sou · GZB321 · 2011-03-08 00:00:00 — Each of these transitions is characterized by tremendous uncer- tainty, but their simultaneous occurrence is creating existential challenges for many of the core institutions of our society. The recent financial crisis is an early example of what is likely to become much more common in the future; namely, the inability of key institutions to anticipate and adapt to changes not only in the global operating environment, but even in the specific domain for which they are responsible. The sequence of institutional creation, obsolescence and reinvention is a central aspect of the very process of history.2 Institutions and the organizations in which they take form (including states, bureaucracies and market systems) are created by human beings to manage and bring predictability to key areas of uncertainty. They are designed to manage one set of circumstances and then often become brittle and unable to respond to change over time. In an environment of expanding resources, brittle institutions can persist for a very long time in comfortable irrelevance. In times of resource scarcity and deepening uncertainty on the other hand, the fundamental choice for many institutions is between adaptation and disappearance. The Adaptive Function of National Diplomatic Institutions For deeply globalized states, this inexorable logic of institutional natural selection places particular importance on the effective- ness of their national diplomatic institutions or ministries of for- eign affairs (MFAs). These organizations have unique responsi- bilities to citizens at the juncture of the historic transitions above and the changing nature of national sovereignty. This is particularly true in Europe given the still-forming balance in practice between the role of member states and the EU in securing the long-term interests of citizens; however, it applies in all cases given the extent to which the primary sources of uncertainty and strategic surprise are now fundamentally global in nature, while the institutions of global governance remain only partially functional. The fading of the boundary that once separated domestic and international policy domains is accelerating as global strategic considerations increas- ingly penetrate all areas of economic life. This process is elevating 2 See , winning economist, in Understanding the Process of Eco- nomic Change. the importance of international law3 and therefore diplomacy as the strategic importance of complex negotiations regarding rule- sets increasingly rivals or even surpasses that of traditional security competition. In natural response, a host of previously domestically- oriented institutions have become increasingly globally – each in its own functional domain. However, the most critical of these issues are increasingly defined by their interconnectedness (e.g., between climate and economic policy, development and security policy, etc.) placing a rising premium on effective strategic coordina- tion and integration. Among the standing executive institutions of democratic governments, MFAs are in many cases most directly responsible for planning and coordinating cross-governmental action in global affairs – and for considering the totality of national interests.4 Thus not only must MFAs calibrate the position of the state within larger regional and global governance institutions – balancing national interests with those that apply at these other increasingly vital levels; they also must play a key adaptive role in collaboratively orchestrating the global activities of the internal institutions of the state. These factors combine to create a degree of complexity for national diplomatic institutions that can only be addressed with significantly more sophisticated instruments of strategic management. The Changing Variables of Statecraft and Diplomacy In parallel to the emergence of these new institutional demands facing MFAs, the players, rules and instruments of statecraft itself are in the midst of a period of fundamental change. State-to-state diplomacy remains fundamentally important, but requires increas- ing degrees of global orchestration. Communication and negotia- tion remain essential, but now must occur with a wider range of actors and often require technical expertise in domains far from the traditional disciplines of international relations.5 This does not mean that diplomatic institutions must retain this expertise inter- nally; doing so is neither feasible nor desirable. However, they now must excel at identifying the need for that expertise, locating it wherever it resides in the government, and decisively coordinating 3See , The Shield of , (: , 2002). 4They generally play this coordinating role without decision-making authority. 5For example in science, and technology; financial analysis, valuation and deal structure; corporate strategy; etc. In addition, the revolutions in information and communication technology, including the rise of social media, have permanently altered the value of the traditional reporting and com- munication roles of diplomats, while placing a growing premium on the action and engagement-oriented aspects of their work. What increasingly distinguishes diplomats in the field from internet- enabled analysts at headquarters is their unique ability to cultivate social capital and influence; build first-hand, high-resolution and non-open source knowledge of the political and strategic landscape; convene, align and mobilize key partners; and, manage diverse teams to achieve tangible results on the ground. Thus, from yet another perspective, the complexity and operational intensity of diplomacy are rising exponentially. At the geopolitical level, the diffusion and changing nature of power and the growing intensity of the competition for influence demand that states be better able to align and concentrate the force of their efforts leveraging all available sources of . The environment increasingly demands true whole-of-government and in some cases even whole-of-society alignment of effort. It also crucially demands more speed. The increasing complexity and accel- erating operational tempo of the emerging global operating environ- ment is causing the value of purely reactive diplomacy to diminish. As a result, the demand for proactive, anticipatory, multi-actor engagement is rising inexorably. This form of diplomacy requires a sophisticated ability to anticipate developments and to analyze the social dynamics and patterns of influence by which they can be shaped. At the same time, it requires an institutionalized ability to make long-range decisions and sustain their implementation. In short, in the current and emerging operating environment, effective action simply requires more strategic processing power. specifically, it requires an institutionalized capacity to: Sustain systematic, anticipatory awareness of their strategic ope- rating environment; Understand their states and citizens long-term interests and priorities within that environment; Harness the collective intelligence of the entire organization and its extended networks; Enable their political leaders to make best possible decisions based on independent, rigorous analysis; and manage clear immediate and long-term priorities and meaningfully specific objectives; Determine, design, and develop the capabilities necessary to achieve those objectives; and, Align resources with and manage performance against those priorities. Taken together, these strategic management capabilities repre- sent the core adaptive capacity of the state in the service of its citizens and society. In most states, the institution that most clearly has the human capital, global presence and networks, and – of par- ticular significance – the mandate to lead this comprehensive strategic work in support of the elected government is the . While the military and intelligence communities also have critical responsibilities in these areas, they are limited by mandate and orientation to a focus on threats and the assessment of existing choices. The role of MFAs, on the other hand, is distin- guished by its vital focus on strategic opportunities as well as threats and its responsibility for creatively and transparently gen- erating foreign policy alternatives. MFAs therefore represent an indispensable engine of innovation in foreign policy and grand strategy. The challenge, however, is that in terms of the strategic management capabilities required to play this role, many national governments are still relying on an institutional nervous system that was designed to manage a very different global operating environment using what are now outdated tools and processes. As a result, not- withstanding the indispensable role of national diplomatic insti- tutions in securing the long-term interests of their citizens, their capacity to do so is unclear. To understand the features of the strategic culture most prevalent across MFAs, it will be important to establish several operational definitions of the key and often confused terms of policy, strategy and resources. These are only working definitions for the purposes of this paper as there is no formally agreed upon lexicon of planning terminology. Policy: A policy generally refers to a principle or guidance mechanism for decisions. For the purposes of this paper and in the foreign policy context on which it is focused, policy can be defined as the official guiding orientation or position of a state with respect to a given issue or set of issues. Policy software can be instantiated in laws, rules, the speeches of the heads of institutions (policy-makers) and various other forms, public or non-public. Policy defines the parameters within which a given government will act (reactively or proactively) with respect to a given issue. It may include goals and the strategies and resources that will be used to achieve them, but those are not central to its definition. Strategy: Strategy is an overused term and an under-practiced discipline. It is too often used to mean simply how to do any- thing intentionally. To avoid this error, the term can be distin- guished by four defining requirements. First, strategy pertains to choices of specifically long-term consequence. Second, a decision can be meaningfully said to be strategic only if it bears a significant relationship to a given mission or central purpose consisting of multiple linked activities. (In contrast, the term tactics is reserved for issues of primarily only near-term direct consequence and those only partially or peripherally related to a central purpose or mission.) Third, strategy is intrinsically perspectival; that is, it requires a defined acting subject with a specific perspective and set of interests. Finally, strategy per- tains in all cases to actual choices6 and prioritization. In func- tional terms, again for the purposes of this paper, strategic planning is the process of: (a) defining goals and objectives; (b) prioritizing among them; and, (c) designing and planning the actions and investments by which those goals and objectives will be achieved (in particular based on explicit consideration of internal resources and external conditions). Although not central to the definition, strategy also ideally includes moni- toring performance against objectives and adapting accordingly. Strategy often necessarily and correctly overlaps with policy (as defined above) in the definition of goals and objectives. 6 The classic test of this criterion is to ask if the opposite of a given strategy represents a plausible choice. Thus by this test, improve performance is not a strategy as its opposite (degrade performance) is not a plausible choice. Resources: There is confusion about the definition of resources. For the purposes of this paper, the term resources refers to the assets used to accomplish a goal or objective. What is vitally important, and too often forgotten in government, is that resources must be understood comprehensively; that is, they include all resources: human, financial, physical and intellectual.7 This aspect of the definition is of particular salience in the current environment because of the austerity efforts underway in many countries. Those efforts often feature a focus on available resources rather than comprehensive resources. What this means in practice is that entrenched interests are able to protect resources from consideration by the strategy process. The result is to make truly strategic expenditures shifts nearly impossible. III.Diagnosing the Problem – Part 1: to Strategic Coherence Although statecraft and the foreign policy enterprise are supreme examples of long-term and fundamentally strategic endeavors, the day-to-day practice of the discipline of diplomacy that supports them is in many ways necessarily reactive – mirroring the political processes to which it is tied in so many ways. Diplomats must be sensitive to immediate circumstances and able to notice and respond to changes rapidly. Details matter, short-term political considerations can never be disregarded, and brief windows of opportunity are often of decisive importance – particularly in the context of the global media environment. Unfortunately, this reac- tive operational orientation in the field and the system of incen- tives that it creates across MFAs has eroded the strategic culture of the supporting institutions. This has both led to and been exa- cerbated by a perennial under-resourcing of the diplomatic func- tion.8 To put it simply, the reactive has crowded out the proactive. Among the clearest internal manifestations of this reactive orien- tation (and increasingly among its root causes) are the surprisingly common weaknesses of traditional MFA policy, strategic and 7In the purest sense, the term resources includes political resources, but political will is excluded for the purposes of this paper. 8Although some countries have begun to make progress in addressing the issue of under- funding, it remains widespread. resource planning processes.9 To begin to understand these weak- nesses, it will be useful to consider several of the organizational challenges that drive them. The Political – Professional Divide: In diplomatic institutions, the divide between the political leadership10 and the professional or career staff is both a central cause and a costly result of the weak- ness of strategic management. This divide is a function of many factors. First among these is the simple fact of the difference in time horizons and corresponding divergences in incentive struc- tures. The political leadership of any government ministry has only a 3–5 year window within which to accomplish its aims. This short time horizon can drive an urgent results orientation within the organization, but it can also lead political appointees toward an excessive focus on shallower, near-term policy outcomes at the expense of longer-term priorities. Second, given potential differen- ces in political orientation, appointees can also often be inclined to limit the policy-making process to a trusted inner circle of like- minded staff – constraining their ability to tap the institutional knowledge and operational capacity of the ministry. Finally, poli- tical appointees have strong incentives to maximize their freedom of action, often making them disinclined to be encumbered by a powerful and binding strategic management process – regardless of its potential benefits for their ability to lead the organization and drive enduring results effectively. Professional staff, on the other hand, have natural bureaucratic incentives to place priority on long-term policy results and the long-term interests of the institution itself, but they can also fall prey to empire-building and turf wars at the expense of true stra- tegic priorities. They also can often become invested in retaining legacy processes and resistant (passively or actively) to efforts by political staff to drive real and necessary change. Finally, in the case of most MFAs, the innovative capacity of professional staff has been limited by the fact that no meaningful time or capacity for strategic foresight has been built into the day-to-day processes which they must execute. Under any combination of these 9In many cases, these weaknesses apply to large governmental institutions in general. They are less common in the private sector because these flaws cannot survive in a competitive market unless protected by high barriers to entry, monopolistic power or government sub- sidy. 10This refers not to members of parliament, but to the politically appointed personnel with- in government ministries whose term of service is linked to that of the elected government of which they are a part. circumstances, this divide can be a source of significant mistrust and organizational dysfunction. Although superior leaders find ways to this divide, institutionalized arrangements for doing so on a consistent basis are rare. The Policy-Strategy-Resources Gap: Among the key and most common bureaucratic results of the political-professional divide is the segregation of the policy, strategic and resource planning pro- cesses. This segregation, in turn, leads to many of the weaknesses to be discussed. At the highest level, it undermines the ability of an MFA to create a coherent and optimally resourced political and operational strategy. The internal costs of the gap can be understood in terms of its consequences for the divided functions themselves. Policy Planning: As defined here, policy planning does not refer to policy-making as it occurs within various regional and functional units or as part of their everyday work. Instead, this refers to the institution-wide policy planning office, function or process that provides intellectual support to the Foreign Minister on issues that cut across the institution. When these functions are segregated from resource and strategic planning, they tend to adopt a focus on broad, conceptual policy issues. In some countries, they have come to be populated over time primarily with academics to the exclusion of both professional planners and diplomats. Without specific planning competence or field experience, policy planning offices can often become speechwriting shops – a vitally important task, particularly from the perspective of political staff, but not one that can meaning- fully be called planning. In addition, while their proximity to the Foreign Minister gives them great influence, their segregation from resources severely limits the depth at which they can meaningfully shape substantive issues. Since resources are central to choices and prioritization and those are, in turn, the essence of strategy, the end result is that policy planning loses its strategic role. Strategic Planning: the last 5–10 years, formal strategic planning of some kind has become increasingly common in government institutions of all types. However, when these activities are segregated from the policy process, they can become bureaucratic requirements with real power to drive results or change. They are often sustained to meet a legislative requirement or in an effort to create more transparency and accountability. The products they generate include strategic plans that translate policy priorities into goal frameworks. However, as they are often not linked directly to resources and often do not receive strong sponsorship from senior leadership, these frameworks are in many cases primarily only symbolic. Resource Planning: Because so much of the resource pool in government organizations is fixed and so is at least appar- ently discretionary, resource planning is often simply a budget development and execution function. In times of fiscal aus- terity, its profile rises primarily because its role in finding savings and/or implementing blunt across-the-board cuts. In times of surplus, the resource planning function is most often only responsible for executing the resource allocation decisions of senior leadership without offering any deep strategic or ana- lytic support. Thus resource planning becomes an opaque pro- cess behind closed doors that is driven by neither the strategic or policy planning functions and is insufficiently supported by visibility into the actual relationship between objectives, resources and results. The divided approach to policy, strategic and resource planning in many MFAs does not generally represent an intentional choice. Instead, it is the result of dysfunctional bureaucratic incentives playing out over a long period of time. Internally, this divide can disable the adaptive capacity of the organization by separating what needs to be done from how it must be executed and funded over time. Externally, it can also be a significant constraint on effective- ness by slowing decision-making and limiting the ability to make long-term investments. generally, it contributes to making diplomacy too much about getting the words right and not enough about achieving results on the ground. Diagnosing the Problem – Part 2: Common Systemic As a result of these fundamental challenges to strategic coherence, many diplomatic institutions are increasingly vulnerable to being surpassed by events and the agility of emerging global actors. Inter- views and work with many diplomats, diplomatic institutions and specifically diplomatic planning professionals over the last 7 years suggest that many of the most pressing and long-standing weak- nesses of strategic management are nearly identical across even highly distinct cultures. This suggests that the mismatch between the planning capabilities of diplomatic institutions and the demands of the emerging global operating environment is as much a system-wide as institution-specific phenomenon. In fact, the per- sistence of the weaknesses may well be a function of the relative lack of competition between diplomatic institutions and other cate- gories of actors. Until recently, given the overriding focus on government-to-government consultation, the absence of external evolutionary pressure has created few incentives for innovation in diplomatic practice. These weaknesses manifest themselves as a set of common divergences from what best-practice performance includes in the 21st century. They are presented here in four broad categories: Inability to Enable Anticipatory, Proactive Action and Investment Systematically: The lack of rigorous, systematic and compre- hensive foresight capacity in large diplomatic institutions has made it difficult for an anticipatory orientation to emerge. When this capacity is absent or weak, individual policy-makers must commission analyses in specific domains on an ad hoc basis or simply limit their efforts to acknowledged current cir- cumstances or a lowest common denominator consensus regarding the most likely future. This inability to systematically track and analyze trends and to consider the evolving range of plausible possible future operating environments (or scenarios) strength- ens the tyranny of the present, induces an excessive focus on discrete events and threats at the expense of context and oppor- tunities, and generally reduces significantly the institutional capacity to take anticipatory, proactive action and make long- term investments. Lack of Systematic Preparedness for Potential Strategic Shocks: This refers to the absence of any systematic process for: (a) identifying, analyzing and prioritizing the range of possible stra- tegic shocks or surprises11 that could be of vital national sig- nificance; and, (b) developing and rehearsing comprehensive responses to those potential shocks of greatest significance and likelihood. It is distinguished from the trend-centered instru- ment above by its focus on preparedness for non-linear forcing events and wild cards – the hallmark of resilience.