An ambitious modernization agenda is beginning to transform the International Monetary Fund
The world today is under stress. Crises like Covid-19 and climate change converge with social injustices and rapid technological advances. ‘Business as usual’ simply won’t work. Reaching that conclusion is easy enough: the challenge is exactly how to adapt, given so many uncertainties. One organization grappling with that question – and confronting the full force of the change dynamics at play around the world – is the International Monetary Fund, known as the IMF or simply the Fund.
The IMF was founded 77 years ago as a vehicle for reconstructing and stabilizing the international monetary system for countries devastated by war and economic imbalances. Today, with 2,400 employees, 190 member countries, and a $1 trillion lending capacity, it is a complex institution with enormous reach. Its work directly influences the lives of the citizens of its member countries. Like any institution with such longevity, the Fund has developed routines that inform how work gets done – but sometimes these practices can evolve into rigidities. Today, the Fund is focusing on modernizing its processes and operations to be more flexible and responsive to the needs of its member countries, helping them to deal more effectively with their stresses and strains.
Faced by such formidable challenges, many organizations focus on IT investments to drive change, neglecting the importance of human empathy. The Fund is different. Purpose and empathy are centre stage. We at Duke CE have been fortunate to partner with the IMF on leadership development, providing an opportunity to observe the Fund’s transformation activities. We typically review change initiatives after the fact, but this is a story about change-in-progress.
Innovation and change
Gina Paone is head of the Fund’s Office of Innovation and Change (OIC). It was created by bringing together the existing Innovation and Change Management Units, with the aim of amplifying innovation and supporting change across the IMF. The new team supports departments and management in steering a prioritized portfolio of organizational changes and fostering a culture of innovation.
With a deep background in talent, learning and organizational development, Paone is helping transform the Fund by engaging its 2,400 employees in the change process. Like so many businesses and organizations around the globe, the IMF has been catapulted abruptly into the virtual world by the pandemic – but the OIC has been working for over 18 months on the Fund’s modernization agenda. Currently, five programmes make up the building blocks for a more modern workplace and more agile ways of working:
- Transforming the HR system and operating model
- Reforming capacity development management and administration processes
- Creating an integrated digital workplace
- A next generation economic data platform
- Knowledge management.
Let’s be clear: change initiatives of this magnitude are never easy and success is not assured. Given all the hard work involved, is change really necessary? One survey of 2,000 managers conducted in 2018, reported on hbr.org, revealed that 47% said they need to reinvent their businesses every three years or less just to survive. Early data for 2020 found the percentage had grown to 58% (‘Three Things You’re Getting Wrong About Organizational Change’, hbr.org, June 2020). Change is crucial to the long-term health of most organizations. Technology is often mistaken as the change itself, but the practical reality is that technology is an enabler of change. People are the driver of change. The reasons are self-evident: without the commitment of its people, any organization’s change initiative will struggle, if not outright fail. Boston Consulting Group (BCG) research indicates that 75% of change initiatives will not work; McKinsey suggests that 72% of failed change programmes are the result of employee resistance. But there is good news too. Another BCG study of 40 digital transformations found that improved financial performance was five times greater for those organizations that emphasized culture compared to those that ignored culture during change efforts.
Don Jones of Experience IT identifies three variables that influence successful change: engaging people in the effort, developing processes fit for purpose, and having relevant technology. These variables tell a story of priorities. For change to succeed, people need to be engaged with the effort from the start so they can see how their work contributes; processes need to be aligned across the organization, not restricted within operating silos; and technology needs to be understood as the enabler, not the driver, of change. Each variable has resonance with the work under way at the IMF.
Today’s converging crises are compromising the economic health of countries everywhere. To mitigate the human toll of these crises effectively, the Fund knows it needs to respond ever faster – and with greater empathy. Empathy places the human condition at the forefront of the Fund’s transformation, recognizing that people are ultimately the catalysts driving change and the beneficiaries of improved operations.
Being empathetic extends to employees too. It connects them more directly to the IMF’s purpose and gives meaning to their work. The Fund is a diverse group of professionals at all levels, with extensive international experience and tenures of 18-20 years or more. IMF employees, such as its PhD economists, work on formidable problems and they take their jobs very seriously because lives are at stake along with countries’ economic health. Their work encompasses a breathtaking range of professional capabilities, which are brought to bear in producing methodologically-sound and evidence-based analyses tailored to each member country’s unique economic needs. The Fund’s operating practices are rigorous, intensive in terms of time and resources, and consequential for its member countries.
As a result, the potential of change initiatives to interrupt the normal flow of work needs to be managed carefully. The OIC engages with Fund employees to encourage their commitment and contribution to the transformation agenda. A culture change of this magnitude requires everyone within to embrace a mindset shift, willingly practising and pursuing change. Progress can be slow at first, says Paone, particularly with 77 years of tradition informing how things are done – so the focus has been on creating a people-centred movement. As more people practise change and see the benefits of working together in a more collaborative, agile, innovative and empathetic way, a network effect takes hold, catalysing the movement and helping it to grow beyond those early adopters who courageously stepped in to attempt change.
The ability of the Fund to engage empathetically with both employees and the beneficiaries of its work will be central to the success of its change and innovation initiatives.
Develop fit-for-purpose processes
Since the IMF’s practices and procedures have been honed over decades, the incentive to change them can be weak. But there is a recognition today of the need for modernization to keep pace with the fast-changing world in which the Fund operates. Internal reviews, silos and cumbersome approval processes among the Fund’s different programmes have been identified as a factor in slow decision-making. Its new technology projects have provided the Fund with the opportunity to focus on all the interdependencies within the institution, and on ways in which departmental silos can be broken down to create a more collaborative and agile approach.
Identifying the opportunity to improve processes across these areas is a vital step in improving the speed of the Fund’s responses to the unprecedented global challenges that are putting such strain on its members’ economies. Paone and her team take a systemic view, connecting Fund departments and people to the ‘big five’ projects and their many sub-projects, in an effort to streamline internal processes and accelerate decision-making.
Technology is at the core of many of the Fund’s initiatives. Designed and implemented successfully, technology can and should speed up the IMF’s response to member country needs. But digital transformation also requires people with the curiosity, skills and appetite for action who can understand not only how things currently work, but how they could work better with improved technology. Core activities, like how Fund professionals engage with member countries’ policy makers, depend on more than just rigorous economic analysis, even if it is enabled by relevant technology improvements. Empathy is also required. The Fund has the resources and intellectual firepower to support the transformation agenda and invest in new technologies. Making them meaningful and impactful for employees and member countries alike, however, requires a high level of self-awareness among the Fund’s people about how their work affects people in member countries.
The IMF’s transformation journey is a work-in-progress, so its full impact is not yet known. What is clear, however, is that business-as-usual doesn’t work in a world where ‘usual’ has gone out the window – and the Fund is focusing on the right variables to increase the chances of success.
The world surely needs the Fund’s modernization programme to succeed. The result will be a widespread and welcome bolstering of its support for governments and citizens around the world, helping them survive in a highly unpredictable world.