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Public-private partnerships are engines of change. But in what direction or to what end are the critical questions. In 1993, our company took on the leadership of the Minneapolis Public Schools. In the ensuing four years we learned a great deal that has helped to answer these crucial questions. Those lessons and their implications for public-private partnerships are the subject of this presentation.
I will begin with a little background about The Public Strategies Group. Then focus on the lessons we learned as the first private company to run an entire public school system. And finally share what we think are the five key strategies or points of leverage for the success of any public-private partnership — what we call the 5 C’s.
First some background. The Public Strategies Group, Inc. is a private corporation dedicated to government reform.
Our Mission
PSG works exclusively with public organizations seeking to transform themselves into customer-focused enterprises. Our mission is to be the best resource in the world for transforming governance. We relentlessly pursue the creation of public services that offer high value added to their customers at reasonable or competitive cost.
Our firm consists of a group of some of the most advanced thinkers and actors in creating effective public enterprises. We are people who have dedicated our careers to public service. We have experienced firsthand the challenges public managers and elected officials face in giving citizens more value for their money. Principals of the firm include David Osborne, the co-author of Reinventing Government and of Banishing Bureaucracy and Babak Armajani, an expert in public sector management systems reform who collaborated with Harvard professor Michael Barzelay on the book Breaking Through Bureaucracy. Others of us have served as leaders in Federal, state, higher education, municipal, and school governments. Our expertise includes strategy development, re-engineering, finance, information management, central service redesign, human resources, marketing, and systems design.
PSG also has a working relationship with a worldwide network of firms and individuals that are masters in various disciplines involved in innovative public sector reform. Network Associates from the United States, Canada, Australia, the United Kingdom, and the Netherlands augment our core as valued team members.
Customers
PSG's services are focused on a small segment of public organizations: those that have concluded that the bureaucratic system has run its course and that transformational change is the only viable long-term strategy for dealing with both increasing demands for service and decreasing resources. Government executives, elected officials, and sometimes even citizen groups hire us to help them plan and execute transformational change.
As consultants, under leadership services contracts, or as public executives, we have successfully led or assisted in the transformation of public organizations from federal and state agencies to local governments. We have advised world, national, state, and local leaders on five continents.
We helped design and author the Vice President's initiative on federal government reform–the National Performance Review. We radically redesigned the child welfare system for the State of Illinois. In New York State we helped create path-breaking designs for Medicaid and Substance Abuse services. We assisted a wastewater treatment plant in Alexandria, Egypt move from being a central government agency to a public enterprise that sells its services to municipalities. We reengineered the Minnesota sales tax system. We have worked with both Indianapolis, Indiana and Hartford, Connecticut to design significant improvements in the value of municipal services.
In Canada we have worked with the provincial governments in Manitoba, Ontario and British Columbia and have provided workshop and training opportunities to federal employees and public sector financial executives throughout the country.
- The highest gains in five years in elementary student achievement;
- The creation of new curriculum standards, testing, and performance reporting;
- The establishment of accountability mechanisms throughout the system with consequences attached;
- Significant improvement in district finances; and,
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As with any school experience we learned many lessons in the course of our time with the schools. These lessons can tell us a lot about the nature of public-private partnerships
The Lessons
I learned my first lesson on January 18, 1994. We had been on the job only a month. My family and I were celebrating Martin Luther King's birthday and our wedding anniversary during a day off from work. We had gone to a movie in the afternoon. As we drove home the radio said that the temperature already had dropped to 15 below zero with a wind chill of 34 below. The forecast was even worse. It looked like this would be the coldest night in recent memory. What, I wondered, does a superintendent do when it gets really cold?
I found the answer when I got home: 57 phone messages were waiting for me from anxious parents, students, and teachers. "Close the schools," they all said. I was totally unprepared. At no time during the endless interviews had anyone ever mentioned that it was up to me to decide whether or not we would have school.
I was saved that night when the governor declared a weather emergency and closed all schools in the state. That was just fine with me. It meant I could go to the office to get caught up. However, from the moment I set foot in the office that morning the phones started ringing. At first I heard about the forecast of continued cold weather and the need to close schools again the next day. As the day wore on I began hearing more and more (with voices increasingly desperate) about the need to "get these darn kids back in school." By the end of the day the callers were evenly divided and extremely emotional!
That’s when I learned Lesson #1: When it’s hard — and it will be hard -it doesn't matter what you decide, you're wrong!! So do what you think is right! Knowing that liberates leaders to do the right thing. In public-private partnerships, the hardest thing is to keep the right thing the main thing. There are so many contending voices that it is easy to lose track. The key to success is knowing what counts — what matters — what is at the core.
I learned the second lesson on the sidewalk in front of a school I was visiting. I was in the midst of trying to visit every school--all 85 in our district. This particular morning I had arranged to take the bus to school with the students. That would have been fine but for the fact both a television crew and a newspaper photographer joined us. The kids just couldn't resist the temptation to show off for the cameras. As a result, the ride was wild!
There we were driving around south Minneapolis with lights flashing and students whooping it up. By the time we arrived at school, everything was at a fever pitch.
The cameras were the first ones off the bus. Then the students and I lined up and started down the aisle. When I got to the front I turned and thanked the bus driver for doing such a good job under such extreme circumstances. She looked up to say, "You're welcome," and then uttered the words I shall never forget, "Don't forget to use the hand rail."
I was still thinking I knew better as I sprawled face first on the sidewalk. I had missed both the handrail and the first step.
Lesson #2: listen to the people around you, they can keep you from falling flat on your face. Success in a partnership requires respect for one another and for what each contributes. Failing that, we are likely to find ourselves flat on our faces.
That same day I learned my third lesson. After I picked myself up off the sidewalk I went in to visit the school. I started at breakfast. There I met Amisha. She was very nice to interrupt her meal to talk to me. I quickly found out that Amisha was in second grade. I asked her, "Do you like school, Amisha?" "Yes," she said, "I love school." I couldn't resist. "What is it about school that you really like?" "Well," she said, "it's my teacher."
Intrigued I just plowed ahead. (Someone taught me once to always ask three "why" or "what" questions if you want to gain real insight.) "What is it about your teacher that you really like?" Without hesitation Amisha taught me one of the most important lessons. "She's proud of us!" came her words.
I was stunned. I don't know what I was expecting--probably something about recess or show-and-tell. Instead I got the chance to see the power of passion in making public organizations succeed.
Lesson #3: the most important thing is to believe in the people we serve. Success means focusing the passion of an organization on what really matters - meeting the needs of our customers — those we serve.
The fourth and fifth lessons came in answer to the annual back-to-school question "What did you do on your summer vacation?":
In 1994, our family took a car trip from Minnesota to Wyoming and back. Here, in brief, is the story.
Day 2: Car overheats outside of Cheyenne, Wyoming. Can't find a motel. There are thousands of people in Cheyenne for their summer festival. Even the Motel 6 is charging $175. Drive instead to Fort Collins, Colorado, another hour away. Day 3: Nice day walking around Fort Collins while they replace the mini-van's water pump and hoses. Car then overheats half way up the Rocky Mountains but we make it over the top.
Day 4: We limp into Jackson, Wyoming. Day 7: Car overheats again. Day 8: Apparently we need a new radiator. It has to be flown in from Salt Lake City. Day 11: We get the radiator, see Yellowstone, and end up in Livingston, Montana.
Day 12: Up early to start home. A small puddle of radiator fluid has formed under one of the hose clamps. No problem. I take out my trusty Swiss army knife and ... the hose explodes! At the garage they tell us the hoses we got in Fort Collins weren't installed properly. New hoses are installed and we are on our way. Forty miles outside Bismark, North Dakota, driving in a light rain at 75 miles per hour the right front tire explodes.
Day 13: New tires are mounted, and we make it home.
Now you might think this was one horrible vacation. Quite the contrary. We actually got to all the places we had planned to visit. And we pulled together as a family and dealt successfully with what came our way.
Lesson#4: things don't have to be perfect to be successful. Success means continually moving forward - making things better every day. Public-private partnerships won’t be perfect, but they can be successful.
The Fifth lesson came the next summer. Another trip. This time we flew. We met relatives in Oregon and went camping in the mountains. What a spot! Tall trees, fast-moving trout stream, clear skies.
The four of us settled down in our cozy tent. In the middle of the night it happened. Our oldest rolled over in her sleeping bag and said the words that strike fear in the hearts of every parent. "Ohhh, I don't feel so well." As we jumped up in response she proceeded to throw up all over every thing and every one. This was followed by near panic as we tried to simultaneously calm everyone down and clean things up, all in the pitch dark. We finally succeeded in reassuring all concerned that things were fine and that in the morning everything would be better.
Lesson #5: when you're in the dark things look a lot better than they really are. Partnerships require optimism even when it isn't warranted. After all we spend a lot of our time working in the dark.
Finally, in the spring of 1996 I learned the last and perhaps most important lesson. I was out visiting schools when I happened upon a second grader who gave me the best job description I've ever had. She was in a classroom of pretty diverse and excited youngsters. When I was introduced, the teacher told them I was the superintendent and asked if anyone knew what a superintendent was. Hands started shooting up, the students anxious to respond. One little boy said, "I know, he's in charge of SuperNintendo!" (Don't I wish.) "No," said the teacher, "he's the leader of our schools. Who knows what a leader is?" Over in the corner was a girl who looked like she was going to jump out of her skin if I didn't call on her. Her answer stopped me cold.
Lesson #6: "A leader is someone who gets things done to make things better." Job #1 in any partnership is to make things better. If those we serve are not better off as a result of our work, we will have let them down. Clarity of purpose, defined measures of success, plus accountability are essential to making our partnerships work for those we serve.
All public services are being challenged in a big way to make things better. Challenged relentlessly - to improve, to restructure, to better meet the needs of citizens and their changing communities, and to do so at a lower cost.
Regardless of the path we choose, transforming public services requires us to leave behind our ideologies and some of our most ingrained habits and beliefs. Such a transformation requires us to move :
- from rewarding good intentions to rewarding performance or results;
- from a system in which people follow rules to one in which people chase a sense of purpose;
- from a system of territorial service monopolies (districts) to one of choice among competing providers;
- from control over inputs to accountability for outcomes;
- from organizations steeped in the traditions of bureaucracy to ones challenged by the imperatives of service; and
- from an ethic of distrust and mistrust to a culture of expectation – high expectation.
The 5C’s — Strategies for Success
The success of public-private partnerships in facilitating this transformation will depend on the degree to which they deal with five critical strategies. These are what David Osborne calls the 5 C’s in his book Banishing Bureaucracy. They are:
- Core
- Customer
- Consequences
- Control
- Culture
Core
The key to the core strategy is clarifying the purpose, roles, and direction of the service and the partnership. Purpose is the key. Most organizations are trying to do too much and don’t do much of it well. Clarifying purpose requires being specific about who is to be served and towards what result. Clarifying purpose means clearing the decks of those activities that don’t enhance or even impede pursuit of the core outcomes.
Clarifying roles means distinguishing and then separating the steering functions from the rowing. Steering involves setting goals and policy and creating effective strategies to direct the organization toward its goals. Rowing entails the actions that actually move the organization toward success. In many organizations these two roles are mixed up with one another to the detriment of both. The fact is that both are important. They are both so important that each needs to be done well.
Clarifying direction involves assuring that the entire organization is aimed at achieving the same outcomes — outcomes consistent with the core purpose. The best way to clarify direction is to adopt a relatively small set of performance indicators that can be used to monitor and help improve performance throughout the organization.
All three — clear purpose, role, and direction — are critical and interrelated. It is essential in any public-private partnership that all involved be pursuing the same core strategy.
Customer
The second key strategy involves identifying the customer to be served and putting that customer in the driver’s seat. No partnership for public service can rely on good intentions to assure quality. Rather, quality is assured through customer accountability — by making customers powerful. The elements of an effective customer strategy include:
- Customer choice — options for the source, quality, quantity, and price of services;
- Performance standards — specifying how good is good enough;
- Performance information intended for customer use; and
- Customer assurance mechanisms - including redress when performance fails.
When customers are in the driver’s seat all members of a public-private partnership will experience the power of accountability for outcomes to drive them toward success.
Consequences
Clarity of purpose and customer accountability are strengthened when performance is consequential. There are a host of options for doing so, including:
- Competitive contracting;
- Performance agreements;
- Performance bonuses;
- Enterprise funding;
- >Gainsharing and shared savings, and
- Performance budgeting.
Any consequences strategy must be aligned with both the core and customer strategies in order to be most effective. Furthermore, it must make the consequences of performance clear to each of the partners.
Control
A high-performance organization focuses on results rather than control. Most public organizations have historically done it the other way around. When purpose is clear, accountability established, and consequences certain then it is time to trade the bureaucratic focus on control for an entrepreneurial focus on results.
Empowerment is the watchword of changing controls. Empowerment of organizations, employees, and communities are all possibilities. The tools of empowerment include:
- Decentralization;
- Site-based management and self-directed work teams;
- Waivers and variances;
- Organizational delayering;
- Labor—management collaboration; and<
- Community management and governance.
The key to an effective control strategy in a public-private partnership is not to trade an ineffective, overbearing public bureaucracy for an equally ineffective and overbearing private one. Rather, the goal is to put control as close to the customer as possible — along with accountability.
Culture
The final transformational strategy focuses on organizational culture. Culture is the entire set of habits, mindsets, and expectations that define the character of an organization. Culture is transmitted and maintained through the thousand little things that make up organizational life. Who parks where, dress codes, time sheets, meeting protocol, forms of address, office size and location, and a million other things make up the culture of an organization. When it comes to organizational change, culture cannot be taken for granted — but most often it is.
The culture strategy must involve an explicit effort to connect the million little things of an organization to its purpose. Altering culture means:
- Changing habits by creating new experiences;
- Touching hearts by creating a new covenant; and
- Winning minds by developing new mental models.
Among the tools available to support a culture strategy are:
- Customer focus groups;
- Job rotation;
- Work redesign;
- New symbols;
- Celebrations;
- Workplace redesign;
- Benchmarking;
- Reconsidering the unspoken rules; and
- Developing new language.
Culture is a particularly important strategy to a public-private partnership for two reasons. First, the partnership’s service culture must be aligned with its organizational purpose. Second, the partners themselves will have to explicitly decide which of their cultural artifacts will be brought to the partnership and which will be left behind. More often than not partnerships break down over cultural issues. Making the culture of the partnership explicit and consistent with its purpose will give the partnership significant leverage for success.
Together these five strategies — Core, Customers, Consequences, Control and Culture — are powerful levers for making public-private partnerships work effectively. When these levers are used well the results can be dramatic. When they are not used well, or worse, when they are ignored, the results can be catastrophic.
The transformation of public services is well underway - it is happening because our societies are relentlessly demanding it. We are still early in the process, stumbling along, trying to learn the lessons fast enough to be able to keep moving.
You are a part of this transformation. Challenge yourselves and all those that come to you with schemes for improvement to show how they've employed the 5 C’s as levers to make their public-private partnerships successful.
And remember the lessons:
- To always do what is right;
- To listen to those around you;
- To believe in those you serve;<
- That things don’t have to be perfect to be successful;
- That it is ok — even and advantageous — to be operating in the dark; and
- That leadership, your leadership, always means changing things to make things better.
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