Is Transformation too Risky for the Feds?

Efficiency and innovation, two core tenets of Transformation, remain buzzwords in the Federal Government. But we’d argue that many Federal executives have been unsuccessful in leading efficiency or innovation programs. Our research with a cross-section of Federal executives and consultants providing efficiency and innovation services to them corroborates this.

There are a variety of reasons for this gap and we’ll explore them further in a future post, but, for now, let’s explore a very basic one: Federal executives operate in a high risk, low reward environment. Said differently, we don’t see a lack of desire to improve “business outcomes,” but rather a lack of incentive to bear the risk necessary to do so. This dynamic makes the Federal Government far more insular than it should be reducing its ability to consistently access and implement best practices from the Private Sector. Even while the Private Sector remains the hotbed of best practices for efficiency and innovation.

Due to perceived risk (and regulations that create an onerous process), many Federal executives never get beyond the Public sector when looking for business management best practices. A typical sequence for looking at best practices goes like this:

(1) look internally within an agency and more broadly the department;

(2) look at other departments in the Federal Government;

(3) side-step out to state and local governments; and

(4) finally externally to the Private Sector and

(5) maybe foreign governments.

 

Said differently, we don’t see a lack of desire to improve “business outcomes,” but rather a lack of incentive to bear the risk necessary to do so.

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Tower Strategy Group has studied private sector best practices and helped corporations improve efficiencies and innovate products and services for almost a decade.

In addition to the fatigue that sets in by the end of this sequential process, perceived risk escalates as you move from Steps 1 to 5.

Private Sector best practices seem to carry higher perceived risk. Both in terms of doability as well as in terms of applicability. On the doability front, insular government practices have already been run through the regulation mill. And when one steps outside of the Federal and State level, they increase the likelihood that a best practice designed to drive towards greater efficiency or innovation may not satisfy regulatory requirements. In addition to inapplicability from regulation, cultural differences between the Private and Public Sector can lead to project failure. At its core, the Private Sector runs on a profit motive and has a highly transactional view on employees. The Federal Government does not.

And then there’s the reward. Or lack thereof. In contrast to the Private Sector, Federal Executives aren’t provided the incentives needed to support trudging through the above process or bearing the risk needed to do so. There’s no fast-track promotion, six figure bonus or dramatic increase in share price waiting for them. A pat on the back and some words of praise simply don’t outweigh the risk. And, because change is hard (to say the least), positive affirmation alone does a poor job of insulating the Federal Government from the disillusionment and turnover that change-related stress can cause.

 
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We’re not naive, we get that the Federal Government won’t change its reward and incentives systems to mirror the Private Sector (at least not fully). However, there is an opportunity to reduce risk and better balance the risk-reward equation. Risk insulation comes from making sure best practices related to efficiency and innovation are captured from the right (i.e., relevant) private sector companies, that those practices are properly dissected to understand the “how” and “why” and not just the “what,” and that care is taken to adapt those practices to the Federal Government rather than employing a simple onefor-one implementation. That requires selecting the right partner. One who can bridge the gap between the Public and Private Sector and that is an expert at change management. Not a Federal Government contractor with little to no experience within the Private Sector or running larger-scale transformation efforts. Because while those partners bring depth in the way agencies operate, they don’t have the experience necessary to effectively define who to study, how to study them and how to adapt those practices to the Feds.

Tower Strategy Group has studied private sector best practices and helped corporations improve efficiencies and innovate products and services for almost a decade. Learn how Tower Strategy Group can help you do the same for your Agency.

Contact us to learn more.