Accelerating Success for Operational Excellence in Government Project: Narrative Framework

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Table of Contents

Background

In 2016, the Ash Center for Democratic Governance and Innovation at Harvard Kennedy School received funding from the Laura and John Arnold Foundation to launch the Operational Excellence in Government Project. The purpose of the project is to identify and celebrate operational efficiency successes across state and local government, and to foster a community of practice around operational excellence. Our goal is to reduce the cost of identifying opportunities for efficiency and cost savings across all layers of government, and to accelerate the transfer and deployment of these successful cases.

We hope that the highlighted insights and recommendations, gleaned from existing reports and compiled across topics, empower governments to build capacity, improve operations, and carry out successful efficiency initiatives. We hope this will generate significant value for taxpayers across the nation.

Now more than ever, our country needs operational excellence in the public sector. Faith in government continues to decline—a Pew survey found only one in five Americans thinks government programs are well-run. Analyzing historical trends in public opinions about government, the Volcker Alliance found that public support for big government is declining while interest in government reform is increasing. The author of the report, Paul Light, noted that “We’ve known for some time that trust in government was dropping. What we didn’t know is what that lack of trust meant for government. Now we can clearly see that the American public wants its government to change. There is a significant appetite—a mandate, really—for significant government reform.”

This paper accompanies an interactive website with a searchable database of 30 government efficiency reports. For each report, recommendations are tagged so that they are searchable on a variety of relevant terms. The reports compiled here were created by government employees as well as their external partners in academia and the private and nonprofit sectors.

No one argues against operational excellence and yet it is seldom the subject of headlines—there is typically a lot more attention paid to the “what” of government than the “how.” This paper intends to focus needed attention on the operations of government and how to achieve better results for the dollars we spend. The opportunity is significant—a study by the consulting firm Accenture estimates that $995 billion in value could be created by 2025 if government in the US achieved a 1% annual efficiency gain in operations.

Operational excellence efforts, whether addressing shared services for payroll processing or information technology, or streamlining processes for the administrative functions of government, can make a big difference both in efficiency and by changing how government is perceived by its customers. When a public sector organization runs with operational excellence, not only are customers happier with the results but employees will enjoy a sense of accomplishment that they have delivered value for the public dollar. This cannot help but improve morale.

Improving government employee morale has value in itself as an accelerant to further innovation. Morale has suffered in many areas of government recently due to macroeconomic trends. A Deloitte survey of employment over the past decade and a half showed that job losses were similar in the public and private sectors, with the public sector losing about a million jobs in the years following the 2008 downturn. Over this period, the rate of terminations in the public and private sectors moved in near lockstep—looking at the “quit to hire ratio,” they found it went from .79 to 1.10 in the public sector from 2009 to 2011, while the ratio went from .81 to 1.14 in the private sector. This dispels the long-held myth that jobs in the public sector are inviolable for life, and certainly contributes to morale problems in some areas of public service.

This paper and website intend to bring together insights previously available but not easy to find. Our goal is to begin the process of creating a shared body of knowledge on how to achieve excellence in the basic operating functions of government—process improvement that enables the government policy engine to function more efficiently. This resource can speed improvement of government functions, and can reduce the cost of doing so. Every dollar saved with operational excellence can be put toward achieving the important policy goals of government.

This paper is a work in progress and reflects information available at the time of writing. The majority of reports discussed here are sufficiently recent that the results of their implementation remain unknown. We hope that our work inspires others to continually contribute to the site and to advance the shared goal of excellence in government administration, shining a light on new approaches and additional successes across state and local government. 

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Insights from the studies

Description of the project

This project brings together for the first time, in an easily searchable database, a wealth of information on government efficiency. The information compiled here was previously available but only with significant effort. Our work to find, categorize, and curate the information paves the way for its use by others. By compiling existing studies, we are giving those who care about government—chief executives, senior leaders, midlevel managers, program administrators, and frontline workers—the tools to make measurable improvement in their work.

Our work provides a cost-free way to access studies already completed for government by top-level consulting firms such as Accenture, Alvarez & Marsal, Civic Consulting Alliance, Deloitte, IBM Global Business Services, Public Financial Management, Public Works LLC, and Harvey M. Rose Associates, as well as by thought leaders in public administration such as David Osborne and Greg Browning.

The reports

This paper describes findings and recommendations from 30 existing studies of government efficiency. The reports catalog a staggering number of recommendations, 2,021 in total, to improve the operations of government. Of the 30 studies, 23 include specific dollar-savings amounts that could be achieved as a result of implementing the recommendations. Annual dollar savings identified in the reports range from $18 million in Albany County, New York, to $7.3 billion in California. The total amount of savings identified in these 23 studies is nearly $17 billion in yearly value to the taxpayers of those cities and states. We estimate that if recommendations such as these were implemented across state and local government, a total of $30 billion in value could be returned to taxpayers each year.

Of the 30 studies, about half (14) were completed by an outside consulting firm and the remainder were completed by a mix of types of teams. There were six studies completed internally by government staff with no outside help. Of the remaining studies, five had private-sector involvement on a commission or committee and five had a university partner working on the project as well. This wide range of team types is evidence of the uniqueness of the needs of state, county, and city leaders in addressing their local challenges in government administration. No single approach will work for all. We hope the resources provided here are useful to all types of teams seeking to make government better. 

Our research process

Studies included in the searchable database on the website were publicly available at the time our research was conducted in the fall of 2016. The process of identifying these studies included the following steps. First, we completed a general internet search for common terms used in operational efficiency studies. We then individually searched the websites of large cities and states, as well as leading think tanks, nonprofits that support government, and consulting firms. Using our team’s knowledge of existing operational excellence projects in government, we identified further studies to include in the sample.

A total of over 200 studies were identified through this process that pinpoint opportunities for cost savings and recommend efficiencies in government operations. Our original intent was to secure studies via Freedom of Information Act (FOIA) requests, and yet our initial scan turned up a much larger number of publicly available studies than we had anticipated, so the FOIA requests were not needed.

We selected from among the universe of identified studies those with greatest value, which we then catalogued, tagged, and curated for access via the website. Those chosen to be shared on our site were selected based on their applicability to other state and local government audiences. Some studies that addressed a narrow scope of service delivery or a niche policy area were excluded from our analysis. We sought to identify broad management practices, tools, and insights that could be applied across jurisdictions. 

Observations from the studies

When looking across the 30 studies selected for inclusion here, some observations include:

Number of recommendations

Reports varied in the number of recommendations from a high of 346 to a low of 10. There were six reports (20% of the total) that each contained more than 100 recommendations. This many recommendations would be an ambitious and unrealistic to-do list for any public official. All but two of these recommendation-loaded reports were completed by internal government teams. It can be difficult to say no when a peer (or worse, a superior) wants to add their pet project to a laundry list of recommendations, but true leadership means keeping to priorities.

There were also six reports (20% of total) that had 20 or fewer recommendations each. All of these studies involved outside stakeholders, either consulting firms or commission members. Studies with 20 or fewer recommendations include those in Cook County/Chicago, Jacksonville, and Los Angeles, and the states of Minnesota, New Hampshire, and Washington. With a more focused and strategic list of recommendations, these are the governments most likely to succeed in their implementations. 

Categories and themes among the recommendations

Recommendations included in the reports ranged from the very general to the very specific—from “furlough days,” “reduce state leasing costs,” “use technology to reduce paper processes,” and “improve management of surplus property” to “use LED bulbs in traffic lights,” “reduce weed cutting costs on state highways,” and “increase parking rates by $0.25 in every parking zone.”  The recommendations stated with specificity have a head start on implementation with their clarity of scope and focus.  Striking the right balance is key—a vague recommendation is hard to define much less implement and measure results of, and an overly specific recommendation may be too prescriptive to foster innovation in the method execution. 

While there was no shortage of recommendations, there was a clustering in a noticeably small number of areas of interest. The research team categorized the 2,021 recommendations, grouping the recurring similar recommendations together. First, the recommendations were categorized into seven broad functional and topic areas, as shown in the appendix. Over 80% of all recommendations address one of the following three broad categories of government administration:

  • Operations and management of departments
  • Revenue collection and financial management
  • Workforce development and human capital management

In a second wave of analysis, our research team identified 43 specific subcategories of recommendations, ranging from streamlining processes to improved fleet management. Each of the recommendation categories and subcategories are listed in the appendix to this paper. Over half of all recommendations addressed one of the following seven specific subcategories of activity:

  • Process change: process improvement within an existing function of government or elimination of a function of government
  • Organizational change: changing an organizational structure or consolidation of operations across departments
  • Performance management: using data to measure and improve performance, such as with “stat” programs
  • Shared services: the sharing of administrative functions (such as HR, payroll, procurement, IT, etc.) across multiple departments of government
  • Revenue enhancement: initiatives to increase the efficiency of collection of taxes, fees, and fines by government, and policies to optimize rates and policies for what is collected
  • Human capital and employee benefits: efforts to manage employee compensation and overtime; efforts to right-size and optimize employee benefits such as employee compensation, vacation, and holiday schedules; employee contributions to health and retirement, etc.
  • Procurement: streamlining procurement processes, improving delegation of authority for small purchases, using procurement cards for greater accountability, implementing electronic procurement to cut cost and increase transparency, etc. 

Governments contributing studies

The reports come from a diverse range of governments across the nation. This diversity includes geographic range and varying sizes of government. Reports have as their subject 19 states, eight cities, two counties, and one federal agency—the US Government Accountability Office. The two county studies examined both the county and the municipalities within the county.

States represented in the reports reviewed for this project range in size from California with nearly 40 million residents to Delaware with just under 1 million. Efficiency reports from the five largest US states are included in our sample (California, Texas, Florida, New York, and Illinois). An additional two states from the 10 most populous are also included (Ohio and North Carolina).

Cities with studies included in our sample include both the largest ones, New York City, Chicago (included in the Cook County study), and Los Angeles, as well as those with fewer than 1 million residents such as Atlanta, Cleveland, Jacksonville, and Memphis. Counties included in our sample include the largest, Cook County, with over 5 million inhabitants, as well as Albany County, New York, with roughly 300,000 residents.

Client, or requestor of the studies

Most of the studies were requested by and were completed for a chief executive, such as a mayor, governor, or county executive. Other government leaders asking for or creating enabling legislation for commissions include the Los Angeles Comptroller, the Texas Legislative Budget Board, and the legislatures in New Mexico and Connecticut. A handful were requested by others outside of government. For example, in Ohio, it was the Chamber of Commerce that sought out a consultant to provide efficiency recommendations to the state. In California, the independent entity CalTax, a nonprofit taxpayer association, sought and completed the report, and in Florida the independent nonprofit Florida TaxWatch initiated and completed the study.

Political party affiliation

Efficiency appears to be a bipartisan issue, with no clear trend in the political party affiliation of requestors of studies in our sample. The representation of political parties among the requestors of studies roughly parallels the respective proportion of each political party among governors and mayors.

For the 30 studies included here, the political party of the chief executive of government at the time of the study included 12 Republicans, 16 Democrats and two that were independent or nonpartisan. Of the Republicans, all were governors. Of the Democrats, there were a mix of governors (8), mayors (6) and county executives (2).

The majority of the studies were completed in the last three years. Half of the executives who led their government at the time of the study are still in power. There are seven executives who were in power at the time of the study and are no longer in power and whose political party no longer holds the position. In these cases, which represent a quarter of the total sample of studies, it will be quite difficult to assess the implementation status of recommendations due to the turnover of key senior leadership roles in government.

Implementation status

Because many of the reports were produced in the past few years, the recommendations are likely still in the implementation process. We were not able to ascertain the implementation status of any of the reports based on public information. Our preliminary and partial research on implementation status consisted of phone calls or e-mails to the contact person for each study where the information was available. At the time of launch of the site, we had the opportunity to speak with only a handful of those involved with these studies and so have limited information on implementation status. We hope that the launch of the site will generate interest among the state and local governments featured here in sharing their implementation stories.

Summary table

The table below lists each of the efficiency studies included in the website and this paper.

 

Jurisdiction

Report title

Estimated annual savings

# of Recommen-

dations

Albany County, New York

Albany Countywide Government Efficiency Plan

$18,882,733

346

Atlanta, Georgia

Blue Ribbon Commission on Waste & Efficiency in Government

$199,218,000

56

California

Government Cost Savings Report

$7,300,000,000

39

Chicago and Cook County, Illinois

Joint Committee on City-County Collaboration

$140,000,000

20

Cleveland, Ohio

City of Cleveland Management & Efficiency Study

$140,680,417

175

Colorado

Government Efficiency and Management Performance Review

$175,107,300

47

Connecticut

Commission on Enhancing Agency Outcomes

$255,721,505

43

Delaware

Final Report of the Delaware Expenditure Review Committee

Undetermined

23

Florida

Report and Recommendations
of the Florida TaxWatch
Government Cost Savings Task Force
to Save More Than $3 Billion

$2,910,000,000

88

Illinois

Delivering Efficient, Effective, and Streamlined Government to Illinois Taxpayers

$118,000,000

27

Indiana

Indiana Office of Management and Budget: Controls and Performance Audit

Undetermined

76

Iowa

Iowa Efficiency Review Report

$341,112,500

90

Jacksonville, Florida

Enhancing Efficiencies in the City of Jacksonville

$12,000,000

15

Kansas

Kansas Statewide Efficiency Review

$408,000,000

101

Los Angeles, California

Blueprint for a Transition to Performance-based Budgeting for the City of Los Angeles

Undetermined

14

Louisiana

Government Efficiencies Management Support

   $546,334,000

107

Memphis, Tennessee

A Strategic Fiscal and Management Plan for the City of Memphis, FY  2015–FY 2019

$35,230,000

28

Minnesota

Drive to Excellence Summary Report

$330,170,000

14

New Hampshire

Report of the Governor’s Commission on Innovation, Efficiency, and Transparency

Undetermined

19

New Mexico

Government Restructuring Task Force

$4,696,100

109

New York

Spending and Government Efficiency Commission Final Report

                                   $1,625,000,000

82

New York, New York

Maximizing Efficiency in NYC Government: A Plan to Consolidate
and Modernize Back‐Office Operations

$140,000,000

37

North Carolina

NC GEAR Report to the Joint Legislative Commission on Government Operations

$14,000,000

22

Ohio

Redesigning Ohio

$1,400,000,000

44

Philadelphia, Pennsylvania

Kenney Transition Report

Undetermined

52

San José, California

City of San José Operations Efficiency Diagnostic

$294,500,000

31

Texas

Texas State Government Effectiveness and Efficiency Report

$27,700,000

121

United States

Government Efficiency and Effectiveness: Opportunities to Reduce Fragmentation, Overlap, and Duplication and Achieve Other Financial Benefits

Undetermined

92

Washington

Getting Results with Lean Principles in Washington State

Undetermined

10

Wisconsin

Reforming Government, Eliminating Waste, Saving  Taxpayer Dollars- The Governor's Commission on Waste, Fraud, and Abuse

$455,850,000

93

Total 

  $16,892,202,554            2,021

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Promising approaches

The authors have identified the following promising approaches for government operational efficiency based on their experience in government and as advisors to government. Approaches described here are those that merit consideration based on their potential public value and their ease of implementation.  

A new mayor, governor, or county executive can refer to this list of operational excellence approaches when determining how to optimize their administration of government. We recommend selecting one or at most a handful of key priorities from among this list of promising approaches, rather than try to take on too much, as that is a sure way to stall progress on all efforts by diluting attention to each.

The chart below describes promising approaches that span the government enterprise as overarching management philosophies and strategies, and then presents the most promising approaches that are relevant to specific functions or departments within government. Each approach is described below, along with characteristics and benefits of the approach for transforming government. 

 

Promising approaches to improving operational efficiency in government

Efficiency approach

Characteristics of approach

Approaches that span all of government

Analytics

· Use data to understand patterns and prevent unwanted outcomes, drive  more of intended outcomes

Shared services

· Concentrate administrative functions (HR, payroll, finance, IT,  procurement) with specialists in one organization and provide service to  departments

· Allow departments to focus on core mission not administration

Consolidation and regionalization

· Reduce duplication by merging similar functions into single agency,      either within government or across governments in a region

Budgeting for outcomes

· Focus on results and outcomes not processes or inputs

· Establish the “price of government” or what the public will pay; set  priorities and create budgets based on what the public wants from  government; use competition to get best value for dollar

Performance management and “stat” programs

· Use data to monitor performance on key indicators

· Hold managers accountable for delivering results

· Provide performance data to the public for increased accountability

eGovernment

· Use technology to reduce paper transactions for internal government    processing as well as customer-facing transactions with the public

· Improves accuracy, transparency, and reduces processing time and cost

· The UK Digital Efficiency Report estimates a 1% increase in digitization  results in a 0.5% increase in gross domestic output

· The average cost of digital transactions is 20 times lower than the cost  of telephone and 50 times lower than face-to-face interactions.

Approaches for specific government departments or functions

Public-Private Partnerships (P3)

· Leverage funding and talent from private enterprise

· Bring innovative ideas and financing mechanisms to government

· Share risk and responsibility

Strategic sourcing

· Analyze spend data to determine which categories have sufficient volume to negotiate bulk purchase discounts from selected suppliers

· Aggregate demand across government for greater buying power

Asset management

· Optimize use of real estate, equipment, vehicles by tracking use and analyzing trend data

Energy management

· Monitor energy use, track data, and analyze historical data to find efficiencies; negotiate volume discounts and encourage energy conservation

These leading approaches and others are addressed in greater detail in case studies on our website.  When considering the approaches, there are two factors to consider—the degree of total long-term impact and the ease or difficulty in implementing the change. The chart below describes the relationship between ease of implementation and impact. Every approach in the chart below brings significant value to government, returning more in taxpayer benefit than their cost to implement.

Ease of implementation is estimated for purposes of this chart based on the number of parties involved in the effort and the degree to which the initiative changes current process. So, for example, asset management is rated as an easier implementation than some other approaches because changes may be transparent to most users; if a fleet is centralized, those who drive the cars may not know who services them, fuels them, and replaces them, and a change from decentralized to centralized may not have any impact on them at all. By comparison, a consolidation effort can be harder to implement because if two agencies are merged it may have an impact on each person in each of the agencies. Changes that accompany an organizational consolidation can impact how employees do their work, who they work with, the technologies and processes they need to master, who they report to, and sometimes even the physical location of where they work. Each of these changes can affect morale and taken together they can present a challenge that requires strong leadership and a solid change management plan.   

 

The approaches that exhibit higher relative ease of implementation, such as asset management, energy management, and shared services should be considered. Where there are competent managers in these functional areas, those managers should be tasked with assessing the costs and benefits of these approaches. If leadership of these functional areas does not possess the analytical skill to assess project viability, but does have the project management acumen to execute a project if viable, then a consultant may be advisable to assist with the assessment of costs and benefits.

Those approaches that are comparatively easier to implement while bringing significant financial and operational value, such as strategic sourcing, analytics, eGovernment, and performance stat programs are perhaps the approaches that every executive in government should evaluate.

Approaches that have high public value and lower relative ease of implementation, such as budgeting for outcomes and the use of public-private partnerships, should be seriously considered. These two approaches are perhaps the most powerful in transforming government with lasting legacy. And yet they take skill and expertise not entirely common in government. Chief executives, efficiency commissions, and legislative bodies should carefully weigh the transformational power of these approaches and, when undertaking them, should assure that the right skills are identified so that the project will be successful.

Approaches with the greatest financial benefit

Three-quarters (23) of the 30 studies included estimates of financial benefit, and these 23 studies included nearly 90% of all recommendations, so the vast majority of recommendations in the studies had quantifiable benefit estimates. Most studies differentiated between one-time savings and permanent recurring savings. Many studies had both one year and multiyear savings estimates. The assumptions used to generate savings estimates (annual cost increases, population growth, etc.) were not consistent so comparing across studies is useful if imprecise.   

Financial benefits of recommendations varied greatly. A handful were in excess of $1 billion, and while most showed positive economic benefit, a handful showed financial loss but demonstrated gains in processing accuracy or equity that justified their cost. The financial value of recommendations includes:

  • 3 recommendations were estimated to have more than $1 billion in value
  • 29 recommendations with $100 million or more in public value
  • 140 recommendations were estimated to have $10 million or more in value
  • 337 recommendations were estimated to have benefit of $1 million or more

The size of financial benefit of recommendations varied and was closely tied to the population size for the jurisdictions—the large states predominantly generated high-dollar value benefit recommendations. Of the 29 recommendations with $100 million or more in public value, each was for a state. Of the 49 recommendations with a value of $50 million or more, all but four were for states. 

The ten recommendations with the highest estimated value are as follows:

 

Government

Recommendation

Estimated $ Value

Recommendation Broadly Applicable?

California

Reform Payment Options to Reduce Accounts Receivable

 $2,300,000,000

x

Ohio

Implement Budgeting for Outcomes: Office of Budget and Management works with the governor and agency leaders to designate leading agency outcome goals and rank major state programs, from most to least cost-effective, in the development of the FY 2012–2013 state operating budget.

 $1,400,000,000

x

California

Provide Flexibility to Schools to Determine Classroom Sizes

 $1,000,000,000

x

California

Reform In-Home Supportive Services

 $768,000,000

x

California

Reform the Community College Fee Waiver Program

 $700,000,000

x

California

Develop Long-Term Strategy for Other Post-Employment Benefits

 $600,000,000

x

California

Allow Private Investment in Alternative Drilling

 $470,000,000

 

Florida

Amend the Class Size Reduction amendment

 $350,000,000

x

Florida

Utilize competitive contracting in providing non-instructional services for K-12 schools

$300,000,000

x

New York

Increased Employee Contribution to Health Insurance

$260,000,000

x

Among these high dollar value recommendations are some that are transferrable across jurisdictions and others that may be optimized for a particular locale. The highest dollar value will come to jurisdictions that accumulate incremental value by implementing multiple waves of improved efficiency, and permanently change their organizational culture to support excellence in operational efficiency.  

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Implementation advice

Successful implementation of an operational excellence initiative in government is impossible without engaged and supportive senior executive leadership. Implementation is infinitely harder than idea generation as it takes persistence, patience, vision, and above all great project management skills. 

The pages that follow provide advice on implementation reflecting the studies gathered for this paper, as well as the observations from other government operational excellence projects the authors were involved in either personally as public servants or as consultants and advisors to government.  Observations included here reflect insights on both what works and more often, what doesn’t in transforming government.  Advice is presented in two parts: first, we share the conditions that must be in place before embarking on a transformation effort in government in order to be successful.  Second, we share advice on conditions that support ongoing success in implementation. 

Every operational excellence success is a significant achievement

The 30 reports we gathered represent ambitious approaches by their respective governments and while in almost every case only some of the recommendations have been implemented we present that result as a success. Changing the status quo is a heavy lift and officials who begin with moderate size wins can produce momentum and develop the skills to do more.

Preconditions that set an operational excellence initiative up for success

Success condition #1 - Prioritize. For any endeavor to be successful there must be focus—it is why a scattershot approach is less effective than a targeted one. As the saying goes, “when everything is a priority then nothing is a priority.” It is the leader who can provide guidance on priority-setting in an operational efficiency effort. Former Minnesota Governor Tim Pawlenty explained this responsibility well, “Leaders inspire us to believe we can do anything, but make sure we don’t try everything.[1]

Six of the reports contain more than 100 recommendations—a very ambitious agenda but one that requires a calculated plan about where to begin and how the early implementation targets build capacity and support. 

Where we have seen success, governments have been parsimonious with priorities. When looking at Results Washington, the state’s successful performance management framework, there are five priority goals for the state and every performance measure ties to one of them. Baltimore uses outcome-based budgeting to track performance against seven key priorities for the city. 

David Osborne, experienced leader of government transformation efforts, and author of government innovation books including Reinventing Government and The Price of Government, advises narrowing the priorities to a manageable handful. When working with government clients, he suggests spending at least a full day, two if possible, in deliberation over priorities, starting with 10 or so and narrowing to 2 or 3 top priorities. He suggests government leaders spend more time on setting priorities and less time writing or reading reports. As he says, “reports sit on shelves.” We suggest that reports such as those we have compiled need to be accompanied by a deliberate implementation plan that might in fact begin even as the group commissioned to do the report continues its work. In this latter sense the report merely represents nomination of transactions that need to be prioritized and implemented.

Success condition #2 - Dedicated senior executive leadership matters. When a mayor or governor or county executive attends key meetings for a project, people notice. They bring their “A-game,” and the chances of missing a deadline are much lower than if the chief executive is not engaged. He or she need not attend every meeting, and may not need to attend at all if they can convey their interest indirectly.  They will certainly need to be ready to step in if there are challenges in aligning resources or in gaining consensus across organizational boundaries. When New York City began its ambitious shared service initiatives that projected $500 million in savings, it began with Mayor Bloomberg addressing all of the relevant commissioners and exhorting their participation by outlining the importance of the work to him.

Success condition #3 – Find a skilled project manager. An experienced project leader can make or break the success of an operational excellence project. In cases where an outside consulting firm is involved, there still must be a senior project manager on the government side who can both lead and direct resources for the project. He or she must be able to make tough decisions and be able to hold others accountable. And that person must have the backing of the key executive. The best project managers for a government transformation effort is one who can collaborate across traditional boundaries and break down silos to get things done. They know when to take calculated risks, because transformational change seldom happens without getting outside the comfort zone of the status quo. Risk-taking means knowing that not every risk succeeds, and a good project manager knows they do not have to succeed every time, but need to just keep trying until they succeed. 

Success condition #4 - Gain buy-in from key influencers. In addition to senior leadership, who must be in support of the effort for it to be successful, there are key influencers who must be on board for the effort to succeed. Influencers are those who have either explicit authority (legislative authorizers, overseers, or funders, for example) or who have tacit authority because of their experience and respect among the rank and file—these respected individuals must be brought on board, and ideally, they must become project champions. David Osborne, experienced government consultant and expert, points out the importance of getting the right people to buy in: “Find the people with the power to say no, and convince them to say yes.” His advice can avoid pitfalls later in a project when the key legislative or executive sponsor is not on board. 

Success condition #5 - Document the business case before you begin. A business case for a project does what a vision statement does for an organization—it provides a way to regain focus when there is confusion. The business case does not need to demonstrate a financial return on investment (ROI) for the efficiency effort, but it must clearly state the benefits to the taxpayer—whether in terms of dollars, quality, or efficiency of processing or improved error or fraud detection. The business case should stand as a clear description of why you are undertaking the project. Ideally the business case will convince the skeptical that your project is worthwhile. When implementation stalls, as most projects will at some point, the business case reminds everyone of the goal and the benefits of achieving it. The business case can also help in gaining buy-in from stakeholders outside the organization. Warning: if you have not carefully benchmarked the status quo, its costs and service levels, the critics will never agree you improved the situation. Change requires proof of success.

Success condition #6 - Create a strategic implementation plan. When creating a strategic implementation plan, create incremental phases of work that build on each other—quick wins can build momentum for the longer-term efforts. The initial phases should improve service delivery in whatever way is most visible and valuable to the public. This will help build support among stakeholders. Think realistically about the staff time involved, and the procurement process. Early successes can build momentum and excitement about the project. Conversely, with an overly ambitious plan, missing early milestones means building up disappointment instead of pride and excitement. Make sure the plan reflects your organization’s strengths and weaknesses and provides additional support where needed.  When creating the strategic implementation plan be sure to flag any recommendations that need legislative approval to proceed.  Also make sure the plan is actionable as the key for this plan is to enable forward momentum. 

Conditions that keep an operational transformation initiative in government on track for success

Success principle #1 - Basic management skills are needed but are often not in place.  Delivering results and implementing the recommendations of an efficiency study will take time, from months to years depending on the complexity. This requires patience, and also requires consistent high quality project management. Implementation advice from Brian Elms, leader of Denver’s Peak Academy, includes a focus on management skills for those who are tasked with carrying out change. 

“The number one thing is that managers, midlevel managers, and supervisors are incredibly important. If we don’t provide them skills on how to support innovation and their team, and teach real management techniques, then it’s going to take a lot longer for us to be successful. In municipal government, most managers have been hired, not because they’re great managers, but because they’ve been here the longest or they are known as a subject-matter expert in that field. And because we don’t know how to promote them as a subject-matter expert, we just make them a manager. But here’s the problem: they don’t really know how to run a meeting, they don’t know how to create a scoreboard, they don’t know how to check-list, and they don’t know how to coach their team.” 

Success principle #2 - A spirit of experimentation. Willingness to try new things is great, but willingness to stop something new if it does not work as planned is even more important. In Utah, the move to a four-day workweek was touted has being able to generate $3 million a year in savings due to having public buildings closed on Fridays and lower overtime costs. In addition it was to boost customer service and employee morale. But an audit showed that the savings weren’t as high as projected, and within a few years the project was terminated. A critical lesson here is do not stop coming up with new ideas, just road test them, look at the results, and then correct course as necessary. 

Success principle #3 - Create a strong change management plan. Changing habits takes time and changing status quo processes in government can take a lot of effort to unlearn entrenched ways.   Change management addresses staff and stakeholder needs and builds in training and support to minimize disruption to routines when the processes or systems are changed. When projects fail to address human nature and the reluctance to change, it’s unlikely the results will be successful. 

When building a change management plan be sure to document and share the benefits to users as that will increase their confidence in the new process and help them be more patient with the inevitable bumps in the road of transition. Create champions who not only receive training but also are given the resources to help others with the transition to the new way of doing business. They can be a great feedback source on how the rollout is going and what needs to be tweaked. 

For example, in the state of New York shared services initiative, Executive Deputy Commissioner Tyler, says, “We can’t even say enough about change management.” She recommends filling the change management role with “people who believe that change is possible.” 

Success principle #4 - Be proactive with messaging. When implementing an operational efficiency project, there may be opposition, especially if the term “efficiency” conjures ideas of job loss. It is important to think through from the beginning what the policy will be around reductions in force. In Denver, when implementing the Peak Academy and training staff to generate ideas to streamline processes, staff at first were reluctant. So, the leaders decided that no one would lose their job as a result of an efficiency improvement they suggested. That was a bold move and likely a very important part of the initiative gaining credibility among the rank and file. Framing the opportunity and messaging to organized labor will be important as will reassuring nervous managers who fear that disruptive change will make their jobs harder. 

Success principle #5 - Bring in consultants when their long-term value exceeds their cost. Government can be successful with or without consultants in achieving operational excellence, as seen by the fact that several of the efficiency studies were completed by government staff without any outside experts.  Government leaders with strong analytic and project management skills and with teams supporting them who are similarly skilled are those least in need of outside consultants. 

One of the great values of an outsider, whether a consultant or academic or pro bono private sector advisor, is objectivity. Objective assessment of the strengths and weaknesses of an operation and the perspective to see how the organization benchmarks against best practice in the public and private sectors is rare for any organization, in the private or public sector, especially when there is little turnover.   

Consultants can provide additional manpower and can provide specific skills not easily available in government. When using consultants, it is important to think about what skills can be learned from them during the project, and then proactively work to transfer knowledge. New York State, in their strategic sourcing project, used outside consultants for the complex spend data analysis to understand buying patterns and to determine which categories of the state’s spending would gain most advantage by consolidation of suppliers and renegotiation of contract terms and prices. While this skill was not common among state procurement staff at the time, during the course of the project the consulting firm trained state staff so that they could continue the strategic sourcing work for years to come.  

In summary, setting priorities and having executive sponsorship are critical at the start of an efficiency initiative project, and management skills are essential to delivering results. 

 


[1] Bob Schroder, “Recruiting and Hiring Senior-Level State Executives” (presented at Delivering Results experts roundtable, Washington, DC, October 30, 2014, and as published in National Governors Association report on that session) 

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Case studies of success

The pages that follow provide examples of how cities, counties, and states have succeeded with operational efficiency initiatives. None was easy to achieve and some took years to reach fruition. Some, while complete, have not yet achieved their full financial return on investment.

The selected case examples demonstrate a range of topics and types of government. They represent a small sample of the many examples of success in improving the administrative processes and functions of government. It is a goal of this project to foster a community of practice where additional case studies of success can be documented and shared. 

 

Efficiency approach

Case example of success

Analytics

· A state government customer service center was experiencing difficulty serving its customers on days when sick calls were higher than average. Staffing shortages were causing backlogs of work and processing delays. Data analytics of historical sick-call patterns identified days that would be particularly challenging, including the day after the Super Bowl, which was the highest sick-call day of the year. Armed with this trend and predictive information, managers were able to proactively manage staffing levels and improve customer service. 

Shared services

· New York State Business Services Center provides HR and finance services for ¾ of state agencies in New York. When the shared services center began, HR and finance staff from participating agencies were consolidated into a single center of excellence.  With a consolidated and specialized workforce, these business services professionals use the latest technology and develop advanced customer service skills. With critical mass in staffing for HR and finance functions across state government, there is sufficient work to afford staff a career ladder with skill growth and promotion potential, which improves morale.  In one example of how this shared service provides financial value, they achieved $9.6 million in savings on credit card processing. 

Consolidation and regionalization

· Bergen County, NJ, will save an estimated $90–200 million over 25 years by consolidating law enforcement operations. Two separate law enforcement operations, sheriff and police, patrolled the same areas separately. Most of the area was also patrolled by local municipal police as well. Consolidating the police and sheriff operations allowed merging the specialized units (SWAT and investigations for example) further building skill and making more strategic use of resources. The resulting combined law enforcement agency is able to respond more quickly to calls for service because of its more efficient deployment of resources. 

Budgeting for outcomes

· Baltimore implemented Budgeting for Outcomes in 2009 and has become increasingly outcome-driven each year. The budget sets seven priorities for the city, and publicly measures progress along key 23 indicators. By using data and tracking outcomes, the city’s “results teams” reduced 911 calls by 50% by providing preventive services to frequent callers. Another results team saved $1.5 million on grass mowing by collaborating across departments.   

Performance management and “stat” programs

· Many cities have successfully implemented “stat” programs, for example, the city of Somerville, MA, saved $10 million when implementing its stat program.

· The state of Washington created Results Washington to track all state spending and activity toward its key goals and to share progress on public dashboards, improving accountability and transparency. By empowering state employees to improve results, the state saved $2.3 million on long distance phone calls. Another stat-driven initiative decreased speed-related deaths by 15%. Wait time for processing public records requests was cut in half through performance based innovation

eGovernment

· Many states are moving to online transactions—whether for renewal of driver’s licenses or other high frequency transactions with government. For example, California estimates it will save $111 million a year by using electronic court reporting instead of paper based reporting. 

· Boston has used eGovernment to make it much easier for businesses to form and grow, with its Business Hub. By combining all of the city processes into one user-friendly frontend system, business owners can now access permitting and licensing processes at the city without having to separately go to each department, as it is all seamless and integrated. 

Public-Private Partnerships (P3)

· $400 million in value has been generated from P3 projects in Indianapolis. Pioneered in the 1990s in Indianapolis under the leadership of then-Mayor Stephen Goldsmith, P3 projects created in that city have delivered significant taxpayer value to date, including a wastewater treatment plant that delivered $189 million in value over a 10-year period. In that case, private management reduced operating costs by 40 percent while continuing to work with the city’s public-employee union. 

Strategic sourcing

· CA saves 60% on pharmacy costs via strategic sourcing and NY saves $92 million a year with strategic sourcing. Strategic sourcing begins with historical spend data and then involves reducing the number of vendors so that strategic price negotiations can lower cost while maintaining or improving quality. Strategic sourcing is most useful for commodities or services that can be commoditized. 

Asset management

· NYC saved $14.75 million by reducing its real estate footprint, right-sizing office space, and adopting a modern workplace office format. California estimates it can save $158 million with improved asset management for surplus property.

Energy management

 ·  Energy savings of 10–25% are achievable with analytics, and many cities and states are moving toward energy efficiency for cost or environmental reasons. Connecticut estimates it can achieve $20 million a year in savings with a 10% reduction in energy use. One MA town saved 40% on light energy costs by installing LED lights in town buildings, achieving 67% more light with 40% less electricity. 

Additional information on these and other case examples of success can be found on the project website.

In conclusion, there are a great many examples of operational excellence in government. The aim of this project is to document successes and increase the spread of those effective approaches to creating value for taxpayers.  

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Reference sources

The books listed below are helpful sources for managers in government seeking to lead operational efficiency initiatives.

The First 90 Days in Government: Critical Success Strategies for New Public Managers at All Levels, 2006 by Peter H. Daly (Author), Michael Watkins (Author), Cate Reavis (Author)

If We Can Put a Man on the Moon: Getting Big Things Done in Government, by William D. Eggers (Author), John O'Leary (Author)

Peak Performance: How Denver’s Peak Academy is Saving Money, Boosting Morale and Just Maybe Changing the World. (And How You Can, Too!), 2016, by Brian Elms (Author), J.B. Wogan (Author)

The Responsive City: Engaging Communities Through Data-Smart Governance, by Stephen Goldsmith (Author), Susan Crawford (Author)

Extreme Government Makeover: Increasing Our Capacity to Do More Good, by Ken Miller

The Reinventor's Fieldbook: Tools for Transforming Your Government, by David Osborne (Author), Peter Plastrik (Author)

The Price of Government: Getting the Results We Need in an Age of Permanent Fiscal Crisis, February 20, 2006, by David Osborne (Author), Peter Hutchinson (Author)

Many Unhappy Returns: One Man's Quest To Turn Around The Most Unpopular Organization In America, March 8, 2005, by Charles O. Rossotti

Photo credit: flickr / CC BY 

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Appendix

 

Categories for Report Recommendations

Asset Management and Sustainability

Data and Information Technology

Internal and Public Engagement

Operations

Performance and Accountability

Revenue Enhancement and Finance

Workforce Management

 

Subcategories for report recommendations

 

Categories and Subcategories for Report Recommendations

Asset Management and Sustainability

              Energy management

Facilities

Fleet management

Natural resources

Real estate

Data and Information Technology

Data systems

E-government

Information technology policy and procedures

Network printing

Internal and Public Engagement

Collaboration

Mission-oriented 

Public feedback

              Stakeholder and community engagement

Transparency

Operations 

Ancillary office operations

Customer service

Legal and policy

License and permits 

Organizational change

Privatization

Process change

Procurement

Programming

Service processes

Shared services

Performance and Accountability 

Innovation 

Performance systems

Program evaluations 

Strategic management

Waste, fraud, and abuse

Revenue Enhancement and Finance

Budget management and analysis 

Cost savings

Economic development

Electronic payment systems

Generating funds

Grants management

Revenue enhancement

             Tax reform and analysis

Unfunded mandates

Workforce Management

Employee benefits 

Human resources

Staffing levels and overtime management

Workforce flexibility

 

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