I have a very short work history with the Public Sector and yet I have heard this adage more than any other “Government is not like Business” or some version thereof. I don’t understand this expression, tenet, belief, dogma… do I need expound further.
I understand the financing principles are different. I submit to the lower pay scale. I accept the reporting and transparency regulations. Now how about the other 50K things Government does in a day?
How can the application of efficiencies, change management and accountability measures, used in the Private sector, often with great success (excluding the corporate bailouts) not apply ito the business of providing services? Are we only losing good talent to the Corporate world due to pay or are there other inherent “problems” and thought processes that can be as burdensome? How do the voices of those interested in applying these techniques find a foothold and move the great wheel of government and delivery of services away from ingrained and often false operational belief systems?
What are your thoughts?
This is a great posting Ami. I have often pondered this question myself. I have worked with the government for the past twelve years and at times my optimism has waned. Howwever, the current wave of change and transparency have increased my faith in the ability to effectuate these changes in the government. As my boss likes to say, it will be “based on the tenet of evolution, not revolution”. GovLoop is an excellent example of this evolution.
I like that quote! I think I’ll put it on my quote board I read for inspiration in trying moments! If your boss doesn’t mind.
I don’t think that he will mind at all 😉
Business and government are driven by different people with different goals. Things like profit don’t apply in government. You usually keep your job no matter how great or poorly you perform. It is harder to fire government workers. Those are just the issues that come off the top of my head.
There is just a whole list of issues that keeps the two separate. It is just a different mindset. Not everybody, but most people. And those most people control the speed and direction of the boat.
GovLoop/Government 2.0 (man it pains me to say anything 2.0) is not going to affect any major change until you get ALOT more people on board. It is a constant selling job from those that believe in the free and open exchange of ideas.
I had similar thoughts reading Fountain’s book “Building the Virtual State,” which blithely makes the following distinction between private and public enterprise (quoted in my blog today):
Whereas dramatic efficiency gains and cost savings in the economy are
rewarded through profits, promotions, stock price increases, and
market share, similar gains in government are rewarded with budget
cuts, staff reductions, loss of resources, and consolidation of
programs. (p. 13)
I don’t really see a distinction. In private enterprise as in government, innovation and cost-cutting benefit the leaders while hitting some of the lower-level managers and staff hard. In both cases, innovation can take place only if the leaders have the determination and guts to demand progress in the face of lower-level resistance. And in both environments, innovation can lead to new opportunities, not just job loss.
But in one key way (which I believe has often been cited), you can’t run a government like business. If my company can’t sell enough books on C++ or Linux kernel programming any more, we go where the market is. Tough luck for people still using C++ and Linux kernel programming who want our books. But if you’re having trouble improving school test scores for lower income minorities, you can’t just find another population and let lower income minorities fend for themselves.
Your raison d’etre is your population; it’s not a market that you’re free to abandon. But you do have to be willing to abandon programs that don’t work. And that’s hard because each program has a mini-industry of experts who were educated in the mindset that led to those programs and will call down orthodox doctrine on your heads for trying something new. The “something new” also has doctrinal adherents who may be operating from flawed assumptions, so issues like improving low income students’ scores becomes politicized. Things don’t generally happen like this in business.
“How can the application of efficiencies, change management and accountability measures, used in the Private sector, often with great success”
And often with great failure. The current economic mess cannot be excluded, as you say above – it’s all based around companies doing what they do. Yes, government agencies can be run more efficiently and effectively, but that doesn’t make them businesses. A large percentage of businesses fail every year, oh my, including GM, Lehman Brothers and Bear Stearns, to name a few. Governments can’t afford to fail. Not that catastrophically.
The voices of those interested in applying these techniques need to keep speaking up and need to keep framing their arguments in terms of cost savings and efficiency, not just the next great thing. I’m really happy you wrote you post because, as a new government employee, I’m still getting used to some of the operational paradigms. The fact that we aren’t working directly for profit may lead some to believe that waste is acceptable, while the great majority of governmental employees want to do their jobs as well as possible, innovate where they can, and generally improve to succeed. I’m really excited by some of the conversations I’ve participated in here on GovLoop and I think the atmosphere is ripe for change and evolution… let’s keep beating the drum, though, and make sure folks realize how important this time really is.
That’s a first. I’ve never heard that saying before. I’m accustomed to hearing lines that government CAN and SHOULD be run like a business.
Well in Government you don’t often hear the reverse of my quote. I often run into individuals, as Rob mentioned, that want to apply the models and processes that worked in the private sector. We brainstorm come up with new ideas and eventually run into hammered politito’s or tenured employees who then use the quote I referred to as reasoning for not supporting change. What I struggle with is the mindset that because we’ve done it this way for X number of years, it’s effective and works well enought to continue. I can only reply with one of my favorite quotes:
“We cannot solve problems by using the same kind of thinking we used when we creted them.” Albert Einstein
oops “politicos”.. typing to fast.
Some parts of Government haveto be run as a business. I’m with GSA and we have to think like a business because over 95% of our “budget” comes from the fees we charge to our customers and not from funds that are directly appropriated to us. And when your competition is viewed as free because their funding is taken out of the agency budget before it’s passed down to the folks with the requirements, you’d better be offering a good product/service in order to keep your customers.
Keep plugging away at making change happen. Do your homework to find out why something is done a certain way – often the process we follow is that way because of a system requirement/limitation that no longer exists. I’ve found that if you can point out the reason for a particular step no longer exists, people are more willing to examine the whole process.
Leadership verses management is the reason why the government runs unlike a business. In a business, the leadership drives the business towards sales or production goals. Those who do not keep up are no longer with the company. In the government, it is all about management. The managers receive a task list and accomplish the tasks with no regard to the overall mission of the agency or changes that might occur after receiving the task list. Since promotions rest on completion of the tasks, those mangers that do well with the task list get the promotions – no thought (leadership) required.
If we look at President Obama, we see a clear example of leadership. Mr. Obama has an answer to every question and a solution to every problem. As someone recently stated, there is not always a lot of substance to the answer. However, what I hear in the answer is a clear desire to offer a solution – to do some good. In addition, if Mr. Obama does not have the answer, he knows that someone in his sphere of influence has an answer and he moves to get that answer for the next time he receives that question – leadership. On the other hand, managers want to know the answer before offering a solution. This often slows the thought process and delays action. Business requires super leadership and a strong management team to ensure the business keeps the promises made by the leadership.
The government works with mostly managers. The idea is to take it slow, have a valid response, and do nothing that might cause one to miss that promotion. To fix it, to get more leadership (be more like a business), we must change the motivators. I do not know how to do this yet – but I am sure there is someone who does. Just my take – what do you think?
Benjamin – very interesting idea. I actually agree with the way you presented the difference of Leadership and Management. I often think that those that try to “lead” meet with such resistance created by process it can mold us into the “management” philosophy. As a friend of mine poetically put it, “We are Sisyphus pushing this bolder up the mountain.” After time can there be a true belief in the achievement of change and with so few opportunities to realize them. It becomes simply a breeding ground for apathy or easy management molding. Motivating speeches and Atta Boys only work for so long. It is true and lasting change that drives us to continue pushing.
“How do we break the cycle?”
“On the other hand, managers want to know the answer before offering a solution.”
I attended a training session a while ago titled Generational Differences. The statement above and whether you view it as a positive or a negative statement pretty well sums up the difference between me (beat-down,battle-scarred old people) and them (kids with puppy-like enthusiasm). Before either side takes offense the previous statement was (mostly) tongue-in-cheek. The truth is though that I do prefer to know the answer before offering a solution. What you may consider a plodding time-consuming approach, I consider just being dilligent. I used to have a sign in my office that said “There is never enough time to do it right but there is always enough time to do it over” I see that in practice more and more. Projects are started before requirements are defined because “we need to get this done quickly” and then we spend countless man-hours un-doing or re-doing things. It used to drive me crazy but I am learning to adapt. I still fight the goosd fight but at the end of the day it’s my job to do the best I can using the parameters I’m given.
Ms. Clouatre-Johnson,
To “break the cycle” requires leadership. To become a leader, one challenges to the status quo and “breaks the cycle”. To challenge the status quo, one must understand what to challenge and pick a few of those challenges to defend. I use a listen, learn, lead, lecture approach to this. That is, I listen to all sides of the story, learn what is important to change, then lead all parties in a direction that we all support, while lecturing (teaching) the team the benefits of choosing the path we chose, listening to their responses, learning what is important to change, then leading all parties in a direction that we all support, while lecturing (teaching) the team the benefits of the choosing the path…
As you can see this is a continuous loop but one that leads to change. This is how “we break the cycle”. Let me know if this works for you. It gives me the ability to feel that I have done my best at the end of every day.
It’s just an excuse that people use who do not know both worlds (but like to think they do).
I bet if you did a survey of the people who say that “government can not be run like a business”, you will find that the vast majority of those people (not everyone, but I’d guess 90%) have NOT worked — as an employee — in both places.
If they *had* worked — as an employee (for at least a year) — in both places, they would know that both places are about working in an organization with chains of command, personality conflicts, bureaucracy, etc.
The reason that the “Dilbert” comic is so popular is because many people, from ALL types of organizations, are convinced that the comic’s creator must have spies in their office. Government employees believe that just as much as those in the private sector.
While there is some truth in the frase, government and business are not the same, there is one specific distinction to be made:
Is the frase used to resist change or is it used to support change going the right way in government.
If it’s the first, as it seems in your case, and you get it time and again, you probably have a leadership problem. And here we are at the true side of the frase: In government these folks don’t get replaced very fast.
🙂
Ami – I posted this article a couple weeks back, but given your recent post, I thought I would share it again. It was written by one of our main partners, Ken Miller. He is the author of “We Don’t Make Widgets: Overcoming the Myths that Keep Government from Radically Improving”. It takes a very interesting look and spin on the question you posed.
Running Business Like a Government
By: Ken Miller (Published by Governing Magazine on April 9, 2009)
There’s a lot that government does right. The private sector ought to take a few notes.
If there is a bright side to this economic meltdown, hopefully it’s that people gain a new appreciation of what it’s like to manage government. I couldn’t help but chuckle when one of the failing bank CEO’s was brought before Congress and asked what he did with the multi-billions of taxpayers dollars his company had received. He seemed genuinely outraged that anyone would dare ask how the money was used.
The CEO’s outrage turned to indignation when one of the congressmen had the nerve to ask the dreaded “but-for” question. The congressman simply asked, “Could you please tell us how many more loans you have made since you got this money?” To which the CEO exclaimed that it was impossible to keep track of funds separately and that no one could possibly separate these dollars and show the direct impact those specific dollars achieved.
Really? Because that’s what we do in government every day. I remember a colleague of mine who had to fill out four different time sheets every month because his time was split across four separate programs and grants, each of which demanded full accountability for time, money and results. What the bank CEO said was impossible is actually business as usual in government. So rather than giving you advice on how you can help improve government, I thought we would take some time to gloat and perhaps reflect on what we do really well.
Here’s what government can teach businesses about their operations:
1. How to have a true appreciation for — and be good stewards of — investors’ money. One of the most offensive perceptions about government employees is that somehow we are all out there living it up on taxpayers’ money. People are quick to lambast government for “wasteful spending.” Whether it’s a local news crew trailing a government-issued car to the mall, or an elected official chastised for attending a conference in Las Vegas, or a ban on providing coffee at meetings, government workers operate in a fishbowl.
Taxpayer money is rightfully watched with careful eyes. While there are certainly some horrific anecdotes of wasteful spending, my experience with government workers actually reveals a strong commitment to conserving these precious resources. The vast majority of government workers recognize that this is not “their” money. Every dollar we spend on logo pens or employee-of-the-month plaques comes directly from a taxpayer and could either be better used somewhere else to meet a need or given back to taxpayers.
Now imagine for a second if the corporations featured in today’s headlines had just a fraction of the regard for their investors’ money that we do for ours. Remember the reactions of the bailout CEO’s who couldn’t understand why we were questioning their purchases? Whether it was a new private jet, a corporate retreat in the islands or the multimillion dollar renovation of a single CEO’s office, the corporate reaction was the same: How dare you criticize how I spent my own company’s money? Except this time, that money wasn’t theirs. It was ours. And these companies are starting to see what it’s like to live on taxpayer funds. The problem is not that they shouldn’t be blowing taxpayers money like this, it’s that they shouldn’t be blowing anybody’s money like this.
One of the points I make in We Don’t Make Widgets, as well as in a previous column, is that all organizations are structurally the same. Every organization has investors who own the organization. In the private sector, these investors are called shareholders. In non-profits they are the benefactors or contributors. In government, our investors are called taxpayers (and yes, I know they are investing against their will).
No matter the sector, the investors demand one thing from their investment: a large return. Simply, they want the maximum return for the minimum investment. For a company, this return is measured in profit dollars. In government, our return is not measured in dollars but in far more important things like a healthy environment, safe neighborhoods, a thriving economy, peace and so on. While we may struggle to accurately measure our return on investment, we do a heck of a job ensuring we aren’t wasting our investors’ money. We know that the money we spend frivolously in one area amounts to less money to achieve these important results. Counter that with our corporate friends in the news. When they pay themselves $40 million salaries or blow a million dollars on “teambuilding” exercises, they are taking money directly out of the pockets of their taxpayers/investors. We understand this in government. And so does our board of directors (the city council, county board or the legislature). And so do the media and our investors. All of these eyes are watching.
But, you say, who cares about these fat cat investors? So the rich shareholders don’t get as rich because of this spending. Big deal. Well, unfortunately, as you may have learned during this meltdown, these investors are each one of us. Forty-eight percent of U.S. households are also shareholders of companies. These companies are owned by our pension funds and retirement plans. They are owned by your grandmother, your neighbor and your child’s teacher. We “invest” over 30 percent of our incomes in government. We should be investing at least another 10 percent in these companies. So my question is, why do we scrutinize every dollar of the 30 percent but only express outrage at the 10 percent when their spending gets so opulent that Michael Jackson blushes? We should expect the same stewardship of our money whether we are investing in public or private enterprises.
2. True accountability. Another thing government is chastised for quite often is lack of accountability. Yet I would put government accountability up against almost anyone else’s. Imagine if a large company had to have every unit of every division go to the board of directors every year and justify their existence, show where every dollar went, and beg for the same level of funding (or underfunding) they had last year. This is precisely the level of accountability and transparency in place in city councils, county boards and state legislatures across the country.
And this is precisely why disasters like AIG don’t show up in elected officials laps. Sure, we get the occasional runaway budget or cost overrun, but nothing like the epic proportions we are seeing in corporate America today. As company after company is trotted before Congress, I keep asking myself, “Where was the board of directors?” It is the role of the board of directors to protect the investors — to ensure their money is put to good use and that it maximizes return. Say what you want about elected officials, but on this measure, they are exceeding expectations. Corporate boards could learn a lot about accountability by attending a city council budget hearing. (Of course, they could also learn more than they ever cared to about wastewater treatment, but I digress.)
3. It’s not about the money. At the risk of enflaming my debate with the pay-for-performance crowd, I hope one of the lessons we are all learning from this meltdown is that bigger paychecks don’t equal better performance. Many are quick to say that the root cause of the meltdown is greed. That everybody was out for a buck. While that is partially true, can you really blame people for playing the game to win?
I’m reminded of the classic quote from Casablanca when Captain Renault exclaims, while pocketing his cash, “I am shocked, shocked to find that gambling is going on in here!” In a culture where everything is driven by money, where each individual is incentivized by money, we are shocked and outraged that people would make risky decisions to make more money. Sure, there have been some amazing acts of avarice, but systemically everybody was acting rationally given the incentives around them. That’s what we humans do.
And that is precisely why I rail against importing the “bonus culture” in government. First, the efficacy is questionable (evidence: look how many pay-for-performance agencies have suspended their bonus programs in these rough budget times, yet the performance hasn’t decreased). Beyond that, though, the unintended consequences of government bonuses can be downright poisonous. People don’t go to work in government to get rich. Most work in government because they felt a tug, a calling. They want to make a difference. This is what truly motivates them.
Yet every time we try to motivate employees in government we do it with money. If we were truly motivated by money we wouldn’t be working in government! I don’t want to replace public-sector altruism with greed. I don’t want to intentionally reward individuals who are actually working in systems, teams and groups. I don’t want people’s creativity wasted on how best to game the bonus system. Simply put, I don’t want the cultures we’ve just been exposed to in this meltdown.
Contrary to what AIG proclaims, it doesn’t take multi-million dollar bonuses to attract and retain top talent (and really, can we call running an entire company, industry and a world economy into the ground a talent?). Brilliant, hard-working individuals leave high paying corporate jobs all the time to join our cause in government. Not for the income, but the impact.
There are still a lot of things we in government can learn from business: how to improve our processes, how to focus on customers, how to use data to drive improvements. But there are also a lot of things business could learn from us. And hopefully what we’ve all learned from this crisis is that we are all in it together. Business and government, taxpayers and shareholders, CEOs and caseworkers, we all have to work together to restore the systems that make America work.
Ami
I predict you will leave government if you hold views like this. Unless Obama and the new administration help people like you, you will not survive. Government is very stifling compared to other forms of enterprise, precisely because it is so parochial and insular in its outlook.
The clarion call from 90% of government employees that what they do is ” different ” is nonsense. It is used to resist change, and fails to recognise that public servants are there to serve the public, not their own ends.
I managed 7 years which was at least 2 too long.
I’ve been told that if government was run as a business it would be bankrupt within a year (not as a defense of how government is run!).
Having spent most of my working life in the private sector, I find it fascinating how the lack of a profit motive shapes the approach to decision-making in the public sector.
Firstly I note that outcomes are less important than processes and we’re often measured on how widely we consult or how many mentions we get in the media, rather than on whether people subjectively believe or objectively experience better health, education, housing, employment, or other outcomes.
Secondly I’ve seen decisions that in a private company would be decided by a junior get pushed up and discussed and decided at top executive level – the equivalent of having your ‘C’ level executives spend their times deciding on the best way to organise the in and out boxes in the mailroom.
Thirdly I’ve seen senior executives make decisions without inviting the experts into the room first – often without experience of the issue less than twenty years old.
Finally, I’ve seen projects meander on for years, spending millions and getting nowhere – without high level concern.
All of these types of approaches can thrive because there is no accountability. No senior executive gets sacked by the board for missing their targets, spending too much or charging too little.
There is limited hard numerical evidence used. Measuring systems are poor. Where a company such as Cisco can close it’s end of year books in three days, government often takes months. Customer knowledge doesn’t accumulate over time in systems that can be mined for valuable trends and data, but instead has to be rerequested every twelve months.
What is most interesting to me is that similar systems have evolved in most governments around the world – from the UK, Australia and Canada (legacies of the Westminister system) to the US, France, Germany and Japan, to Russia, Brazil and Poland.
Clearly the approach is evolutionary – with similar beasts evolving in similar environments around the world.
Maybe while we still define government in the way we have today we will not see these characteristics change until we see the environment change – starving out the unsuccessful government beasts….
Is the internet going to cause a dieback of government species, force them to evolve or die whilst allowing a new collection to thrive? Or will it take far greater changes in human society?
I think it is still too early to tell – though the approach President Obama is taking appears promising if he can make the changes effective at government DNA levels.
You could also use the quote, “[The definition of] Insanity: doing the same thing over and over again and expecting different results.” — Albert Einstein
I have rolling this argue (you can/should vs. you can’t/shouldn’t) since 2005 when I ran smack into a wall of “lifers” in DHS that argued you cannot run Government like a business while their change-agent bosses were arguing you can.
After reading some of your responses and reflecting on my own limited experiences, I have to think that the answer really is “it depends on what you are talking about.”
Should staffing and compensation in the government mimic that of the private sector (i.e. risk/reward, merit and performance based compensation): I would argue yes. I’ve seen incredible federal employees who did remarkable things such as figuring out that three different programs within DHS were doing the same thing and when they combined the three into one and then cut out the waste, you then had information sharing AND at half the cost. They should have gotten a BIG FAT BONUS for it. Instead, they got a nice placard saying “thanks” and a note in their file that would accelerate their chances at GS-next. The reward didn’t come close to the risk they took cutting budgets and jobs. (As an aside, they didn’t really cut many jobs due to a lot of vacancies that DHS was having troubles filling.)
Contrast this with an entire Division within DoS where the Division Director begged me, the contractor PM, to so all of the work his entire staff was doing because they were incompetent, immovable, untouchable, and he couldn’t get rid of them in a timely fashion to meet the program’s objectives.
Human strategy wise, It’s probably a mixed bag.
Can you run a government program like a business, I have to respond with an emphatic YES, but only with the caveat that you understand that the metrics used to measure performance must take on the same set as a non-profit organization (NPO). In most NROs, if you fail at your mission, like Andy stated, you can’t just change your target market, product or service. Instead have to innovate new and/or better ways to service those markets. Example: USAID’s work in AIDS prevention in Africa. It is costly. In many cases it is largely a waste of money due to roadblocks put in place by the governments in places like Zimbabwe, etc. You can’t decide to cut your losses and let a third of a continent die of this horrible disease. Instead you innovate. You find new ways to distribute preventative. You leverage other aid programs to get supplies where you couldn’t before.
Of the performance measures that I’ve used in audits the ones that translated directly from the private sector were: cost, schedule, risk, scope, technical performance (quality), effectiveness (did the program meet the mission objectives or to what extent did the program meet the needs of the stakeholders).
Things that seemed different, but really aren’t are things like: Congressional mandate compliance. For some reason the “politics” side of a mission of objective is perceived as being unique to the government. In truth, the private sector has to deal with the Congressional mandates, too. These come in the form of things like Sarbanes-Oxley, SEC’s Committee of Sponsoring Organizations of the Treadway Commission’s (COSO’s) Internal Control—Integrated Framework, FCC rules and regs., Health Insurance Portability and Accountability Act (HIPAA), etc. When I compare the IT governance, security and privacy controls in SarbOx, HIPAA, SEC Regs., FISMA and the requirements of the Clinger-Cohen Act, I get a fairly tightly overlapping Venn diagram. The controls and process are basically the same. The private sector (finally) is being forced by Congress to implement the same controls that the US Goverment has been mandated to use for the same political reasons: good intentions and a way to line the pockets of consultants (self-inclusion disclaimer applies). Additionally, the private sector forces upon itself specific (sometimes better, sometimes not) standards/processes to deal with inequities in the market much in the same way many Government Departments (particularly where foreign policy, intelligence, or national security is involved) have set the bar higher for standards/processes. One example that comes to mind is DHS/ICE’s background investigation standards for employees and contractors is much more stringent about personal financial matters for the same level clearance (SECRET) than the Department of Defense because of problems having Border Agents being bribed by drug cartels.
Again, I think there are surface-level arguments both for and against running the Government like a business; however, when I peel back the layers of the onion, I see mostly political spin or resistance to organization change. There are really no REAL reasons you couldn’t run the Government like a business. Cities, townships, and many States do and have achieved remarkable successes. In the U.S. Government, one of the largest examples I can think of is the outsourcing of much of the U.S. Prison System. It’s a well managed program that does a great job of keeping bad guys (and gals) locked up. Another example that I can think of is the work being done within the DoS’s European Bureau for rationalization of diplomatic services. There are some really sharp folks over there that are really thinking like corporate execs: Websites, Service Centers, Twitter, SMS, Web-based scheduling for visa applicant interviews. Incredible stuff.
It can be done, you just have to understand how to correctly measure success and who you’re ultimately working for. (It ain’t Congress, a Secretary or the President.)
I love Benjamin’s observation about management vs. leadership.
Ami, to answer your question about how we break the cycle? First a quote…
“[The definition of] Insanity: doing the same thing over and over again and expecting different results.” — Albert Einstein
We (contractors the government) have to think differently and be willing to patiently educate, push, pull, whatever it takes to make ideas and changes stick. We have to understand that the Government is a reflection of the society that made it. And we have to work with that society to shift from a culture of entitlement, “what can your country do for you”, etc. to a culture of “what can you do for your country”.
I have been rolling the argument that you can/should vs. you can’t/shouldn’t run government like a business since 2005 when I ran smack into a wall of “lifers” in DHS that argued you cannot run Government like a business while their change-agent bosses were arguing you can.
After reading the responses here and reflecting on my own limited experiences, I have to think that the answer really is “it depends on what you are talking about.”
Should staffing and compensation in the government mimic that of the private sector (i.e. risk/reward, merit and performance based compensation): I would argue yes. I’ve seen incredible federal employees who did remarkable things such as figuring out that three different programs within DHS were doing the same thing and when they combined the three into one and then cut out the waste, you then had information sharing AND at half the cost. They should have gotten a BIG FAT BONUS for it. Instead, they got a nice placard saying “thanks” and a note in their file that would accelerate their chances at GS-next. The reward didn’t come close to the risk they took cutting budgets and jobs. (As an aside, they didn’t really cut many jobs due to a lot of vacancies that DHS was having troubles filling.)
Contrast this with an entire Division within DoS where the Division Director begged me, the contractor PM, to so all of the work his entire staff was doing because they were incompetent, immovable, untouchable, and he couldn’t get rid of them in a timely fashion to meet the program’s objectives.
Human strategy wise, It’s probably a mixed bag.
Can you run a government program like a business, I have to respond with an emphatic YES, but only with the caveat that you understand that the metrics used to measure performance must take on the same set as a non-profit organization (NPO). In most NROs, if you fail at your mission, like Andy stated, you can’t just change your target market, product or service. Instead have to innovate new and/or better ways to service those markets. Example: USAID’s work in AIDS prevention in Africa. It is costly. In many cases it is largely a waste of money due to roadblocks put in place by the governments in places like Zimbabwe, etc. You can’t decide to cut your losses and let a third of a continent die of this horrible disease. Instead you innovate. You find new ways to distribute preventative. You leverage other aid programs to get supplies where you couldn’t before.
Of the performance measures that I’ve used in audits the ones that translated directly from the private sector were: cost, schedule, risk, scope, technical performance (quality), effectiveness (did the program meet the mission objectives or to what extent did the program meet the needs of the stakeholders).
Things that seemed different, but really aren’t are things like: Congressional mandate compliance. For some reason the “politics” side of a mission of objective is perceived as being unique to the government. In truth, the private sector has to deal with the Congressional mandates, too. These come in the form of things like Sarbanes-Oxley, SEC’s Committee of Sponsoring Organizations of the Treadway Commission’s (COSO’s) Internal Control—Integrated Framework, FCC rules and regs., Health Insurance Portability and Accountability Act (HIPAA), etc. When I compare the IT governance, security and privacy controls in SarbOx, HIPAA, SEC Regs., FISMA and the requirements of the Clinger-Cohen Act, I get a fairly tightly overlapping Venn diagram. The controls and process are basically the same. The private sector (finally) is being forced by Congress to implement the same controls that the US Goverment has been mandated to use for the same political reasons: good intentions and a way to line the pockets of consultants (self-inclusion disclaimer applies). Additionally, the private sector forces upon itself specific (sometimes better, sometimes not) standards/processes to deal with inequities in the market much in the same way many Government Departments (particularly where foreign policy, intelligence, or national security is involved) have set the bar higher for standards/processes. One example that comes to mind is DHS/ICE’s background investigation standards for employees and contractors is much more stringent about personal financial matters for the same level clearance (SECRET) than the Department of Defense because of problems having Border Agents being bribed by drug cartels.
Again, I think there are surface-level arguments both for and against running the Government like a business; however, when I peel back the layers of the onion, I see mostly political spin or resistance to organization change. There are really no REAL reasons you couldn’t run the Government like a business. Cities, townships, and many States do and have achieved remarkable successes. In the U.S. Government, one of the largest examples I can think of is the outsourcing of much of the U.S. Prison System. It’s a well managed program that does a great job of keeping bad guys (and gals) locked up. Another example that I can think of is the work being done within the DoS’s European Bureau for rationalization of diplomatic services. There are some really sharp folks over there that are really thinking like corporate execs: Websites, Service Centers, Twitter, SMS, Web-based scheduling for visa applicant interviews. Incredible stuff.
It can be done, you just have to understand how to correctly measure success and who you’re ultimately working for. (It ain’t Congress, a Secretary or the President.)
oh and Jim? I need you take you out to lunch. Thanks for fighting that “good fight” and it is a Worthy Fight.
Devon. I am reading this on me cell and accidently hit delete button when trying to hit accept. I sincerely appologize. Ami.
As someone in business, who was in the corporate world and who is a former public manager, the adage “government can’t be run like a business” may exist because the business of government is not profit based, and the Board of Directors, i.e. elected officials are in office by popular vote, not based on their knowledge of the delivery system.
I would think another reason folks might say “Government can’t be run like a Business” is that businesses by their nature are *exclusionary*.
E.g., Apple sells products to people who want to be on the cutting edge, that want that stylish gizmo/desktop and aren’t upset (or at least not enough not to purchase) that it won’t run on someone else’s hardware. That’s different than working at (an unnamed) TLA where the inputs are ASCII, because ALL computers can produce readable text in that format and Government needs to communicate with all citizens where *they* are. Where the citizen *is* whether that’s the best and newest or the item held together with bailing wire and bubblegum *IS* different than the business saying, ‘Ok, everyone wanting to run System 9, tough’ we’re only supporting this OS X!
I disagree with Ken Miller (cited by Jeffrey Press): “The vast majority of government workers recognize that this is not “their” money.” Au contraire: everytime I look at my paycheck, I see the fraction that is Federal taxes and think of me as taxpayer: Do I want to waste ‘my money’? Given that most of my co-workers are aware of how tightly I squeeze my personal funds, it won’t surprize them that I try to save the Government $$ where I can, to the extent of making sure my TLA pays not a single penny of sales tax…..
What I’ve noticed in government is that since it is driven by political winds and subject to growth and contraction based on who’s in power, is that groups are highly territorial, and use politics and politicians to their advantage. BRAC gets the heavy hitters out making deals to save bases in their districts and states.
All these feifdoms lend themselves to duplication of duties and lacks of common points of decision making.
The government is too big and segmented for any one person to keep track of and make streamlining decisions for, like a CEO could in a business.
Unfortunately governmnet won’t be run like a business because (1) it is against the self interests of most government employees and (2) they aren’t built the same.
Isn’t the root difference competition? For profits are FORCED to innovate, take risks, and become more efficient. If they don’t, their competition will, and they will eventually go out of business.
But Ami didn’t ask “why DOESN’T government be run like a business.” I think Mark Harris is on the right track, and perhaps I can build on that in a positive way…
Government leaders I’ve met feel a big responsibility toward protecting the taxpayer, and the down sides of the status quo are not as “in your face” as they are in the private sector. On the way to market efficiency, the private sector does alot of things that would be considered wasteful on the tax payer’s dime. Not only do companies fail, but also product lines, business initiatives, etc. So it is natural that some “old hands” and shorter term politicals are wary.
One strategy to overcome this obstacle–to support the evolution of government–is to create space for a pilot project (like Govloop?). If it has measured results to demonstrate its success, then you’ve removed alot of the risk for decision makers.
Other than that I can only say, “keep plugging!” Better government becomes a reality only when you who believe in it push for the resources to make it happen.
Ami: Andy’s point is right on the mark. The reason you cannot run government like a business is that your market is not based on your product. That is why, too, certain functions are inherently governmental. Providing health care to the indigent and seriously ill is not profitable, but a humane society believes we should do this. Business is not going to jump in and provide that service. Ditto, providing education in low income neighborhoods.
I don’t think this means that you give up applying good business practices in government work. It just means that some projects we must take on the government, profitable or not. I think also, if you look around you will find that not all the talent leaves for the private sector, nor is the private sector deviod of “dead weight” or people who are obstructionist when it comes to change.
Your marketing strategy for change needs to be different in government than in the private sector. If you stay around long enough you will find out that “major changes” in our business model are often touted every four years. And for some who have been around long enough, it seems like it is often change for that sake of change, not for any real improvement. Hang in, find people who are willing to work for change, do your homework on what’s already been tried, and you should find allies to push what change you need.
Interesting conversation. Excellent question, Ami.
I’ve been in public service for 8 years and have been cynical about my organization for 7-7.5 years. However, I think trying to implement private sector practices into the public sector is not that useful:
* Values underlying private sector practices are based on competition, which is the opposite of what the public sector requires. Co-operation is required by government organizations because the scope and breadth of issues they deal with is so complex and inter-related. These underlying values have a profound effect on the kinds of work processes and management practices that will arise.
* Gov’ts have to be more conservative because if they fail, people’s lives can be very disrupted, especially vulnerable populations. The competitive mindset of businesses encourages them to take risks, and bigger risks can lead to bigger rewards.
* Leadership is much more important in the public sector, because there are so many stakeholders involved and they don’t report to each other — you can’t just tell other departments or divisions what to do. The private sector, which can more easily rely on strong management to accomplish goals, has a more direct hierarchy. The public sector cannot just manage better outcomes.
In many cases, government processes can be managed like a business. But because we tend to get front-loaded financially, the need to innovate isn’t always the top priority.
If people stop reading newspapers and magazines, those industries have to come up with new ways to serve their product or die. Government usually doesn’t have that sense of immediacy.
We innovate by finding new ways to deliver the services that we offer. Can we make the information that the citizens have already given us (and paid for with their taxes) more available? Can we find a way to engage the public online like we never could before? Can we deliver services more efficiently? You bet.
Will we be rewarded? Not substantially. And that’s where we break from running government like a business. But that may not be such a bad thing, in light of the recent banking/financial troubles.
Reframing the issue perhaps would have us all talking about the ideal way to develop and create any work environment. Perhaps it’s not so much whether Corporate is Better or Government is Hampered with Lack of Funds or Inefficiencies – maybe time spent on thinking ‘what could be?’ rather than comparing what exists is an approach to take?
The real difference is that government is a tool used by politicians to execute social reform. We all know of employees that, if they didn’t work for the government, would be on welfare. There are also programs that if not done by the government, wouldn’t be done. Plus, government is more service than it is production. This makes it challenging to apply Earned Value Management, Lean Six Sigma, TQM, etc. to government processes; although, this should not stop us from trying to use the change management techniques that work for industry.
Wow – this is a really insightful question, and having worked in both public and private sector as an employee and a CEO it took me a while to work out that the question and many of the responses contain at least these assumptions:
1. Businesses run in a similar way to each other
2. Government departments runs in a similar way to other government departments
3. There is a formulaic way that you can run a business that is repeatable
4. Business practice can be transposed onto government practices
5. Culture is caused by current leadership
(There are two types of people in the world those that group things into two categories and everybody else)
There are some really bad businesses (soul-less, ethics-free), and some great government departments (innovative, results oriented).
I think that the difference is summarized in the sense of purpose, and ability to cause change. An individual can be excited about their work where it affects another person directly or where they have an effect on how the organization can achieve meaningful results.
What level of business do you think Government needs to be more like?:
Small entrepreneurial businesses (of the Silicon Valley style innovation through creative destruction) bring a power of creativity that medium and large business cannot hope to engage. Most don’t make it, but the ones that do, do so because they did something worth doing and had the luck of timing, and skills to do so. History removes the bad ones, the unlucky ones, and the ones that did something not worth doing. Even in the failed ones, the personal heroics are the stuff of legend. I don’t think that anyone wants government to emulate these.
Then you have the growing companies that grow by doing more of the same. Once you have something that you do well, profitably, and can repeat, you repeat it. The challenges here are about culture – a large business – at least following conventional management theory – must be managed, have processes, and rules. In building that stability and repeatability you lose the ability to innovate, and individual empowerment (that being the nature of rules). A very small number of companies like 3M and HTC violate this, but only after building a large business and then changing how they worked. Along the way companies acquire other companies, some get mismanaged and die. Personal heroics are frowned upon because you should have been able to do it as part of business as usual. Government probably isn’t trying to emulate this either.
Then you have big business. Corporations with accountability and rules. Each one is unique, and although there are commonalities and shareable business practices you would be hard pushed to find two that work in a similar way. These organizations can often feel soul-less and like the people inside them cannot make a difference. Every now and then one of these will die out of boredom or merge with another. Most interesting change is caused by selling bits off and buying new bits. Personal heroics are a dismissible offense. Change takes years – though fewer than it does in Government. I think that some Government departments already do a good job of emulating these.
Then you get the real freaks – the ones that are big and fun, purposeful and meaningful, the superbands of the corporate that get written about in books, where it looks like a well planned course, with a rose-tinted rearview, where nothing ever went wrong, that always had good strong leadership that never made a bad call. Is this possible? Bear in mind that to be that good you have to have tried some stuff and failed – and the failure to not matter, because it is the ability to try that is important, and the successes that count. At this point you are talking about a small number of businesses that are different to each other – which one do you want to be like?
An answerable question may be “How can my specific organization be more like this other specific organization in these specific attributes?”
There are great books on the subject of how great companies became great with good supporting evidence – for good method Jim Collins (Good to great, Built to last) has some great information at the strategy level. Everything else follows from there (tactical goals, a positive evolving culture, engaging change throughout the organization). Alternatively Winning by Jack Welch tells the life story of causing a huge scale of change in existing big enterprise over a 15 year period in GE.
Losing talent? Perhaps – though more likely is that those people once had hope too, and have had it beaten out of them. I refuse to believe in people born with bad spirit. If they are broken, it is probably not because they arrived broken. People eventually get broken by lack of meaning and ability to cause change. By having rules imposed on them, and not being able to express their individuality. Many good people (who cannot see it coming) try to cause change and end up eventually getting broken and becoming a lifer – they then become part of the same machine as they are not only eager to cause the change they cannot see that change is possible, after all they tried themselves once…
Then there are people who deserve to be in legends who keep applying the energy every day, work out how to navigate the organization and how to cause change and make the difference, and make their way up the organization at the same time as causing positive change. I meet many of these regularly at Government conferences, whose blogs I read, who write on this site with positive news of what they are doing and what they achieved. And they stand out, because it is hard to do. It isn’t to do with pay, or rewards, or accountability measures. It is about doing the right thing when faced with adversity, and a real commitment to public service. (After all it is easier to not risk being broken by the system and go somewhere else where change that leads towards visible goals is wanted and rewarded).
As an important point though – I don’t directly work with national government bodies, and the one I deal with don’t set out to break people in the same way.
I am seeing from several of the responses that some of you may think I have given up and only want to blow off steam. No true. I sincerely want to find a way to spark change, to foster change or at least the concept and possibility that change can be good for us. I want to serve my community, it’s the reason I left a better paying position and came to work for my governemnt. It’s just very different and I wanted some insight of how others may have achieved it. Several of you have given great examples on both sides. I know some business strategies wll not work exactly as they do in the private sector, but the trying to find new “fixes” seems much more apparent there than here. So I want to foster this in my own little corner of the world. I want to do it smarter than I’ve done it in the past. I want to push without ruffling too many feathers. But thank you all for the wonderful comments and suggestions!! Keep up the great work!
what about running business like a government? transparancy and accountability, with leaders democratically elected (one man one vote has yet to make the shareholders meetings)? Wouldn’t it be wonderful for government not to be so defensive??
I would always hope to communicate that the daily energy and never yielding are more important than the pre-packaged answers that the private sector regularly gets so wrong as well. Just do something, it doesn’t even matter how small nor if you are wrong – initiative beats inertia every time. I wish you luck. I know that I don’t have the spirit to change it from inside (from outside I can help)
Have you met @krazykris – he is one of the most evangelical, friendly, and informative on the application of new technologies in government that I have met. He would most likely will be able point you at technologies and people in the sector that cause change.
If there is any way I may be able to help let me know – I don’t presume to understand your department or its issues – I just know a few great change management parables. The best advice I can offer without specifics is to change it one person at a time: Change “by us”, not “for them”.
I guess I’m an old head (been in the federal workplace for a couple of decades). Government is different from business because the goal is different (profit vs. public service), and we operate in a political climate that is often volatile and rarely predictable.
That being said, every day I look for new ways to accomplish the mission in a smarter, more cost-efficient way. You make changes by understanding your mission and then implementing changes that bring about the successful accomplishment of that mission. You pick your spots, and then you teach and manage upward as best you can. When a change, that seems radical, allows my organization to become better, I’ve established credibility and I get a little more leeway to make the next change. The public sector, not unlike the private sector, is risk-adverse. So you have to become a risk management expert.
I challenge my staff continuously, by asking are we the best that we can be; are we in a position to successfully take on this function for another organization that may be struggling and continue to be cost-effective? They in turn bring me potential innovations, large and small. I reward them for the successes, and encourage them in light of the failures, making sure that we take away the lessons to be learned.
Can you truly run government like a business? I don’t know, but my answer would probably be, why aim that low? Why not run it better than business? Get best practices and improvements from any source that you can. You might surprise somebody. At the end of the day, success always works.
This is a great thread and have enjoyed reading through all the thoughtful comments. Wanted to add a couple of things which seem timely. The first is from today’s Wash Post (6/24/09 – see: http://bit.ly/EvfNV) on how Secretary Chu at Energy has been making his agency much more productive in providing loan guarantees for renewable energy projects. It doesn’t exactly answer the question about “why can’t Gov’t be run like a business.” But maybe this isn’t quite the right question, as other comments have suggested. Isn’t it more about how government can generate the kind of outcomes typically associated with business — productivity and effectiveness? If so, it’s encouraging to see good examples of how government can achieve these goals through leadership that questions some of the ways things have traditionally been done.
The comments here also conjure up something like a Serenity Prayer for making change in government…that some things are probably very difficult to change/improve no matter what, while others that may look just as hard, can actually be changed if someone in the right place at the right time has the courage to try. And then there’s that little important bit about the wisdom to know the difference….
I completely agree Joshua, about “knowing the differnce.” This is where I bump the status quo often, I’m still learning when to change tactics and who to approach about championing ideas or changes. But I’m learning. I’m sure many people approach their work and projects with the goal of a quality end product. But running into the hidden agendas, political swamp and other generally undermining influences, still sometimes catch me off guard. So it is here that I feel the “run like a business” should often apply but doesn’t seem to be as straight forward.
About ten years ago someone explained to me in a training session a very important reason why government (our government in particular) cannot be run as a business. It struck me so firmly between the eyes that I remember it even to this day – which is saying a lot. The U.S. government is unique in all the world in that it is a Jeffersonian Democracy (which is very different from a regular democracy). A Jeffersonian Democracy is a system where the majority or majority viewpoint does NOT necessarily rule. Instead, it is a system where, ideally, the majority bends over backwards (or attempts to bend over backwards) to protect its minorities or minority viewpoint – – primarily from the majority. Most businesses, particularly large businesses do not and cannot afford to run this way.
Is it perfect? No. Does it always work the way it is supposed to? No. Is it clumsy and frustrating at times? Yes, primarily because most of what we do in some way involves people, values, rights – all of which by nature can be complex and messy. However, it can also be very challenging and rewarding. There are some things (like freedom and basic human rights) that are more important that efficiency and money.
I am definitely not what you would call a flag-waving patriot, but next time you find yourself embroiled in a hot button issue with the public, just thank your lucky stars that you live in a country with a government that cares to listen to or even allow a different opinion, much less consider it as a viable option.
As someone who has spent his whole career except the last 5 years in the private industry, the main differences I’ve found between government and private industry are;
1. If you want to do something new and different, private industry asks; “Are there any laws preventing you from doing it? If not, you can go ahead”. Government is the opposite. It asks, “Do you have prior permission (i.e. a mandate) to do it? If you do, you can go ahead.” It is sort of like the old saying — It’s easier to ask for forgiveness than for permission”. You can get things done a lot faster in private industry,
2. I find it much easier to make a direct connection between my work and making a meaningful, positive impact for others when working for the government. In private industry, it was always a couple of degrees of separation removed from the final positive social results. For example, if I can help Health and Human Services market their new women’s health book to the American public, I can see a direct connection between what I do and making the world a healthier place. In private industry, when I marketed packaging machinery that filled injectable pharmaceuticals, the logic was more like “If our machinery is well engineered to avoid putting particulate matter into a syringe, and if I market that machinery to Abbott Laboratories, and if they use the machinery to fill medicine that eventually goes into a patient’s arm, then maybe I made the world a little bit healthier”.
Much more of a logical stretch, don’t you think?.