Is President Obama Thinking Outside the Box?

by Alan P. Balutis

In his State of the Union Address in January 2011, President Obama noted, “We cannot win the future with a government of the past.” The president’s statement and his call “to merge, consolidate, and reorganize federal government in a way that will . . . meet the challenges of the 21st century” seemed to catch some in the White House by surprise. Jeffrey Zients of the U.S. Office of Management and Budget and Lisa Brown of the White House staff were soon named to head the reorganization effort.

 

On March 11, President Obama signed a memorandum directing Zients to develop a plan to overhaul federal trade and export agencies within the next three months. The reorganization effort is designed to eliminate government redundancies and consolidate overlapping functions. According to administrative officials, there are at least 12 agencies involved in trade activities.

 

Only a few days before, on March 8, the National Academy of Public Administration (NAPA) had convened a group of scholars, as well as many veteran public administrators, to discuss reorganization—what was happening, why, lessons learned from similar undertakings previously, and so on. The participants, largely fellows of the NAPA nonprofit coalition, were committed to a dispassionate review of the state-of-the-art of government reorganization. This Forum emanated from that half-day of presentations and discussions at NAPA in Washington, D.C.

 

Prepare Three Letters

One of the classic jokes in Washington is the tale of the three letters, which people revise as events arise:

 

Coming into the office, the president finds a note from his predecessor. It reads: “Good luck to you. I have left three numbered envelopes in the middle desk drawer. If you encounter a crisis or a problem you can’t solve, open an envelope and it may point you toward a solution.” Only a few months into his term, the president is shaken by the continued business turmoil, unemployment, and the failure of the economy to rebound. Reaching into the drawer, he pulls out the first letter and opens it. The message says: “Call a press conference and blame your predecessor.” He immediately does so, and his public ratings soar; media criticism abates.

 

Further into his term, problems return. Hostilities continue overseas, the deficit continues to grow. The president reaches in for the second envelope. It reads: “Announce a major reorganization.” Once again he follows the letter’s guidance and his popularity rebounds. But less than a year later, another crisis flares. Up against the debt ceiling, facing a divided Congress, his ratings hovering at less than 48 percent, the president turns in desperation to the final envelope and opens it. The message reads: “Prepare three envelopes.”

 

The joke yielded a good laugh at NAPA, but we charged onward—to seriously consider how and whether reform can enhance government performance.

 

The Reorganization Urge

Reorganization remains a popular prescription for many of the ills of government. However, the specific effects of particular organizational patterns and the consequences of restructuring have been largely ignored. Simply put, no one really knows whether proposed reforms will do what their sponsors say they will.

 

No one has said much about the unintended consequences of these changes. No one really knows whether major adjustments in structure, procedures, or processes will make an agency (or the entire executive branch) a better place in which to work, a more effective institution for the generation of imaginative policy, or a more responsive organ of government.

 

We do know reorganizations sometimes have traumatic effects on the organization and its employees. And, many argue, unwarranted emphasis should not be placed on efficiency as grounds for reorganization. The simple fact is that public administrators and organizational theorists know very little about what types of reorganization promote efficiency.

 

Articles in this Forum speak, realistically we hope, to these questions and concerns. In addition to describing and evaluating the nuts and bolts, the “how to do it” aspects of governmental reorganization, we try to explain why reorganization initiatives have come about, why the issue of reorganization is always with us, why and how they succeed (or fail), the actual impacts of such reforms, and what alternatives or managerial options may exist today that didn’t previously.

 

We believe, that taken together, these articles begin to answer some very important questions about federal management reform and reorganization in the 21st century, an age with new options for innovation.

 

Reorganization Won't Cure All

The Forum contributors all agree that reorganization is not some magical cure-all for a variety of political and bureaucratic ills. Dwight Ink, who served seven presidents, addresses key factors in successful reorganization efforts: timing, planning, implementation, and outreach to the Congress. Private-sector leaders Mark Abramson and Paul Lawrence offer success stories from agency-level reorganization. Author Beryl Radin seconds Ink’s motion about the important role of Congress in government reorganization and adds that interest group politics need to be considered.

 

To increase the chance of success, former union leader and American University public management scholar Robert Tobias calls not only for new and different behaviors from Congress, but also from the President and department leaders. Ron Sanders, David Mader, and Melissa Allen highlight seven lessons learned from their collective 107 years in senior public sector positions: get the enabling legislation right; engage and empower career executives; avoid the thirst for instant gratification; take the opportunity to reengineer; give the union(s) a seat at the table; pay attention to the “soft” stuff, such as culture, values, and employee engagement; and be prepared to weather the storm.

 

George Mason’s Paul Posner and University of Maryland’s Scott Fosler add to the best practices list. Posner does so by outlining six “poison pills” of reorganization efforts, including “glacial change” and “the mirage of cost savings.” He also opens a discussion on the need to consider mission fragmentation—the root of why 17 agencies have a piece of food safety and more than 60 deal with job training.

 

Posner recommends portfolio budgeting or crosscutting councils to forge combined efforts. Fosler argues that, in the end, the keys to successful federal reorganization are conceptually simple: centered on valid purpose, appropriate design, effective execution, and careful attention to the changing realities of government.

 

Finally, aren’t there alternatives to disruptively moving boxes in our traditional organizational charts? Yes, say Grant Thornton’s Robert Shea and Marc Hebert: implementation of the Government Performance and Results Act Modernization Act. Yes, says IBM’s John Kamensky: virtual reorganization. Amen, says Chris Mihm of the Government Accountability Office, arguing for “. . . collaborative mechanisms to knit together various related programs and efforts that cut across federal agencies.”

 

Reorganization is hard work. But recognizing the difficulties—and sometimes failures—and appreciating lessons learned is not defeatism. We believe the work will become easier if reorganizers understand the forces and challenges involved and that the potential for success will increase. It is to that end that this Forum is dedicated.

 

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Alan P. Balutis is senior director and distinguished fellow in Cisco’s Internet Business Solutions Group, the firm’s strategy and consulting arm, where he heads their North American practice. He is also chairman of The Public Manager Board of Directors. In a government career spanning 30 years, he spent a third of it running the management and budget office at the Department of Commerce and serving as its chief information officer. Contact him at abalutis@cisco.com.

 

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Leading Differently: Can Reorganization Change Things?

by Robert Tobias

Like anything that has to do with relationships, change is more of a process than an end goal. It is not ordinarily possible to predict the precise effects of a change. Things happen along the way: new evidence emerges, people voice opinions, technology fails to work, and so on.

 

However, because hope springs eternal, the federal government has frequently tried to change the way the executive branch agencies do their jobs by legislating or dictating new organization charts. It should surprise no one—certainly not anyone who has ever been married or lived in a family—that new reporting charts alone will not achieve the desired result.

 

The latest attempt to create a more “competent and efficient” government comes from President Obama. In his State of the Union message earlier this year, he pledged to improve the nation’s competitiveness in world markets by combining 12 different export-related agencies. In a March 11 Memorandum to all executive departments and agencies, President Obama clarified his political and efficiency-related reorganization goals: to facilitate competitiveness, increase agency transparency, and maximize return on taxpayer dollars.

 

Federal government reorganizations fall on a continuum from least to most complex, based on whether they are internal to the organization or span agencies or departments, and whether the rationale for the reorganization is efficiency, effectiveness, or political change. The most complex reorganizations reach across departments and advance not only efficiency or effectiveness, but also make a political statement. The question is: Will President Obama change his approach to the design, his expectations, or his implementation of his reorganization effort to increase his chances of success?

 

Reorganizations’ Savings Not Guaranteed

Will President Obama’s efforts follow the path of the massive reorganization that created the U.S. Department of Homeland Security (DHS)? That reorganization promised to achieve political goals, cost savings, and effectiveness. But there is scant evidence that those promises have been realized.

 

DHS was hatched by a small group of people working secretly in the White House to create a new organization chart to assure Americans that terrorism on the scale of 9/11 would never again occur on our soil. The new simplified DHS reporting structure sought to reduce overlapping responsibilities of employees in 22 agencies through combining some agencies, and eliminating others—all in the interest of refocusing 180,000 employees from their then-current missions to a new mission of making the homeland more secure. The creators assumed a new organization chart would lead to an integrated effort to increase security, reduce overlap and save money. Eight years later, DHS continues to struggle to integrate the 22 agencies into “one DHS,” and no money was saved.

 

The assumption by DHS creators was that a new organizational structure would change behavior. In other words, if DHS got the “boxes” right, the minds, hearts, and actions would follow. The emphasis was on the intellectual evaluation of where the boxes ought to be, who should report to whom, and who should be allocated what resources. Nobody asked whether all those federal employees in the boxes would continue to do what they had done in the past, or what would change their behavior to achieve the new goals and objectives.

 

Private-sector experience with reorganization has been similar. The most dramatic example of failure was the 2000 merger of Time Warner with AOL. Similar to the creation of DHS, a small, secret group of executives from Time Warner and AOL decided to merge the two companies, and then announced the decision—that AOL would purchase Time Warner for $164 billion—to their respective organizations at the same time they announced it to the world.

 

Ten years later, the stock value of the two nowseparate corporations is one-seventh what AOL-Time Warner fetched in 2000 on the day of the merger. Steve Case, then-president of AOL, in a New York Times retrospective, acknowledged the failure, but reiterated his intellectual rational of the “core strategic value of the idea.”

 

In the same article, Richard D. Parsons, then-president of Time Warner, indicated the intellectual rationale failed because the two companies “were species that were inherently at war with each other.”

 

Intellectual clarity translated into great organization charts does not necessarily do the job. Reorganization cannot trump endemic organizational culture or guarantee success if those merged have no leadership to take them in a new direction.

 

The same could be said about the attempt to merge the Immigration and Naturalization Inspectors (INS) and the Custom Inspectors in the newly created DHS Customs and Border Protection Agency. The idea was to integrate those who worked side by side—one group focused on immigration and the other on trade and drugs—into “One Face at the Border.” Blending the two formerly siloed organizations would theoretically reduce duplicate supervisory structures and training, directives, and overhead costs.

 

However, there was no effective leadership for achieving that goal. Each agency’s employees viewed their work as the most important and their colleagues as the most skilled. Notwithstanding extensive cross-training and efforts to refocus from immigration to trade and drugs, and vice versa, employees continue to describe themselves as “legacy customs inspectors” or “legacy immigration inspectors.” Behaviors have not fully changed, and the respective cultures have not been successfully merged.

 

What Might President Obama Do Differently?

Whatever structure eventually emerges, President Obama will want affected employees to change their past behavior to achieve the new goals and objectives. The president might model the behavior he seeks by changing the historical presidential role from public policy creator to public policy implementer. He could choose to fulfill the role that has become a textbook cliché: lead the implementation he seeks.

 

Reorganizations need leaders “at the top” who work with those they lead to create a new vision. Burt Nanus, who has long-studied the role of vision, states: “Vision allows leaders to inspire, attract, align, and energize their followers, to empower them by encouraging them to become part of a common enterprise dedicated to achieving the vision.” A new department will also need a referee to decide the inevitable turf fights, oversee the creation of goals, and ensure their prompt implementation.

 

What Might Congress Do Differently?

Congress overwhelmingly supported the substantial changes inherent in the creation of DHS, but did not change itself. All congressional committees and subcommittees presiding before the creation of DHS are in effect today, and now even more, some 108 according to NPR, are exercising the same oversight and voting on the same appropriations.

 

DHS spends far too much time with congressional oversight, appropriations, and authorization from committees who often give contradictory direction. Congress should lead the change it seeks: Change its structure to reflect the structure of the department.

 

What Might New Department Leaders Do Differently?

Unlike DHS, a new department should plan on including the reorganized and merged employees in the implementation. A new department needs employee energy focused on creating a new future, not holding onto the past. Leaders have a better chance of developing changed followers if they are willing to change themselves.

 

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Robert Tobias is the director of the Key Executive Leadership programs and the Institute for the Study of Public Policy Implementation at American University. Contact him at rtobias@american.edu.

 

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Visionaries: 2011 Service to America Finalists

“The people who do our nation’s work often go unnoticed,” says Max Stier, Partnership for Public Service (PPS) President and CEO. “That’s why the Service to America Medals are so important—they showcase the good that our public servants do.” The Public Manager asked four finalists recognized for smart budgeting: “What made it possible to carry out your vision and accomplish your goal?” They answered unanimously: “Focus.” Here is more about their projects and how they got the jobs done.

 

W. Todd Grams

U.S. Department of Veterans Affairs

Achievement:Integrated and streamlined agency operations, reduced costs, and delivered better service.

 

We tied our CFO initiatives to the [Department’s] priorities and goals, with a specific focus on where we can have the greatest impact on improving veterans’ services and increasing value for the taxpayer dollar. Within this strategic construct, we have established a strong program management environment that maintains attention to priorities (at the expense of less important efforts); encourages and enforces accountability; and provides assistance and support to project teams to help ensure their success.

 

Bill Guerin

General Services Administration

Achievement:In only 18 months and $565 million under budget, obligated $5.5 billion in stimulus funding to make federal buildings more energy efficient and sustainable.

 

GSA’s focused project management team rallied behind my plan to reinvest in public buildings…to make them sustainable workplaces. GSA worked proactively and creatively to overcome any obstacle. We developed new ways to communicate and track information, organized spending plans that allowed maximum flexibility and control, and worked together tirelessly to deliver on our commitment to stimulate the economy quickly.

 

Ann Marie Oliva

U.S. Department of Housing and Urban Development

Achievement:Created new data systems that shortened the time it takes to award homeless grants from 213 to 61 days, reduced administrative costs by 90 percent and provided information to better evaluate homeless programs.

 

Working to end homelessness has been the singular focus of my career. While “e-snaps” is the most technically difficult project I have ever managed due to the need to get critical funds to service providers on time, the office work does not compare to the challenge of living on the streets or being in a shelter with your kids. That is the driving force that motivates me and my team to get the job done.

 

Janet St. Laurent

U.S. Government Accountability Office

Achievement:Provided management and financial oversight that has helped the Pentagon save $20 billion while ensuring our troops have the equipment and training they need.

 

Three strategies have been critical to securing cost savings and improving business operation efficiencies. First, hiring capable, dedicated staff and investing in development built GAO’s knowledge of defense issues and led to results. Second, establishing performance goals and tracking progress has focused us on cost savings. Third, building relationships with department and congressional leaders has yielded actions on our recommendations.