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A TCI Book Review

Banishing Bureaucracy: The Five Strategies for Reinventing Government

David Osborne and Peter Plastrik
Addison-Wesley, Reading, Massachusetts, 1997.

Eight years ago, in 1990, one of the authors of this book (David Osborne) co-wrote a book (with Ted Gaebler) entitled Reinventing Government, in which several principles for reorganizing government departments and agencies for improved effectiveness were espoused. The present book builds upon that work, dealing more with the implementation of change in governments to achieve these ends.

"..Reinventing Government was not designed to help readers figure out how to proceed. It described the characteristics of entrepreneurial governments - how they act and what they do - but it did not discuss how to create them. It did not lay out the strategies by which bureaucratic systems and organizations could be transformed into entrepreneurial systems and organizations.

This book does. A few of the principles of Reinventing Government such as "customer-driven government" also define key strategies you can use to leverage transformation. But not all do. Reinventing Government was primarily descriptive, while this book is prescriptive. It provides practical know-how you can apply, whether you are a politician, a public servant, or a citizen.

Reinventing public institutions is Herculean work. To succeed, you must find levers that can move mountains. You must find strategies that set off chain reactions in your organization or system, dominoes that will set all others falling. In a phrase, you must be strategic. This book lays out the five strategies that have proven the most effective - and describes how the world's most successful reinventors have used them." (pp. 9,10)

As background, the ten principles for reinventing government articulated in the book of that name were as follows:

  1. Catalytic government - separating steering (policy and regulatory functions) from rowing (service delivery and compliance functions)
  2. Community oriented government - empowering rather than serving: in other words, enabling the community to serve their own needs, rather than the direct provision of services for them
  3. Competitive government - injecting competition into service delivery to ensure cost-effectiveness and quality services provision meeting the needs of the market
  4. Mission-driven government - transforming rules-and-procedures-driven organizations into entities that are clear on their missions and mandates, and have few internal obstacles in the way of accomplishing them
  5. Results-oriented government - funding outcomes, not inputs
  6. Customer-driven government - meeting the needs of the customer, not the bureaucracy
  7. Enterprising government - earning rather than spending
  8. Anticipatory government - prevention rather than cure
  9. Decentralized government - from hierarchy to participation and teamwork
  10. Market-oriented government - leveraging change through market mechanisms

With this background, the authors of this book have turned their attention to the bureaucracies that exist within all government departments, and identified strategies to overcome the inertia and unwillingness to change that often exists. They have outlined five areas of action that should be considered in making government departments more effective (which they call 'levers of change'). They describe this as changing the basic 'genetic code' (the DNA) of government. These five areas of action are summarized in the chart below:

 The Five C's - Strategic Approaches to Changing Government's DNA





1. Core Strategy

• Establishing clarity of purpose
• Establishing clarity of role
• Establishing clarity of direction


2. Consequences Strategy

• Managed competition
• Enterprise management
• Performance management


3. Customer Strategy

• Customer choice
• Competitive choice
• Customer quality assurance


4. Control Strategy

• Organizational empowerment
• Employee empowerment
• Community empowerment


5. Culture Strategy

• Breaking habits
• Touching hearts
• Winning minds

Under the first of these areas, the Core Strategy, the authors discuss three approaches to focussing on the essential purpose of an organization. The first of these is to ‘clear the decks’ — that is, to critically examine all functions undertaken by government in order to determine which ones are truly essential to the core goals of the organization. The second approach is to uncouple what they call ‘steering’ (the policy-making and evaluation functions of an organization) from ‘rowing’ (the program and services delivery function). The third approach is to improve the aim of programs and services, to ensure that they are being delivered to the right target markets and are meeting their needs. The examples cited in the book of governments that were successful in re-thinking their core missions in this regard were New Zealand, the U.K. , and the State of Texas. (Canada under the Mulroney government was even mentioned as a nation that had started into this approach but lost their nerve mid-way through.)

Regarding the implementation of these approaches, the authors discuss several tools:

Tools to Clear the Decks

  • Performance or program reviews
  • Prior options reviews — developed by the British government, which require that every five years an agency be reviewed with a view to whether it should be abandoned, privatized, reorganized or restructured
  • Sunset rules that require that public agencies be re-authorized periodically
  • Asset sales to move public assets into private ownership
  • Quasi-privatization methods, which allow governments to retain ownership of an asset but turn its operation over to the private sector
  • Devolution of activities to a lower level of government

Tools to Uncouple Steering and Rowing

  • A flexible performance framework, which separates the discrete functions of policy-making (‘steering’) and service delivery (‘rowing’)and into different organizations and uses contracts to specify purposes, expected results, performance consequences and management flexibilities
  • Competitive bidding

Tools for Improving Your Aim

  • Outcome goals
  • Steering organizations
  • Strategy development
  • Performance budgets
  • Long-term budgets
  • Accrual accounting, which depreciates assets and enters debits on the books when they are incurred, not when the money is actually spent

The second area is the Consequences Strategy, which entails the notion of introducing consequences to managers and employees in government which result from their efforts. These consequences can act as either powerful incentives or disincentives for bringing about certain behaviors. There are three basic approaches discussed: enterprise management, which takes a certain government activity and essentially privatizes it by turning it into a separate profit-seeking venture; managed competition, an approach that allows the private sector to compete with the public sector to provide goods or services; and performance evaluation. The examples cited in this area of the book are the City of Indianapolis, the State of Minnesota, the Province of British Columbia, and Australia and New Zealand.

Tools that the authors discuss in implementing the Consequences approach are:

Tools for Enterprise Management

  • Corporatization, which turns organizations into publicly owned businesses that are quasi-independent of government
  • Enterprise funds (also known as revolving funds) — public organizations that are funded with customer revenues rather than tax dollars
  • User fees
  • Internal enterprise management: making internal service units within an organization accountable to their customers

Tools for Managed Competition

  • Competitive bidding
  • Competitive benchmarking

Tools for Performance Management

  • Performance awards
  • Psychic pay (non financial rewards such as time off)
  • Bonuses
  • Gainsharing (i.e. having employees participate in the financial gains made by the organization over the course of (usually) a year
  • Shared savings (‘gainsharing for organizations’)
  • Performance pay
  • Performance contracts and agreements
  • Efficiency dividends, which occur when an organization reduces its budget incrementally, but requires that output measures of performance remain unchanged (an approach frequently used in the U.K.)
  • Performance budgeting

The third approach is the Customer Strategy, where the focus is on serving the key customers and stakeholders of the government department or agency. Here again there are three basic approaches outlined, and a series of tools suggested. The first approach is to give the customers (i.e. the recipients of the government department) a choice between being served by the public sector, or some other organization or entity. The second strategy is to introduce the notion of competitive choice, where the public can choose the provider of the service, and the public funding for that service goes to the provider chosen. The third approach is to ensure that customer quality assurance mechanisms are in place. The examples used in this section of the book are schooling in Minnesota, New Zealand and the U.K.

Tools for implementation of these approaches that are discussed in the book include:

Tools for Customer Choice

  • Public choice systems, which allow the public to choose between different vendors — public and private — of goods and services
  • Customer information systems and brokers

Tools for Competitive Choice

  • Competitive public choice systems, which allow the public to choose between different vendors — public and private — of goods and services, and public dollars follow the customer
  • Vouchers and reimbursement programs

Tools for Customer Quality Assurance

  • Customer service standards
  • Customer redress (e.g. financial compensation when an organization fails to live up to its promises)
  • Quality guarantees
  • Quality inspectors
  • Customer complaint systems
  • Ombudsmen

The fourth area of investigation is the Control Strategy, which focuses on the levels where decisions are made within a government organization. The basic strategies envisioned are to empower organizations, to empower employees, and to empower communities. (The U.S. National Forest Service is examined as a key case study example in this regard.) The specific tools for implementation discussed in the book are:

Tools for Organizational Empowerment

  • Decentralizing administrative controls
  • Organizational deregulation
  • Site-based management (rather than centralized management)
  • Opting out or chartering (which allows existing or new public organizations to operate outside the jurisdiction of most government control systems)
  • Reinvention laboratories ( i.e. areas of experimentation, free from much government interference)
  • Waiver policies
  • Beta sites
  • Rule sunsets (i.e. a time limit on rules governing organizations’ administrative behaviors)
  • Intergovernmental deregulation

Tools for Employee Empowerment

  • Management delayering (fancy talk for eliminating middle management)
  • Organizational decentralization
  • Breaking up functional silos
  • Work teams
  • Self-managed work teams
  • Labour-management partnerships
  • Employee suggestion programs

Tools for Community Empowerment

  • Community governance bodies, which shift control over the direction of public organizations from elected officials and civil servants to members of a community
  • Collaborative planning
  • Community investment funds
  • Community managed organizations
  • Community government partnerships
  • Community-based regulation and compliance

Finally, the fifth strategic approach examines the cultural makeup of the governmental organization. Using the City of Hampton, Virginia ('the most livable city in Virinia') as the case study, the authors identify three approaches in this 'Culture Strategy'. These are: changing day-to-day habits, winning hearts and winning minds. The implementation tools discussed in this section are:

Tools for Changing Habits

  • Meeting the customers
  • Walking in the customer’s shoes
  • Job rotation
  • Internships and externships, which involves bringing in outsiders for work stints for some period of time, as well as sending employees to other similar organizations to work for temporary periods
  • Cross-walking and cross-talking
  • Institutional sponsors
  • Contests
  • Large-scale, real-time planning exercises
  • Workouts: or ‘brainstorming sessions’: intensive, short-term group exercises in barrier-free climates to generate ideas about how to improve targeted work processes
  • Hands-on organizational experiences, or teambuilding exercises, where larger numbers of employees gather to share new experiences and challenges that foster teamwork skills
  • Redesigning work

Tools for Touching Hearts

  • New symbols
  • New stories
  • Celebrating success
  • Honoring failure
  • Rituals
  • Investing in the workplace
  • Redesigning the workplace
  • Investing in employees
  • Bonding events
  • 'Valentines’ - group exercises where employees tell other work units what they would like them to do differently in an open and honest environment free from workplace rivalries

Tools for Winning Minds

  • Surfacing the givens — a facilitated group exercise where people identify the hidden underlying assumptions that shape their system or organization
  • Benchmarking performance
  • Site visits to other model organizations
  • Learning groups
  • Creating a sense of mission
  • Building a shared vision
  • Articulating organizational values, beliefs and principles
  • Using new language
  • In-house schoolhouses: training employees to become agents of positive change, and in turn training other employees
  • Orienting new employees

As the foregoing undoubtedly illustrates, Banishing Bureaucracy is a very rich resource for those in the public sector (or in charge of the public sector) in determining how governments can maximize their effectiveness. Highly recommended!






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