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What CEOs Can Learn From Governments That Have Managed High Performance

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While most efforts to eliminate government waste have failed, a few standouts have succeeded. A new study drills down into the secrets of that success and the results may be instructive for business.

The United States has a long history of attempting to eliminate government waste. When people think about improving efficiency in government, they often bring up one of several prominent, national-level initiatives that have taken place over the last century. These initiatives touted bold goals and sweeping agendas and held out the prospect of major change.

1. The Hoover Commission

Perhaps the most successful of these high-level initiatives was the Hoover Commission, set up by President Truman shortly after World War II. Truman appointed ex-President Hoover to head the non-partisan commission, which had an equal representation of Democrats and Republicans. Hoover had a reputation for being a reformer, which began with his “War on Waste” after World War I as President Coolidge’s secretary of Commerce.

The Hoover Commission ran from 1947 to 1949 and was reestablished from 1953 to 1955 by President Eisenhower to address concerns about the government’s rapid growth during the Korean War. In total, both commissions offered 587 recommendations, and of these, more than 70% were implemented, including the formation of the Department of Health, Education, and Welfare (HEW) and the Government Services Agency (GSA), as well as the modernization of the federal budgeting process.

2. The Grace Commission

 Another prominent national effort to eliminate waste in government was initiated in 1982 by President Reagan. He created the Private Sector Survey on Cost Control (PSSCC), popularly known as the Grace Commission after its head, J. Peter Grace, then-CEO of industrial powerhouse W. R. Grace & Company.

The Grace Commission’s charge, as Reagan famously put it, was to “Drain the Swamp.” Its final report contained hundreds of detailed examples of government waste and estimated that its recommendations would generate more than $400 billion in savings in the first three years alone.

While Congress did act on a few of the specific examples of waste, it ignored all policy-related recommendations.

3. The National Performance Review (NPR)

In March 1993, President Clinton asked Vice President Gore to lead the National Performance Review (NPR), an interagency task force whose goal was to streamline the federal government, later renamed The National Partnership for Reinventing Government. The NPR’s 2,000-page report claimed that $108 billion could be saved through less bureaucracy, program changes, and streamlining the contracting process. 

Just like Reagan’s initiative, its ambitious agenda of reform and improvement ran into strong political headwinds, and relatively few of its recommendations were implemented.

Why High-Level Initiatives Fall Short

While these large-scale, one-off efforts did make some progress, they fell far short of what was possible. High-level initiatives—whether at the national, state, or city level—are undoubtedly important for “big-picture” moves, such as restructuring agencies and making major policy changes, as we saw with the Hoover Commission. But they can’t do much to improve day-to-day operational efficiency. They’re simply not capable of effectively penetrating the multiple layers of the government’s hierarchy, each of which has its own set of inefficiencies.

In recent decades, countless initiatives in state and local governments have attempted to create some form of ongoing improvement, typically drawing on whichever popular improvement methodology was prevalent at the time. Unfortunately, most of these programs produced limited results. They rarely succeeded in creating the culture and systems needed for sustained and broad-based continuous improvement (CI).

To uncover why, we embarked on one of the largest studies of efficiency improvement in government in three decades. We deeply analyzed CI initiatives in 77 government organizations—from small departments to entire cities and states—and interviewed more than 1,000 people.

Some of these initiatives were struggling. Others were just getting started or had made limited progress in specific areas. But a handful of high performers had developed levels of efficiency and service that rivaled the best companies in the private sector. We wanted to find out how these rare high performers had succeeded in transforming themselves when so much of government has not.

For example, how did Denver’s Department of Excise and Licenses reduce wait times from an average of an hour and 40 minutes to just seven minutes, and then to zero, while the volume of licenses doubled due to the city’s booming economy? And how did the Washington State Patrol garage triple its productivity and become a national benchmark for police departments?

What we found was surprising. These two organizations, and the other high performers in our study, were achieving their impressive levels of efficiency and service in unexpected ways. We expected to find most improvement being driven in a top-down fashion, perhaps by middle or upper-middle managers, or to involve some major technology investments as is typical in the business world. Although we found plenty of examples of top-driven programs, invariably, they were the low performers.

What stood out about the high performers was that in every single case, 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. They created teams with strong local cultures of improvement. Bit by bit, through large numbers of small, highly targeted ideas, these front-line employees relentlessly increased performance.

Front-line leaders, not their higher-level managers, were the real heroes of their organizations’ innovation stories.

Why Front-Line Ideas Are Incredibly Powerful

Despite being so small that they mostly fly “under the radar” of the larger organization, front-line ideas are an amazingly powerful source of improvement. Research has shown that roughly 80% of any organization’s improvement potential lies in the creativity and initiative of its front-line staff. But why?

Most problems and operating inefficiencies are deeply buried in an organization’s day-to-day processes and work routines, and the resulting inefficiencies can only be rooted out by the people closest to the problems involved.

Though leaders are naturally drawn to large-scale improvement projects, with their promises of transformative change, the nature of government—with its host of political, regulatory, and bureaucratic hurdles—makes such initiatives challenging. Top-down approaches are simply incapable of penetrating the many layers of government and getting at the day-to-day problems where most of the improvement opportunities are.

The high-performers in our study had all discovered the enormous power of front-line–driven improvement. Its very nature, being both “under the radar” and surprisingly powerful, makes it the perfect way to create lasting change in a government setting.


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