Government Should Run Like a Business—but Not in the Way You Think

Regimes around the world are under pressure to deliver more and cost less. Here's a plan for how to actually make that work.

"Government" is, everywhere, an industry in serious trouble. Not only do its consumers constantly complain, but some also are finding alternatives. Its products are failing the tests of quality and innovation, and it costs more than users want to pay. If governments were private firms, they'd be facing the prospect of either a takeover to "rescue" them or death in the competitive marketplace as their customer base migrates to newer alternatives.

Don't buy the government-business comparison? In fact, governments today face precisely those challenges. Start with takeover threats. Many governments -- from a variety of municipalities in the United States (Governing maintains an online list and map citing at least 31) to several member countries of the European Union -- have been forced to accept one form or another of outside supervision of their fiscal affairs. The Tea Party openly offers the usual corporate raider's solution: dismemberment and liquidation of the hostile takeover target -- in this case, "government" generally.

Look at competitive challenges to governments today: not just a range of alternative public-sector models, from the autocratic to state failure, but also a growing host of private-sector challengers in the provision of every sort of "governmental" service, from the state's traditional province of use of force to such newer areas as social welfare (as we'll discuss in future posts, non-state actors ranging from major defense contractors, responding to former Secretary of State Hillary's Clinton "soft power" initiatives, to terrorist group Hamas have gotten into the social services field). Many businesses have qualities of de facto government (top-down decisions, no consumer voice, little transparency, trampling of individual rights like privacy, and no viable means of escape; as I've written elsewhere, Facebook comes to mind). So it's not too big a stretch to say that governments face pretty much the same challenges as any other business.

At some point, all entities need a demand for their services, to deliver those services at a level of quality that maintains that demand, to respond to innovation and competition by improving them for the times, and to do it with the resources they can command by performing those functions. Any entity that ignores these realities will eventually "go out of business" -- whether or not it's a business.

To make government work in the 21st century requires the same basic "business plan" as in any other failing, but potentially still viable, enterprise:

  • First, resize it to current realities -- stop the bleeding, cut the fat, and get the existing operation on stable footing. Then, start thinking about the future -- or, more accurately, the present that's already arrived while the enterprise remained stuck in the past;
  • Redesign the business, its products, services, and organization, to meet current and future demand -- you wouldn't keep selling buggy whips if people wanted cars. And then,
  • Redefine and reposition the enterprise to compete effectively against new competitors and in whole new markets.

That's the business plan I'll follow (if fitfully) in this space. Let's start with resizing, the subject of most of the debate about government today. How much should we spend on government? How large or small should the deficit be? How much should we cut? A good place to start is discussing how we can control reckless spending, spend more wisely, and make the decisions necessary to bring spending in line with what we're able and willing to pay for it.

That's because, in turning around a troubled enterprise, the first thing to do is to stop the hemorrhaging. That doesn't mean you start hacking away at the enterprise indiscriminately, or just blow it up. You want to attack the problem strategically, starting with purely wasteful spending that can be eliminated without hurting operations -- in fact, eliminating waste will actually help operations.

Consider for a moment what is "waste" (and its cousins, "fraud" and "abuse"). Many people apply this term to virtually any government program with which they disagree. For instance, a liberal may view military spending as "waste" while a conservative might think the same of giving money to a homeless person. We'll use the term "waste" in a different and more precise sense: money that isn't being spent for its intended purpose. However one feels about defense spending, defense dollars shouldn't be spent on gold toilet seats, as the National Performance Review under Vice President Al Gore found they were, and whatever one thinks of welfare, welfare dollars shouldn't be spent on ineligible services, as various federal reviews have found to be the case with as much as 40 percent of Medicaid spending.

Presented by

Eric Schnurer is president of Public Works LLC, a public-policy and management-consulting firm that works with state and local governments across the country. He has served as a gubernatorial chief-of-staff and speechwriter or policy adviser to governors, senators, and presidential candidates.

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