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

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

Have you ever used an anonymous opinion gathering device such as this?

No

Yes

0%0%

1. No

2. Yes

Have you ever driven more than 30 MPH over the speed limit?

No

Yes

0%0%

1. No

2. Yes

Did you ever lie to Mom?

No

Not e

xact

ly a

lie

Yes

0% 0%0%

1. No

2. Well, it wasn’t exactly a lie

3. Yes

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?

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 real world systems, processes or

events.

Applied to: Budget Office, entire organization, community and other organizations

Change Model # 1

“Pull Change”

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?

0%0%

1. No

2. Yes

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?

0%0%

1. No

2. Yes

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?

0%0%

1. No

2. Yes

Pull ChangeCommunicated

Accepted

Change Model # 2

“Starting Change”

Have you ever had a really messy office, garage or closet?

No

It w

asn’t

real

ly m

essy

Yes

0% 0%0%

1. No

2. It wasn’t really messy

3. Yes

D x V x F > Rc

Starting Change

DissatisfactionWith Present

enVision aBetterFuture

FirstSteps

ResistanceTo Change

Change Model # 3

“Adoption of Innovation”

Which of the following best describes you and an Apple IPod?

First t

o buy

Early

buye

r

Needed

pro

of to

buy

Still i

nvest

igat

ing

No in

tere

st

0% 0% 0%0%0%

1. One of the first to buy it

2. Bought one early on, but only after talking with someone who already had one

3. Bought one, but waited until the technology and access to songs were proven

4. Am still investigating buying one, but not ready yet

5. Really have no interest

“Budget AI” 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?

0% 0% 0%0%0%

1. Sign me up for the Beta version. I want it now

2. It sounds great but let me talk with someone who has it up and running

3. Show me that it really works in the real world and I’ll consider it

4. Not interested now, but send me updated information periodically

5. Really have no interest

Adoption of Innovation

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

Chasm

Change Model # 4

“Grow or Die”

Time

Return

Effort

1. Startup

2. EarlyGrowth

3. LateGrowth

Source: George Land, Grow or Die, 1973

4. Limits

5. Decline6. New Startup

7. New Early

Growth

Growth Curve

Where is the China

on this growth curve?

1 2 3 4 5 6 7

0% 0% 0% 0%0%0%0%

1. Startup2. Early growth3. Late growth4. Limits5. Decline6. New startup7. New early

growth

1

2

3

4

56

7

Where is the U.S. on this growth curve?

1 2 3 4 5 6 7

0% 0% 0% 0%0%0%0%

1. Startup2. Early growth3. Late growth4. Limits5. Decline6. New startup7. New early

growth

1

2

3

4

56

7

Where is YOUR Budget Office on this

growth curve?

1 2 3 4 5 6 7

0% 0% 0% 0%0%0%0%

1. Startup2. Early growth3. Late growth4. Limits5. Decline6. New startup7. New early

growth

1

2

3

4

56

7

Change Model # 5

“Linking Strategy to Action”

Change: Linking Strategy to Action

WW Where now

WHWhat How

WWWho/When

/Where future

Change Model #6

“Setting Priorities”

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

A. Aaaaa aa aaaaa aaB. Bbbbbbb bbb bbbbbbC. Ccc ccc ccc cccD. Ddddd ddddd ddddddddd dE. E eeee eeeeeee eeee F. Fffff ffff ffffff ff ffff fff G. Ggggg gggggg ggg ggggggggH. Hhh hhhhhh h hhhI. Iiiiiiii iii iiiiiiiii iiiiiiiJ. Jjjjjjjjjjjj jjjjjjj jjjjjjjjjjjjjj

How do you assess which ones are more important; how do you determine “what” to focus on?

IMPORTANCE

CURRENT PERFORMANCE

High

Low High

Focus on the “Whats”

From Option Technologies Interactive, 1980s to present

IMPORTANCE

CURRENT PERFORMANCE

High

Low High

C

D

BE

G

AF

HI

Assessing the “Whats”

J

From Option Technologies Interactive, 1980s to present

Strengths

OverkillsGripes

Opportunities

Maintainers

Emergents

Change Model #7

“Action Planning”

Focus on the “Hows”

Hows (actions)

Whats (CSFs)

ImpactsC F A G J H B

•Install cost software•Use cost information

•Train collections staff•Install new equipment

•Engage in P.R.•Target key markets

•Reduce turnaround time•Develop incentive plan

•Generate new ideas•Determine what works

2

1343111

12

From Hardaker & Ward, “Getting Things Done,” Harvard Business Review, 1987

Change Model # 8

“Creating anAdaptive Organization”

Which of the following would you prefer? Have

someone…

… te

ll yo

u wha

t to d

o

… a

sk y

our o

pinio

n

0%0%

1. Tell you what to do

2. Ask your opinion about what should be done

Organizational ChangeTraditional Participative

AUTHORITY

MANDATE(“Telling”)

COMPLIANCE(“Have To”)

TIME

PRODUCE(“Minimum Standards”)

LEADERSHIP

INFLUENCE(“Asking”)

COMMITMENT(“Want To”)

TIME & ENERGY

PERFORM(“Meet Expectations”)

Time

Universal