MANAGING IN THE FEDERAL GOVERNMENT
NEW CONCEPTS FOR A NEW ERA
BACKGROUND AND AN OVERVIEW ON:
REINVENTING GOVERNMENT
AND OTHER RECENT BOOKS ON MANAGEMENT
January 1993
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^£1 \ UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
* .OMBA* \ WASHINGTON, D.C. 20460
JAM 7 1992
ADMINISTRATION
AND RESOURCES
MANAGEMENT
MEMORANDUM
SUBJECT: Background information on Reinventing Government and
other recent writing on management
FROM: jbhn O'Brien, Chief, QA&E Staff
TO: OHRM Division Directors
OHRM Program Managers
Human Resources Officers
With the arrival of new leadership in the Agency, I thought it
would be helpful to provide an overview on the concepts and
approaches to management which our new executives may use to guide
programs and priorities. This booklet provides an overview on the
most likely sources — the experts and their books — for the new
management concepts.
There is one book, Reinventing Government by Osborne and
Gaebler, which has been much quoted and referenced over the past
several months, and I've concentrated on this book in the pages
that follow by including an executive summary and three recent
articles.
I hope you find the information in this booklet timely and
useful.
RecycbtfRecyciabie
PiMM flo paper mat coma r i
« MM> 75K weyctod Cbw
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MANAGEMENT CONCEPTS AND THE NEW LEADERSHIP
As members of the HR community, we need to be well informed on
the management concepts and assumptions by which the Agency's
senior leadership will convey their priorities and directions. The
Agency's new leadership will in due time make clear their specific
management style and concepts. However, over the past year, there
have been frequent references and discussions in the media
concerning a specific book and a specific management concept which
we anticipate will play a prominent role in the new leadership.
The book is: Reinventing Government; How the entrepreneurial
spirit is transforming the public sector
by David Osborne and Ted Gaebler
The concept is: entrepreneurial government
This booklet provides an early snapshot on "entrepreneurial
government" as described in Osborne and Gaebler's book, and in
addition, provides snapshots on other concepts and books which we
anticipate will play key roles in setting the management
assumptions and priorities for the new leadership.
We present this information to provide the HR community with
a preliminary overview and, thereby to make us better prepared to
respond to the needs and priorities of the new leadership. In
addition, in section 2. An Executive Summary, we highlight specific
human resources issues including: a critique of civil service
systems, a discussion of the China Lake Project, and views on job
classification, training and promotions. We have organized this
report from the general to the specific as follows:
• I. SNAP SHOTS OF NEW CONCEPTS FOR THE NEW LEADERSHIP
— a brief description of Reinventing Government in the
context of other books, concepts and individuals which we
anticipate will be the most likely sources for the new
management assumptions and priorities.
• 2 . AN EXECUTIVE SUMMARY OF THE BOOK REINVENTING GOVERNMENT
— Major concepts from the book, specific human resources
issues, definitions of "entrepreneurial government" and "the
new paradigm."
• 3. TWO ARTICLES AND A BOOK REVIEW OF REINVENTING GOVERNMENT
— Critiques of the book, and comments on the application of
"entrepreneurial government" in the federal sector.
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CONTENTS
1. SNAP SHOTS OF NEW CONCEPTS FOR THE NEW LEADERSHIP 1
[source: Washington Post. Nov. 8, 1992]
Reinventing Government by David Osborne & Ted Gaebler
Laboratories of Democracy by David Osborne
The Work of Nations by Robert Reich
"The Aschauer Curve" by David Aschauer
Minding America's Business by Ira Magaziner
& Robert Reich
The Silent War by Ira Magaziner & Mark Patinkin
Politics and Productivity by Laura Tyson
"The New Paradigm Group" — Robert Shapiro
"Public investment" — Robert Solow
2. AN EXECUTIVE SUMMARY OF REINVENTING GOVERNMENT 7
[source: John O'Brien, QA&E with material from a review
article by Jim Carr, EPA -Institute in the OPM
newsletter: Senior Executive Service. October 1992]
3 . TWO ARTICLES AND A BOOK REVIEW OF REINVENTING GOVERNMENT 14
"A Case for Reform" by James Fallows
The Atlantic Monthly, June 1992
"Bureaucracy busters" by Don L. Boroughs
U.S. News & World Report. November 30, 1992
"The Promise to Transform the Government"
The Washington Post. December 14, 1992
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1. SNAP SHOTS OF NEW CONCEPTS FOR THE NEW LEADERSHIP
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David Osborne
r I . ' • ' f i • ' I *
iJ J I * I i t". H ! • 111
Osbome, 41, a journalist turned
expert on innovative government,
has helped to shape the Clinton phi-
losophy of doing more with less.
In Osborne's view, centralized,
bureaucratic government no longer
works. But state and local govern-
ments, short of funds, have made a
virtue out of necessity—pioneering
new, low-cost ideas that decentralize
authority and foster partnerships be-
tween the public and private sectors.
In his book "Laboratories of De-
mocracy," to which Clinton wrote
the foreword, Osborne describes
Clinton as a "new Democrat" who
started his first term as governor of
Arkansas as a classic, crusading lib-
eral reformer and then discovered
that such an approach did not work.
He wrote that Clinton in his last
two terms as governor came to be-
lieve that economic growth must
come before spending for social pur-
poses, and that government must
work closely with business.
He would double Clinton's pledge
to reduce the federal bureaucracy by
100,000 workers in his first four-
year term and would cut the budgets
of "antiquated" departments such as
Agriculture, Commerce and Housing
and Urban Development by 6 per-
cent a year over four years.
In his book "Reinventing Govern-
ment," Osborne cites the grass-roots
work in Minneapolis of citizen activ-
ist Ted Kolderie.
In the 1970s, Kolderie and others
began agitating for competition
within the public school system and
eventually pushed through a bill al-
lowing local public school teachers to
create their own schools.
Kolderie is now drawing up an ed-
ucation proposal for Clinton. "The
traditional role of government is to
give money and add regulations,"
said Kolderie.
"The trick is to connect presiden-
tial leadership to state legislatures
through the governors."
i
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Roberts. Reich
Reich, a member of the faculty of
Harvard's John F. Kennedy School
of Government, once said that he
agrees with only 30 percent to 40
percent of the Progressive Policy In-
stitute's positions, but added, "I'm
glad the kettle is being stirred."
His book "The Work of Nations-
has been read and underlined by
Clinton, and he has become a leading
authority on the competitiveness of
the U.S. economy.
Reich writes in the book that the
notion of an "American" corporation
is steadily losing meaning. Whenev-
er possible, he says, American-based
multinational companies will move
their manufacturing to the country
that offers the best mix of cheap la-
bor and high-quality production.
Reich argues that the best de-
fense against that is government in-
vestment in American workers—
through training and education—and
in the transportation systems and
telecommunications networks on
which modern businesses rely.
Such investments, he argues, will
encourage foreign companies to lo-
cate their most modern plants and
research facilities in the United
States.
"Government policy makers
should be less interested in helping
American-owned companies earn
hefty profits from new technologies
than in helping Americans become
technologically sophisticated," ac-
cording to Reich.
Reich argues that it is permissible
for the federal government to go
even deeper in debt as long as the
money is invested in people or infra-
structure and the amount doesn't
exceed the likely return.
-- 2 --
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THE 'ASCHAUER CURVE1
HOW ECONOMIST DAVID ASCHAUER SHOWS A CORRELATION BETWEEN
GOVERNMENT INVESTMENT AND PRODUCTIVITY GROWTH
1950 1955
1960
1965 1970
•The comoinen D'cductivitv ol iaoor and
"Value of publicly owrvrj assets sncn as dams, highways
SOURCE Davifl Ascnauer
1975 1980
and mass tMnvt
1985
David Aschauer
In September 1988, economist As-
chauer published a paper for the Chi-
cago Federal Reserve Bank that
showed what he called "a distinct pos-
itive relationship" between U.S. pub-
lic spending on infrastructure and the
broad growth of U.S. productivity, af-
ter a number of factors were dis-
counted.
Since then the "Aschauer curve"
has been cited by many of those, such
as Reich, who support major new ini-
tiatives by the Clinton administration
to rebuild or upgrade the nation's
transportation and telecommunica-
tions systems.
Sources say that Aschauer's find-
ings, if correct, suggest that large in-
vestments now are justified even if
they worsen the budget deficit in the
short term. In the long term, the in-
vestments will bring in more tax rev-
enue because the economy will grow
faster.
Aschauer calls his own findings
"startling," and acknowledges that
they nave been questioned by econo-
mists at the Brookings Institution and
other think tanks.
Without mentioning Aschauer di-
rectly, the Congressional Budget Of-
fice also has questioned his thesis.
Aschauer stresses that not all pub-
lic investment will produce a big long-
term return. For example, he opposes
pork barrel highway projects, but
strongly supports government invest-
ment on advanced technologies, such
as "intelligent highways."
These are exciting times for an
empirical economist," he said. "Poten-
tially, there's a grand experiment out
there."
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niESILENTWAR
Ira Maga/iner and
Mark I'atmkin
Ira C. Magaziner
Magaziner, 45. one of the most
liberal and controversial of Clinton's
inner circle of advisers, first met
Clinton as a Rhodes scholar and
worked on a variety of issues for the
Clinton campaign.
A Brown University student activ-
ist, Magaziner and other young
graduates failed in a postgraduate
attempt to transform Brockton,
Mass., from a working-class commu-
nity into a model city. In 1984, he
suffered a bigger setback in a refer-
endum when voters rejected 4 to 1
his plan to revive the Rhode Island
economy.
Magaziner has coauthored two
books on U.S. industrial competitive-
ness, and has churned out ideas
about health care, the retraining of
workers, the restructuring of corpo-
rations and the conversion of U.S.
defense companies to developing
commercial technologies.
In the latter role, he has offered
suggestions to Rep. David McCurdy
(D-Okla.), who has emerged as a
leading advocate of "defense conver-
sion" in Congress. The key goal of
both McCurdy and Magaziner is to
preserve the advanced skills of de-
fense workers by keeping tnem at
work on commercial ventures so
that they could be quickly switched
to new military projects if necessary.
to this end, Magaziner would have
the Pentagon make a 20-year com-
mitment to buy commercially useful
communications systems, short-haul
aircraft, waste disposal systems and
"intelligent highways" from private
companies.
McCurdy and feOow members of
the House Armed Services Commit-
tee have stopped short of accepting
the proposal, but have recom-
mended a long-term plan in which
the Pentagon would finance research
and development by defense and
nondefense companies in energy,
transportation, environment, com-
munications and other promising
commercial fields.
— 4 —
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Politics and
Productivity
Laura D'Andrea Tyson
Tyson, a professor at the Univer-
sity of California at Berkeley, wants
a closer partnership in technology
between U.S. government and busi-
ness to stave off Japanese and Euro-
pean rivals.
It is a notion that has supporters
throughout the Clinton camp, begin-
ning with the president-elect.
"We need to have some place in-
side the government to monitor
competitive trends in key industries
around the world and the U.S. posi-
tion in these industries." Tyson said.
It could be an existing agency or
something new such as Clinton's pro-
posed Economic Security Council. In
either case, she said, it must be an
agency that keeps score, reporting
which industries are doing well.
Robert Shapiro
Shapiro, 42, is a leading force in
the Progressive Policy Institute,
which some believe could become as
influential in a Clinton administration
as the conservative Heritage Foun-
dation was in the Reagan years.
The institute is the research and
policy arm of the Democratic Lead-
ership Council (DLC), a group of
elected officials who banded togeth-
er in the mid-1980s to counter the
supply-side theories of the Reagan
administration. Clinton chaired the
group at one time.
Shapiro is a member of something
called The New Paradigm Group,
which has a Republican member and
favors a free-market, anti-bureau-
cratic approach to public policy.
Some Democrats consider his
views heretical, but the DLC's more
moderate positions have been re-
flected in Clinton's frequently voiced
support for U.S. technology and
business competitiveness.
On the deficit, Shapiro is a hawk
who would only allow it to grow if
personal incomes of Americans were
growing at a similar rate.
'The deficit absorbs the energy
and the arguments for new initia-
tives like a black hole, an enormous
gravitational force," said Shapiro.
"We have to pull ourselves out of
that gravitational field."
He stresses that any fiscal stimu-
lus must be balanced by concern for
the deficit.
Robert Sotow
Some people who know Nobel
Prize-winning economist Solow were
surprised when a few months ago he
endorsed the Clinton economic plan,
which many said would make the
federal deficit worse by spending
more money on new programs than
could be offset by taxes or other sav-
ings.
The MIT economist had signaled
his contempt for President Bush
with a sarcastic comment about the
"read my lips, no new taxes" pledge.
Solow said he could read Bush's lips
but he doubted they were connected
to a brain.
Many people took that as an at-
tack on the fiscal irresponsibility that
has produced the nation's huge defi-
cit. But earlier in the year, Solow,
joined by Nobel laureate economist
James Tobin and others, urged the
Bush administration to give the
economy a shot in the arm with
more government spending, even if
it meant increasing t'ie federal budg-
et deficit in the short run.
Then, at a press briefing this fall,
Solow endorsed Clinton's focus on
public investment as the key to ac-
celerating growth.
Solow, however, remains skepti-
cal of claims of economists known as
"growth theorists," who claim that
government investment in training,
education and infrastructure can in-
crease the economy's output.
Some argue that deficit spending
can push the economy close to its
potential. But many economists con-
tend that is not true for the United
States today.
Because of the huge budget defi-
cit, they say, government borrowing
takes away from the pool of capital
that would otherwise be used by the
private sector to finance its invest-
ments.
But Solow and others say that the
economy is so weak that the govern-
ment has to step in to get things
moving.
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2. AN EXECUTIVE SUMMARY OF REINVENTING GOVERNMENT
A NEW APPROACH TO GOVERNMENT
Over the past decade, governments at all levels in the United
States have faced a wide range of problems and challenges,
including tighter budgets, a shrinking tax base, rising citizen
expectations and declining government resources. The responses to
these challenges are varied, but the most effective responses share
common elements, and viewed from a broad perspective, they reflect
a new approach to government called entrepreneurial government.
Osborne and Gaebler have examined those governments in the U.S.
which have successfully met the new challenges, and from this
examination they have developed 10 key principles which explain
successful government. These 10 principles serve, in turn, as a
blueprint for citizens and officials who would make their
government better, and as benchmarks to gauge their success.
Taken as whole, the 10 principles of organizing and operating
government, define the concept of:
Entrepreneurial government
"Entrepreneurial government" is characterized by Osborne and
Gaebler as an approach to governing that stresses the importance of
"steering" over "rowing". Officials "steer" government toward the
goals desired by citizens by leveraging the powers of market
forces, incentives, creative financing, improved accounting systems
and other innovations. In the past, and unfortunately today as
well, governments have concentrated on "rowing"— determining a
need such as public housing, job creation, or police protection—
and then creating bureaucracies, with complex rules, regulations
and controls to serve that need. Today this model, or "paradigm"
of government must be changed and replaced by "entrepreneurial
government." An "entrepreneurial government" concentrates on
"steering" the varied resources of government, private industry,
and voluntary organizations toward efficient solutions that meet
citizen needs and solve community problems. The 10 key principles
of "entrepreneurial government" are:
1. Catalytic government — using the public, private, and
voluntary sectors to solve community problems by using methods
like seed money grants, public-service partnerships, and
vouchers.
2. Community-owned government — empowering citizens rather
than the bureaucracy to solve problems. For example,
encouraging and supporting the tenants in a Metro DC public
housing project to buy their apartments.
-------
3- Competitive government — promoting competition between
service providers both inside and outside government.
Example: New York City's Sanitation Department operates a huge
fleet of trucks with maintenance work performed at city and
private repair shops. To spur competition, and gain savings,
management posted in each city shop a chart for all workers to
see which compared the cost of maintenance in their city shop
with the cost in an equivalent private shop.
4. Mission driven government — the mission drives the
organization rather than rules and regulations. Example: the
Navy's China Lake Experiment which freed managers of
traditional personnel regs and allowed greater discretion in
promoting and rewarding subordinates.
5. Results oriented government — measuring government
effectiveness not just by inputs (money, manhours, equipment),
but also by outcomes. For example, the federal Jobs Training
Partnership Act which uses performance contracts in which
vendors are paid according to the number of trainees placed in
iobs. not just the number trained.
6. Customer-driven government — offering choices to clients—
for example, choices between schools, training programs, and
housing. The World War II era G.I. Bill was an enormously
successful example of "customer" choice, because veterans
could choose almost any college, rather than having government
dictate.
7. Enterprising Government — not just spending money, but
earning money thorough user fees, investments, and enterprise,
and using these earnings to offer new services, or reduce the
cost of existing services. In Chicago the city contracted for
towing abandoned cars and now receives $25 per car or $2
million a year from contractors.
8. Anticipatory Government — attacking problems before they
emerge rather providing services to mitigate problems after
they arrive. An example: EPA's approach to pollution
prevention which concentrates on stopping pollution at the
source, and pollution controls which emphasize recyclable
materials.
9. Decentralized Government — authority is decentralized to
make bureaucrats more responsible and more efficient because
they have more localized power and more job satisfaction. TQM
is a method to decentralize. In addition, General Creech and
his turn-around of the US Air Force Tactical Air Command
relied on decentralizing and delegating authority down the
chain.
10. Market oriented government — using market mechanisms to
price services, create efficiencies, trim bureaucracy, save
money. For example: the Washington DC Metro system pricing
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fares at higher rates during rush hour in order to spread out
demand.
THE PRE-CONDITIONS NEEDED TO IMPLEMENT ENTREPRENEURIAL GOVERNMENT
Osborne & Gaebler specify certain pre-conditions that are
needed before "entrepreneurial government" can be implemented.
They state that at least 4 of the 8 conditions listed below are
needed to implement an entrepreneurial approach:
1. A crisis — necessity becomes the mother of invention. The
most common form of crisis is a fiscal crisis. When no crisis
is present "imaginative leaders sometimes create one."
2. Leadership — Nothing is more important. Typical leaders:
a mayor, governor, or president. Important characteristic:
the ability to "champion and protect those ... who are willing
to risk change."
3. Continuity of leadership — key leaders must stay the
course, or else their organization will not take the risk of
reinventing itself.
4. A healthy infrastructure — defined as the informal network
of civic commitment where citizens, volunteer groups, business
and media are committed to the public welfare.
5. Shared vision and goals — a consensus on basic goals.
Entrepreneurial leaders rally the community to their vision
and goals.
6. Trust — all sectors of the community trust each other:
e.g. the mayor, union, business leaders, city council.
7. Outside resources — most organizations embarking on change
need outside help in the form of money, expertise or political
support.
•
8. Models to follow — institutions take great comfort when
they can see what they are trying to create already in
operation somewhere else. Models provide institutions with
the conviction that change is attainable.
THE "CRISIS" OF GOVERNMENT TODAY AND THE NEED FOR A "NEW PARADIGM"
Osborne & Gaebler consider most government organizations at
all levels in the U.S. in a "crisis" primarily because government
is following an obsolete model or "paradigm" that does not meet the
needs and desires of citizens. What's needed is a "new paradigm",
a new way of regarding the relationship between citizens,
government, and the services government delivers.
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The present day model or "paradigm" of government was set in
place from 1900 through 1940. During this period, from the
Progressive Era to the New Deal, a model of government evolved
which functioned primarily to provide "services" for an emerging
industrial economy. When the public or voters desired government
to meet a common need, then government supplied, sometimes
efficiently sometimes wastefully, the "service" to fulfill that
need— e.g. building and repairing public roads, bringing
electricity to the farmlands, feeding the homeless.
But, at the beginning of this period, around 1900, government
"service" organizations often suffered from endemic waste and
fraud. To attack this weakness, the Progressives and their allies
helped to legislate and implement public accounting and budgeting
systems, competitive contracting requirements, and civil service
systems. The central purpose of these innovations was to provide
limits and controls on politicians and bureaucrats in the
expenditure of public resources. The controls were exercised
through complicated systems of rules and regulations to ensure
equity, guard against fraud, and provide detailed documentation for
inspectors, and the public at large.
The Progressives' prescription for good government succeeded.
The Progressives' control systems have largely eliminated the
pervasive waste and fraud which was common weakness at the turn of
the century. Their "paradigm" of government became the dominant
view for the next 60 years: large bureaucracies dispensing
"services" to citizens, creating new bureaucracies as new needs
were discovered.
However, in the 1990s, the complex rules, regulations and
limitations of the Progressive era have become the deadweight and
inhibitors that prevent politicians and civil servants from
responding quickly and efficiently to the challenges of today.
Governments must become more than just "service" providers because
the "services" citizens desire are too diverse and citizen needs
are too varied to be satisfied by large bureaucracies.
The "new paradigm" of government which is needed to today is
a concept of government in which all sectors of the community —
government, private, and voluntary — are engaged in the solution
of common problems. Osborne and Gaebler write: "The central
failure of government today is one of means not of ends." For the
authors "entrepreneurial government" provides a new means for
meeting the traditional ends and common needs of a community, while
the "new paradigm" provides a new concept to inspire all sectors of
the community toward a new vision of government.
— 10 —
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SPECIFIC HUMAN RESOURCES ISSUES CITED BY OSBORNE & GABBLER
The authors discuss many examples of innovative management and
government systems. They specifically discuss civil service
systems, since increasing the efficiency of government must include
increasing the efficiency of government workers, and especially the
means to manage the workforce. Specific citations concerned with
human resources systems are as follows:
• Government personnel systems generally
Most of today's civil service systems are derived from the
Federal Civil Service Act of 1883. Fine for its time, but an
obsolete guide for today — "Designed for a government of
clerks, civil service became a straitjacket in an era of
knowledge workers."
• Hiring
The hiring process is slow and rule bound. The authors'
"favorite horror story": the Michigan State pension fund has
to creatively invest $20 billion, but it "is expected to hire
venture capitalists from those who score well on the civil
service exam."
• Promotions
Seldom related to performance, and controlled more by the
personnel office than the manager.
• Firing
So time consuming, tedious, and complicated few managers ever
make the attempt.
• Formal reduction in force
Inefficient and illogical: "Typically, layoffs comb out the
younger, eager employees and leave behind the deadwood—in
jobs they neither know nor want."
• Does a transition to "entrepreneurial government" require
layoffs?
"We have found that the transition can be managed without
significant layoffs..." The transition will create new
organizations and changes to the traditional mission of
government which in turn may require lower staff levels, but
these lower levels can generally be met through attrition and
reassignments.
• Classification
Complicated, tedious, and time consuming.
— 11 —
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Training and Development
"No one wants poorly trained employees making important
decisions, yet few governments spend much on training."
Decentralizing is one of the 10 key elements of
"entrepreneurial government" but management must assure that
employees are well trained to prepared them for broader roles,
and to demonstrate concern for their professional development.
The China Lake Experiment — a qualified success
The 1978 Civil Service Reform Act permitted demonstration
projects such as the China Lake Experiment which
"revolutionized the personnel system" at the Naval Weapons
Center, China Lake, California. At China Lake the complicated
federal classification system was replaced by a limited number
of pay bands, allowing managers greater flexibility to hire,
and reward good performance. The Reagan Administration
insisted that the China Lake Experiment be "cost neutral", and
thereby weakened its effectiveness. Nonetheless, China Lake
"shows the way toward a modern personnel system."
-- 12 --
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Atlantic
A Case for
Reform
by James Fallows
REIN\ ENTING Gov ERNME\T
How che Entrepreneurial
Spirit Is Transforming the Public
Sector. From Schoolhouse to
Statehouse. Citv Hall to
the Pentagon
by David Osborne and Ted Gaebler.
Addisoa Wesley, $22.95
JAMES FALLOWS ("A Case for Reform")
is The Atlantic's Washington editor and the
author of National Defense (\^%\) and More
Like Us (1989). Fallows is writing a book
about the future of East Asia.
-------
THIS BOOK may turn out to be
enormously influential. Ten
years ago every businessman in
America seemed to be reading In Search
of Excellence, by Thomas Peters and
Robert Waterman. I doubt that Rein-
venting Government will enjoy the same
runaway commercial success; its in-
tended audience—politicians and gov-
ernment managers—is not quite as
large or as well funded as Peters and
Waterman's was. But in spirit, approach,
and general elan, the two projects are
quite similar. In Search of Excel-
lence examined the most suc-
cessful U.S. corporations to
find out what traits they shared,
especially traits of corporate
culture. Reinventing Government
examines state and local gov-
ernments, plus a few federal
bureaucracies, to find out what
constitutes governmental suc-
cess and to see how the lessons
of success could be applied
where governments now fail.
David Osborne (who has
written occasionally for The At-
lantic) has spent much of the
past decade studying state and
local governments. His previ-
ous book. Laboratories of Democ-
racy, which described innova-
tion at the state level, was a
warm-up for this one. Ted Gae-
bler has been a city manager
in several places, most recent-
ly Visalia. California. The two
maintain a studiously nonparti-
san pose, and the book's jacket has a
carefully balanced set of blurbs from
Republican and Democratic officials.
William Weld, the Republican governor
of Massachusetts, says that the book
will be "required reading in the Weld
administration." Bill Clinton says more
expansively that it "should be read by
every elected official in America." Os-
borne has been a campaign adviser to
Clinton in this year's presidential race,
and at one stage he served as a surro-
gate for Clinton. (In January, when
Gennifer Flowers made her allegations
concerning Clinton, Osborne was pit-
ted against the New York gossip colum-
nist Cindy Adams on the television
show Larry King Live. It was up to that
point the most bizarre pairing of the
campaign, as the tweedy, staid-seeming
Osborne had to discuss the nuances
of the "love nest" with a woman who
exclaimed that the allegations might
be good for Clinton because being a
"great lover" is "part of the presidential
resume.")
If Clinton—or, for that matter. Weld—
should become President, the Osborne-
Gaeblcr message would have obvious
importance. Even without top-down
support, it has already attracted a cult-
like following in state and local govern-
ments. Moreover, the impact of the
book's argument is almost completely
positive. If governments throughout
the country ran the way this book sug-
gests, the United States would be a
happier and better-governed place.
Considered as an instrument of politi-
cal reform, therefore. Reinventing Gov-
ernment deserves attention and praise—
even though considered strictly as a
book it leaves me quite critical and
O;
SBOR\E \SD Gaebler's initial
achievement is to stand on an
unfamiliar side of a great politi-
cal divide. This is the divide that sepa-
rates theory from practice, politics from
governance. It is the gap between the
government's intentions, as reflected in
speeches and six-point plans, and its
effect, as reflected in what agencies
and bureaucrats do all dav. Virtually all
of American journalism is focused on
the intentions side of this divide—on
the struggle to pass a bill, win an elec-
tion, confirm a nominee. When we read
about the effect side, it's usually be-
cause of an outright scandal,
such as the S&L collapse.
Journalists are uncomfortable
trying to make subjective
judgments about whether a
program has worked well or
poorly, and they often find the
whole subject of implementa-
tion boring.
The division between in-
tentions and effect creates a
class division among politi-
cians. Senators can remain al-
most completely on the inten-
tions side. They tell us their
plans for solving this or that
problem, which usually means
the legislation they would
support, but they arc rarely re-
sponsible for carrying plans
out. Governor0 of very large
states—in practice, only New
York and California—can get
honorary membership in the
intentions club and be ex-
cused from talking much about
— 14 —
-------
implementation Ronald Reagan was
able to rise above the workaday details
of the state government in Sacramento,
as he later did with the national gov-
ernment in Washington Mario Cuo-
mo's struggles with the New York state
government have been portrayed, by
Cuomo and a sympathetic press, as a
lamentable nuisance that has kept him
from talking about the big picture
Osbornc and Gaebler concentrate
exclusively on the delivery end of
government, although their findings
naturally have implications for how
laws should be drafted m the future
Their most significant accomplishment
is to integrate many hundreds of exam-
ples into a basically new concept of
how government should function.
This concept is organized into ten
chapters, reflecting the ten operating
principles that distinguish a new "en-
trepreneurial" form of government
But they all seem to be corollaries of
one central principle- Government
should use incentives, so that people
want to do certain things, rathei than
using rules and regulations that force
people to comply
This is also the main idea of the
New Paradigm movement, an on-
again-off-agam bipartisan effort to re-
think government. The Old Paradigm,
in this view, was born almost a century
ago, during the Progressive era, when
"political reform" mainly meant gov-
ernment efforts to regulate the mighty
business trusts, plus the breaking up of
corrupt political machines. (Progressive
reformers, like many New Paradigm-
ists today, were from the "better class"
of people, who looked balefully on the
tawdry instincts of ordinary politicians.)
The centralized regulatory approach
got bigger and stronger through the
New Deal, the Second World War. and
the postwar welfare, entitlement, and
national-security state Everyone in
every party now agrees that the system
is too big, costly, and cumbersome
The New Paradigm argument is that
the system can't be saved by doing
more of the same, and that, contrary to
Ronald Reagan's claims, it's not sensi-
ble simply to do less of the same The
government must do something differ-
ent—which brings us back to this
book
Osbornc and Gacblcr say that by us-
ing more incentives and fewer regula-
tions, the government can applv the
automatic-feedback mechanisms of the
market to its own operations Incen-
tives are self-enforcing, if people can
save money by changing their behav-
ior, thev usually change Regulations.
bv contrast, must be enforced You
need inspectors to make sure that com-
panies are complying, and internal in-
spectors to make sure that the regular
inspectors have not been bribed. Os-
borne and Gaebler provide more illus-
trations, in more permutations, of the
incentive-based approach than I can
hint at here.
For example (although this is not in-
cluded in the book), for nearly a gener-
ation the U S government has tried to
save gasoline by dictating fuel-efficien-
cy standards. Under the Energy Policy
and Conservation Act of 1975, each
manufacturer's fleet had to meet a
steadily rising "corporate average fuel
economy" level- 20 miles per gallon in
1980, 27.5 miles per gallon by 1985.
This is, in effect, the King Canute ap-
proach to conservation: the sovereign
orders the cars to become more effi-
cient But by the mid-1980s, the price
of gasoline was dropping—which left
manufacturers with no economic in-
centive to invest in expensive new en-
gine technology and customers no in-
centive to buy expensive new
fuel-efficient cars. The law did, howev-
er, give manufacturers a powerful in-
centive to lobby Congress and the De-
partment of Transportation, in hopes of
overturning the law or postponing the
deadlines.
The incentive approach would be
simply to raise the tax on gasoline. In
the short run that would help cover
some of the real cost to the nation of
using gas—the environmental impact,
the effect on the trade balance (im-
ported oil now accounts for at least half
the trade deficit), the need or tempta-
tion to fight wars in the Middle East.
In the longer run it would transform
the car companies and the American
public into natural allies in the struggle
to create more-efficient cars. When
gasoline costs three 10 four dollars a
gallon, as it does in most other First
World countries, people find ways to
conserve. The same principle applies
to other forms of conservation. You see
manv fewer bottles on the roadside in
states with heavy bottle-deposit fees
than m states with strict anti-littcring
laws
Much of the book is about the inter-
nal mechanics of bureaucratic opera-
tion, and ic shows great canniness
about how regulations and incentives
really work. Here a memorable illustra-
tion concerns what The Washington
Monthly magazine, in a pioneering arti-
cle on the subject twenty years ago,
called "The Spring Spending Spree."
As a government agency nears the end
of a fiscal year (which used to occur in
June for the federal government), it
has every reason to spend every penny
that's left in the budget. Under most
budgeting systems it can't keep for the
future the money it doesn't spend
now—and in fact, underspending this
year will usually mean a smaller bud-
get next year, since obviously the de-
partment didn't need all the money it
had received. The government as a
whole may think it wants to reduce
spending, but each component part has
an incentive to do just the reverse. The
answer, as Osborne and Gaebler sensi-
bly explain, lies in changing the incen-
tives, through muhi-vcar budgets,
more-flexible budgets that allow man-
agers ro move moncv from one account
to another, even encouraging agencies
to open monevmakmg, businesslike
operations.
Some of these reforms can bring
new problems of their own For in-
stance, the Customs Service is allowed
to sell the boats and airplanes it confis-
cates from drug smugglers, and to use
the proceeds for its own budget. Some
lawyers have complained about an
overzealous approach to confiscation.
Osbornc and Gaebler carefully sift
through such consequences, as part
of their generally sophisticated-
sounding understanding of bureau-
cratic realities.
Rather than paraphrasing the entire
book, let me simply say that it is full of
sensible, specific recommendations.
Politicians and government officials re-
ally should read and underline in it.
But I'm not sure that manv other peo-
ple should.
ONE OBJECTION co this book is on
the purelv conceptual level; ic
offers a view of government that
defines away some of our largest, most
difficult political problems The book's
working assumption is that the Ameri-
can public, through its government, al-
ways means to do the right thing, and
that it's held back onK b\ specific fail-
ures and barriers—Uultv information,
bad incentives A suspiciously large
-------
number or supporting anecdotes are
drawn from cities like Orlando.
Phoenix, and Sunnvvale. California, in
Silicon Valle\ In such places the politi-
cal world may operate as Osborne and
Gaebler sav. and the mam drama of
government mav be the struggle to
serve its people more efficiently. But in
manv other political arenas, from the
local to the federal level, government
works on more Hobbesian premises. It
takes moncv from the politically weak
and gives it to the politically strong. No
one opposes the concept of efficiency,
but in practice many parts of the gov-
ernment are designed to be noneffi-
cicnt—that is. to preserve jobs. The
major problem in federal politics is not
that the government is perplexed
about how to administer programs. It is
that the public demands more in ser-
vices and benefits than it is willing to
pav for in taxes.
Osborne and Gaebler do not explicit-
Iv denv that anv of these complications
exist, but an implied faux optimism
runs throughout the book: If onlv we
knew all the facts, we'd never make
these foolish mistakes. For instance, in
illustrating the (unexceptionable) point
that it's cheaper to prevent a problem
than to solve it after it has happened.
they mention that thousands of young
black men are killed or wounded by
gunfire everv vear. It would be more
sensible and efficient, they suggest, to
get rid of the guns than to buitd more
jails. You don't say! Hev, maybe it
would also be more sensible if the
Arabs and Israelis made friends, rather
than fighting so much! But perhaps
there's something involved in the Mid-
dle East, and in America's reliance on
guns, that goes beyond faultv cost-ben-
efit analysis.
Osborne and Gaebler might properly
respond that they're not trying to solve
all the world's problems, it's enough to
help solve a few. as their book will. But
a sort of chirpmess in the book's out-
look is connected to its most serious lit-
erarv and intellectual defect. I trust the
conclusions that the authors reach
mainly because the conclusions con-
form to mv experience as a reporter and
in the government. But I don't trust all
che evidence thev present. This book
sometimes seems to be the work of
salesmen, not reporters or analysts
The anecdotes that jam the pages
have an unvarying narrative structure.
A government program is failing The
administrator stops and thinks things
over the entrepreneurial wav He takes
the N'ew Paradigm approach and—
presto1—"the results speak for them-
selves" (a phrase that is worked to
death in the book)
I don't doubt that something like
this sequence happened—that the pro-
grams worked better after the
change—just as I don't doubt that peo-
ple who go to Dale Carnegie courses
generally become better speakers. But
the tone of the book often reminded
me of an Amwav or a Dale Carnegie
sales pitch, or a TV mfomercial. Every
story is a success storv. Before the
change everything is bad. After the
change everything is good. Characters
have no function or nuance except to
put the New Paradigm into effect. I re-
spect Osborne and Gaebler as theorists
about the government, but I do not
trust them as reporters—that is. people
who will observe critically and open-
mmdedly and tell vou everything they
have seen.
Mv suspicions are heightened by
their handling of a case I happen to
know about firsthand. Osborne and
Gaebler present a long and 100 percent
favorable profile of William Creech, a
retired Air Force general who from
1978 to 1984 ran the Tactical Air Com-
mand, often called TAG TAG was the
fighter-plane branch of the Air Force.
Before Creech took command, it had
terrible operational and morale prob-
lems. Large numbers of planes sat in
the hangars, for lack of spare parts. Pi-
lots could not get enough flying hours
to remain proficient. By the time
Creech left, things looked much better
for TAG. More planes were operational;
more pilots were in the air. ("The re-
sults speak for themselves.")
Osborne and Gaebler present this as
a clear-cut morality play. Before Creech
arrived. TAG had been overcentral-
ized—that is. Old Paradigm. Repair
work was handled by one big, imper-
sonal, centralized depot, which slowed
things down and eroded morale.
Creech believed in decentralization
and incentives. He got rid of the cen-
tral repair depot and made each squad-
ron responsible for its own mainte-
nance. He made sure that the head
mechanic's name was painted on each
plane's nose, right next to the pilot's, to
svmbohzc their bond. He emphasized
the intangible elements of pride: "He
had every building in the TAC com-
-------
mand given a fresh coat of paint, and
he invested in carpets and furniture
and new barracks." Most impressive of
all. according to Osborne and Gaebler,
" T.\C accomplished all of this Kith no new
money, no man people, and a vork force
with less experience than the wort fane m
place througfr the years of decline."
Osborne and Gaebler chose to itali-
cize this passage in their book, which is
unfortunate, because it is both flatly
untrue and broadly misleading. T\C's
turnaround had everything to do with
money. The "years of decline" in the
late 1970s were due principally to dis-
honest budgeting. The Air Force,
along with the other services, chroni-
cally lowballed its estimates of how
much a new fighter plane or missile
would cost, in order to get more planes
authorized. Inevitably the planes cost
more than "expected." and the ser-
vices made up the difference by raid-
ing the opcracions-and-mamcenance
account. The result was the bad old
TAG that Osborne and Gaebler de-
scribe, with too little fuel and too few
spare parts.
Creech's tenure coincided with the
early years of the Reagan boom in de-
fense spending. The reforms Creech
made were undoubtedly important,
but so was the money. The TAG budget
went up 44 percent during Creech's
tenure, which included a big increase
in the operations-and-maimenance
account.
It would not have undermined Os-
borne and Gaebler's case to show that
the story had complications. No matter
how much moncv is involved, it still
makes sense to decentralize authority,
as Creech did. It would not have hurt
to hint that the man himself might
have had complicated motivations. Be-
cause Creech's story seems to fit their
argument, Osborne and Gaebler pre-
sent him as a one-dimensional hero ("a
man who remains a legend within the
U S. Air Force, even m retirement").
Thev discuss Creech in a way that
sounds as though they have talked with
him personally—"Creech later confid-
ed," "Creech asked " I don't know
whether thev actually talked to Creech
—their reference notes show that most
of the quotations come from one of
Creech's published speeches and a
magazine profile—but if thev did, they
could hardly have avoided noticing the
droll side of his emphasis on pride in
appearance. The carpet in his office
was so thick that one's shoes practically
disappeared in it. His assistants were so
ramrod-straight and wrinkle-free that it
was casv to imagine the daily panic as
they prepared to meet the general's
eye.
Osborne and Gaebler's case would
have been even more powerful if
they'd been able to admit that real peo-
ple, not earthbound saints, put it into
effect. D
-------
Bureaucracy busters
BY DON L BOROUGHS
-------
Business is teaching government how to give taxpayers more for their money
Xerox senior manager WC En-
mon spends his days training
work learns in customer satisfac-
tion, quality measurement and process
redesign. That should come as no sur-
prise. The Stamford. Conn., corpora-
tion has been using such total-quality
concepts for 10 years to fight Japanese
competition and win back market share,
from a low of 10 3 percent of the U.S.
copier market in 1985 to 17.6 percent in
1991. But Enmon is not working with
Xerox employees; he is putting these
corporate tools in the hands of the
226.000 civil servants and executives of
the Texas state government in Austin.
The Xerox-paid special adviser to Dem-
ocratic Gov Ann Richards acknowl-
edges that government cannot be run
exactly as a business, but he believes the
same techniques that helped improve
copiers will belter the efficiency and
service of government. "We're talking
about delivering service that meets the
customers' needs," says Enmon. "It
doesn't matter whether it's a widget or
a driver's license."
From Fort Lauderdale, Fla., to Fort
Collins. Colo., from Oregon to Ohio,
state and local governments have begun
seizing upon the business
concepts (hat American
companies began using in
the 1980s to reform their
own stifling corporate
bureaucracies. The new
buzzwords of the board-
room — empowerment,
customer-driven, team-
work and especially total-
quality management-
are increasingly becom-
ing the mantra in council
chambers, statehouses
and pockets of the feder-
al bureaucracy. In the
past six months alone,
1,000 inquiries have
poured into the offices of
the Public Sector Quality
EMPOWERIN0INI
FRONT UNI
Building inspectors
Pnoena
CORPORATE TACTIC: Mov-
ing decisions to tower
levels for speed, efficiency
PUT INTO PMCTKC: Fteid
inspectors have been
trained to make building-
code decisions that were
once passed five levels up
;, the chaw of command.
\ Decisions that used to
„ take a week are made on
^thespot.
ITr 11 ./i • .-* i .• < I
Improvement Network, a Madison, Wis.,
group that teaches business principles to
government leaders. And the platforms
of candidates in eight of the 12 guberna-
torial elections this month had planks
featuring entrepreneur-
• • ial government.
Intensifying this trend
was the publication this
year of "Reinventing
Government,", by David
Osborne and Ted Gae-
bler, which spotlights
many of the cities, states
and federal agencies
where practices honed in
the private sector are sav-
ing taxpayers' dollars and
making the phrase "gov-
ernment work" a label of
pride, not derision. "We
still think of.government
as monopoly, bureaucra-
cy, hierarchy," says Meryl
Libbey of Harvard's Ken-
— 19 —
-------
• BUSINESS
nedy School of Government,
"but that's not the way it's
happening among the more
innovative local govern-
ments. There really is a sea
change taking place."
Many observers believe
the tide is about to sweep
Washington as well. In Ar-
kansas, Gov. Bill Clinton es-
tablished what is widely con-
sidered the most advanced
total-quality-management
program in state govern-
ment, enlisting the assistance
of a local Eastman Kodak di-
vision. Quality executives in
Little Rock brag that Clinton
even left the campaign trail
for a day to attend a meeting
of his "quality team" in May.
The president-elect has also
consulted repeatedly with
Osborne, whose book Clin-
ton has praised (box. Page
55). While the next leader of
the federal bureaucracy has
been short on specific plans,
his national economic strategy promises
3 percent administrative savings in every
agency and a 100,000-position reduction
in the bureaucracy, enhanced by a "shift
from top-down bureaucracy to entrepre-
neurial government." Clinton could find
an unexpected ally in House Republican
Whip Newt Gingrich, who last week in a
speech before Republican governors op-
timistically estimated that total-quality
management could save 15 to 25 percent
of the cost of government over five years.
Government waste. Falling profits
woke business up to the need for change,
but government is responding to tax-re-
volting voters who refuse to pay another
dollar for less than a dollar's worth of
service. Seventy percent of Americans
believe that when something is run by the
government, it is usually inefficient and
wasteful, according to a recent Times
Mirror poll. Business, too, has tired of
paying more and getting less, which helps
explain why such companies as Xerox
and Kodak have been so eager to share
their expertise. Florida Power & Light,
the only American company to win Ja-
pan's coveted Deming Prize for quality,
for example, is acting as a mentor for the
Florida government's efforts to reform
its bureaucracy. "Whatever we can do
that helps the state." explains Dale But-
ler, an FP&L supervisor, "could have a
tremendous impact on our tax costs."
The privatization movement has also
stirred bureaucrats to the realization
that their monopoly is no longer safe. A
survey by the National
Conference of State Leg-
islatures found that near-
ly 60 percent of legisla-
tors now favor privatizing
traditional government
activities. The public sec-
tor is increasingly faced
with the option of learn-
ing from business or be-
ing replaced by it. "Gov-
ernment has to change
the way we operate," says
Steve Burkett, city man-
ager of Fort Collins. "We
are going to have to be-
come more productive."
To make real produc-
tivity gains, politicians
are learning, corpora-
tions had to change their
very shape. Executives
became obsessed with
flattening their organiza-
tions in the 1980s as they
came to realize that in-
formation and decisions
were slowed and garbled as they moved
up and down each additional layer of
management. The solution was to put
more decisions in the hands of lower-
level employees who can act on them
quickly, while eliminating the need for
several layers of supervisors. At Motoro-
la's semiconductor division in Phoenix,
for example, "empowered teams" now
set their own production schedules as
PLEASING
THE CUSTOMER
Traffic police
Reno, Nev.
CORPORATE TACTK: Ori-
enting work around cus-
tomer desires
PUT MTO PRACTICE: Reno
police found that simpfy
issuing more tickets
made residents angry
without reducing acci-
dents. After soliciting the
advice of their "custom-
en, " traffic cops found
more targeted and less
offensive ways to control
traffic, such as this
speed-monitoring sign.
Citizens are happier, and
accidents are falling—
down 20 percent in the
first half of 1992.
they prepare batches of
specialized computer
chips. Because such deci-
sions have been imple-
mented without passing
through the chain of
command, most Motor-
ola units in Phoenix have
eliminated at least two
layers of management.
Executives credit the im-
proved productivity and
responsiveness with
helping reverse Motoro-
la's slide in worldwide
semiconductor market
stiare, which has grown
over the past two years,
while revenues have risen
$600 million.
Flattened. Across
town. Phoenix Mayor
Paul Johnson isn't much
worried about market
share, but he is equally
enthusiastic about alter-
ing the hierarchical bu-
reaucracy of city government. Phoenix
has studied Motorola's success, and
Johnson now boasts that the city serves
more people today with 450 fewer em-
ployees than it had three years ago,
largely because of cuts in senior- and
middle-management positions. The
mayor is particularly emphatic that de-
cisions not get passed from desk to
desk, a lesson he learned battling red
1
-------
• BUSINESS
tape as the owner of a local
construction firm.
In the past, for example,
when Phoenix building in-
spectors came across uncer-
tain situations that required
them to interpret the build-
ing code, they would routine-
ly refer the question up the
chain of command to an as-
sistant director, five layers
above. Developers would
have to put parts of a con-
struction project on hold
while waiting for a decision,
which was usually based on
the advice of the inspector
anyway. Today, inspectors
make similar decisions on the
spot, or refer them to their
immediate supervisors, sav-
ing developers tens of thou-
sands of dollars. Such im-
provements have led to a
drop in customer complaints
at the Development Services*]
Department, despite^a 23 •
percent reduction in staff.
In most government agencies, the
number of complaints coming over the
transom is not followed very closely, but a
new vanguard of entrepreneurial govern-
ments is taking up the customer revolu-
tion begun by corporate America in the
early 1980s. In Phoenix, every depart-
ment has conducted customer focus
groups in the past six months. The city of
Fort Lauderdale hopes to polish its im-
age by putting parking enforcers, who
often deal with irate tourists, through
customer training. Fort Collins annually
sends out surveys to 1,000 of its citizens.
Says City Manager Burkett, "We can
have all kinds of data about how great
our library is, but if our customers think
it's lousy, we're not achieving our goal."
Productive police. If the Reno, Nev.,
Police Department had been interested
in customer service in the early 1980s, it
would have found an ideal model close at
hand. Harrah's Casino Hotels was then
developing what is perhaps the most ex-
tensive customer-service data collection
system in its industry. Nearly 2,000 visi-
tors are surveyed by phone each year
after returning home from Harrah's,
while thousands more are interviewed on
site. The results are tracked monthly. But
the Reno police were more interested in
writing tickets than reading surveys. Ac-
cidents rose in the early and mid-1980s.
Reno cops, armed with 21 new radar
units, more than doubled the number of
traffic citations. But the accident rate
refused to budge, and in 1986 and 1987
SCOn OCXDSMITH CQO '. S
angry citizens turned
down two ballot-box pro-
posals that would have in-
creased police funding.
With some advice from
Harrah's, Reno police
have begun listening to
their customers. More
than a thousand citizens
are surveyed each year by
telephone. As a result of
their advice, many inter-
sections have been im-
proved. Police are no lon-
ger encouraged to write
tickets in random loca-
tions, instead targeting
sites with large numbers
of accidents or customer
traffic complaints. To-
day, 9 of 10 Reno citizens
approve of the depart-
ment, up from 4 of 10 in
1988. And though ticket-
ing is down, the accident
CUTTING WASTE
FROM THE PROCESS
Tree-trimming crews
Cleveland
CORPORATE TACTIC: Rede-
signing the work process
in search of efficiencies
PUT MTO PRACTICE: When
business consultants ex-
amined the way Cleve-
land cut trees, they found
crews spending almost as
much time driving from
site to site, stuck in traf-
fic jams and waiting at
the gasoline pump as
they spent trimming trees.
The problem was not la-
ziness but organization.
With a better schedule
and division of labor,
productivity rose more
than 40 percent.
rate fell 20 percent in the
first six months of 1992.
In their pursuit of satisfied custom-
ers, American companies in the 1980s
sought out the teachings of W. Edwards
Deming, the quality consultant many
Japanese industrialists credit with their
success. One of the key tenets of his
philosophy of total-quality management
is music to the ears of government
workers weary of the stigma of the lazy
bureaucrat: Of any problem with quali-
ty or efficiency, 85 per-
cent or more lies within
the process, not the peo-
ple who work it. Bob
Garda of McKinsey &
Co. finds that 10 to 20
percent of the costs can
be wrung out of a proc-
ess—in business or gov-
ernment—by redesign-
ing it. "We have good
people in government
trapped in bad systems,"
says Gaebler. "They
have to go."
Out on a limb. The tree
trimmers of the city of
Cleveland would agree.
For as long as anyone
could remember, several
tree crews had criss-
crossed the city daily,
pulled away from rou-
tine trimming tasks to
handle emergency re-
quests. When Garda
studied their movements
in the late 1980s, he found that they
were actually working with trees only
five hours of the day, spending much of
the other three hours in traffic. Garda
recommended that one crew be as-
signed to emergencies, while the others
stick to their assigned trimming jobs all
day. As a result of such changes, the
department now services more trees
with 18 people than it could in the past
J
-------
with 27. Productivity has risen 43 per-
cent while citizen complaints have fall-
en 63 percent.
In the front-running governments
that are using Dealing's total-quality
management seriously, government
workers themselves are finding ways to
improve the efficiency of their work sys-
tems. Arkansas has sent more than 5,000
of its 32,000 employees-from Gover-
nor Clinton to garage mechanics—
to I'/fc- to three-day training ses-
sions where they are taught how
to chart work processes, measure
results and redesign for effi-
ciency. One team of workers
from the motor-vehicles of-
fice studied how to speed
the turnaround of license-
plate renewals, which were generat-
ing weekly complaints from citizens who
were waiting up to three weeks for their
certificates and decals. The team decid-
ed that rather than saving up re-
newal requests so that new regis-
tration certificates could be
batch-printed on the weekend, they
could simply attach computer-coded
slickers to the old certificates as they
arrived. All renewals are now mailed out
within a day, while the department saves
$10,000 a year on forms alone and even
more on printing.
If Clinton promises to do for Ameri-
ca what he has done for Arkansas, how
large a revolution could he stir in the
halls of the Washington bureaucracy?
The new president may find himself too
preoccupied with reviving the stagnant
economy to make any early, bold moves
toward creating a more entrepreneurial
federal government. And if he does, he
will find all manner of obstacles in his
way. Th§ federal bureaucracy is an orga-
nization far larger than General Motors
and IBM combined, with a civil-service
system rewarding a manager for running
a bigger staff, not a more efficient one.
Nonetheless, at the Federal Quality
Institute, an appendage of the Office of
Personnel Management, the change in
leadership has sparked hope. Director
Don Mizaur, whose staff has spent five
years as the federal government's princi-
pal cheerleader and catalyst for total-
quality management, says that Washing-
ton is "not seeing the bottom-line,
measurable results that some people ex-
pected." The private sector has turned in
more impressive results, adds Mizaur.
largely because in companies "these
things are primarily led by the CEO."
But expectations are rising once again in
Washington; a new CEO is on his way
from Little Rock to the White House. •
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THE WASHINGTON POST
THE FEDERAL PAGE
CLINTON'S DOMESTIC AGENDA
AREAS UNDER
CONSIDERATION
BY TRANSITION TEAM:
•^Reinventing government
j National service
j Welfare overhaul
j Children and
family issues
j Crime and justice
j Education and training
G Community development
j Housing and agriculture
G Civil rights and labor
G Campaign finance
G Technology and
related issues
10 PROPOSALS FOR CLINTON
FROM A FAVORITE THINK TANK
• Create a performance-based federal
budget.
• Overhaul the civil service system.
• Create a labor-management council,
negotiate a "grand bargain" with federal
employee unions, and cut the bureaucra-
cy through attrition by 200,000 jobs.
• Enact a "sunset" law and commission
to eliminate federal programs and regu-
lations.
• Pass a non-tax
revenue act creat-
ing incentives for
federal agencies
and employees
to raise new
revenue.
• Create an "innovation fund" so that
federal agencies could borrow for invest-
ments that would increase revenue or
cut costs.
• Cut spending for designated depart-
ments such as Agriculture, Commerce
and Housing and Urban Development by
6 percent annually for four years to force
their transformation from ",-owing" to
"steering" organizations.
• Merge the Census Bureau and other
appropriate statistical agencies into a
new National Information Agency.
• Enact a truth-in-spending law that
would force elected and appointed offi-
cials to confront the long-term implica-
tions of their decisions.
• Inject further competition into the de-
livery of federal services.
SOURCE: "Mandate tof Change," Progressive Policy Institute
THE WASHINGTON f>OSr
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THE WASHINGTON POST
MOINDAV, DECEMBER 14,1992
The Promise
To Transform
Government
By Stephen Barr
WjUnngton Post SuH Wirier
The womes are familiar: Gov-
ernment is sluggish, suffering from
bureaucratic bloat. It is full of rules
and regulations and chains of com-
mand. It can't keep up in the real
world. Now, more than ever,
change is mandatory.
For Bill Clinton, the remedy is
"reinventing government." The
words served not only as a cam-
paign slogan but as the foundation
for his promise "to change the way
the federal government operates."
How that promise can be carried
out is under study by the transi-
tion's domestic policy team. Its
leading advocate, David Osborne,
has been asked to take part in the
Little Rock, Ark., economic summit
beginning today, focusing, he said.
on "the connection between rein-
venting government and creating
job growth."
The transition team's work has
been guided in many ways by Os-
borne. who wrote a chapter on the
topic in "Mandate for Change," a
policy blueprint for the Clinton ad-
ministration released last week by
the Progressive Policy Institute, a
think tank that has helped shape
several Clinton initiatives. In his
chapter, Osborne urges the next
president to "create a high-level
reinventing government group
within the White House."
The phrase "reinventing govern-
ment" covers almost everything
that Clinton talked about during the
campaign. It's a way to raise money
and cut costs, a way to link govern-
ment management and systems to
big issues like health care and "fair
share" taxation. It includes Clin-
ton's pledge to cut 100.000 federal
jobs through attrition and to require
federal executives to achieve a 3
percent across-the-board adminis-
trative saving in every agency.
It's also how Clinton can change
the behavior of the bureaucracy by
injecting it with an entrepreneurial
spirit that provides new incentives
for federal workers.
To skeptics, however, "reinvent-
ing government" is just a buzzword
that, allows Clinton to redefine
tough political issues as bureaucrat-
ic problems and to beguile taxpay-
ers with visions of more govern-
ment for less money.
"When we can't deal with the big
issues, we start dealing with the
management," said H. George Fre-
derickson, a University of Kansas
public administration professor.
"The big issues are housing and
health care. It takes dedication and
political consensus-building and dol-
lars and skills with federalism to
deal with those problems. What
you've got in Washington is the
wrong-problems problem."
But Osborne and his supporters
say they believe it is time to con-
centrate on how government
works, because they view this as
central to helping solve the nation's
long-term economic problems.
For example, Osborne said, the
government has set up job training,
vocational education and welfare
systems that began decades ago.
Because of the way the government
provides money for vocational ed-
ucation, he said, "you get a system
that continues to teach things in
some cases long after those skills
become fairly irrevelant to the mar-
ketplace."
The government's systems can
be restructured only by "changing
the basic incentives that drive pub-
lic institutions," Osborne said in an
interview. The budget system re-
wards waste and encourages waste,
because if you don't spend every
penny every fiscal year you lose it
and get less next year. So if you're
smart, you spend it."
As he explains in his "Mandate
for Change" chapter: "Most public
programs are monopolies whose
customers cannot go elsewhere for
a better deal. Most are funded ac-
cording to their inputs—how many
children are eligible for a given pro-
gram, how many families are poor
enough to qualify for public assist-
ance—rather than according to
their outcomes, or results."
— 24 —
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Osborne doesn't fault govern-
ment workers so much as he does
the way government manages.
"The marching orders given to the
bureaucracy often require them to
suspend common sense." he said. "If
your personnel system makes it
difficult to move people around as
needs change, it won't move them
around."
Ralph Whitehead, a University of
Massachusetts professor who
studies the nation's work force, said
he thinks the Clinton administration
can use "reinventing government"
efforts as "an experimental show-
case for new ways of organizing
work."
If the federal government be-
comes an innovator, "it can gain
new stature in the country. If it
doesn't step up, it will be one more
sign that the Beltway is out of
touch," he said.
The erosion of the middle class
over the last decade shows why it is
important to think about how work
is organized, Whitehead said. "The
vanous levels of the public sector
spend hundred of millions of dollars
on manpower, mainly for education,
and hundreds of millions on tech-
nology," he said, "but spend very
little on establishing the work sys-
tems that make sure that the man-
power and the technology will get
hooked up to one another in ways
that are efficient and equitable."
Osborne's proposed solutions
have been outlined in detail in a
book. "Reinventing Government,"
that he wrote with Ted Gaebler, a
former city manager of Visalia,
Calif., and. Vandalia, Ohio. The
book, which appeared on best-seller
lists earlier this year and has sold
70.000 copies, gives examples of
innovative government at the local
and state levels and concludes that
"the central failure of government
today is one of means, not ends."
Under Osborne's framework, a
"mission-driven government," for
example, would overhaul its budget
system and adopt performance-
based budgeting. Performance mea-
sures would be developed for all
federal programs, and the budget
would specify performance targets
and reward agencies that exceeded
those targets.
"Politically, it requires a change
of mindset on the part of people in
Congress," Osborne said. "They're
used to controlling the inputs—
you'll spend so much on this base or
that base—and they're used to dis-
tributing pork. A performance-
based system eliminates some of
the micro-management up front."
Congress, however, has seen
several similar overhaul proposals
before. For example, Osborne
urges a "sunset law" that would re-
quire reapproval of all government
regulations—a practice that could
create political chaos when such
popular programs as Social Security
came up for renewal.
And Congress has been moving
to foster better management in the
government. Sen. William V. Roth
Jr. (R-Del.) expects to reintroduce
legislation next year that would re-
quire federal agencies to develop
program performance plans, specify
goals and report on the results.
Sen. John Glenn (D-Ohio), chairman
of the Governmental Affairs Com-
mittee, has helped create new agen-
cy financial officers and reviews and
strengthened the role of inspectors
general.
James Colvard, a former deputy
director of the Office of Personnel
Management, said there is "some
real profit to be made" by rethink-
ing many of the current bureaucrat-
ic premises.
"The federal system is highly
overstructured at the moment," he
said, leading to situations where the
official interpreting a federal rule
effectively makes decisions for line
managers and employees but "is not
held accountable." He added, "It's
the kind of thing that occurs when
you have complex processes
There are no villains, and that's the
part that makes it so frustrating."
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