The world’s premier alliance of multi-stakeholder change networks is reviewing standards that operationalize their change strategy. The ISEAL Alliance is the global association for social and environmental standards.  Members include the Forest Stewardship Council (FSC), the Marine Stewardship Council (MSC), Social Accountability International (SAI), the Fair Labelling Organization (FLO: fair trade) and the International Federation of Organic Agriculture Movements (IFOAM).

You know ISEAL organizations by their labels:  Fair Trade’s on coffee, MSC’s on seafood,  FSC’s label on paper and wood products. ISEAL’s Impact Code helps define what to measure and how to measure in order to be awarded the labels. Highly relevant is the work of 2009 economics Nobel Prize winner Elinor Ostrom.

The Change Strategy

The change issues are sustainability and economic justice.  A basic Code element of the change strategy is multi-stakeholder engagement.  This produces a “whole systems” perspective about how companies’ actions impact social, environmental and economic outcomes. This is a big change from the traditional exclusive corporate focus on its own financial welfare.

Currently the standard does a good job of defining who stakeholders are.  However, how they must be engaged is defined under the very general concept of “consultation” that raises questions.

For MSC and FSC, certifiers who meet certain standards are hired by a “client” (usually a forestry or fishery company) to determine whether certification standards are being met.    Typically certifiers interview stakeholders individually and there is not necessarily a collective meeting of stakeholders.  Nor is there any requirement that a multi-stakeholder group be developed to manage the fishery/forest or ensure the certification standards are being met between the certification renewals.

This is distinctly different from the strategy of the Global Fund to Fight AIDS, Tuberculosis and Malaria (the Global Fund) and the Extractive Industries Transparency Initiative (EITI).  The former only accepts funding applications from multi-stakeholder groups;  the latter, a spin-off of Transparency International, requires that applications for “validation” of transparency standards come from multi-stakeholder bodies.

“EITI offers a platform for dialogue to discuss transparency issues,” Tim Bittiger, EITI Regional Director explained to me.

The Nobel Prize

Ostrom won the Nobel Prize for her analysis of economic governance. The media release announced her win this way:

“(Ostrom) has challenged the conventional wisdom that common property is poorly managed and should be either regulated by central authorities, or privatized. … She observes that resource users frequently develop sophisticated mechanisms for decision-making and rule enforcement to handle conflicts of interest, and she characterizes the rules that promote successful outcomes.” (Royal Swedish Academy of Sciences 2009)

She spent decades studying successful resource management at the local level by multi-stakeholder groups.  Most of ISEAL’s members are multi-stakeholder networks at the global level, which reflects their theory of change.  This would lead you to expect that they would find this a compelling arrangement locally, as well.

Empowerment

Paddy Doherty who is managing the Impacts Code review process, says that ISEAL members talk about the importance of “empowering” stakeholders.  This suggests the importance of creating new governance arrangements locally where differences can be worked out, and collective planning and heightened standards can be advanced.

As might be expected, there is already experience with cross-stakeholder groups locally.  FLO deals with cooperatives that cross the traditional labor-management divides.  MSC Project Manager Amanda Stern-Pirlot comments that: “If a fishery has certification conditions (i.e. has to make improvements over the course of their certification) often the cooperation of others is needed to fulfill these conditions, particularly when improvements to management systems are needed. In lots of situations, having a good collaborative relationship with stakeholders outside the client group is essential.”

Multi-stakeholder Platform Issues

The idea of forming multi-stakeholder groups for certification raises skills issues. Typically certifiers have traditional auditing expertise (eg.: from Arthur Anderson) and would not be equipped to handle some of the dynamics and associated goals.  Making multi-stakeholder platform development would require a very different set of competencies.

Doherty raises the valid point that the Global Fund and EITI are dealing with different situations:  handing out large amounts of money in the one case, and working with large corporations and governments in the other.  However, maybe this simply suggests a modified strategy to foster formation of a multi-stakeholder group.  It could be made a condition of renewal of certification, for example, so the initial certification ushers is contingent upon a plan and commitment to develop a local platform.

The big product and attraction to multi-stakeholder platforms is their ability to coordinate their very distinct resources and capabilities, and challenge each other’s parochial perspectives, to produce very wonderful innovation…to do what none of them could imagine doing on their own.  This is the type of change that is required to realize the objectives of ISEAL Alliance members.  This has been well-documented, including in my last book Societal Learning and Change:  How governments, business and civil society are creating solutions to complex multi-stakeholder problems.

Until 30 April 2010 you are invited to contribute your ideas for improvement, discuss key issues, and propose changes to the code.

Networks aiming for large systems change go through development stages as they grow and move from initiation to realizing their potential.  But throughout these stages, there are three particular dynamics important to nurture across these stages.

First Network Dynamic:  Community Development

These days the terms network weaving and boundary spanning are often presented as new concepts.  But for anyone like myself who has a pre-internet history in systems change, the term community development gets at the essence of what network development is about.  Some people might resist community development because they think of it as “geographic”, but this was never a necessary quality.  Global Action Networks are community organizers – it’s just that their community is global.

I like “community development” because it’s grounded in a very rich history of strategies and activities that are very adaptable to network development.  Moreover, framing a network as a “community” emphasizes its human rather than technical qualities that are the essence of healthy networks.

Community development starts with understanding who is in the community.  At the beginning, this is often more complicated that it might seem.  For the Global Finance Initiative we spent significant time analyzing this with mapping processes to identify key stakeholder groups and organizations/networks within each of those stakeholder groups.

As a network develops it brings out participants’ common interests and builds a common sense of purpose that are essential to successful networks.  One key outcome is enhanced understanding of inter-dependence. A second key outcome is enhanced coherence. This is a really important systems thinking concept that describes the process of creating alignment among the stakeholders towards a common vision.  By increasing stakeholders’ contact with one another, they understand and begin integrating diverse perspectives and developing shared activities.

Second Network Dynamic:  Deep Change

Colleague Otto Scharmer of Massachusetts Institute of Technology developed the Deep Change figure to describe transformational change processes.  This followed interviewing over 150 thought leaders on innovation and leadership. Social change networks are about realizing this type of profound change with their diverse participants.

The process is sometimes referred to as the “U process” because of the shape of the figure.  It begins with “co-sensing” to develop a collective understanding of “the current situation” with respect to an issue that appears “stuck”, complicated, and of high complexity.   Scenario development and other processes help people realize particular patterns that can make sense of diverse perspectives.  For large systems, this initially might take a year or two.

This moves people into co-inspiring, what Otto also refers to as “presencing”.  It is so central for him that he has established the Presencing Institute and some of the great open source online resources like the U toolbook. Presencing requires a process such as a retreat where people can get in touch with what might be and what is possible to “emerge” from “what is”.  This might take six months to a year.

The next stage is the “co-creating” which is my particular focus with networks as vehicles for this:  development of the strategies, relationships, resources, skills, structures, processes, and cultures to support responses to the network issue.  This involves fundamental realignment of power relationships that are deeply challenging to traditional organizations and individuals.  For global impact, this takes a couple of decades or more.

This approach guided the development of the change network called the Sustainable Food Lab.  This change process involves significant “shifts” in power and relationships amongst individuals, organizations and with society as a whole.  It is a process that I describe as “societal learning and change”.

Third Dynamic:  Experiential Learning

Experiential learning processes are the third dynamic present throughout change networks’ development.  Sometimes people refer to Scharmer’s dynamic as one of “learning from the future”, which means going through a process of deep reflection upon the current state, possibilities to address some issue and how to realize those possibilities.  Traditional learning is about learning from experience and the past.  This is often referred to as the “experiential” or “Kolb” learning cycle.  It draws from work of John Dewey, Kurt Lewin and others that David Kolb summarized.

This is the essence of creating a learning network as processes and a culture that encourage reflection upon what has been done, and integration into future actions.  This should not be thought of as a great chore or require some huge effort.  Rather, it is something that is integrated into the daily, weekly, monthly and annual rhythms of a network.  I like the term “action learning” to emphasize that there are not huge gaps between the steps in the cycle, but that they should happen as decisions are being made.

The health of these three dynamics is developed through a variety of activities.  Assessing their health should be part of assessing the health of a change network itself.

We can easily be overwhelmed by the complexity of large networks where there are  many different organizations and people involved. Clearly “seeing” relationships between organizations, people, and key concepts is important for successful network strategies.

To vastly enhance and speed understanding of these relationships, I’ve worked with various forms of “mapping”.  Network maps are diagrams of lines or arrows (representing connections) and nodes (representing individuals, organizations, ideas) that can visually communicate tremendous amounts of information much more easily than volumes of text.  Here are some approaches I’ve found useful:

Web crawls

This approach maps and analyzes relationships between URLs.  This gives a picture of how organizations and issues are connected virtually that is increasingly important in any strategy.  Since URLs are usually associated with organizations, crawls quickly identify organizations working in a particular issue system.  The crawls maps links on one web-site to another webs-site.

Example: Working with a tool developed at the University of Amsterdam, we did crawls to identify networks in the global finance system for the Global Finance Initiative in order to identify key organizations and people to develop a change strategy.  Map 1 is of NGOs engaged in the global finance debate;  it suggests that surprisingly they do not have well defined relationships with perhaps the most influential players in global finance, including the Bank for International Settlements and the Financial Stability Board.

Map 1:  Web Crawl

(Click on map to enlarge view.)

Social/Organizational/Inter-Organizational network analysis (SNA/ONA/IONA)

This is classic social network analysis applied specifically to understanding relationships within and between organizations. The existence and relative importance of relationship, connections or communication flows between individuals and organizations is described by these approaches.

Example: When the Global Reporting Initiative considered its strategy for developing a South African network, we used social network analysis.  This produced Map 2, which shows distinct groups of organizations.  This emphasizes the importance of weaving the groups together, and the value of working with organizations that are well-connected in the groups.  Another product was a guide on how to initiate a network.

Map 2:  Inter-Organizational Social Network Analysis

(Click on map to enlarge view.)

Value Network Analysis (VNA)

Key roles and value outputs in an issue system are defined through VNA, helping to shift stakeholder mindset toward a network perspective beyond their usual organizational or institutional focus.   This approach has been developed by Verna Allee. It is available for immediate access and applied use at http://valuenetworks.com/.

Example: When the European Commission wanted to understand how to enhance the process of innovation, we applied VNA using the ValueNetworks.com application to produce a report with four archetypes (models) for moving from an academic idea to a product for a consumer, with important policy implications.  Verna emphasizes the importance of including both contracted tangible exchanges such as money, and intangible ones such as information.  This is illustrated in Map 3

Map 3:  VNA map of innovation

(Dashed lines are intangibles, solid lines are tangibles.  Click on map to enlarge.)

Strategic Clarity Mapping (SCM)

SCM generates a mutual understanding among diverse players’ of their respective strategies to address an issue – including their mental models about change strategies.  This approach has been developed by Jim Ritchie-Dunham of the Institute for Strategic Clarity.

Example: When CARE in Guatemala pondered the increasing poverty, despite its best efforts for many years, we used SCM to change the strategic relationships of CARE, and shift it from project-level to system-level strategies (from building wells to creating a system to build wells).  Map development is documented in a learning history I wrote.

Another examples is with Youth Employment and Sustainability (YES), a Global Action Network.  Institute for Strategic Clarity Vice President Luz Maria Puente worked with YES’ Latin American region, to support the region’s and the sub-countries planning.  It revealed both distinctions between the countries’ strategies to help them learn from one another, and identified weaknesses and strengths of their strategies.  Map 4 shows how Chile and Mexico develop entrepreneurial skills, so young people can start their own business, by providing them support through an incubator system.  This work with YES is described in a Working Paper just published today.

Map 4:  SCM Complex view of poverty

(Click on the map to enlarge.)

A key contribution of these mapping approaches is their ability to generate strategic discussions.  People can see links that they can question, and discuss how to strengthen them in a very strategic manner.  They identify key leverage points — points that will help “move” the entire system because of their connections to other points.

Web crawls are definitely the easiest to undertake.  SNA and VNA and SCM in particular are best developed collaboratively with system participants.  With this approach, even the SCM insights and outputs are well understood.  You can find a paper comparing these methods here. And join me for a free webinar March 17 to further explore these methods;  you can find more webinar information here.

If you were given 10 million euros and three to five years, how would you go about “changing the role of the financial system to better serve economic, social and environmental objectives”?  The EU is asking that question.  And that’s something that I’ve been answering with a consortium of more that 20 European universities. Our proposal went in last week.

For me, all this builds on the work of the Global Finance Initiative that I led.  Scaling Impact’s Sanjeev Khagram and I were convinced of the need for a multi-stakeholder Global Action Network (GAN) in the global finance arena that would take on the very issue the EU is asking with an EU focus.  Starting in January 2008 – just before the financial crisis and with $185,000 from Ford Foundation – we analyzed the global financial arena by further developing mapping methodologies and putting together a stewardship team that came up with a clear action strategy.

But we couldn’t get money for the next phase…because the financial crisis shrank foundations’ budgets and visions!

One exciting aspect about the EU Call is that they clearly want what I’d call a societal learning and change strategy…where financial system stakeholders will work together to (1) gain important new knowledge and perspectives that will change the way they think about the financial system, and (2) develop new social ties that provide for on-going development of new ideas, strategies, structures, and processes with regards to the financial system.

In other words, the goal of the Call is not simply to produce new reports, books and ideas…it’s about making sure the new knowledge is “held” by stakeholders and that they have the vision and relationships to further it.

The Proposal

The proposal to the EU was put together with leadership of the European Academy for Business in Society and Maurizio Zollo, Director of the Center for Research on Organization and Management at Bocconi University in Milan.  It proposes conventional research by an inter-university faculty to investigate from a multi-disciplinary perspective the historic financial system dynamics with comprehensive analysis of the reasons for the financial crisis.

But the project also proposes an action research strategy that includes:

1. Mapping social structures and developing a holistic computer model that simulates cross-system (finance-environment-social-economic-political) and cross-level (local-to-global) interdependences. This contrasts with the narrow product- and firm-level simulations used by finance that contributed to the financial crisis.
2. Engaging stakeholders. A stakeholder council will include financiers, policy makers, regulators and social-, labor-, consumer-, and environmental-activists working on finance issues.  With the researchers, the councillors will co-lead the project and engage their respective constituencies. This will be supported by an innovative social media strategy.
3. Scenario-building. Through stakeholder engagement with small focus groups around the world and larger European ones, plausible alternative futures will be developed.
4. Experimenting. Working with financial firms and other stakeholders, new approaches to such things as decision-making and product development will be tested.

Each of these four actions will further develop methodologies that will be very helpful to other network change strategies.

This approach, like the strategy proposed by the GFI, builds on the experience of GANs and the World Commission on Dams in particular.  The WCD was a 1997-2000 multi-stakeholder process to create comprehensive guidelines for the building of large dams in response to environmental and social disasters associated with large dams funded by the World Bank.  Although the diverse Commissioners reached consensus in a final report, it did not translate into agreement among the broader stakeholders‘ community, and responsibility for next steps was delegated to the UNEP that proved incapable administratively or authoritatively to effect pursuit of the Commission‘s work.

The response to the EU Call aims to overcome the WCD short-coming with its more comprehensive activities and explicitly creating stakeholder connections that can carry on the work.

How would you address the financial crisis as a large-system change challenge?