Reform in Aotearoa skews towards the standard model of politically sponsored, centrally-led, and public service delivered. Legislative change is often at their foundation. Our short political cycles also drive a familiar pace and cadence, moving rapidly from big ideas through to implementation to make progress within election cycles. Examining how change happens in systems, however, points towards some broader patterns. ​

As we spoke to our interviewees and researched successful, unsuccessful and in-flight reform programmes in Aotearoa and internationally, a number of success factors emerged that connect into the framework for reform. Reform is most successful when we have an alignment around the case for change, a clear view of what our levers for reform are and how we believe change happens and is sustained in a system, and our ability to stay the course and be accountable for delivery.​

Case for change

Sponsors, participants and citizens are aligned on the vision and the drivers.​

Reform gets out of the starting block when there is a common understanding of why reform is needed. To some extent this is the easy part: the global context of climate change, or the impacts of the pandemic, are largely agreed. That our housing system has failed to deliver affordable housing, and that this failure is inequitably experienced by certain groups, is empirically true. Despite this, there are still challenges. For example, whether you view the purpose of the housing system to be creating homes or creating wealth generates different views on the case for reform.​

Critically, alignment is not just about political sponsors. The support of citizens and participants in a system, especially those with the most to win or to lose from reform, was identified by many of our interviewees as an imperative. In Aotearoa, reform agendas and policy are still largely politically driven, but there is a real opportunity to bring these conversations out for wider discussion through think tanks and academia. The advantage of exploring and informing reform agendas outside of political policy-making is in broadening what is considered beyond political leanings and time horizons. It also serves to hear from and amplify a much wider set of voices with real influence on public discourse. ​

We have understood the root causes of the current system performance and outcomes.

The necessary next step is to understand the root causes of today’s reform drivers. What is holding the current system back from performing as we want it to? If reform is on the table, the system has generally resisted simple fixes, sometimes over decades, and there are likely to be many interdependent things that need to change now.​

Reform comes in many shapes or sizes, however the big reforms on our horizon look very different from many of our more successful reforms stories. The Reserve Bank Act and Public Finance Act, for example, are often cited as examples of good reform. However, the issues that those reforms overcame were much more linear than those we are facing today. ​

Complex reforms involve multiple participants, relationships and structures and the relationships between actors in the system create feedback and incentives that fuel the system’s behaviour.​

This makes it difficult to understand which things are symptoms and which things are root causes. To determine this requires an ongoing process of dialogue with participants to understand how the system operates today, the forces that hold it in place and the leverage points. Failure to do this results in a common pattern: simple interventions which make sense on paper don’t translate in practice to provide the incentives and conditions for change. We end up with “stuck loops” of behaviour that become troublesome.

What’s preventing our systems from operating as we want them to?

• The goals and underpinning paradigms of the system are no longer appropriate.
• Power and decision rights are held in the wrong places, are inequitably held, or accountabilities are missing or unclear.
• Functional gaps and duplication exist in the system.
• How the system operates – the roles, responsibilities and processes – are poorly understood and executed.
• Information assymetry between participants and citizens, with gaps and missing feedback loops.
• Capacity and buffers are insufficient to respond to change and shocks, making the system fragile and slow to respond.

Theory of change

Using our whole kete (and picking the right tools).

We are seeing a shift in understanding what our levers for reform really are. Traditional levers such as structure, rules and incentives are still critical tools in defining and driving behaviours. These levers also have the advantage of being tangible and measurable, and arguably we know how to pull these levers. One of the most important levers that is often overlooked is narrative and storytelling. The way we talk about our systems, the language we use and how we frame our stories shines light on, and gives rise to, our worldviews and how we think about our society. This is a much less tangible lever than something such as revising legislation, but it is arguably more effective and sustainable in the long run.

Deloitte Director, Cassandra Favager, on the lessons learned.

Working the levers: What are the interventions we can make?​

Reformers have a kete of possible interventions at their disposal:​​

• Narrative and storytelling. How we think and talk about our systems, their purpose and who they are for, and the changes we are making.
• Outcomes and values. What we value and measure, and hold our systems to account for delivering​.
• Governance and decision rights. Who holds power, influence and the right to choose; how decisions are made and accountability is distributed​.
• Citizen-centred accountability. How systems are held accountable to the people they are there to benefit​.
• Resource and funding. The distribution, levels and investment into the system’s financial and non-financial resources​.
• Function and structure. The functions and activities within the system, how these are organised and structured in relation to each other​.
• Rules and incentives. Both formal (legislation, regulation, policy, tax and fiscal) and informal (social licence, cultural norms, ways of working) rubrics that guide, incentivise and deter activities and behaviours​.

“We definitely have a gap in understanding that mindsets, narratives and mythologies deeply inform our decision making and how we get the systems we do. As policy makers, our own mythology is that we make a lot of our decisions based on logic and evidence, but in the real world of policy making we make nearly all of them based on culture and mindsets and emotion. The logical rational actor model has been disproven again and again." – Jess Berentson-Shaw​

The neoliberal reforms provide an excellent case study in narrative and mindsets; policy changes were underpinned by a total (and global) shift in our beliefs about market economics, the singular importance of economic growth and,  fundamental to the challenges we experience today, an underpinning belief in the trickle-down effect and that unshackling the markets would lead to economic growth and greater wellbeing for all. ​

Today, Aotearoa is at the forefront of shifting our definitions of wellbeing to be far broader than merely economic, and equity is at the heart of many of our most ambitious reforms, but the impact of the neoliberal reforms has been a long-lived one. ​

“If you want serious long term reform, we need to generate a coherent narrative. Maori people are brilliant in telling stories, let them take a leadership in telling the narrative.” – Girol Karacaoglu​

The lesson for the future is not in dropping levers from our reform kete, but expanding our definition of reform to pull on less tangible levers which have the power to create enduring change.​

Nā to rourou, nā taku rourou, ka ora ai te iwi. With your food basket and my food basket, the people will thrive.​

There is a strong argument for more networked and distributed models of reform: consideration should be given to who can – and should be able to – pull the appropriate reform levers. ​

“If you want to progress a multidimensional policy programme such as wellbeing, it needs to have integration across the public sector as well as with the communities. So integration with business, NGOs, iwi – we don’t have the machinery to do this. The infrastructure we are missing is anything to give effect to voice [at the centre]” – Girol Karacaoglu​

In Aotearoa, this includes consideration of the role of iwi and the Crown, including where decision rights sit. ​

More broadly, determining who is best placed to lead and implement change includes considering more sophisticated models for involving businesses, communities and citizens than is seen in a traditional consultation and engagement approach. ​

The Aotearoa Circle provides an example of that in action, through its partnership with the Ministry of Business, Innovation and Employment (MBIE) to consult on the national energy strategy. The Circle’s role in bringing together leaders from public and private organisations focused on sustainability provides an alternative platform for engaging a wide range of voices.

Picking a path: How change should happen ​

In structuring up the change, reformers have a series of stacking choices they can make:​​

• Gradual and iterative or punctuated and big bang. Can change be made through evolution and continuous improvement, or is it necessary to break with what went before?​

• Sponsorship or leadership. Where will reform be sponsored versus led? Should they be the same role or different?​

• Centrally or de-centrally focused. What is the appropriate balance between being closer to the impacted communities (more devolved) versus achieving greater consistency and alignment (more centralised).

• Singular, collective or distributed leadership and decision rights. Is accountability held in one place, multiple discrete places or are there shared accountabilities? Who will work the levers identified, and have accountability for decisions?​

• Singular, collective or distributed resource model. What necessary skills and knowledge come from public, private, voluntary and community sectors? How are resources combined and aligned?​​

Successful delivery

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Courageous leadership ​

Ultimately, people are at the heart of reform. Shifting behaviour and investing in relationships takes time and relentless focus, placing great demands on leaders and people. ​

Leadership is the critical enabler to any change effort, whether at the organisational or system level. Reform amplifies the ask of leadership due to the complex nature of what is being led – this is not about managing a well-defined path, but navigating an unpredictable journey. The key elements of reform leadership are vision, courage, collaboration and enablement. ​

Leading a reform requires clarity of vision and recognising that the ‘southern star’ we are  aiming for needs to be kept in view and communicated throughout the journey. Great reform leaders create energy and enthusiasm for change, even when the journey is difficult. This also requires reform leaders to find their own wellsprings of energy, enthusiasm and inspiration, which can be challenging at a personal level. Establishing cross-system leadership forums is often seen as a mechanism for collaboration and joint action, but can serve just as effectively to build a supportive coalition.​

Reform doesn’t follow a smooth path. There are dead-ends, unexpected complications, difficulty in aligning participants and actions, and often new priorities that may arise. A system resists simple fixes and which means that many attempted reform efforts will suffer short term failures or setbacks. It also means that solutions may require dismantling of long-held structures of power, funding and decision-making. This requires courage of reform leaders – to call out the things that need to change, admit to failure and accept learnings, and to continue to stay the course and push forward a reform agenda even with head winds. There is personal risk involved in leading reform – taking on a reform agenda can result in spectacular and high-profile failure. While we need reform leaders willing to take those risks, placing the outcomes ahead of their career trajectories, we also need to create an enabling environment that values courage and vision, and places these above short-term successes. ​

Because reform is usually a system-wide effort, there will be multiple players in the system, with differing motivations, who must work cooperatively to give effect to the change. Leadership in reform requires skill in creating coalitions of the willing, developing mutual action, and establishing trust and collaboration. Too often we observe the forums for collaboration becoming forums for management and oversight. Here, tikanga offers us greater insight into what may be required – investing time and energy into establishing deep trusting relationships as an enabler for collaborative action. Systems analysis and practice that seeks to uncover motivations, strengthen shared aspirations and vision, and develop genuine partnership actions, can be useful in equipping leaders with the insights to lead collaboratively.​

Finally, an enablement mindset in reform leaders means they recognise that they are supporting the system to change itself. Leaders must view themselves as the ‘base of the tree’, upholding the actions, initiative and judgement of the frontline operators in the system. A top-down command and control mindset does not work in reform, because there are too many moving parts – no one leader, or group of leaders, can maintain the full system view and orchestrate actions. A leader of reform needs to invest significant time into building the capacity and capability of the system to change. This means investing in people, enabling them with the right information, tools and processes, and building a culture of safety and confidence to take action.

Talent

New Zealanders are acutely aware that there is only so much talent at every level – from governance and leadership, to the domain and technical expertise that individual reforms need. Pragmatically, reform requires a broad set of skills, experience and expertise, not all of which does – nor should – reside within the public service.​

In the immediate future we are likely to tackle this in two ways. Firstly, mechanisms drawing on the knowledge and talents of business, iwi, communities and our institutions are needed to resource reform with the right people. This includes investing in capabilities outside of the reform programme (and the public sector) itself.​

Secondly, by being smart about deploying resource across the reform agenda, enabled by greater coordination and agreed prioritisation criteria, skills and talent within the public sector can be moved and accessed more responsively. ​​

“We need to be able to deploy resources across the Public Service to support the government to implement its programme. It is [the job of the Public Service] to do this, not the job of government to organise around us.” – Peter Hughes 

Both come with a risk to be managed. A descent into poaching talent between participants will leave lesser resourced organisations short. A highly mobile talent pool also robs individual reforms of depth and continuity. ​

“Public service outlasts the government of the day - and should enable consistency of implementation. But the problem is we turn over quickly between roles, we have a highly migratory public sector. If we are not careful, we just end up shifting the deck chairs which is why we must continuously develop new talent into the service.” – Matt Tukaki​

Resourcing​

Reform is expensive and resource intensive. The Auckland supercity reforms cost hundreds of millions of dollars and while annual savings were projected from the merged organisation, many reforms do not deliver a financial return on investment due to a focus on improved services or social outcomes. The same reforms also involve hundreds of staff, contractors, and consultants in their initial set-up phase, with many more involved in longer-term transformation projects designing, building, and implementing organisational, process, and technology changes.​

Funding reform and finding the capability and capacity to deliver is a significant challenge. The recent Reform of Vocational Education cost $280 million for the merger of 16 polytechnics into one new organisation, and the creation of six new workforce councils. The current Three Waters reform has a package of at least $2.5 billion budgeted, in addition to implementation costs for the four new water entities. These are sums that must be justified against other calls on Budget allocations, such as additional Government services or investments to drive wellbeing outcomes, and all fit within annual operating allowances in the order of $3-4 billion.​

The ability to lead and deliver reform is also a rare talent, as diverse teams often many hundreds-strong with skills across leadership, strategy, policy, operating model design, organisational change, human resources, finance, information technology, customer experience design, machinery of government, and industry sector experience must be hired and deployed against uncertain challenges over an extended period. ​

Some people have the opportunity to work on several reforms during their working lives but for many, one is enough as it can be stressful and demanding. The large size of reform teams also means a mix of sourcing models is needed, as public servants are supplemented by assistance procured from the commercial or contract sector. As a result, it is difficult for the public service to build and maintain deep reform experience within its workforce and make that available to subsequent reforms. Reform teams can often feel they are doing reform for the first time, and many of them are — models for capturing individual and organisational learnings, and sharing those across reform teams, are not well developed in the public service.​

If the cost and scale of reform cannot be scaled down, we can explore mitigations such as different resourcing models and improved knowledge capture and dissemination to reduce the barriers to good practice and learning from experience.