Sunday, September 15, 2013

What's YOUR Local Government Definition of Victory?

In our work at the Center for Priority Based Budgeting, we've been overwhelmed by success stories stemming from partnerships, involving the convergence of results with what any given community wishes to achieve, and sound economic development plans. In fact, one of the key reasons cited by so many of our most recent PBB implementers for initiating the process is their desire to identify the most opportune partnerships, both public-public and public-private partnerships, worth pursuing in support of achieving the community's well defined results. We're so excited about this, it begs the question: at what point does Priority Based Budgeting become, in part, the systematic discovery of Priority Based Partnerships?

What is interesting is that the very term "partnership" lacks the power to truly convey the significance of the solutions that can truly come about; the kinds of solutions we're seeing unfolding as the Metropolitan Revolution gains traction across the country. Sometimes, a "partnership" is the recognition that, in order to achieve a community's intended Results, it's in the best interest of local government to assume the role of "facilitator" rather than leader. Detroit Mayor David Bing was quoted in the New York Times, depicting his view of the role of the City in facilitating partnerships and economic development: "My job is to knock down as many barriers as possible and get out the way."

We are moved by this glimpse of what becomes possible when local government understands the Results it is striving to achieve, it's role in achieving them (even when that role is less prominent), and aligns resources to bolster success. The Decade of Local Government 2.0, and the opportunity to achieve Future City USA status, stands for all of us in local government. The opportunity is upon us!

Your Definition of Victory?

Recently Alan Webber, Founding Editor of Fast Company magazine, delivered the controversial and innovative key note message to kick-off TechFestNW in Portland, Oregon. Webber stated  "In 1993, in the first issue of Fast Company, we published a brilliant essay by Mark Fuller, a former HBS professor, co-founder of Monitor Consulting, and a military strategy expert. The essay was called “Business As War,” and it compared business strategy—or I suppose urban strategy—to military strategy."

"In Mark's essay he raised a provocative question about business strategy, using the context of the
Vietnam War. How was it possible, he asked, for the United States to win every battle in the Vietnam War, and lose the war?

The answer, he said, was that the United States failed to ask the last question first. The last question, whether for a business or a military engagement—or for a city—is, "What's your definition of victory?" 

Or to put it a slightly different way, "What's the point of the exercise?"

If you go to war, and you don't have a clear definition of victory, how do you know how many resources to commit, how to make the case for the conflict with your own people, how long to stay, what "results" you're trying to achieve, or when to leave—or even whether you're winning or losing?

The same is true for a business—or, for that matter, for a city seeking a strategy. You need to be able to answer the question, "What's your definition of victory?" "What's the point of the exercise?" "What are the Results your community seeks to achieve?" so you can begin to know why you are doing what you are doing, and how well you are doing it.

Which is why having a definition of victory—why asking the last question first—establishing the results a community seeks to achieve -- is fundamental to any military engagement, any business strategy or entrepreneurial startup, or any urban planning exercise.

Portland, Oregon: A Case Study

From Webber's keynote address: In 1970 I graduated from college. In the fall, my college roommate and I piled our stuff into my blue four-on-the-floor 1968 Mustang and drove across country to Portland, Oregon. It was late afternoon, early evening when I crossed the Steel Bridge and found a place to park in the run-down warehouse district behind the railroad tracks next to Skid Row. I remember getting out of my car, looking toward the non-too-tall office buildings in what passed for downtown 40-some years ago, and thinking, “Well, here I am. In the big city.” 

In fact, what I quickly learned—what I would have already known if I’d grown up in an actual big city or gone to college in one—was that Portland was far from a big city. Portland in 1970 was more like the rest of America in the 1950s. It was a backwater town—some would even say a jerkwater town. But to use those words is not to be unkind or even harshly judgmental. If Portland in 1970 was America in the 1950s, there were a lot of things to like about it. In its conservative, slow-to-change way, Portland had managed to avoid many of the faddish traps and trendy disasters that faster-moving, more dynamic cities had already succumbed to.

The best and brightest of America’s prestigious urban planners, transportation experts, economic development gurus, and social engineers had already laid waste to most of the country’s big cities. Urban renewal had been used as a tool to bulldoze slums, displace minorities, and erect sterile single-use zones that in many cases reflected an architectural style best described as “Mussolini modern.” Everyone who counted knew that freeways were the wave of the future—that massive concrete channels needed to be carved through old and uninteresting city neighborhoods to make it faster, easier, and more convenient for former city dwellers—the ones with money and choice—to make the morning commute from the sprawling suburbs to the rapidly rotting urban core—and back again at night. All that old housing stock, all those old neighborhoods, what difference did they make? They were the past.

As were downtowns. In keeping with the best thinking of the best minds, downtowns had been zoned off by function. So there was a government center, where federal, state, and local government buildings were clustered together. There was the financial district, where high-end office space was grouped. The performing arts deserved their own buildings all in the same area, as did the shopping district, the hotel and hospitality area—and so on. All of those zones contributed to a sense of order—and an overwhelming sense of sterility, a profound lack of diversity and a total absence of the energy engendered by mixed uses. Not that it mattered all that much, since downtowns operated more or less like bathtubs, filling up in the morning rush hour, emptying out in the evening rush hour, and then remaining silent, empty and deserted until the next morning brought the next wave of commuters. And again, since everyone knew, absolutely knew, that suburban shopping malls and office parks were the future, what difference did it make if the old downtowns, once the heart of cities, gradually shriveled up and died?

The '70's

Now the good news for Portland in 1970 was that the city leaders were so conservative, so slow, so
sclerotic, they’d managed to miss almost all of these carefully planned catastrophes. In that sense, Portland was like that amazing house that lucky homebuyers sometimes stumble into. The place has been owned by the same couple for 30 years, and while they haven’t done anything to improve it, they also haven’t done anything to ruin it. At least not quite yet. Because as I quickly learned after I’d been in town for a year or so, Portland was at an inflection point. While nothing had been done yet to sentence Portland to the same fate as almost every other American city—and in particular, the country’s sprawling Western cities—there were a series of looming decisions and simmering crises that Portlanders were about to face. And how those inescapable choices got made would determine the face and the fate of the city for years, for decades to come.

Now if this were a different group in a different city, I’d do my best to draw out the drama of Portland at its moment of decision. How do you revitalize a city where the mayor and city council averages more than 70 years of age—and makes their decisions over private lunches in a private room in the Congress Hotel before acting out political kabuki in the public council sessions? How do you even begin to clean up the air in a city that violates Federal clean air standards three days out of five? How do you kill not one freeway—the ill-named Mt. Hood Freeway that never actually was designed to go to Mt. Hood—but an entire freeway map designed for the city after World War II by legendary New York master builder Robert Moses? A freeway map that described Portland as a mini-LA, a shell of a city with one out of every 10 houses either bulldozed to make way for a freeway or sitting directly adjacent to one? How do you convince downtown merchants that it is in their own best interests to rip up the two most popular streets and install an untested, unproven transit mall? Or impose an absolute lid on the number of downtown parking spaces—when everybody knows that unlimited free parking at suburban shopping malls would mean the demise of downtown? How do you convince the Port of Portland that its plan to extend a runway into the Columbia River isn’t a bad idea only because of its impact on that historic river. It’s also a bad idea because of the impact on the neighborhoods in Northeast Portland of thousands of additional cars streaming through their streets to get to the expanded airport—with no thought of mass transit as an option?

Portland’s vaunted livability was preserved, and today, 40 years later, it is easily America’s favorite big-little city with an unparalleled quality of life, great coffee, artisanal restaurants, more breweries per capita than any city on earth, and its own cult TV show. It is known far and wide as the place young people come to retire.

Portland as an Urban Startup

Except that’s not quite how—or more importantly—why it happened. The real story has a much more direct bearing on this gathering—and on what you do next on Portland’s behalf as a result of this gathering. Make no mistake. Portland in 2013 is at a “what’s next?” moment, much as it was in 1970. Except in 1970 we were trying to save Portland from urban ruin. In 2013 you have the opportunity to propel Portland to urban greatness.

The first thing you need to know about Portland circa 1970 was that it was an urban version of an entrepreneurial startup. We didn’t know it at the time. And the language of entrepreneurship wasn’t part of the public conversation the way it is today. But that’s what it was. What we were advancing back then was an alternative business model for a city—even though nobody at the time had heard of business models.

But think about it: What Portland did in the 1970s was to zig when everyone else zagged. We didn’t try to be more like Seattle or more like San Francisco. We tried to be more like Portland—the best Portland we could imagine and then implement.

To do that, we disrupted the status quo. We challenged conventional wisdom. We advanced an alternative theory of the case—as they say in business school—one that ran counter to the way every other American city was developing at the time. We were an urban Apple: Portland dared to “think different.”

What's Next?

Which leads me to the first question that I’d like to offer as a topic for your ongoing conversation and debate—a “what’s next?” question for the Portlanders of today: What’s Portland’s current business model? What’s the theory of the case going forward? What’s your version of Portland 2.0? 

The second thing you need to know about Portland in the 1970s is that livability was never the goal. True, it was always a component of a well-integrated urban strategy. But it was always a building block, an essential Portland attribute and a deeply held Oregon value. But it wasn’t the definition of victory for the city. It was an input for creating the Portland strategy, but it was never the sole output.

So if livability was an input, not a final goal, what was the point of the exercise 40 years ago in Portland, the definition of victory? The answer was something we called the "population strategy.”

The population strategy was a product of some world-class detective work by David Yaden, who, at the time, was Portland’s premier pollster. Both going door-to-door to conduct interviews and looking deeply at data on emerging demographic trends, David discovered that Portland was at risk of becoming a city with its middle missing—that is, if political, economic, and social trends were to continue, Portland would end up as a city with very old people and very young people—and very few people in the middle.

Why did that matter? Because the people in the middle—the middle-income, employed families with children—are the people who provide the glue that holds a healthy city together. They’re the people who volunteer to be Cub Scout and Brownie leaders, soccer coaches and PTA presidents. They get involved in their neighborhoods. They keep eyes on the street. They turn out to vote. If a city is fundamentally about more choice for more people, they are the people who enable and amplify—and often pay for—more choice for more people.

With David’s analysis, we had our definition of victory—we knew what we were solving for in the
equation that was Portland. Our definition of victory was, how do we retain and attract middle-income families with children? How do we get them to vote with their feet? How do we get them to stay in the city, to cast their vote for the city? Livability would absolutely help influence their choice. But so would good schools. And quality jobs in convenient locations for the residents of Portland’s neighborhoods. So would safer, calmer streets, and sidewalks with lower levels of stranger-to-stranger street crime. And better parks with more choices for recreation inside the city.

Here’s the deal—for business entrepreneurs or urban strategists: Once you know your definition of victory, then you can begin to connect the elements of your strategy into a coherent, internally consistent whole. But until you have answered that fundamental question, until you know the definition of victory, you really have no strategy. You have an assortment of programs, a loose collection of policy initiatives—but no clear strategy.

PDX's Definition of Victory?

So the second “what’s next?” question for Portlanders today is: What is your definition of victory? Forty years after the design of the population strategy, simply continuing with that original goal seems an unlikely answer—especially at a time when, from all appearances, the success of that strategy has, inevitably, caused a new problem: the displacement of poorer Portlanders to the inner rings of the suburbs. So perhaps a new goal needs to be about re-balancing the city, about economic and social equity for all Portlanders, if this is to be a great city.

A second question that needs to be addressed also comes, I believe, from that misreading of livability as a goal rather than an input. Making livability and environmental sustainability a hallmark of the Portland story has tended to obscure the key role that jobs and economic development always played in that original strategy. From the beginning, it was always clear that the environment and the economy were inextricably linked. Two sides of one coin. Far from being mutually exclusive, a healthy economy combined with a healthy environment would make the Portland strategy work—at every step of the way. In fact, I don’t think it would be wrong to say that the livability agenda was only possible because of a pragmatic business strategy.

Take the Mt. Hood Freeway. It could only be killed once it became clear that neither the money for the freeway nor the construction jobs associated with it would be lost—only transferred to light rail and surface street improvements across the entire metropolitan region. When that transfer became possible, the Mt. Hood Freeway became both a business deal and an environmental deal.

The Downtown Plan became real not when it was adopted by the City Council—there’d been too many doorstop-sized plans passed over the years. It became a living, breathing vision for downtown when the mayor and his team made a pilgrimage to Seattle, sat down with the Nordstrom family and offered them a package deal that resulted in the first new department store built in downtown Portland in decades—and on the exact block where the plan called for such an investment from the private sector. That business deal gave the plan credibility—and allowed the rest of the plan to move forward.

Today, issues of livability seem to overshadow issues of economic viability. And that raises another “what’s next?” question for Portland: Where is the pragmatic economic vision that will support and sustain, in pure business terms, the city’s treasured quality of life initiatives? Will that economic agenda come from a vibrant tech community? Will it emerge from hackathons and creative apps? Will it come from small and medium size businesses that need help to reach critical mass? How can Portland afford to pay the bills that are part of a genuinely sustainable strategy?

How Do You Overthrow a Successful City? 

How do you overcome the complacency that comes with success? How do you resist the temptation
to believe the hype that success always engenders? What does it take to disrupt yourself when the rest of the world is celebrating your success? How will you overthrow a successful city? How will you take the heritage of Portland as it is now, and do the hard disruptive, urban entrepreneurial work to take this good, livable city and take it forward to make it a great world-class city?

That’s the ultimate “what’s next?” question that stands before the Portlanders of today. And it’s a much harder, and a much easier, task than the one we faced 40 years ago. It’s harder because success is such a seductive trap. Success breeds its own kind of complacency. It’s why so many old and successful companies stop innovating, loose their creative spark—and stop asking challenging questions in the service of disruptive answers.

The success of the original Portland strategy should lower the barriers to experimentation; you have a sound basis from which to try new things—knowing that the fundamentals are in place, the values are sound and the underlying framework makes sense. Portland works. And now the question is how to make it work even better, for even more people, in even more ways.

And you have more tools with which to work. Forty years ago, infrastructure investment was more or less limited to the hardware of the city—housing stock, transit lines, parks. Today, you have the software of the city with which to experiment—social media, the rise of the sharing economy and the evolution of the city not as a bunch of buildings, but as a platform, an operating system.

And you have the benefit of perspective—a way of looking at and evaluating the two largest issues confronting the whole country: the challenge of fixing public education and the need to address the growing gap between the rich and the poor—our current national crisis of the missing middle, the middle class.

You have something almost no other city in the country has: the social and political capital with which to work, to grow, to build, to create—yes, to disrupt—your way to greatness. When you look at the cities of America, Portland is truly unique. There is no other city in this country that could boast of its livability—and then go beyond that to aspire to genuine greatness.

That’s the “what’s next” question for Portland today.

That’s the “what’s next” opportunity for Portland—and you—to embrace.


The Implications

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 concept of the “intended use” of resources based on the results a community desires to achieve, or what we would call “alignment of resources with results” in Priority Based Budgeting.

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.)

Central to PBB is the idea that all local government organizations can determine the role they're suited to serve best within a community, and amongst all potential service providers within a region - identifying the overlap, the potential for partnerships, consolidated services, and spinning off of services between city, county, school district, non-profit and private sector organizations. The end goal is nothing short of the most efficient use of a community's resources as a whole, to achieve the results of a region – it’s "bang for the buck" for the provision of public services.

Keep an eye on the CPBB blog for further updates. Sign-up for our social media pages so you stay connected with TEAM CPBB!

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If you're thinking of jumping into the world of Fiscal Health and Wellness through Priority Based Budgeting we would certainly like to be part of your efforts! Contact us to schedule a free webinar and identify the best CPBB service option(s) to meet your organization's particular needs.

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