Tuesday, May 28, 2013

Are YOU Running Government Like a Business?

The latest Atlantic Monthly poses an idea, not unfamiliar to local government leaders: "Government Should Be Run Like a Business (But Not the Way You Think)"

For many of us who have heard this argument before, and who have reasoned tirelessly either for it, or against it, we must still be able to ponder the implications – what are the best and most applicable concepts of the business world that might actually help us in local government management? Of most interest to us is the author’s concept of the “intended use” of resources, or what we would call “alignment of resources with results” in Priority Based Budgeting.

In April 2010, as we were implementing Priority Based Budgeting in the City of Boulder,
Colorado, something completely surprising and unexpected took place. An organization representing some of the City’s business interests, Boulder Tomorrow, took note of the process that the City was implementing and asked us to come speak at a breakfast event.

As breakfast events go, we were excited to be there with City staff, and at the same time curious as to the reasoning of this group’s interest. Were they, too, going to raise the issue of how to run a City like a business? Were these business owners and leaders going to push the conversation of privatization?

Well, the time came for us to be introduced for our presentation, and it was during these welcoming remarks that they likened Priority Based Budgeting to the closest approach possible to running a business. Knowing how this would endear us to the audience, you can imagine how pleased we were to have this kind of introduction. But we were also so curious – for what reasons did the speaker make this bold statement? He said, “Priority Based Budgeting is the closest version of the concept of Return on Investment (ROI) that a public sector entity can achieve.”  

As we wrote about in 2012 for PM Magazine, Priority Based Budgeting has unveiled a way for local governments to spend within their means by continuously focusing on the results most relevant to their communities and the programs that influence those results to the highest possible degree. The concept involves leveraging each tax dollar so programs with the greatest impact on results are distinguished from programs with a lesser influence.

In fact, communities that have embraced it have redefined the notion of return on investment—it’s a “return on results,” a societal return, where each dollar is evaluated in terms of its influence on the community. One dollar spent on a program achieving multiple results is a leveraged dollar – it’s as if it is being spent again and again to achieve the results that the community is in business to achieve.

(For more on the City of Boulder's Resource Re-allocation Breakthrough we offer this graphic depiction on ICMA’s Center for Management Strategies blog.)

Is this the answer to the question of how to run government more like a business? We don’t know, but we are especially intrigued with alignment of resources with results, and with return on investment.

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