21st Century Governance

David Osborne
He is Senior partner at The Public Strategies Group, a consulting firm. Also author of five books including the New York Times bestsellers Reinventing Government and Banishing Bureaucracy.
The Difference he makes Advices public organisations on how to develop and implement strategies to improve their performance.
Key Insight “You can’t skip the steps of controlling patronage, corruption and creating an independent judiciary that ensures the rule of law.”

What has changed about 21st century governance?
Why do things need to change? Bureaucracy stood for centralised, hierarchical decisions made at the center at the top; deliver standardised services to mass market. They build the same roads, same education, and offer uniform services. They are built to do that and control that through rules and regulations and ignore results. Customers of bureaucracy have no power, their customers can’t go elsewhere, and they are often monopolies. During the industrial era bureaucracy was the best way for public administration. At that time there were no computers, workforce was not educated, and communication was not as good.

Before the bureaucracy era, the governments were much more informal , there were few rules, But corruption and patronage was the big concern.

But now as society shifts from industrial to information economy, underlying conditions have changed. With computers everything changed. It’s a global market place. There is much more economic competition between the countries. If regulation is slow and infrastructure is mediocre, companies are at a disadvantage. Pace of change has become very important. Bureaucracy was built to be stable. We have more demanding customers today. People are more educated. They expect much more and private sector has raised expectations.

Think about post offices. In the 1960s-70s, we loved it. Today our postal service works better, but we think it’s lousy because we have gotten used to Fedex. People expect more because they have choices. Due to global competition, we can not increase taxes without hurting our economy. Conditions have pushed public organisations to change. Bureaucratic organisations need to decentralise, become flatter and use networks, contract to others, use vouchers and other measures. Bureaucratic organisations run on rules and regulations. Rules tie people down. We need to shift focus to results.

Is there any difference in the way how developed and developing world and how democracies and non-democracies are dealing with it?
There is a profound difference. In developing countries, corruption and patronage is a huge problem. They have to solve those problems first. If corruption is rampant you can’t decentralise the government, empower the employees, because some of those employees may be corrupt. A good example is Mexico. It wanted to control patronage so that people are hired on merit rather than patronage so they created a national civil service. Developing countries have two things on their agenda: Controlling corruption and patronage and establishing independent judiciary and transparency in budgets. Developed countries are a step ahead. (They are looking beyond bureaucracy to offer efficient governance).

Non-democratic governments can obviously make changes faster unlike the democratic government. .

Is it possible for countries like India to leapfrog stages?
It is possible. Look at the outstanding example of Singapore. It was a poor corrupt country with no natural resources. Because of enlightened government, they invested in people and created one of the most modern governments. But you can’t skip these steps of controlling patronage, corruption and creating an independent judiciary that ensures the rule of law. If you don’t fix that you can’t build modern governments. But you can do all of it at the same time. Look at Chile. The government of Abu Dhabi has set goals to be one of the best five governments in the world in the delivery of government services. South Koreans, Malaysians have done a great job.

What are some of the major shifts you see in the 21st century governments?
I spent years studying this stuff. I broadly put them under five broad strategies: Clarity of purpose: An example: Budgeting for outcomes. Some versions of which I have seen in the US, New Zealand. This is about managing strategic planning of budget – you start with outcomes. It’s one thing to have a strategic plan and another to fund it. Governments are looking at new strategies to budget for outcomes. So far it was being done by departments, now you do it by outcome goals.
For example a government can set its outcome goals as providing better education or cleaner environment. And then figure out how much money they want to spend doing it. Then you decide a strategy how best to do it and let each department compete. And you fund whoever is the most cost effective in achieving the goal.

Creating consequences for performance: An example: Forcing public departments to compete with private. For example for any service you let them compete every 3-4 years to get the contract.

Accountability to customers: An example: Under the bureaucratic regime you send children to school, you have no choices. How about making it such that you can send your child to any public school and money will follow where the child goes. And schools function like marketplace – if you get children you get money. And then you can also let schools differentiate. You can set up schools for children that love technology, those that love art or science and maths. This offers people choices of different kinds of schools. And brings accountability – you lose money when you lose children.

Decentralisation of control: Example: Remember what British government did in 1987 during Thatcher era. It was called next step reforms. They took up each department. Worked out operational agencies – typically each department would have 5-6 and identify the jobs they have to do. Then give them enormous flexibility and a budget. And sign a 5- year agreement with them outlining what they are expected to deliver and how they are expected to improve performance. It worked very well. It gave managers of those agencies the power to manage, by getting rid of some of the overly burdensome, one-size-fits-all rules.

Culture change strategy: An example: Improving work processes using six sigma, re-engineering work processes so that things become faster. Here you are empowering employees, making them more responsible and effective.

What are some of the lessons governments are learning from the private sector: In the US, private sector has been a great driving force. Companies like GM are still bureaucratic while those like Google and Apple are leaner, flatter, more entrepreneurial forms of organisations. From customer relationship management to business process re-engineering – some of these learnings have come from the private sector.

What are some of the things governments can do to build result-oriented governments?
Competition. It makes them compete. Another powerful strategy is you make public organisations earn revenue in a competitive market place, like say in schools that focuses them. Third is performance management system that pushes them to be results oriented: Rewards for success, punishment for failures; financial bonuses for organisations that improve performance. Or change the management of the organisation; if a school is failing year after year, it’s not unusual for the district to go and take over the school in the US.

While talking about change management, anything you do differently in government vis-à-vis business?
In business you can take rational steps that are painful – like layoffs or close down a part of the business and justify to owners that we have to survive.

In government if you do those painful things, people go to the elected officials, and they often stop you. It’s much harder. Your change strategy in government must also have a political strategy. Also in government, all employees are lifetime employees; it’s very difficult to fire them. So you have to find other ways to motivate them.

I have a great example, though it’s a bit dated one. Air Combat Command, a US government body did an incredible job in the 1980s. It earlier consisted of two parts – the tactical air command and the strategic air command. Those organisations were struggling post Vietnam war. Morale was low, performance was declining. And then tactical air command did an entire turnaround in five years under Bill Creech. There are lot of things the air force measures – how long does it take to repair, how many planes, how many sorties. All the numbers were going in the wrong direction. Pilots were leaving and morale was down. Then Gen. Creech came and he did a number of things and reorganised. Earlier they had all mechanics in one unit, all pilots in one and all planes in one. So nobody took ownership. After reorganisation – what he did was each squadron of pilots will own its planes, mechanics, pilots etc. now they would measure how they do and publicise it. Nobody wanted worse sorties rate. There was competition between squadrons. Big boards were put up with results. Then he created rewards – every month whoever exceeded targets got a three-day weekend. Pride is the fuel of accomplishment. And he created pride in performance. He invested in improving working conditions. Gave squadron funds to improve working facilities, spruced things up, began using TQM. This happened between 1978-84.

How do you evolve a system that listens in a constructive manner, filtering out the noise?
While listening there is a tendency to listen to those who make the most noise and are most organised. It is important to do surveys to get an objective view of what people think. Doing citizen hearings often mean you are hearing only those who are well organised and well represented. So you may not get the full picture. Use surveys and focus groups to get the views of random samples of the population, which are more represenative than interest groups are.

You can structure your decision making, you can use public views in a specific way. For example planning for budget – and how are we going to spend money? And we must budget for outcomes. What outcomes are the most important? How important is say education vs health vs transport for people? Ask the people; get their input; use surveys and focus groups. Governments are also using Internet to let citizens weigh in what they want and how they want money to be spent.

For example, my company worked earlier with the governor of Iowa when he did budgeting for outcomes. He put outcome goals and strategies on the Internet and gave people opportunity to vote. You could if you thought the government should spend money on health – then you can see what programs must get funded and vote accordingly. The Iowa governor used it as a way to get inputs.

So you should not just ask public what’s important in general but actually build that process of listening into the budget process and give them a chance.

What are some of the biggest challenges you see developed world governments are facing?
Fiscal crisis is a big one. Because population is ageing, baby boomers are retiring; our social security and retirement costs are going up rapidly due to this demographic trend. Second is global warming. It’s a huge challenge that all governments seem to be grappling with. Three, public distrust and cynicism about governance. Because there is mismatch between bureaucracy and what public wants today. They are frustrated. Role of media is aggravating it. Media tends to play the role of opposition and feeds the distrust with the government. The big challenge is to earn back citizen’s trust. Four, not knowing the results of what you are spending. Governments are still learning how to measure the results. Citizens are very frustrated and they are demanding that they want to know.

Last, the role of money in politics in the US. Here electoral campaigns are funded by private contribution and they have enormous influence on the government. It is polluting political process, feeding distrust. So many of our politicians are for sale.