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Four Tenets to Less Government Spending

Stephen Goldsmith | 06/17/2013
Adam Gault

We have been writing for the last two months about the simple proposition that government can in fact work much better, faster and cheaper. Despite varying opinions about the appropriate size of government, politicians should be able to agree that the taxpayer money government spends must be spent wisely.

Politicians, buffeted by the pressure of false tradeoffs of higher taxes or fewer services and the ever increasing dependence on government programs and funding, usually avoid the heavy lifting of making government more efficient. Yet we remain confident that administrative savings of 10–25 percent can be achieved in almost every public agency. Such efficiencies necessitate changes to the traditional hierarchical and command-and-control structures we described in the first essay. Over the summer, we will be working with the Manhattan Institute to augment these essays with how-to examples that will analyze best practices and offer a better way to beleaguered citizens who are tired of receiving mediocre services in return for their taxpayer dollars. The basic tenets of this approach include:

1. Human Relations

Government hires awkwardly and suffocates the best and brightest once they enter public service. The new digital governance will look at which individuals are most likely to succeed at which jobs, organize individualized training, equip employees with the right tools, and then reward problem solving, not mindless rule following. Analytics will identify the poorly performing employee early and facilitate bonuses for strong performers. Reform will allow those workers to have more discretion, but at the same time require them to be more accountable.

2. Delayering

We cannot afford all the layers of bureaucracy that now exist. It is not just the cost of the layers, but the very fact that more often than not they subtract rather than add to the effectiveness of the functions for which they are responsible by limiting employee discretion, skill, rewards and innovation. Management too often means directing subordinates’ activities, not producing solutions.

The newly empowered worker will be a problem solver. Analytics allow us now to know which employees are producing desirable outcomes. An approach to public governance that was designed 100 years ago and used civil service, union and other rules to prevent public workers from abusing their discretion must be replaced by new ways to enforce accountability that do not narrow work, drive up costs and limit solutions.

3. Valuing the Retail

Government produces too many technical specialists—highly trained experts that no longer interact with real people but administer a program by applying formulas. The new governance will create more personal and digital connections between communities and officials—not confrontational, after-the-fact protests about a decision, but the real-time collaborative interactions that produce solutions.

Personalization is now possible for those who wish and/or insist that government respond to their needs on their terms. Small businesses need not wander through a dozen doors to add jobs. Citizens no longer need to spend hours trying to demystify an issue or even calling the 311 center. Let them register to receive personalized outbound messages from a government that knows and responds to their needs. Government that views its citizens as partners in solving issues will better prioritize expenditures, discover solutions to recurring problems, and generate more value.

Better, faster and cheaper governance involves more collaboration with those served. It involves listening to and curating their information, establishing priorities with community leaders and working together to solve problems. Government that applies a top-down solution designed by a professional bureaucrat often values the right programmatic response over the common sense one. Digital tools –Twitter, Facebook and the like – can provide valuable insights and serve as a platform for new ways of collaboration.

4. Focus Resources by Acting Preemptively and with Precision

Government allocates enormous resources to responding to problems in an ad hoc and non-strategic manner. Agencies work through lists of complaints or inspection orders. They act in the routine and/or in response to an issue that pops up—a broken water main, a crime, fire, battered spouse or child or the like. Government dilutes its resources both by responding in a willy nilly way and by failing to prevent the problem in the first place. In the developing era of "preemptive government,” some cities now integrate data and analytics to discover and address situations before they ripen into serious or expensive problems.

Preemptive government is a term that is sure to make some uncomfortable. Today we have governments that wait until problems manifest themselves, or a resident calls 311 with a complaint before dispatching resources. This is a reactive system that ignores strategic thinking and prioritizes whoever cries loudest. With good data and analytics, we can predict a whole range of coming eventualities. If Walmart can predict product usage in various stores based on a range of weather and event indicators, cities can similarly predict demands on their resources.

When the water main in front of your home bursts and your street is flooding, you expect the water utility company to get on it right away. Or if the building next store catches fire, you expect the fire department to arrive as quickly as possible to contain the fire and put it out. Your opinion of whether the utility company or fire department did a good job is mostly shaped by how quickly they arrived and how effectively they solved the problem. Now imagine if the utility company prevented the underground pipe from breaking in the first place because they had data suggesting it was likely to burst soon and conducted preventative maintenance. Or imagine if that neighboring building never caught fire because city officials had data showing which buildings were at risk for fires and they took preventative steps.

Of course most cities professionally inspect various areas, from infrastructure to regulated businesses. However those inspections, driven by a particular department, have two problems. They do not as a rule match the time spent on various inspections with the relative priority of each; i.e. they often have a huge inventory of work that causes them to spend too much time on inspections where there is little risk of a problem and too little time on higher-risk inspections. Secondly, inspectors and regulators fail to take into consideration data that exists outside their sphere of control—data residing in other departments or in the community itself.

Cities and states can – or should be able to – better predict both a broad range of risks including buildings most likely to burn, soil and sewer problems most likely to create environmental risk, roads likely to deteriorate the quickest, and outcomes—which providers in social service interventions are most likely to be successful with which categories of individuals. Today we indeed can invest an ounce of prevention and avoid a pound of cure.

If your city operates municipal swimming pools, you expect them to take steps to prevent the pools from developing leaks, since repairing leaks costs much more than preventative maintenance. We don’t just have to preempt swimming pool leaks. We now have the ability to get ahead of many bigger and more consequential problems, improve outcomes and boost customer satisfaction – all while saving money. Most governmental units apply these measures in some ways, but a few trailblazers are using sophisticated new approaches on a much broader scale – integrating data and organizing work around insights drawn from the data that facilitates preemptive government.

Once officials get the metrics right and clearly define the outcomes, the new data systems and practices will generate additional benefits. Local and state governments sit on mountains of valuable data, and as they increasingly learn to use data productively, breakthroughs in service delivery will occur with increasing frequency. They will also learn how to achieve more without more staff, instead realizing savings by preventing problems and focusing resources where they are most needed.

Even more importantly, these approaches will save lives. Indiana officials, starting under the leadership of then-agency director James Payne, began equipping child protective service workers with tablets so they could more effectively gather and enter information on cases. Now they are layering analytics on top of it that will guide both caseworkers’ discretion in making very difficult decisions and the actions of their supervisors in paying attention to workers whose results do not match the norms.

Similarly, these data-driven approaches can improve a broad array of public activities: enhancing the flow of traffic, identifying patterns of waste, fraud and abuse, and using predictive policing to help reduce crime. For example, when London began its ambitious congestion pricing program, a myriad of complaints surfaced that ranged from concerns about privacy to anger about pricing. However the congestion pricing ultimately gained the approval of a public that had grown frustrated with immense congestion on London’s limitless web of streets and roadways. The program is a case study in how to successfully implement a highly complex system in a dynamic environment. It uses pricing to manage congestion, but also allows officials to address traffic problems as they occur. Likely traffic hotspots can be anticipated and areas prone to congestion due to special events or other factors can be measured in real-time, allowing officials to reroute traffic, fix broken lights, or take whatever other immediate action is necessary to keep traffic flowing. While the installation of cameras remains controversial, the London program is an example of how new technology can enable officials to preempt problems in ways that improve citizen satisfaction and reduce other negative externalities such as traffic accidents.

We now exist in a permanent state of citizen demands exceeding public resources. This requires government to operate differently—providing more personal attention and interacting with communities to understand and anticipate their needs so public resources can be better calibrated to provide the outcomes constituents demand. We can no longer afford to make massive investments in hopes of finding a solution. The return on investment for each dollar spent needs to improve dramatically.

In these essays are just the tip of the better, faster, cheaper government iceberg, but we are confident that the principles applied in these essays can in fact produce substantially more public value per dollar spent.