The Private Sector isn’t perfect. Far from it. Key weaknesses for all but the best performing companies include a short-term focus, a transactional view on employees and a focus on the bottom line that can sometimes trump the interests of society and the public good. All factors that run against the grain of the Federal Government. Having said that, the Private Sector does tend to outperform the Federal Government when it comes to both innovation as well as optimizing for efficiency. And it does so not simply because it’s focused on those business opportunities for a longer period of time but because, over that time, the Private Sector has developed, implemented and refined proven models (structures, processes and systems) to max out efficiency and develop and deploy groundbreaking innovation. Steps that have allowed the Private Sector to produce higher quality and faster outcomes for its stakeholders and constituents (i.e., its customers) at a lower cost. The Private Sector is the engine of innovation and efficiency.
More than ever, Federal Executives are under pressure to do the same - i.e., to do more with less and to do it better. And, as we’ve previously explored, those efforts require Transformation. At least for truly break through performance. An area that top-performing Federal Executives explore but that often gets overlooked by most is the opportunity to identify, adapt and implement efficiency and innovation-related best practices from the Private Sector. Practices that, because they are proven, can help to identify new improvement opportunities, reduce implementation timelines and control risk created by trial-and-error.
Why does the Private Sector warrant study and, in the right cases, emulation by the Federal Government? As top-performing Federal executives have discovered, for three major reasons:
Innovation as a Need Rather Than as a Nice-to-Have
The Private Sector exists in highly competitive markets. Where the mantra is often “innovate or die.” And because of that, leading Private Sector companies constantly fine-tune what they offer their customers and how efficiently they produce those products and services. They understand that standing still is equivalent to falling behind. Just ask Blockbuster, Kodak, Barnes & Noble and RIM / Blackberry. They, amongst countless others who failed to innovate, have died or remain shadows of themselves. In contrast, winners in those segments have emerged due to constant experimentation with the next business model, form of technology, customer segment and operational capabilities / structure. We get the Public Sector is different. Innovation is not necessary for survival per se of Federal agencies and departments, but failing to innovate isn’t an option either. Because not doing so can certainly pose a substantial threat to the continuity, size and relevance of Federal Agencies. Due to both external competition (e.g., USPS vs. FedEx) and internal competition (e.g., DoD’s takeover of all background checks for the military).
Financial Rigor and an Outcomes Focus
Financial pressure in the Private Sector is real and financial management tends to be rigorous and on-going. There’s a certain brutality to how the Private Sector allocates its resources to drive increased profit and lower costs. Ask anyone impacted by countless waves of “right-sizing.” Obviously the Federal Government is a little different. At the most basic level, departments of the Federal Government don’t control their own budgets. Congress decides how much money they recieve, and how that money is going to be divvied up. We’d argue this creates the need for more not less financial discipline. As (1) Federal departments are forced to work with constrained finances and (2) even if departments do not have to worry about generating profit, they do have to demonstrate to Congress, a discerning stakeholder, why they deserve to receive larger budgets going forward. This is where Private Sector best practices can play a major role. Helping the Federal Government (1) define how to do more with less, (2) reallocate existing budget in ways that yields better outcomes (3) measure outcomes from previous and pre-existing spend and (4) leverage that work and develop and clearly communicate a business case for more effective budget levels going forward.
Objectivity as a Means to Diffuse Biases
Federal Departments and Agencies can struggle with objectivity. Between existing personal disagreements, preferences for certain business practices, employees crossing back and forth between departments, and differing political ideologies, collaboration and consensus often remain a challenge. Especially as it relates to opportunities to transform Federal operations and service delivery from either an innovation or efficiency perspective. Private Sector best practices can help to short circuit those biases. By providing factual, objective data points of which efficiency and innovation programs work, which don’t and how to best go about implementing those selected for adaptation to the Federal sector.
Contact us to learn more about how we can help you tap into Private Sector best practices to accelerate your efforts while substantially bringing down the risk for programs you’re in charge of.