Are Willing to Trust and Take Risk Understanding Value From New Perspectives Deep Level of Cross-fertilization
Innovation: #5 Key Qualities Community Connections Real connection, Not Lip Service Deep Sustained Involvement Public: Not “me-centric” Looking for Long –term Value
Innovation: #6 Key Qualities Results Focused If You Count It, It Will Change Useful and serves need Sustained Impact, Not Flash in the Pan Knowing Who Benefits
Fostering Innovation If you create the qualities, will innovation come? No, Innovation is never automatic Yes, Will generate the ideas and foster the spirit that supports innovation Support with a culture of innovation Consider what has worked and not worked in your organization Consider the straddler (and the stragglers) Set the bar high. Invite all to determine how to get over it.
Combination of Individual and Organizational Characteristics Organization is reactive Organization is proactive Staff members hunker down Denial Resistance/ Anxiety over risk taking Staff members are resilient FrustrationConstructive Can you be constructive but still be tired and discouraged?
What Kind of Change? Continuum of response to crisis: INNOVATION “Re-Invention” Continuum of outcomes:
Characteristics of Innovative Leaders* Senior executives of the most innovative companies—only 15% the total—don’t delegate creative work. They do it themselves. *Jeffrey H. Dyer, Hal B. Gregersen, & Clayton M. Christensen, “The Innovator’s DNA,” Harvard Business Review (December, 2009). Study of the habits of 25 innovative entrepreneurs and survey of more than 3,000 executives and 500 individuals who had started innovative companies or invented new products.
Five “Discovery Skills” that Distinguish the Most Creative Executives Associating Successfully connecting seemingly unrelated ideas. Questioning Constantly ask questions that challenge common wisdom; ask Why, Why not, What if… Observing Scrutinize common phenomena, particularly the behavior of potential customers. Experimenting Try out new ideas and approaches. Networking Find and test ideas through a network of diverse individuals.