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Reason Foundation

Innovators in Action 2009

The Public Enterprise System: Managing for Better Value in Government

The Commission for a New Georgia—Business Meets Bureaucracy

Sonny Perdue
January 29, 2010

[This article was originally featured in Innovators in Action 2009.]

As I traveled the state as a new governor, I would make a point to swing by the local drivers' license office to see how long the lines were running. The license bureau is one of the few state offices just about every Georgian over 16 had to visit every few years, dreading the day.

In this little finger of a massive state bureau­cracy was embodied much of what drives citizens crazy about dealing with their government—processing that drags on for hours through waiting lines, form shuffling, and public service employees who forgot their middle name. The message to citizens: "that's just the way government does things"...because it can.

I was advised that the licensing process could be "fixed" with a $20 million system. Six years later, there is no $20 million fix, but statewide, the average time in line for a license renewal is now about six minutes. Or you can skip getting in line by going online. The license process went from embarrassment to the perfect example of how state government can be "faster, friendlier, easier" for Georgians.

What happened at license bureaus is one small victory for taxpayers in the "quiet revolution" that has been taking hold in Georgia state government on a day-by-day, office-by-office basis, for more than six years. The transformation has moved across a succession of diverse state functions and services large and small, systematically and sensibly changing the way we do business.

The operative word is "business"—which some would say is the opposite of "bureaucracy." The reality is that government will always be organized in bureaus, which is not mutually exclusive with being a business-like operation. The concept that pulls the organization and operations together is the "enterprise" and how its resources are strategically managed to give maximum value for the tax dollar. In the best possible world, a public enterprise is driven by the value motive: the optimum nexus of quality and cost in things that matter to the taxpayer. Applied to the business of government, value is counted in many ways—from saving millions of dollars in the cost of government goods and services through strategic purchasing, to slashing turnaround times for state processes.

Bureaucracies, built to run on a stable funding source with a monopoly on services, have little motive to surpass the status quo in improving value. Their shops don't go out of business if they under-perform. Successful businesses, however, survive and thrive in a culture of innovation and improvement to increase the value of return for their investors.

That's the genius we tapped in the Commission for a New Georgia (CNG).

The Commission for a New Georgia: Business Meets Bureaucracy

After running a small business and serving 11 years in the state Senate, I brought the eyes of experience to observing business-as-usual in the state's multi-billion dollar enterprise. Every year, I saw millions of tax dollars streaming into operations, services, assets and programs in more than 80 separate agencies, plus a score of authorities, with implicit budget autonomy. I saw allocations decided by power politics, personal affinity, and leaps of faith—hardly ever by data and analysis that spoke to business hard-heads like me. In practice, bureaucracy ran itself and we paid the bills.

As a new governor, surveying the vast totality of the government enterprise, I found that what I had long suspected was true: Not even the governor could get a simple accounting of how many cars or buildings the state owned, or timely spending spreadsheets, or basic per­formance data to make sound decisions about deploying resources. The state's business ledger was a puzzle wrapped in a maze defended by 100 silos. Any CEO knows you can't manage what you can't measure.

Government's monopoly on state services nurtured red-tape routines, where customers often felt like widgets on an assembly line.

This mega-billion-dollar conglomerate unquestionably held untold potential for cost savings and unrealized opportunities for improved service. The question was how to get at it. Change rarely happens as an inside job. Breaking through administrative layers to core issues would take the right wedge, a driving force of fresh eyes and ideas focused on key functional areas from a cor­porate operations perspective. The best possible answer was obvious:

What if top executives from high-performing corporations evaluated state government operations as they would their own business...what would they change and how would they do it?

Shortly after I took office, I put that ques­tion to a delegation of highly respected corporate executives, considered statesmen of private enterprise in Georgia. I challenged these business leaders to engage Georgia's robust private sector as a working partner in re-engineering Georgia's bureaucratic machinery into a 21st Century business model.

They were being asked to do more than help state agencies work through a task list of tactical problems. Their charge was to initiate a manage­ment turnaround: converting bureaucracy-as-usual to business principles and best practices across the board in government. Our overarching mission encompassed streamlining operations with lean processes and new technologies, putting the enterprise on a sound, data-driven business basis, and building a culture of performance and public service, where continuous improvement is systematic and sustainable. In short, to transform Georgia to the best-managed state in America, giving the best value citizens can get anywhere in the public sector.

These busy leaders agreed to take it on, with one condition: that their work would translate to results, not into reports. I held myself accountable for making good on that guarantee.

In 2003, we could only count on a four-year term to cut through decades of administrative undergrowth, so the Commission's strategy was aggressive and action-oriented.

After six years, the nucleus of the brain-trust I call my "real-world consultants" are still on board for a second term. During that time, the Commission has marshaled two dozen business-led task forces which have engaged nearly 400 knowledgeable citizens and world-class consultants to help their state achieve better government. These expert teams analyzed 24 areas of operation across the enterprise and recom­mended 130 results-based actions to improve performance.

CNG's work has been the catalyst for innovation, modernization, best practices, and professional standards in a broad array of operations across the state government. These corporate citizens waived consultant fees and contracts—none billed the state for their time. Even the Commission's three-person operations staff was loaned from public and private organizations, and office expenses have been supported by unspent private contributions to the gubernatorial transition.

By the close of my first term, Georgia's government performance score had jumped from "average" on a national rating scale to the top five best-managed states. Organizations such as the Pew Center on the States, Governing magazine and, of course, Reason Foundation are spotlighting the Commission's success.

Like a Business, But Not Exactly...

The idea behind the Commission has never been about "running government like a business." It is about applying business-like perspectives, principles, and practices in the arena of government management. I saw synergy in a hybrid system, where bureaucracy embraced the innovations and incentives that spur results in private enterprise, albeit for a different motive.

Together, our public-private partnership began a quiet revolution to transform the mechanics, the mindset and the management of government.

Over the decades, Georgia has had a succession of "reform commissions" which turned out scads of reports but scant results. We had to show that the CNG was not your grandfather's commission. The design of a new enterprise-wide business model, the infusion of private-sector thinking, and a strategy of intentional implementation were innovations that would prove critical to success.

At the outset of my administration, I made the opening move to position the organization for an agenda of new business. I changed the dynamics at the top of the executive branch from political to managerial leadership. It was a corporate-style organizational chart, which created the state's first chief operating and chief financial officers. To fill these pivotal roles, I recruited two seasoned, successful business executives who understand how the distinct roles of divisions work together for the success of the enterprise. The COO and CFO have been fundamental to instituting enterprise-wide change. And their close working relationship with the Commission has kept innovation initiatives firmly ensconced on the agenda for the administration and our agency heads.

How and Why the Commission Worked

To ensure independence, the Commission established itself as a corporation—privately funded and free of office politics. True to its name, the "New Georgia" group broke from old patterns of past councils. CNG designed a nimble, multi-pronged and ongoing plan of work to keep change churning and spur rapid process improvement. CNG members believed it was critical to produce results at the speed of business, not in "government years." Their findings and recommendations were posted on a public website: newgeorgia.org.

CNG ran a rolling agenda of tasks targeted to key government operations. The task forces were lean, expert, and focused. They performed the forensics on current and recommended specific improvements, ranging from updating practices and technologies to total modernization of business systems. When the work of each task force was done, in about 100 days, members closed their briefcases and went back to their own businesses. One of my most rewarding experiences as Governor has been to watch these "civilians" sign up for a tour of duty inside government.

The task forces first targeted visibly problematic areas of asset management and administrative operations. Early wins demonstrated the resolve to change business-as-usual. However, fixing individual problems is only half the job. If the system is broken, it will be a continuing source of poorly executed operations, which ripple through the quality of state services. We handed the Commission the keys to the silo system, to see what was broken.

Storming the "Silos"

Don't misunderstand: bureaucracy is on "our side." Its offices serve the indispensable role of the keepers of continuity in government operations as administrations come and go. But over time it burrows deep into departmental bunkers and builds firewalls between agencies. These silos harbor a myopic view of organizational roles, unhealthy competition for appropriations, and suspicion about sharing ideas, people, and resources. Their inhabitants too often lose sight of the notion that collectively, "we, the government" are here to serve the same state and citizens. The culture increasingly gets in the way of good performance and good people.

The Commission's work created the leverage to pry open functional areas, exposing those programs where business as usual is simply not good enough. Findings revealed widespread data deficiencies and apparent unawareness of industry-standard operating procedures.

A series of task forces confirmed that govern­ment had no comprehensive inventories of the state's valuables—including thousands of buildings and properties and fleets of vehicles and aircraft. State entities were managing over 1,400 individual bank accounts, resulting in lost investment earnings, increased bank fees, and higher risk for error and fraud. Seriously delinquent taxes and undisbursed federal funds approached $6 billion in uncollected revenue. The state had not produced a timely Consolidated Annual Financial Report in 15 years. State offices were bogged in business processes and technologies left behind by the private sector years ago. Billions of dollars in state-contracted purchases and services were being hand-processed, working out of file folders and fax machines, with no enterprise-wide database on what was spent or bought. Hardworking staff struggled with poorly designed processes, taking the brunt of customer frustration over inept service.

That is a micro snapshot within the macro picture of the state's operational infrastructure.

By 2004, with a mountain of task force recommendations now in front of us, our administrative team was facing the slippery slope between initiatives and implementation. This is where past commissions met their downfall.

Closing the Deal: Implementation

Business-as-usual doesn't just go away in an entrenched bureaucracy of scores of agencies with 100,000 employees. External forces of change, like the CNG, can press only so far through the layers of administration surrounding problems. That explains why many astute and actionable recommendations made by past commissions never reached their target.

In 2004, I established the Office of Implementation, with the dedicated mission of systematically transferring CNG innovations into state operations. It has mobilized cross-agency teams in generating synergistic, statewide solutions to widespread issues. The anticipated pushback from inside government didn't happen. Energized by opportunities to excel, a corps of agency leaders and line staff emerged as champions of change. Many said they had been waiting years for their voices to be heard. They are the heroes "on the ground" in the quiet revolution.

The implementation track record is unprecedented among Georgia commissions: Of the 130 CNG recommendations that went forward, over 80 percent have been instituted and are reshaping the business systems of state government. The rest are in the pipeline on schedule to be completed before the end of my final term in January 2011.

How Is It Working Out for Georgia?

Midway through my second term, Georgia is changing the dynamics and the dialogue about how government works. A fundamental change in direction has been moving business processes out of silos and into enterprise-wide management systems. This has provided the data for strategic decision-making and the transparency for a high-degree of accountability.

But transformation gives the most value when it changes the everyday lives of people for the better, often in ways they care about more than the "headline" issues focused on by the media.

One of the CNG's most innovative initiatives is the Office of Customer Service (OCS) launched in 2005—the first in the nation for a state government. The program combines process improvement, employee training, and public recognition to instill service standards that meet the "faster­friendlier-easier" test in customer-facing agencies. Employee-led agency teams are achieving dramatically better performance results with the same, or even reduced, staff and budget. We're measuring shorter lines, better call-handling, and faster turn­around at offices across the state.

That means a child support order which used to take three months to process can now be ready in 24 hours. Taxpayers can expect answers to their state filing questions within three days, not eight weeks. Medicaid's once-routine 45-day processing period has been reduced to same-day service for more than half of the applicants.

In 2008, the OCS launched a statewide customer call center—1-800-Georgia—where phones are answered by operators, not recordings. An encyclopedia of more than 2,000 services puts at the operators' fingertips answers to common questions and information to direct callers to the right office on the first connection.

CNG recommendations have resulted in long-overdue "firsts" which have enabled the state to institute best business practices on an enterprise basis. Some examples:

Georgia's first State Accountant upgraded financial controls to industry standards and practices. For the first time in 15 years, the state met the deadline for the federally required Con­solidated Annual Financial Report.

Georgia's first State Property Officer consoli­dated overlapping real estate responsibilities of four agencies and organized the state's vast property holdings into a management portfolio. As a result, surplus properties were sold, leases re-negotiated at lower rates, and uniform construction guidelines adopted. The first comprehensive inventory of government land and facilities has been catalogued on a web-based GIS inventory open to public view (www.realpropertiesgeorgia.org).

State government's information technology infrastructure has been consolidated and priva­tized IT functions within the Georgia Technology Authority, managing a consortium of private-sector providers to keep the state's infrastructure updated, with appropriate levels of security and disaster recovery.

This year we launched the Transparency in Government website (open.georgia.gov), a searchable database that gives Georgians unprecedented access to agency expenditures on professional services, employee salaries and travel, state financial reports and program reviews from the two previous fiscal years.

The state procurement division, which con­tracts over $5.7 billion in purchases a year, has completed a total transformation to strategic sourcing; the first wave of new contracts on major spending categories came in $101 million below previous pricing.

To date, CNG initiatives have been credited for cost efficiencies and revenue returns totaling over $200 million—not counting collections of overdue accounts. Examples: the fleet of state vehicles was downsized by almost 10 percent; aviation services were consolidated from five agency-operated fleets to a single authority that covers all missions with fewer planes and pilots. The state has recovered more than $200 million in seriously delinquent taxes and uncollected revenues from federal allocations. In state health programs, tougher verification of eligibility and other program changes have reduced spending from double-digit annual percentage growth to well below 10 percent, saving the state literally billions of dollars.

Institutionalizing Transformation

Rolling the credits on the long list of transformative achievements initiated by the Commission, the striking realization is that state government is a different organization today than it was six years ago. Focusing on the customers' needs has challenged employees to get creative in re-thinking processes that not only better serve their clients, but make the day-to-day work more satisfying. A recent survey showed 75 percent of state employees say they are satisfied with their jobs, up from 68 percent just two years ago, even with budget cuts and furloughs.

There is a renewed respect for "the people's government"—the right of citizens to expect their tax dollars will serve the highest and best use and where government is transparently accountable for that stewardship.

Agencies never get used to having less money to work with than the year before, but this recession has been marked by a "can do" spirit. Leaders now know their organizations and can make value-based decisions on what priorities must be protected and where operations can be reduced without dire impact on quality. Timely data is supporting tough calls about where to deploy scarce resources.

My administration will be book-ended by the two worst economic crises since the Great Depression—the post-Sept. 11 recession and the global financial implosion. Governors don't control world events or Wall Street. We do, however, manage the governments of the states we serve. As Georgia's CEO, that puts in my hands the levers of hundreds of essential functions and services, which cost billions of tax dollars and impact the lives of nine and a half million Georgians every day. That's a powerful tool for maximizing value in government. I promised Georgians six years ago I would use it, wisely and tenaciously, to make their state work better.

The Commission will remain active until the close of my administration. The members have served well in their mission and exerted their energy, expertise and enthusiasm to galvanize momentum for change. Our plan was not a blitz, but a foundational building process which would embed an enduring culture of stewardship and service. We will never exhaust the need for continuous improvement, measuring results and holding ourselves accountable. My expectation is that those principles will continue long after this administration has left the Capitol.


Sonny Perdue has served as the Governor of Georgia since 2003. Prior to his tenure as governor, he spent 11 years as a Georgia state senator. He graduated from the University of Georgia, where he quarterbacked the Bulldogs and earned a doctorate of veterinary medicine. He served in the Air Force after college, rising to captain and gaining hands-on experience in operations and leadership in a government organization. After a brief career as a practicing vet, he went on to own and operate successful agribusinesses with locations across the Southeast.

His tenure in office has been highlighted by successes in raising high school graduation rates and SAT scores, bringing business and jobs to Georgia, and re-engineering the workings of government to deliver better value for citizens. Under his leadership, Georgia's government performance rating has moved from "average" to the top five state scores.


Sonny Perdue is Governor, State of Georgia


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