Better at Doing What?

Private companies think about their "value proposition" all the time. What are we doing for our customers that make them happy to pay our price?...
by | August 19, 2009
 

Private companies think about their "value proposition" all the time. What are we doing for our customers that make them happy to pay our price?

Government services usually don't come with a price, but government managers should examine their value proposition just the same. In fact, revisiting "why" an agency is involved in a particular activity can be a crucial step in finding better, faster, cheaper ways of delivering value to citizens and taxpayers. While mayor of Indianapolis, I witnessed well intentioned public officials outsource an activity with the result that we became more efficient at accomplishing an obsolete process.

Getting the value proposition right unlocks better and cheaper results more than any single other thing government can do. Consider New York City's effort to address homelessness. At one time, the city saw itself primarily in the business of providing shelter. In 2002, more than 33,000 people were living in city run shelters each month--no matter how many shelters were opened, they always seemed full.

Then Mayor Michael Bloomberg put Linda Gibbs in charge of homeless services. Upon taking over, Gibbs asked herself a simple but powerful question: What is our purpose? What is the value that we are attempting to deliver to citizens?

The answer to that question prompted an insight. Gibbs realized that her job wasn't to run homeless shelters. Her agency existed to help people who were homeless--to reduce the need for emergency shelter, in fact.

Gibbs looked around and discovered that all her agency's efforts were directed at running shelters. As Gibbs later observed, "We were smart enough to know how to help the clients' underlying needs, but you put them in the shelters and suddenly the shelters became the solution, which is turning the world upside down."

Gibbs soon redefined the agency's goal from serving the homeless to reducing homelessness and redirected resources to prevention. The new approach worked. By 2008, of those receiving this more comprehensive assistance, more than 90 percent had not reentered shelters within one year of being served. (For details about how this was accomplished see the Harvard Kennedy School case study, Overhauling New York City's Approach to Shelter .)

In the midst of all the hectic activity associated with running a public agency, it is easy to become consumed by the crisis du jour. In fact, the frenetic demands of what you are doing can get in the way of looking at the deeper questions of purpose. The what can hide the why.

Put yourself in the shoes of Michelle Rhee, brought in to run the perpetually dysfunctional Washington, D.C., public schools. Many superintendents have broken their shovels trying to dig their way out of that hole. Where do you start?

Rhee began by thinking about the schools' value proposition and made a startling discovery. She wasn't there to run a school system. Taxpayers and parents don't care about a school system. She was there to provide an education for the children of Washington, D.C. She and Mayor Adrian Fenty recognized that academically prepared children was a result that people were willing to pay for, and they didn't much care about how it happened.

This insight is why Rhee, unlike many superintendents, has readily embraced D.C.'s charter schools and private scholarship funds. "I believe that part of my job as superintendent of the D.C. public schools is to make sure that all 100,000 school-age children in this city get a great education. It really does not matter whether that is happening in a D.C. public school, a charter school or a private school through the Opportunity Scholarships Program," said Rhee. "What matters is not about market share; it's about making great schools for kids."

Great companies understand that a value proposition must be centered around the consumer, not the producer. Putting the consumer at the center of your focus is the best way to drive innovation that delivers better, faster, cheaper results.

This discovery process does not come easily. For an interesting exercise, ask some of your colleagues to define the public value being delivered in the federal "cash for clunkers" program. Don't let them simply name the groups that benefit--car dealers, car makers and new-car buyers. Press them to identify and rank the public purposes served by the program. Is it to stimulate new car sales? To reduce pollution? For each such public purpose, think about whether "cash for clunkers" is the best activity to get to that value.

Efficiency isn't an end unto itself. So before you try to make something more efficient, make sure you understand your value proposition, or you might just wind up improving something that ought to be junked--just like that gas-guzzling clunker out in the garage.

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