ince publishing Reinventing Government, I have turned my attention to issues of implementation: How can an agency like yours make this historic crossing from the bureaucratic model to a more flexible, innovative, entrepreneurial approach? My partner Peter Plastrik and I have researched successful reinvention efforts in five countries, to discover which strategies and tools have been most effective. We have authored two books-one on strategies and the other on tools-that will be published in 1997.
The most important lesson we have learned can be summed up in two words: Be strategic.
To change a huge, complex system in fundamental ways, you need enormous leverage. You get this leverage by using strategies that change the most powerful dynamics that shape public organizations: their purposes, incentives, accountabilities, power structures and cultures. The goal is to create a system in which every organization and every employee wants to improve performance. Being strategic is like using judo: You need to know where a little force will produce big effects.
Some places have figured out how to do it. These include U.S. cities such as Phoenix, Sunnyvale, Indianapolis, and Hampton. At the federal level, organizations such as the Air Combat Command and regions of the U.S. Forest Service have achieved success. National governments in the United Kingdom, New Zealand and Australia have transformed themselves, as have other units such as the school districts in East Harlem, New York, and Edmonton, Alberta.
But it's still rare. Most leaders who try to reinvent are not strategic. To some degree this is true of the Clinton Administration's efforts. There has been a lot of progress-there are many islands of innovation-but they still operate in a sea of bureaucracy. The administration hasn't yet found the levers that will force the entire system to change in fundamental ways.
Getting Leverage for Change
The first thing you need to understand about leverage is that you can apply it at different levels, which have different power to force change:
- The system within which the organization functions.
- The administrative systems that control the organization.
- The organization where you work.
- The work processes that determine how work is done.
- The people who do the work.
The organization where you work is constrained by the system's rules and incentives, as well as its administrative systems. You can change a great deal within an organization, particularly if you can carve out some flexibility from the administrative systems. But obviously you have little leverage to force change in other organizations within the system.
Changing work processes is important, but it won't force change anywhere else-in fact, it is hard to change work processes without changing the organizational structure and administrative systems of an institution.
Finally, changing your people offers the least amount of leverage. Bureaucratic systems are designed to work in the way they do, regardless of who fills the job. You need to change the culture of those people, but this is a long, slow process that rarely leverages change back up through the system.
The second thing you need to understand about leverage is that there are some basic building blocks of all public organizations that must be changed to shift them from a bureaucratic to a more entrepreneurial model. In every city, county, state, or country we have examined, there are five basic strategies that have power. We have given them all names that begin with the letter C, and we describe them as the "five C's."
- The Core Strategy. Creating clarity of purpose.
- The Consequences Strategy. Creating consequences for performance.
- The Customer Strategy. Making organizations accountable to their customers.
- The Control Strategy. Pushing control down from the top and out from the center.
- The Culture Strategy. Changing employees' habits, hearts and minds.
If these five C's represent the basic levers for reinvention, how does each of them work?
The Core Strategy
The core strategy focuses on steering, not rowing-making policy and setting direction rather than producing services. This is typically a role for elected officials and the top civil servants who report to them. It involves three basic approaches. The first is stripping away what does not contribute to the purpose of public organizations-by abandoning it, devolving it, selling it, or leasing it. The issue is not privatization; it is clearing the decks for action. By stripping away multiple and conflicting missions, you give managers the clarity of purpose they need to manage effectively.
A second approach is uncoupling steering from rowing and compliance from service functions. Separating these roles into distinct organizational units with separate missions can enhance the quality and effectiveness of both steering and rowing. The British and New Zealanders have done this systematically, at both the national and local levels. It has helped these two countries achieve enormous improvements in the efficiency and effectiveness of their programs and agencies.
A third core approach is to clarify your aim by creating new steering mechanisms. In the United States, steering functions tend to be concentrated in elective bodies. But elected bodies like the Congress, state legislatures, and city councils have great difficulty thinking and acting strategically. There are, however, ways to get around this. The New Zealand government has adopted long-term outcome goals, which it then translates into medium- and short-term outcome goals, which it then translates into output targets for agencies. Oregon has created a highly visible body representative of stakeholder groups in the community, called the Oregon Progress Board. It has set long-term goals, called the Oregon Benchmarks, and it measures progress and reports to the governor, legislature, and community.
The Consequences Strategy
Creating consequences for performance is probably the most powerful lever in the reinvention tool kit. There are three approaches to working this lever. When appropriate, the greatest leverage can be achieved by using enterprise management: putting a public enterprise in a competitive market, making it dependent on its customers for its revenue, and letting it sink or swim based on how well it serves those customers. There is nothing like competition to force rapid change. Agencies that serve the public can be turned into corporations or enterprises funds, but agencies that serve other agencies-maintenance shops, print shops, data processing offices, and the like-can also be turned into enterprises. This approach is only appropriate for services that should be paid for directly by their customers.
A second approach is called managed competition. If you can't put the organization in a market you can often create competition through competitive contracting. For example, Indianapolis has put more than 27 of its services out to bid, saving more than $100 million over seven years. The U.K. has used this approach-what it calls "market testing"-nationwide. Ironically, when Indianapolis put the operation of its airports out for bid, the winner was the British Airports Authority, a British agency privatized by Margaret Thatcher.
The third approach is performance management. If you can't use competition, you can measure results and create incentives or rewards for those who achieve them. You can use tools such as performance contracts, performance awards, performance pay, performance-based budgets, and gainsharing to create incentives for high performance. Sunnyvale, California has increased its productivity 6 percent a year using performance management.
The Customer Strategy
One of the best ways to change a public organization is to make it accountable to its customers.
In most public organizations, accountability flows up the chain of command. If the steering organization sets goals in terms of its customers, however, it can be held accountable for achieving goals that are important to the customer.
The most powerful way to do this is by creating customer choice. If customers can choose the service providers they prefer-the flow of money follows their choices-then the organizations that serve them must be accountable for satisfying their needs.
The second approach is quality assurance. You can set customer service standards and require public organizations to meet them or offer their customers some form of redress.
The British pioneered this approach with their Citizen's Charter. British Rail's Passenger Charter, for example, offers passengers delayed for more than one hour a voucher worth 20 percent or more of the ticket price. If commuter rail line does not meet its punctuality or reliability targets, passengers get a 5 percent to 10 percent discount on their next season ticket.
To use the customer strategy, you need to listen to the customer, using surveys, focus groups, interviews, rating systems, complaint tracking systems, and the like. Although essential, this is not in itself enough to force change. You may know what the customer wants, but your organization may not be willing to go through the pain of the changes required to deliver it.
The Control Strategy
The control strategy pushes significant decision-making power down through the hierarchy and at times out to the community. It shifts the form of control from detailed rules and hierarchical commands to shared missions and systems that create accountability for performance.
There are three approaches to this strategy. Organizational empowerment moves control down to organizations by loosening the grip of the central administrative structures, such as budget, personnel and procurement systems. Organizations then use employee empowerment to push decision-making authority down to those with front-line knowledge. Finally, some reinventers use a third approach, called community empowerment. They shift control from public organizations to the community, empowering community members and organizations to solve their own problems and take responsibility for running their own institutions.
The Culture Strategy
This strategy is the weakest of the five C's. However, it is a lever that must be worked if you are to sustain a reinvented public organization. The other four C's will drive changes in the culture-but they will not always create exactly the culture reinventors want. At some point in the change process, all successful reinventors discover that they must consciously work to change their employees' habits, hearts, and minds.
The approach that creates the most leverage is to change what people do. If you create new experiences and new behavior, you will get new thinking. Available tools include interactive strategic planning, job rotation, internships and externships, cross-walking and cross-talking (e.g., interdepartmental task forces), and contests.
Dealing with people's emotions has leverage because emotions are far more powerful than ideas. You can do this by celebrating successes and honoring failures; creating new stories, language, and symbols; establishing new rituals; building a sense of team among the people in your organization; and investing in your employees and their physical work space.
The final approach to working the culture lever is what we call winning minds. Some leaders develop new mental models by involving their employees in the creation of mission statements, in visioning processes, and in articulating their beliefs, values, and assumptions. Others use systems models to create common understanding of the way things work and how changes will be effective.
You will face many barriers as you use these strategic levers: elected officials who play politics when leadership is needed; unions that see their role not as asserting employee's interests and principles, but as maximizing their membership; resources that are stuck in narrow line items; personnel rules that eliminate the flexibility you need to make changes; and, perhaps most of all, the complex array of stakeholders in your existing system.
There are ways around, over, under and through these various barriers to better serve citizens' needs. But make no mistake: Working the levers to reinvent your government is not easy. That's why they call it "work."
David Osborne, co-author of Reinventing Government and author of Laboratories of Democracy, is managing partner of the Reinventing Government Network, a consulting firm, and co-chairman of the Alliance for Redesigning Government, a nonprofit learning network. His next book, Banishing Bureaucracy: The Five Strategies For Reinventing Government, will be published in February 1997 by Addison-Wesley. This article was condensed from a speech Osborne delivered to a National Performance Review/Government Executive conference on "The Reinvention Revolution."