38909 Capacity Development B R I E F S S H A R I N G K N O W L E D G E A N D L E S S O N S L E A R N E D WHEN PASSIONATE LEADERSHIP STIMULATES ENDURING CHANGE: A Transformational Capacity Development Anecdote from Uganda Nadim Matta and Patrice Murphy1 What causes a water utility in Uganda to reverse course dramatically, from the brink of extinction to financial viability within less than a year? Experts typically maintain that deep organizational changes require a long-term approach to developing staff and organizational capacity--that capac- ity growth is unlikely to be compatible with short-term efforts. That is mostly true, but sometimes passionate and committed leadership can turn things around in a remarkably short time and make those results stick. This example from the water sector in Uganda turns on its head conventional wisdom about capacity growth and how long it takes to effect enduring change. Within the development community, certain development, and performance improvement. Within a assumptions about capacity development are held to couple of years, NWSC went from being a fiscally and be self-evident. Capacity and institutional develop- operationally dysfunctional utility to a financially sus- ment experts have often noted the perceived conflict tainable and efficient service provider. The story of between achieving short-term results and building this transformation, as told by Dr. William Muhairwe, long-term capacity. Some experts argue that a long managing director of NWSC, and his colleagues, lag time between capacity-enhancing inputs and the begins on a low note. A few months after Dr. consequent impact is inevitable and that intervening Muhairwe's appointment in May 1999, a World Bank variables make attribution of enhanced capacity all team traveled to Uganda as part of the first Poverty but impossible. Some go further and argue that short- Reduction Strategy Credit (PRSC) the Bank was term results are at best a distraction from the real designing.2 The team expected to recommend signifi- work of enhancing capacity. cant management changes for the long term sustain- Yet, sometimes, achieving short-term results can lead ability of NWSC. In an effort to preempt these deci- to long-term transformational change, and achieving sions, Dr. Muhairwe impulsively declared to his short-term results and building long-term capacity for Board, "We will turn this company around within change can be mutually reinforcing. The critical ques- 100 days, or I will resign." tion is how to stimulate and sustain this "virtuous" The press got wind of his bold assertion and spread cycle of results achievement and capacity development. it across Uganda. Although Dr. Muhairwe had uttered The Uganda water sector offers one such example of a transformational process that was driven by passionate 1 leadership and, contrary to popular development wis- Nadim Matta (nadim@rhsa.com) and Patrice Murphy dom, was front-ended by short-term results producing (prm@rhsa.com) are partners at Robert H. Schaffer & initiatives that led to longer-term impact. Associates and work with private sector organizations on results acceleration and change management. They have Capacity Lessons from the Water Sector worked with several World Bank teams to introduce the "Rapid Results Approach" into client projects and programs. The opin- in Uganda ions and assessments in this article are those of the authors and do not reflect analyses and assessments made by World The experience of the National Water and Sewerage Bank teams. Corporation (NWSC) in Uganda reflects a tripartite 2At the time, the World Bank programmatic lending instrument relationship among results achievement, capacity was called the PERC (Public Expenditure Reform Credit). O C T O B E R 2 0 0 5 NUMBER 13 the words spontaneously and in a private conversa- 54 percent to 850 people. Dr. Muhairwe sensed that tion, he now felt he had to deliver on the challenge he the tide had turned in terms of building a results-ori- had set for himself. He called all his managers together ented utility culture. His managers were becoming for a solid week of crisis meetings. The group came up more skilled and confident. In fact, he had managed to with five areas on which to concentrate: water produc- build a cadre of leaders who were in turn challenging tion, water distribution, collections, customer service, and empowering their own people in a similar manner. and cost reduction. A spot analysis showed inefficien- In the midst of this effort, Dr. Muhairwe had the cies and inconsistencies--170 drivers for a fleet of 120 opportunity to spend two weeks at an executive vehicles, for example. Within a few days, the manage- development program in the United States. What he ment group had a clear game plan for starting the util- heard there only confirmed his conviction about what ity's turn-around, and as the plan got under imple- he and his colleagues were doing at NWSC. In fact, he mentation, noticeable improvements in utility realized that he had been using a homegrown version management and service delivery occurred. Dr. of the famed General Electric Co. "Work Out" Muhairwe and his team fondly refer to these initial-- approach to organizational performance improvement largely opportunistic--100-day performance improve- and capacity building; this approach is based on creat- ment projects as their "Start-Up" program. ing 100-day cycles of results achievement through Stepping Up to the Challenge: Strengthening collaboration, empowerment, and accountability. Management Accountability Spurred by his renewed confidence in what his team was doing, Dr. Muhairwe launched NWSC's "Stretch To maintain momentum, Dr. Muhairwe implemented Out" program. Muhairwe and his team designed this a series of six-month "Step-Up" programs, starting in program to scale up the results they had achieved and early 2000. Their primary goal was to position each of drive them further throughout the organization. Their NWSC's service areas--11 in number at the time--to initial focus was on one significant challenge: to operate at a break-even level. The strategy was to use improve operating margins, while expanding the existing capacity to revitalize operations, improve ser- number of new water connections. By concentrating vice, and increase revenue. It was tough going and on a series of 100-day revenue collection targets, the frustrating, and initial projects had little impact. By teams were able to increase collection efficiency from mid-2000 the pressure was on again. During planning 75 to 95 percent within a year. for PRSC negotiations, the draft policy matrix man- NWSC continues to be profitable, and its success dated full transfer of NWSC operations to private sec- continues to inspire other organizations across tor management. Uganda. Dr. Muhairwe also travels extensively to Dr. Muhairwe used the push for privatization to fuel other countries to share his experiences at NWSC and his improvement efforts. He told his people that full encourage his counterparts to adopt similar scale privatization was five years off, and in the approaches to moving organizations to higher perfor- meantime there was a job to be done.3 He redoubled mance and capacity--he and his colleagues are cur- his efforts to engage his staff to sharpen performance. rently providing coaching and support to leadership In 2001 NWSC signed a national performance contract teams in a number of water utilities, including those with the Government of Uganda as part of the launch of Kenya and Tanzania. of PRSC 1. Convinced that the contract would provide the framework for a system of accountability and Stepping Back and Letting the Clients reward, Dr. Muhairwe reassembled his management Figure it Out... team and challenged them to establish and commit to In reflecting on his experience, Dr. Muhairwe specific performance targets. These area performance described an unusual relationship with the World contracts paralleled measures and indicators con- Bank team who worked with him to transform NWSC. tained in the national performance contract. Indeed, He said that he always felt able to drop by and discuss the sum of area goals exceeded the targets set forth the challenges and obstacles with members of the by the government. team. In response to these conversations, Muhairwe's Dr. Muhairwe made it clear that managers would be counterparts would track down management literature held accountable for the performance of their area and that could help, offering it with strong doses of would receive financial rewards if they achieved the encouragement. He also described the Bank team's targets. Some managers initially dragged their feet, but willingness to spend hours talking with him about all of them gradually embraced the effort, especially how to apply the latest theories and trends at NWSC. after the first wave of managers successfully set, 3 reached, and received rewards for achieving their NWSC had experimented on a smaller scale with two contracts goals. By the end of 2001, eight of the original eleven with private operators in the Kampala area between 1998 and 2001 and had outsourced several of its non-core functions areas were breaking even. At the same time, the num- such as security, cleaning, and vehicle maintenance to private ber of areas rose to 13, and NWSC reduced its staff by contractors. O C T O B E R 2 0 0 5 NUMBER 13 The NWSC story illustrates the powerful link that the journey to sustainable results. The other, perhaps can exist between achieving near-term results and more critical challenge is actually to travel down the developing organizational capacity for achievement path--to implement these constantly evolving solu- and performance. The transformation in capacity and tions. The capacity for making change happen tends performance started with a drive to achieve extraordi- to be the weakest link in the chain that leads to nary results--in 100 days. It was fueled by a relent- results. Here again, the NWSC story offers another less focus on achieving increasingly ambitious results. important insight: Chances of successful implementa- The "hands-off," yet supportive stance exhibited by tion can be improved if (a) people responsible for the World Bank team actually created the space for Dr. implementation are engaged in formulating the Muhairwe and his team to own the challenges--and desired changes, and (b) implementation efforts are the results. organized to show demonstrable impact in 100-day cycles. The NWSC story suggests that the capacity to "The key is not that they stepped in and waved implement and to make change happen exists in a magic wand, restoring NWSC to profitability," organizations, but it often lies dormant until the right Dr. Muhairwe explains. "Rather, they stepped context is created. back and let us figure it out for ourselves." Creating a Context for Achievement: Lessons from Crises Yet, many questions remain. Will clients have the capacity to implement efforts without the detailed In crisis situations, a sense of "change or perish" guidance that development projects used to provide often exists, and individuals, teams, organizations, them? Do clients have the technical capacity to figure and societies can almost instantly mobilize to take out the right solutions? Will they know where to start effective action. In a crisis, the factors that normally get and how to sequence implementation? Will they have in the way of swift, effective action fall away. Clashing the leadership and managerial capacity to drive imple- egos, conflicting agendas, aversion to risk taking, red mentation? Will they be able to create the right con- tape, poor methods of communication, and time-hon- text to ensure sustained implementation and results? ored traditions are all quite easily sacrificed. Previously These questions are important, but they are often unthinkable feats are accomplished in record time, and rooted in a world view that assumes that complex group members operate with a higher level of team change efforts can be mapped out in advance and spirit, energy, and creativity. Passionate leaders can foreseen to produce desired results. The reality sug- use crises to tap into capacity people never knew they gests that achieving long-term results requires con- had, a phenomenon that is as easily observable at the stant iterations and experimentation that cannot be level of personal experience as it is at the group level. engineered in advance or managed from on high. Natural disasters of all kinds typically unleash this Rather, the best that can be done is to continually response. But creative leaders do not need to wait for shape the right context for this experimentation and natural disasters or crises to unleash this capacity. discovery to take place. They can create the same underlying conditions of urgency and high stakes that drive people and organi- The Leadership Challenge: Unleashing Capacity zations to tap more of their capacity--and one way to As the NWSC case illustrates, the turnaround did not do this is through translating long-term plans into happen because donors--or Dr. Muhairwe for that 100-day "must-do" goals. matter--worked out some magical answers. Rather, Passionate--and Engaging--Leadership he created a compelling context in which a multitude of answers emerged, some no doubt quite different Learning from crisis situations to galvanize collec- in each of the water areas in the country. Where did tive action requires individuals who are willing to step these solutions come from? They came from people on forward and take risks. The quality shared by these the frontlines, who were in turn challenged by their individuals is an uncommonly stubborn belief in the managers to achieve unusual results. Moreover, these possibility, or even inevitability, of succeeding despite answers and strategies evolved and changed in the odds and seemingly insurmountable obstacles. response to the various challenges that Dr. Muhairwe These individuals are not exhibiting the "heroic lead- threw at the system--from "Start-Up," to "Step-Up," ership" so often glorified in management literature nor to "Stretch-Out." The NWSC story demonstrates a key a belief in their own ability or influence, but rather a principle: The capacity to figure out the right answers conviction about what one's team and organization often exists locally; the challenge for donors and prac- can achieve, once properly focused and mobilized. It is titioners is to give people the space to come forward this "engaging" quality of Muhairwe's leadership that with the answers that work for them. stands out. Figuring out the "right" solutions, however, (in the It is this same "engaging" quality that we have right place and at the right time) is only one step in observed in a variety of situations--and countries-- where the same phenomenon of capacity unleashing an explicit focus on performance improvement and a has occurred. These are individuals that are not nec- specific mechanism for achievement, the link between essarily at the top of the formal authority structure, reforms and results is a hit-or-miss proposition. but who choose to step into the role of empowering Perhaps a better approach is to start where there is others and inspiring them to reach for seemingly urgency at the local level for achieving better results, impossible goals. The presence of these types of indi- even if the path to achieving these results is not yet viduals can make a big difference in terms of driving clear, and the policy and institutional environment is the "results agenda" in development work. In fact, not yet quite optimized. some of the focus of development work needs to be on creating the conditions that enable and encourage Conclusion these individuals to step forward and take their right- What we can learn from the Uganda water experi- ful place in driving the results agenda in the develop- ence is not simply that some short-term results can ment of their country. stimulate positive changes in organizational capacity. We may also surmise that charismatic leaders can Where to Start? cause profound changes within a short time frame. In development work, the question of sequencing Compelling leadership, however, is often cloaked in and pacing of interventions occupies a lot of time and magical, inspirational overtones that cannot be repli- attention. This often leads to protracted discussions cated, much less scaled up. So then, how do we among development professionals and national leaders demystify leadership in the context of this work and (complemented by participatory consultations at all deconstruct it to its core components? Is it realistic to levels of society) to figure out the right blueprint for expect, wait, and hope for capable leaders to emerge? change: policy reforms, institutional reforms and so on. In this regard, perhaps the more important lesson No doubt this is tremendously critical work, as long from this experience is that of enabling context cre- as it does not become a substitute for taking action or ation. It is the creation of a compelling utility environ- an excuse for delaying action. In the case of NWSC, ment that inspired staff and managers to outperform when Dr. Muhairwe came on the scene privatization their expectations; thus, the task for donors and policy was at the top of the agenda; he brushed that development practitioners may be both to encourage agenda aside and focused on improving operations-- capable leadership and to allow for organizational starting immediately with 100-day results. environments to provide a compelling context in A focus on grand reforms can lull development pro- which natural leadership emerges and teams are moti- fessionals and government leaders into a false sense vated to outperform. of security. It can be tempting to think that enhanced performance can be signed into existence with the cre- Peer Reviewers: Heather Baser, European Centre ation of a legal document or policy statement. Organi- for Development Policy Management, and Peter zational, institutional, and policy reforms may be a Morgan, independent consultant on capacity and stimulus for accomplishing better results, but without institutional development. About World Bank Institute (WBI): Unleashing the Power of Knowledge to Enable a World Free of Poverty WBI helps people, institutions, and countries to diagnose problems that keep communities poor, to make informed choices to solve those problems, and to share what they learn with others. Through traditional and distance learning methods, WBI and its partners in many countries deliver knowledge-based options to policymakers, technical experts, business and community leaders, and civil society stakeholders; fos- tering analytical and networking skills to help them make sound decisions, design effective socioeconomic policies and programs, and unleash the productive potential of their societies. WBI Contacts: Mark Nelson; Program Manager, Capacity Development Resource Center Tel: 202-458-8041, Email: mnelson1@worldbank.org Pinki Chaudhuri, Coordinator Tel: 202-458-5787, E-mail: pchaudhuri@worldbank.org Visit our website for more information and download the electronic copies of all Capacity Development Briefs: http://www.worldbank.org/capacity O C T O B E R 2 0 0 5 NUMBER 13