Real Leaders

What Can Business Leaders Learn From What Government Does Right?

Whether people want more government or less government, they all want efficient government. Unfortunately, public-sector organizations are generally not known for their operational excellence. The natural question arises: By their nature, do government operations have to be inefficient?

In 2015, we became aware of a small but growing number of public-sector organizations that had dramatically improved their performance—and in a relatively short time. We were intrigued and started to visit them and look into what they were doing. This was the beginning of a six-year study that culminated in our book Practical Innovation in Government.

Throughout our careers, our work has centered on how to create high-performance organizations. Until recently, this meant we studied and worked primarily with private-sector companies. But as we identified and visited more high-performing public-sector organizations, it became clear they had developed approaches to continuous improvement that were proving astonishingly effective in a government setting. In fact, some of these organizations had attained levels of efficiency and service that rivaled the best private-sector companies anywhere.

A case study: Denver’s Department of Excise and Licensing

Consider what happened at Denver’s Department of Excise and Licensing. In 2013, it was the city’s “problem” department and a huge headache for the mayor’s office. The department had 39 employees who issued some 48,000 licenses each year. There were approximately 80 different types of licenses, most of which had to be renewed annually. These included everything from individual licenses for taxi drivers and security guards to business licenses for restaurants and liquor stores.

When a new manager, Stacie Loucks, took over, she found that average wait times were running an hour and 40 minutes, with peak wait times of five to six hours. The lobby was often jammed so full that the air conditioners couldn’t keep up and the temperature climbed into the mid-80s.

But in just two years, Stacie transformed Denver Licensing into a showcase department. Wait times dropped to seven minutes and then were all but eliminated, despite a doubling in the volume of licenses issued, due primarily to the city’s booming economy. And despite the dramatic increase in license volume, Loucks was the only department head in the city government who didn’t ask for more staff or resources in the next budgeting cycle.

A surprising study finding

We found numerous examples like these across a diverse set of government operations. After being a severe bottleneck to state patrol operations, and the subject of the largest number of trooper complaints, the Washington State Police garage went on a multiyear improvement effort. In that time, it tripled its productivity and became a national benchmark for other states’ police garages. Similarly, a K-8 school in New Brunswick, Canada, boosted the percentage of students reading at the appropriate age level from 22% to 78%.

Our study ended up taking us to 77 organizations in 5 countries and involved interviews with more than 1,000 people.

What we found was surprising. The high performers were achieving their impressive levels of efficiency and service in an unexpected way. We had expected to find most improvement being driven in a top-down fashion, perhaps by middle-level managers or professional staff, as it generally is in the business world. Although we did find plenty of examples of top-driven programs, invariably, they were all marginal or low performers.

The highest-performing improvement efforts we encountered were quite different. What stood out was that in every single one of them, the lion’s share of the improvement activity was taking place on the front lines. The primary champions of change were low-level managers and supervisors.

Like Stacie Loucks at Denver Licensing, they had created units with strong local cultures of improvement. Bit by bit, through large numbers of small, highly targeted ideas, their units relentlessly increased performance. These front-line leaders, not their higher-level managers,were the real heroes of their organizations’ innovation stories.

Front-line–driven improvement is uniquely suited for government

The more we studied this front-line–driven improvement, the more we realized how uniquely suited it is to a government environment. Improving efficiency, it turns out, is one area where public sector leaders should definitely not follow conventional business practices.

In the private sector, changes are generally less complicated to execute. If top or middle managers want to make a change, they usually have the power to do so. But government is not a business. When government managers want to create change, they typically face a host of political, regulatory, and bureaucratic hurdles that can make the process painfully slow, inordinately time-consuming, and even professionally risky.

Although the front-line ideas implemented by the high performers in our study were generally small and inexpensive, they had a huge impact cumulatively. (Think back to Denver Licensing, which completely eliminated its long lines.) At the same time, each individualidea went largely unnoticed by customers, colleagues from other departments, and higher-level managers. In short, they were invisible to outsiders.

The leaders in these government organizations have figured out two things. First, without the countervailing forces faced by higher-level managers, front-line leaders and staff can implement large numbers of improvements with little interference. And when ideas do need to involve other functions, front-line leaders can often work directly with their counterparts in other departments to get them done.

Second, in spite of being so small that they are “under the radar,” front-line ideas are an amazingly powerful source of improvement. Research has shown that some 80% of any organization’s improvement potential lies in the creativity and initiative of its front-line staff.When it became clear to us that the dominant factor distinguishing the high performers in our study was front-line–driven improvement, we were surprised, yet not surprised. Surprised, because we were simply not expecting to see its singular importance in the government context. Not surprised, because in the rare cases of true front-line driven improvement in the private sector, it also produces extremely high rates of performance improvement. The problem in most private-sector organizations is that managers make little or no use of this potential.

The takeaway

So, the answer to our opening question is, “No, government doesn’t have to be inefficient. In fact, it can be very efficient. But it won’t get there by following traditional business practices.”

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