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You Can’t Run Government Like ‘a Great American Company’

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In March, the White House established the Office of American Innovation, led by Jared Kushner, President Trump’s son in law and senior advisor. As a former real estate developer and investor, Kushner said, “the government should be run like a great American company.”

It’s certainly not the first attempt to make government run more efficiently. In 1937, the Brownlow Committee made recommendations that resulted in the creation of the Executive Office of the President and led to the reorganization of the executive branch.

During the Reagan Administration, the Grace Commission claimed to have identified over $400 billion in costs savings. President Clinton’s Reinventing Government initiative sought to reduce the size of the federal government and save over $100 billion. George W. Bush, the first MBA president, introduced a management agenda that relied heavily on accountability via government scorecards.

In the 1990s, Congress passed several pieces of legislation that were also designed to leverage the best management practices from the private sector and apply them to the public sector.  Among them were The Federal Acquisition Streamlining Act, the Government Performance and Results Act, and The Clinger-Cohen Act.  

There is a rich literature in the application of business practices to government, including  Graham T. Allison’s Public and Private Management: Fundamentally Alike in All Unimportant Respects? Prior to Allison’s work, it was generally accepted that public and private managers were responsible for performing similar functions, such as planning, organizing, staffing, directing, coordinating, reporting and budgeting. But Allison and others demonstrated that while there may be common managerial functions in both sectors, there are great differences between the two sectors that impact what managers do and how they go about their work.

Among the differences:

  • Government values accountability, transparency, diversity, and fairness over efficiency.
  • Agencies operate within a broader policy, legal and political context that sets priorities, limits alternatives, and determines budgets.
  • Private sector performance metrics, such as profitability, return on investment, payback periods, or market share capture, don’t generally apply in government.  

Efforts to make government run more like a business have also encountered skepticism that they were driven more by ideology than any real concern about providing better government services, leading to polarization and resistance.  

So, here we go again. A new administration and a new effort to make government run more like a business. I applaud the intent and am excited to see where it leads. I believe that great things can be accomplished with vision, determination, and know-how when driven by committed leadership at the highest levels of government. To increase the odds of success, the Trump administration should employ the following strategies:

Focus on solving our most challenging policy issues and dramatically improving customer services. Let’s drop that “running government like a business” language altogether. Instead, focus on the most difficult policy issues of the day and leverage the best thinking from the public, private, and nonprofit sectors to solve them, from the customer’s perspective. The tough problems don’t have a single answer. All three sectors almost always have a role to play. Usually, more than one government agency is involved, as are several congressional committees. What is really needed is an entity with the authority to perform the “convener” role, to bring these sectors together and channel their energies to workable solutions. This is a role for government leadership.

Accelerate the adoption of new business models and technology. For example, there is an historical shift occurring in how information technologies are driving performance improvements.  The technologies (cloud-based, platform-as-a-service technologies such as Salesforce) and methodologies (agile) to radically modernize government services exist and have proven successful in the private sector. Failure to fully harness these technologies means that dramatic government transformation potential is left untapped.

Run the Office of American Innovation and the American Technology Council in a transparent, open manner. Both of these entities should include open meetings where the public can hear what is being discussed and provide input. Citizens, government employees, business owners all should have a voice in this process.     

The public sector has always sought to leverage best practices from the private sector and apply them to improve efficiency or provide better services. Responsible public managers do that every day, you just don’t hear about them nearly enough. Done correctly, the Trump administration’s focus will elevate and accelerate these efforts and result in a true transformation of government operations. If not, the administration will fall victim to that other classic of public administration literature: Charles E. Lindblom’s Still Muddling, Not Yet Through.

John Low is vice president of corporate strategy at Phase One Consulting Group.

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