Work in Progress: Toward Agile Organizations
Christiaan Gort of Turner writes on Platform O, the online platform for public administration, about agile implementing organizations. The report *Werk aan Uitvoering* states that implementing organizations must increase their agility. That’s easier said than done, as Christiaan knows firsthand.
Work on Implementation: Toward Agile Organizations
The “Werk aan Uitvoering” (WAU) report, published last year, states that implementing agencies need to increase their agility. Easier said than done, says Christiaan Gort. The problem is that the structures of implementing agencies aren’t designed for agility at all, as he realized when the RVO was established. What can we learn from this? And how can implementing agencies improve their structures?
In 2015, I was involved in the merger between AgentschapNL and Dienst Regelingen (DR), which continued as the Netherlands Enterprise Agency (RVO). As part of the merger, RVO was tasked with cutting costs by 14 percent while maintaining the same scope of responsibilities. Prior to the merger, AgentschapNL had an organizational structure in which the programs of the various clients were assigned to corresponding divisions. Within each department, there were multiple teams that were responsible from start to finish for the implementation of a number of programs—from drafting a grant program to its execution and all associated customer interactions. As a result, the more than 100 programs were almost all implemented in different ways. This had to be done differently, better, and, above all, more cost-effectively.
Scaling up, standardization, and digitization
The focus of the merger was therefore on increasing scale, standardization, and the digitization of processes. RVO was certainly no exception in this regard. Over the past twenty years, these priorities have been common among implementing organizations, as a means of maintaining service levels through multiple rounds of budget cuts. Consequently, the numerous mergers and reorganizations have typically resulted in functional organizational structures, in which similar process steps are assigned to a single organizational unit. The task of these organizational units is to carry out these steps as efficiently as possible.
Of course, this structural choice has consequences. Because the various steps in a regulatory process are spread across multiple organizational units, changes to a regulation lead to adjustments in those units. Furthermore, all interdependencies must be reconfigured. This has resulted in cumbersome organizations that are highly efficient at implementing current laws and regulations but are no longer able to adapt quickly to changes.
Greater agility is needed
This is fully in line with the findings of the WAU report. Based on a comprehensive problem analysis and the proposed courses of action, the report concluded that implementing organizations must increase their agility. These agencies are increasingly confronted with changes in laws and regulations, driven in part by growing political unpredictability, rapid technological advancements, and higher societal expectations. The pace of change and the uncertainty surrounding it will only increase. The current structure of implementing organizations is not designed to handle this—and neither is RVO’s.
Under RVO’s new structure, responsibility for programs was divided up, with process steps that could be standardized grouped together. This was one of the factors that made the cost-cutting measures possible. Professionalism has increased because expertise in specific process steps has been consolidated. However, the same principle applies here: increased interdependencies have reduced effectiveness and agility. Implementing changes and delivering customized solutions has become more difficult.
This was also known at the time. A prerequisite for these changes was therefore that the clients—namely, the policy ministries—would change their approach to management. Less focus on details and how schemes were structured, and more on broad outlines and societal outcomes. This would give RVO the leeway to design new schemes on its own and make optimal use of the standardized process steps.
“Greater interdependence reduces effectiveness and agility.”
Breaking Down Structures
In practice, many implementing organizations still find that the commissioning policy departments continue to dictate how programs are structured. And when politicians also interfere with implementation, experience shows that this only intensifies the problem. How do we deal with this? On the one hand, this requires a change in the way organizations are managed; on the other hand, it requires implementing agencies to offer more customized solutions to their clients. Societal changes also demand more customized solutions. This applies both to the way new programs are designed and to the delivery of services. How can we increase that agility without falling back into old structures? The answer lies in the organizational structure itself.
Fewer dependencies
Two principles are crucial for agile organizations. The first principle is to minimize dependencies between organizational units as much as possible. This makes it easier and faster for organizational units to adapt to changes in the external environment. This is achieved by assigning responsibility for a given process to a single organizational unit as much as possible.
However, in complex implementing organizations, it is often not possible to centralize all tasks under a single authority. It is wise to at least centralize oversight of all activities related to the specific program. Do not let current job functions serve as the guiding organizational principle; instead, make them secondary to related programs and implementation chains. Professionalism is maintained by forming multidisciplinary teams that bring together the expertise needed for implementation. Experts from different teams work together to ensure the necessary professional development.
Decision-making at the lower levels of the organization
The second principle is that decision-making authority should be delegated as low as possible within the organization. Decision-making authority must reside where the information is available to make the best assessment. By reducing interdependencies—the first principle—decisions can also be delegated to lower levels than they are now. This increases agility because adjustments can be implemented more quickly without having to jump through all sorts of decision-making hoops. Furthermore, this gives professionals more leeway to tailor services optimally to the needs of citizens. No detailed work instructions, but clear frameworks and guidelines, within which professionals have the freedom to operate in accordance with the intent of laws and regulations and to bring a human touch back into service delivery.
Interestingly, research on organizational structures over the past few decades has shown that functional organizational structures are not always more cost-effective. While they may be the most efficient for each individual process step, they require so much coordination that the benefit is often negated. In environments where change is frequent, they even appear to be less efficient because the costs of change are high. It is therefore high time to take a close look at the current structures of implementing organizations.
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