"Doing What Works" Transcript

Jeffrey Zients, Office of Management and Budget Deputy Director for Management and Federal Chief Performance Officer
Thursday, February 18, 2010
Center for American Progress, Washington, DC

Thank you for the kind introduction. John, what you didn’t cover in that nice introduction is that I have a wonderful wife and four kids, three dogs, two birds, a tank full of fish and I’m told, a chinchilla on the way. If you were crazy enough to drop by my house this weekend, you’d feel like you were entering a zoo with no zookeeper. So you probably wouldn’t stay long and you’d walk away with serious reservations about this title of chief performance officer.

While I’m here at the podium today, I’m aware that I’m the new person to this challenge of improving government performance. Many of you here have been working this terrain for many years and you’ve been incredibly generous with your time in helping me get up to speed. John, thank you for your early counsel and for your leadership of CAP; Nancy, for our regular Starbucks breakfast sessions of counsel and for the McKinsey work that’s so pioneering in the field; and Reese for making today possible.

For those of you who I have not met, I’ve spent my whole life in the other Washington – growing up here and for 20 years in the business sector. For the majority of my career, I’ve helped lead two firms – the Advisory Board and The Corporate Executive Board. Both of these firms focus on helping companies improve performance and achieve operational efficiencies.

I always wanted the opportunity to serve in government. So when I got the call asking if I would like to be a candidate for the role of chief performance officer, I said, yes, almost instantly. I say “almost” because I did have to run it by that large committee back home. But the move felt instinctively right at that moment. And my experience across the past half year has only deepened that conviction. I know now that for the first time in memory we have three ingredients in place that are essential for a step function improvement in federal performance.

First, we have a president who is committed to opening government, to right answers wherever they come from. I can tell you from my private sector experience that this type of openness leads to innovation and improvement. Second, the president has refrained from wholesale government bashing. While it can be appealing in its simplicity, it’s counterproductive. To get real results we need to engage conscientious, hard-working people in the effort. And the president’s tone paves the way.

Finally, we have the urgency of the moment. Mounting deficits and debt are placing enormous pressure on government to cut spending and make every dollar count. Every corner of government needs to do its part to spend with great care. With these ingredients in place, we have an unparalleled opening to improve the performance of the federal government. And the opportunity for improvement is significant.

For a while, a productivity boom has transformed private-sector performance over the past two decades. As McKinsey and others have pointed out, the federal government has almost entirely missed out on this transformation. For example, the Department of Veteran Affairs stillprocesses disability claims by hand, passing manila folders six to 12 inches thick from metal desktop to metal desktop. Veterans wait 160 days to receive their benefits.

The VA is not alone. The Patent Office, the institution right at the center of protecting and promoting innovation, now receives more than 80 percent of patent applications electronically. That’s good. However, these applications are then manually printed out, rescanned and entered into an outdated case management system. The average processing time for a patent is about 3 years. These types of antiquated processes are too common across government. They contribute to the continuing perception that government wastes taxpayer dollars.

Now, can we behave exactly like the private sector? No. The public sector does face unique challenges including compliance obligations that become real hurdles and objectives beyond the simple bottom-line motivation of the private sector. But many state and local governments and some federal agencies have been able to work around these constraints and have improved efficiency and raised service quality. We have to get the whole federal government on track to make that kind of progress. To understand how, I’ve spent a lot of time listening to front-line workers, career managers and agency leadership.

It’s been an education and an inspiration to get to know these very talented individuals. They are truly committed to getting government working for the American people. I’ve also studied the efforts of past administrations and gotten counsel from the good government community, including several of you in this room who’ve taken all that input and are now focused on six strategies that offer the greatest potential to improve performance.

Here are the six performance strategies, moving left to right: eliminate waste, drive top priorities, leverage purchasing scale, close the IT performance gap, open government to get results and finally, attract and motivate top talent. These are the six strategies that represent the biggest opportunity to boost performance and get government working for the American people. I’ll spend the rest of my time fleshing out each strategy.

Starting with strategy one, eliminate waste. The most sustainable way to save is not to trim around the margins but to cut what doesn’t work, what is duplicative and what is outdated. Through the line by line review of the 2010 budget, we identified 121 program terminations, reductions and savings totaling $17 billion. None other than the Washington Times congratulated the president for the administration’s success in discretionary budget cuts in 2010, noting that it was higher than any reductions under the prior administration.

For the 2011 budget, the president has proposed 126 additional program cuts totaling $23 billion. Going forward to make good choices about where to invest and where to cut, we need a systemic way to evaluate what works and what doesn’t. To this end, the president placed a major emphasis on increased funding for rigorous program evaluations in his 2011 budget. These evaluations will help agencies find out whether they’re getting the most bang for their buck.

If we have 40 different job training programs going across seven different agencies, where are we getting the greatest impact? Programs that are effective we’ll continue and those that aren’t we’ll either fix or terminate. But wasteful spending isn’t just about ineffective programs. In 2009, the federal government reported improper payments of $100 billion. These are payments to the wrong person or to the wrong entity or for the wrong amount. $100 billion of waste is not just a waste of money, it also erodes citizen trust. It’s unacceptable.

We’ve committed to reducing this quickly and have set hard targets. Agencies are designating senior accountable officials to own specific reduction targets. We are partnering with states by investing in state pilots to reduce error rates and we’re setting up incentives for states to bring their rates down. Agencies are moving aggressively. For example, the Department of Education is reducing Pell Grant payment errors by half a billion dollars by transferring data directly from the IRS to the students’ applications.

Across all these efforts, we are actively engaging our partners in Congress. Doing so to ensure that the drive to eliminate waste is not viewed solely as an executive branch initiative but rather as a common goal across government. Beyond cutting where we are not getting our money’s worth, we also need to make sure that the government is doing what we want it to do.

Our next strategy is to drive our top priorities. In most organization, leaders set priorities and then drive the organization to meet these goals. This is hard in government because senior political leaders tend to focus on policy development in crisis management – not execution and not implementation. To focus senior agency leaders on getting the most important things done, we’ve launched the High Priority Performance Goal initiative in June 2009.

Agency heads have committed to a limited number of goals with high value to the public. These are front and center in the president’s FY 2011 budget. Agency leadership, secretaries and deputy secretaries have taken real ownership here. These management goals set ambitious targets to be achieved within 24 months. The targets are quantifiable. They’re well defined and they’re outcomes based.

If you take a look at the High Priority Performance Goals, you will see three attributes. First, the goals are aligned closely with the agencies’ missions. For example, the Department of Labor has a goal to train more than 120,000 Americans for green jobs by June 2012. You will also notice that many goals span across agencies, attacking the problem that the government too often works in tight silos, in programs, bureaus and departments. HUD and VA are not. They’re working together with a shared goal to reduce the homeless veteran population by 70 percent by the end of 2012.

And finally, you’ll see a lot of goals to improve the quality of customer and citizen-facing services. All of the available data suggests that the best way to change someone’s impression of government is through favorable, direct interactions. To that end, the United States Citizen and Immigration Service has a high priority goal of moving 40 percent of its service delivery online by 2011. This will bring transparency and speed to a process that has historically frustrated applicants.

So that’s High Priority Performance Goals. We will review them regularly. We will immediately course correct if things are off track. So the first two strategies are about concentrating it on what matters – cutting what’s not working and then focusing on a few key priorities. To support these initiatives, we need strong infrastructure – most notably, in contracting and information technology. Currently, they both have big problems. When we fix them, we’ll get immediate savings and we’ll have a strong platform to get other things done.

Let’s start with contracting, where we need to leverage our purchasing scale. The federal government is far and away the world’s largest purchaser. We buy over $500 billion of goods and services every year. Despite this scale, we too often do not get the best prices or value for our money. And our contracting processes are slow and cumbersome. I do appreciate that contracting in the federal government differs from the private sector. But that doesn’t make it any less important to figure out what’s working both in and outside our four walls and reform contracting.

The president has committed to saving $40 billion through contracting reform by the end of FY 2011. This serves as an important catalyst to push us to action. How do we do this? To start, we need to leverage our purchasing power and buy smarter. We need to work across agencies to take advantage of our scale. Take the simple example of office supplies. Over 100 federal organizations have separate contracts for office supplies. As a result, they’re paying 30 to 50 percent different prices on any given day for the exact same pens and paper.

We do our purchasing like we’re 100 medium-sized businesses, not the world’s single largest purchaser. By standardizing specs for commonly purchased items and working together across silos, we can pool our purchasing power to leverage our size and lower cost. But it’s not just about pooling purchasing power. We also need to build up the capacity and the capability of the contracting work force. While dollars spent on contracting doubled during the Bush administration, the size of the work force responsible for managing federal contracts remained flat.

The growth in contracting volume has outstripped the capacity and capabilities of these professionals. Our contracting work force lacks the bandwidth to coordinate effectively with program managers. As a result, contracts are often times awarded before the government has figured out exactly what it needs and without full competition. This leads to cost overruns, delays and dissatisfaction about performance. We’re investing here. The FY 2011 budget requests $158 million for agencies to build the capacity and capability of the contracting work force.

Given the hundreds of billions of dollars in play here each and every year, a small investment has a very high return. This investment can save the government tens of billions of dollars and get better results. I mentioned earlier the president’s commitment to save $40 billion from contracting by the end of FY 2011. We’re off to a very strong start as we’ve already identified $19 billion in savings for 2010. So that’s contracting – important to fix because we can save money but also because so many other things are dependent on getting contracting right.

The same is true for information technology and the gap between where we are and where we need to go is significant. In fact, I believe IT represents the largest gap between the private and public sectors. Technology has been at the center of those private-sector productivity gains across the past two decades – both efficiency gains and service quality improvements. For the most part, the federal government hasn’t participated in these gains.

In service quality, we’re falling further and further behind. If you can book dinner for an airline flight online, then why shouldn’t you be able to make an appointment at the local social security office the same way? On the efficiency front, the story is the same. We have antiquated systems and processes throughout many agencies.

For example, the government system for managing retirement records is stuck in a different era. Here it is, a cave in Boyers, Pennsylvania. Yes, a cave and, yes, the retirement records are stored in 35,000 metal file cabinets. It reminds me of that famous last scene at the end of “The Raiders of the Lost Ark.”

Clearly there is a better answer here. However, it’s not as if we’re not trying. There’ve been several attempts to move the retirement records from the cave era to the digital era. And each time, the efforts have come up short. Unfortunately, this is not an isolated example. Across government we spent $76 billion in information technology last year. And we’ve spent more than $500 billion across the past decade. But we’ve got a poor track record of getting our money’s worth. When we try to upgrade systems, projects frequently run behind schedule or over budget.

Too often, projects never accomplish what they were intended to do. To close the IT gap, we need to change how we manage and spend IT dollars. To that end, the president appointed the first ever federal CIO and federal CTO to lead and coordinate our technology investments across agencies. We’ve also launched the IT Dashboard, where leaders in government and the American people can monitor every technology dollar we spend on major projects. Here’s the president reviewing it.

Every major IT project is rated against performance expectations and we’ve launched tech stat review sessions and accountability sessions. If a project is over budget or behind schedule or not performing up to expectations, we will either develop a credible turnaround plan or we will terminate it.

We’re also reaching out to the private sector for input. In mid-January, the president hosted 50 leading CEOs to advise us on how to improve our IT operations. Attendees included Indra Nooyi from Pepsi, Gary Kelly from Southwest, Steve Ballmer from Microsoft and Craig, Craig Newmark from Craigslist.

Dozens of concrete ideas and best practices service, some of which reinforced our early reform efforts, others that suggested new solutions for us to pursue. Ideas such as getting objective, outside experts to review projects upfront to make sure that we’re setting off on the right path. Making sure we have the right people with the right skills tasked against each project

and breaking projects into manageable chunks with well-defined milestones. This kind of best practice sharing works and we will continue to engage with the private sector going forward.

So all of this is improving our management of large-scale IT projects. At the same time, we’re also focused on the types of solutions we pursue – looking to take advantage of more agile, light technology such as cloud computing and to shared services wherever possible. If chosen well, these new technologies can be cheaper, faster and less risky than the big, custom solutions that have too often failed in the past.

As we embrace these new technologies, we are very mindful that we operate in an increasingly interconnected and complex environment. For this reason, the administration is pursuing a comprehensive cyber security approach to securing our digital infrastructure.

And we integrating cyber security into the designs of systems rather than bolting it on as an afterthought. Whether it be cyber security, large-scale project management or the adoption of light technologies, we are making progress and we will close the IT gap.

Let’s turn to the next strategy, open government. That’s about opening ourselves up to get feedback that can help us perform better. The president has committed to an unprecedented level of openness. In terms of performance, opening government gets us two things. First, it makes us more accountable by holding our feet to the fire. Second, it accelerates innovation by engaging the best minds to get to the best solutions.

Let’s start with an example of accountability. Here is usaspending.gov. This Web site aggregates every dollar the federal government spends, whether it’s a contract, a grant or other form of assistance. We’re launching version 2.0 soon with new features to increase usability and expose critical data. For example, a user will be able to compare data on a state-by-state basis and also drill down to the congressional district.

Data will be sortable by the type of contract award, by size and by recipient. As we add new features, we’re also focused on improving data quality. We’re working with agencies to integrate rigorous data quality checks into the regular financial reviews. This kind of openness leads to accountability for the administration, for federal managers and for Congress that results in a better use of taxpayer dollars.

And opening up also gets us innovation. In the fall, we tapped into the collective wisdom of government employees through the SAVE Award. Federal employees submitted 38,000 ideas for saving money and improving services. Some ideas were bold. One brave soul suggested abolishing the IRS. He used to work there. (Laughter.)

There were many great ideas, ideas as simple as eliminating paper pay stubs and as big as rethinking return to work incentives for those on disability. Fifteen SAVE ideas are included in the president’s FY2011 budget. In another example of innovation this summer, the Veterans Administration hosted an innovation contest to solicit ideas from frontline workers for reducing the backlog of disability claims.

Lots of participation – over 3,000 ideas surfaced. A panel of internal and external experts selected 10 winners. The secretary hosted them in D.C. and their ideas are now being funded and implemented. So that’s how open government helps performance, holding people to a higher standard and engaging the best minds.

But to get the most out of people, we have to do more. That’s why our last strategy is about attracting and motivating top talent. The federal government’s human resources practices are based on a personnel system that was created 60 years ago. Many of our practices are bureaucratic, cumbersome and outdated.

Too often, we don’t focus on people as a primary tool for achieving our missions and we underinvest in training and development. To attract and retain the best people, we need to fundamentally rethink how we both hire and develop our employees. Does anyone have any idea what this is? Or this? Or this for that matter?

You need all three of these slides in eight-point font to map out the hiring process at HUD. It’s a 40-step process. Nineteen different signatures are required, 139 days from start to finish. Not surprisingly, this results in terrible satisfaction scores from both managers and applicants. And HUD’s 139 days to hire is not the exception.

In fact, it’s right at the average across all agencies. I spend a lot of time recruiting in the private sector and my experience is that the best people don’t loiter for five months. They find another home. The good news is that HUD is taking aggressive actions to fix this problem. And we’re now supporting OPM and Director Barry as they work with other agencies’ leadership to streamline the hiring process across government.

Our goal is to cut the hiring time at least in half. We will focus on making the process more candidate-friendly and less bureaucratic. Starting with short, plain language, job descriptions, not 20-page documents full of government lingo. Requesting resumes and cover letters, not burdensome essays that don’t predict performance anyhow.

Creating a transparent process that make application status clear, not a black hole process that turns off applicants. Most importantly, we will be holding hiring managers, not just human resources departments, accountable for successfully recruiting the right people for the job. So that’s how we’re working to get great people through the door.

But what happens when they get here? We’ve got real problems engaging and retaining the best. For example, our performance appraisal process needs redesign. Out of 1.9 million civil servants, only 12,000 are rated below fully successful. That’s less than 1 percent. Not surprisingly, only 29 percent of employees believe that steps are taken to deal with poor performers.

Where, in these numbers, is there good news for the many hardworking strong performers? Beyond appraisals, we need to invest in development. Training and development for our frontline workers is vital to achieving efficiency and service-quality gains. Given the difficult budget environment, we have to maximize the effectiveness of every dollar we spend on

training and we need to invigorate our 7,000-person cadre of senior managers, the SES, by giving them opportunities to take on new responsibilities and develop good leadership skills.

The president summarized the need to change how we hire, engage and develop employees and his aspiration to make government service cool again. As the retirement of nearly half of the government workforce approaches in the coming decade, we have a pressing need and also an opportunity to make this happen.

But we can only achieve the president’s vision with hiring systems that attract the best, performance systems that motivate the best and development and training systems that strengthen the best. So that wraps up attract and motivate top talent. And that also brings us to the end of our six strategies.

Focus on what works by eliminating waste and driving top priorities. We build our contracting and IT infrastructure to 21st century standards and give people a stake in government by fostering a culture of performance through open government and better engagement of our talented workforce.

These are concrete, focused strategies aimed at the places where we can get the most performance gains. That’s the what of our plan. Now, let’s talk about the how. One consistent theme you’ve undoubtedly picked up here is an imperative to do more with less. With the discretionary budget freeze, the president has made the focus on cost control and efficiency very clear.

And at the same time, we’ve talked a lot about the need to up our game on quality. But often thought of as being mutually exclusive, cost and quality are not a tradeoff. The private sector productivity gains of the past two decades came about because companies got lower cost and better quality at the same time.

For example, Southwest Airlines has relentlessly lowered cost and increased quality. They provide self-service check-in because it’s faster, easier and cheaper than doing it in person. And they settled on a single plane type because they save money and make it much less likely that passengers sit around waiting for spare parts.

Southwest is part of the larger trend. Since 1990, private-sector labor productivity has increased by over 50 percent. At the same time, quality levels have risen across all major industries. The point is, the organizations who have been part of the productivity boom haven’t just worked cost or quality. They’ve worked both at the same time.

And to make sure we do the same, we’re setting up public dashboards to track progress and holding regular performance reviews with agencies to drive results. You’ll be able to see this on our government-wide performance portal launching this summer. But let me step back and anticipate the question you’re asking yourself right now. How do they actually think they’re going to get this stuff done in a place as vast as the federal government?

I’ve studied change in the private sector for two decades and I’ve managed my fair share of it. One thing I’ve learned is that most leaders try to change either through command-and- control from the top or by broad empowerment of employees. Command-and-control gets you focus, but it’s hard to tap into employees’ intrinsic motivation.

Empowerment gets engagement, but not necessarily direction. It’s hard to tackle the really big problems. We’re aspiring to a third path, one that focuses on the really big things, but that does so by tapping into the desire for collaboration. The high-priority goals are a great example. They focus agencies on the really important challenges, but the agencies determine them based on their mission and urgency.

We’re working with the agencies not from a compliance perspective, but with a collaborative spirit that acknowledges that we’re all after the same result. This focused collaboration is a key lever for driving change. But leaders have also got to convince people within the organization that change is possible.

Too often, I believe, organizations spend too much time thinking about and planning for change management and all the steps that are needed to prepare the organization for change. My strong belief is that the best way to prepare an organization for change is by changing and by celebrating the early wins that build change muscles and convince people that change is not only possible, but right within their reach.

Across the government, there are examples of public servants and agencies who are demonstrating this point with early wins. Like Nancy Fichtner, who recently won the SAVE Award and met with the president for suggesting that veterans, leading VA hospitals should keep their medications rather than throwing them out and then having to reorder them at the local pharmacy.

Or the procurement executive at NNSA who saved 18 percent through eBay-like auctions in reverse, where contractors bid down the price for the services they’re competing for. Or the CIO and his team at the VA who pulled the plug on 12 IT projects when they saw how off-track they were. Or the team at Citizen and Immigration Services, the old INS, which in just 90 days, replaced its opaque application process with a transparent tracking system that allows people to check their status online, better and cheaper.

So how do we spread this belief across government? Leaders of major change efforts tell you that there’s a moment when people shift their perspective, when they stop looking at change as someone else’s job and instead embrace it as my job. When they stop spotting problems and start implementing solutions, that’s when we’ll begin to turn, to build the belief that changes not just possible, but that it’s happening.

That’s where all of you come in. I ask of you today, is that you help build the critical mass of public servants who choose to believe that change is possible. Help me by calling out great examples and recognizing heroic efforts. Help me by pointing out things that run counter to the strategies I’ve outlined.

Help me by continuing to provide the thought leadership and creative solutions that allow us to do more with less. As for me, I have the honor of being the nation’s first chief performance officer, the key word here being performance. That means you should hold me and my team accountable for results, whether we get them and whether we’ve helped make government more capable of getting them in the future.

That is the most important standard you should use to judge our success. With your belief and support, I’m certain that we can deliver on the promise of a government that is as effective and as extraordinary as the nation we serve. Thank you. (Applause.)

Source: http://www.americanprogress.org/events/2010/02/inf/DoingWhatWorksTranscript.pdf