Government as a business

From PLN

Government as a business

by Leslie Dillon, from Leader's Digest November 2007

Ian Davis, managing director of management consultants McKinsey & Company believes a strong, productive public sector is “fundamental to the strength of any society.” He also believes a public-sector crisis may be looming on the horizon.

The best way to “help stave off a public-sector crisis...is to continue to facilitate private-sector growth through an increasingly open economy.” At the same time, it is imperative that public-sector productivity be improved. Productivity isn’t just “savings.” Instead, “productivity simultaneously improves performance while decreasing costs.” In governments, the productivity imperative is “to deliver better results—both in terms of quality and quantity.”

There’s increasing pressure on governments (and government agencies) “to do more things and to do things better.” At the same time, “citizens want better services, more choice, more convenience, and improved customer service.”

Davis advocates that governments (and government agencies) adopt approaches that have helped increase productivity in the private sector--”better transparency, improved performance management, better alignment of incentives, stronger accountability, better incorporation of technology and, crucially, better attraction, deployment and development of talent.”

Innovations, such as private-public partnerships, will also be crucial. And governments (and government agencies) will need to experiment with totally new approaches as well.

The four reasons usually given as “barriers to improving public-sector productivity [are] either no longer relevant or not as hard to overcome as first thought”:

It’s too hard to measure productivity.
Lack of market forces and competition.
Resistance to productivity.
Politics blocks reform.

Mr. Davis concludes that a “broad range of stakeholders” will be needed to meet the coming public-sector crisis. Government can’t solve its challenges alone, and the attitude that it can needs to change, as does the “belief that private-sector institutions--be they businesses, nonprofits or simply citizens--can maintain a distant and often adversarial relationship to government... All of these stakeholders will have to take a role in helping craft a solution for the challenges the public sector faces.”

(Ian Davis, “Government as a business,” The McKinsey Quarterly, October 2007.)