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What Tools Currently Used in the Private Sector Can Most Benefit the Public Sector?

One answer to improving performance is to adopt tools that the private sector uses to operate their businesses more successfully. Today many public executives and personnel are “going back to school.” They are attending seminars on finance, marketing, purchasing, leadership, entrepreneurship, strategy, and operations. They are taking courses in schools of public administration or in business schools to advance their skills and understanding. They want to avoid obsolescence and dependence on civil service and seniority to protect their jobs or qualify for promotions. They want to restore personal and citizen pride in their employer.

These public servants (and you may be one of them) are reviewing and in some cases adopting such private sector practices as

  • Total quality management
  • Customer-driven strategy
  • Self-managing teams
  • Flat organizations
  • Visionary leadership
  • Re-engineering
  • Performance metrics and appraisal
  • Incentive systems and pay for performance
  • Cost/benefit and cost/effectiveness analysis
  • Outsourcing
  • E-government and e-information
  • Learning organizations
  • Lean production

Some people question how far this can go, claiming that government operations are inherently different from business operations. The cry to make government agencies more efficient, effective, and innovative strikes many citizens as a pipe dream. They see too many contrasts between government and business organizations:1

  • Government organizations often are monopolies; businesses exist in competitive markets.
  • Government is constituted to serve the interests of citizens; business aims to maximize investor profits.
  • Political leaders are creatures of constituencies, reflecting their interests; business leaders are responsible to boards of directors.
  • Government activities typically occur in the public light and receive a great deal of attention in the media; business activities largely are shielded from the media and take place insulated from public, governmental, and media opinion.
  • Citizens belong to interest groups that vary in size, influence, and power; businesses obtain their benefits through lobbyists and directly from political leaders.
  • Citizens in most contemporary democracies have a strong distrust of government, are ill informed, and show weak participation; investors and business leaders have a strong interest in their enterprises.
  • Units of government often have poorly understood mandates and arenas of action. Their functions evolve haphazardly with considerable duplication and overlap; business enterprises have specific divisions of labor and organizational operations.
  • Citizens check actions of political leaders by elections, polls, and media stories; business leaders are ultimately accountable only to their boards.
  • Governments are slow moving and subject to checks and balances, public hearings, agency infighting, veto powers; business activities are fast moving, once decision making enters the domain of CEOs and boards.
  • Government operations are often underfinanced; businesses can get the funds they need when they can demonstrate that it will lead to an acceptable profit.
  • The government in the U.S. is divided into three federal branches, 50 states, and an estimated 83,000 local governments with overlapping responsibilities; business tends to have concentrated, centralized activity at the CEO and board levels.2
  • Government is involved in virtually every area of life; business is focused on the goods and services it produces.
  • Governments distribute, redistribute, and regulate resources; businesses mainly produce and distribute resources.

We argue that these differences are often exaggerated and should not be used as an excuse for inefficiency, ineffectiveness, or waste. Many groups—Common Cause, Citizens for Better Government, The Innovation Groups—are working to improve the efficiency and effectiveness of government operations. A major force has been the book Reinventing Government: How the Entrepreneurial Spirit Is Transforming the Public Sector by David Osborne and Ted Gaebler.3 The book contains sweeping proposals for change, exemplified by chapter titles including “Catalytic Government,” “Community-Owned Government,” “Competitive Government,” “Mission-Driven Government,” “Results-Oriented Government,” “Customer-Driven Government,” “Enterprising Government,” “Anticipatory Government,” “Decentralized Government,” and “Market-Oriented Government.” Endorsed by prominent governmental leaders and elected officials including Bill Clinton, the book reads like a business textbook on how government could be better run.

Change is inevitable and affects the public as well as the private sectors. All organizations are subject to new challenges and new competitors, any of which might call for a restructuring of the organization or its termination. Public sector agencies do not have a guaranteed life or funding levels. Like businesses, they must read the landscape of changing forces and technologies; they must think strategically; they must envision new modes of efficiency; they must innovate; they must market their merits to the general and particular publics who pay taxes or oversee their activities. You, as a current or future public leader, can contribute to that change management.

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