Commented December 8, 2009
The question regarding change is "by what method?" Change with a cost focus always increases costs,...
A city official once compared managing in City Hall to driving a bus, with one difference. "Every seat is equipped with a brake, so lots of people can stop the bus at any time," he said. "The problem is that this makes the bus almost undriveable."
Anyone who has ever tried to introduce change to city operations will recognize the feeling. Would you like to save money by closing an underutilized fire station? You can expect the firefighter's union, the neighborhood association and the local city councilmember to all reach for their brakes.
Even the most incremental change is often greeted with a massive wave of resistance. A political leader has to expend enormous energy in an effort to generate relatively small savings.
So if you are going to have a big fight even for little changes, why not fight for something big? Why not go for transformational change instead of incremental change?
That's the approach Mayor Dave Bing in Detroit is taking. Bing is thinking big. Facing a $280 million budget deficit, the mayor convened a "Crisis Turnaround Team" that laid out a path forward. Based on the team's 150 recommendations, the mayor is looking to close a city-run power plant that employs 68 city workers, outsource the management of Detroit's airport and consolidate IT operations. And that is just the start. In many ways, it is a total revamping of city operations.
"The biggest problem that we're going to have ... is that it's a very hard spin to get city workers and people who live in the city to accept change," Bing told the Detroit Free Press. "But if we don't, we die..."
Bing took over a city in both fiscal and administrative meltdown, his predecessor convicted of two felonies on his way out of office. But what if a public leader takes office without the "benefit" of a major fiscal crisis to help drive change? For a leader with vision, it's important to make the case for change before a crisis.
On his first day in office in January 2005, Indiana Governor Mitch Daniels issued an executive order establishing the Office of Management and Budget, including the creation of a small but important department of Government Efficiency and Financial Planning. With a $1 million annual budget and a staff of between five and nine employees, this office was charged with three tasks: assisting agencies to create performance measures; identifying and implementing cost savings; and conducting a systematic review of all state government programs.
Unlike a department-by-department cost-cutting exercise, this office had the big picture in mind, and was able to drive change from the top down. While most states were caught flat-footed by economic events, Indiana was able to meet the economic downturn from a position of strength. For example, in 2006, Indiana received $3.8 billion from foreign investors in exchange for the right to operate the 157-mile Indiana Toll Road for the next 75 years. Not only is that a price that would likely be unattainable today, it helped Indiana fund needed infrastructure without raising taxes.
"Sometimes I joke about the brilliance of our method, things like spending less money than we take in. What a blinding insight that is," says Daniels.
It was the independence of the Government Efficiency and Financial Planning department that allowed it to turn a critical spotlight on state operations: "The organization and structure of Indiana state government is the result of decades spent creating new agencies, boards, commissions and programs to address problems and placate special interests," according to a 2006 review by Indiana's Office of Management and Budget. "With 73 agencies and more than 300 boards and commissions, Indiana state government today is unmanageable, unaccountable and inefficient. If state government were created today, it is doubtful that the new organizational structure would look anything like today's state government."
Indiana probably isn't unique in that regard. But Indiana is unique in that it took on these issues in 2005. As a result, its fiscal outlook is healthy, while many of its neighbors are in fiscal meltdown. Just before a tsunami hits, the shoreline actually retreats into the ocean, giving a false impression of calm, low seas. Smart swimmers take note, and start running for high ground.
With billions of dollars in federal stimulus money flowing to state and local governments, many public officials are also witnessing a false period of calm at the moment. Smart officials know that a massive tidal wave of red ink is heading their way, but what is a smart public leader supposed to do?
Start now. One lesson from Detroit and Indiana is that transformation requires a separate, independent team focused 100 percent on instituting big changes. The other lesson is that change will face opposition - so why not focus on transformative change rather than incremental? It's a lot better to get ahead of a crisis than to wait to be engulfed in an incoming flood of red ink.
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