High Performance Government

Executive Summary for State, Local and Public Service Agencies

Achieving high performance at state and local levels

Until recently, local governments had been remarkably resilient, weathering economic cycles better, in most instances, than private-sector organizations. Today, however, the ravages of the Great Recession have left municipalities from Waco, Texas, to Wellington, New Zealand, awash in red ink and struggling to stanch the flow. There are few aspects of civic life that local and state governments do not touch, from parks and schools and libraries to streets, sewers and cemeteries. However, increasing budgets is no longer viewed as a viable option. The second option, cutting services, is also unpalatable. Now there is an innovative third option: improving service to the public while reducing costs. The new book, Building High Performance Government Through Lean Six Sigma: A Leaders Guide to Creating Speed, Agility and Efficiency, explains how to accomplish bothdelivering more with less. The book is not merely theory of what might be done in the future. The proof already exists. The books authors explain in very practical ways how public sector organizations have been helped to reduce operating costs by up to 20 percent. Organizations are able to achieve these gains not by across-the-board budget cutting but by targeting inefficient processes, reducing waste and implementing streamlined programs aligned with high performance. Innovative solutions are needed because demand for public programs remains strong, yet state funding of local governments and public agencies in the United States is predicted to fall by between 10 percent and 15 percent a year until 2012. Expenses, meanwhile, continue to rise, driven by an aging public-sector workforce, rising healthcare costs and underfunded pensions. National governments, many of which are already incurring large deficits, are unlikely to come to the rescue. Its more important than ever to find creative ways to maintain or improve service levels without asking for budget increases.

Why we wrote this book

Based on decades of practical experience with organizations in both the private and public sectors, we set out to write an indispensable book that could be used as a practical how-to guidebook for leaders at all levels of government. Building High Performance Government Through Lean Six Sigma is anchored in pragmatic management theory yet explained in plain English. We have included numerous real-world examples and actual organizational achievements. Our aim is to help leaders of governments and public agencies envision innovative yet achievable solutions to their budgetary pressures. Our book provides context and overall direction to surmount some difficult challenges. We answer high-level questions: Why does high performance 2 matter in the public sector? Are the rewards worth all the trouble? What changes are likely to deliver the biggest bang for the buck? How can public sector agencies innovate yet do it cost-effectively? How can governments reduce costs yet be more responsive to citizen needs? We view high performance as the capability to improve productivity continually and deliver more on your organizations mission at a set cost. Our experience has shown us that a proven way to pursue this goal is through a vigorous performance anatomy. Parts I, II and III focus on three important levers to address the challenge: (1) operational excellence, (2) agility and (3) workforce and culture. Together, these components create a performance anatomy capable of generating the distinctive capabilities that public agencies need to operate at peak efficiency. The final section of the book, Part IV, ties together key concepts and explains how to make the future a reality for your publicsector organization. With the right guidance, the road to high performance is attainable and the journey easier than many in the public sector imagine it to be. It is entirely realistic to aim to maintain or improve service levels yet reduce budgets between 10 percent and 20 percent. Employing Lean Six Sigma techniques can alleviate the fiscal pressures many governments are facing, and pave the way to high performance.

Praise for Building High Performance Government from those in the know:
Every level of government is experiencing a budget crunch these days and that always results in slashing services. This book can help public-sector leaders find another optionhow to deliver on their core mission at a much lower cost. Sean OKeefe, chief executive officer EADS North America1 Building High Performance Government is a fast read with a big message. It explains how the inevitable downsizing of governments at all levelsfederal, state and localdoesnt have to also mean fewer or lower-quality services. This book highlights viable strategies to create better alignment and greater productivity in government. Graham Richard, former mayor Fort Wayne, IN2 A solid read for federal, state and local government leaders wondering how to do more without more. Building High Performance Government focuses on the main things that leaders can do to help their organizations get more out of each tax dollar while also improving quality and speedan absolutely essential requirement in todays fiscally constrained environment. David Melcher, President of ITT Defense & Information Solutions3

Aspire to high performance

The public sector has much to learn from process innovations pioneered by the private companies that compete vigorously on a daily basis to survive turbulent market forces. But the public sector is entirely different, you say? The majority of your customerstaxpayers and other government agenciesprobably do not agree. Their expectations are rising. They know what is possible, especially in terms of service delivery from highly efficient private companies. They are looking for similar quality outcomes and higher productivity from public sector organizations. In addition, there are a growing number of examples that show governments and public agencies are capable of delivering more for less. Building High Performance Government Through Lean Six Sigma: A Leaders Guide to Creating Speed, Agility and Efficiency shows how to create the foundation for moving to a higher level of performance from whatever level a public sector organization is operating at today. The goal is to help public sector organizations deliver required outcomes at 10 percent to 20 percent under what it takes to deliver them todayall the while maintaining or improving service levels.

Is the 20 percent savings goal realistic?

The premise may sound high to some skeptics. The authors, however, contend it is a conservative figure representing the cumulative impact of improvement efforts. Individual areas can expect much greater savings. The US state of Ohio, for example, established the nations first statewide shared services center for back-office functions in 2009. By consolidating a number of financial processesincluding accounts payable, invoice processing, travel expense reimbursements, and vendor

1 Mr. OKeefe is also a former Secretary of the US Department of the Navy. 2 Mr. Melcher is also a senior vice president of ITT Corporation, a US Army Lieutenant General (Ret.), and formerly the US Armys Military 3 Deputy for Budget and Deputy Chief of Staff for Programs in the Pentagon

maintenance and managementOhio Shared Services reduced duplication and benefited from greater economies of scale. (These activities were previously separated among individual agencies.) The Ohio Shared Services center enables various agencies to focus more intently on their core functions and missions. Ohio already has realized productivity improvements of up to 20 percent, while costs for processing travel and expense reportsto cite only one examplehave been reduced by more than two-thirds, from $37 to $12 per transaction, a drop of nearly 68 percent. By consolidating a broad range of back-office processes, Ohio expects to achieve about $26 million in average annual savings, orover 20 yearsmore than a half a billion dollars.

foreign applicants would find easier to use. They also wanted a more consistent approach across all of Frances 70 offices handling requests. Accenture helped the Home Office identify, prioritize and implement the improvement projects. As a result, efficiency and time-to-serve have improved by at least 20 percent and by as much as 32 percent. (The rate varies depending on baseline measurements taken from multiple work sites.) Improved workflows have reduced stress levels among Home Office employees and also have increased consistency and applicant satisfactiona sure sign of the success of an approach that is both outcomesfocused and citizen-centric.

Strengthen distinctive capabilities to fulfill your organizations mission. High-performance government organizations are committed to developing distinctive capabilities that support the essential services or products they deliver. At the same time, they are aware of how to minimize effort in non-core activities. For example, the Defense Logistics Agency (DLA), as its name implies, is responsible for getting equipment and supplies to the US armed forces wherever they are needed in the world. The agency manages more than 4 million consumable items and processes more than 30 million

Principles to create greater value

The Accenture Institute for Health and Public Service Value has studied public-sector organizations to identify the strategic and operational principles for creating greater public value. Combining this research with experience helping private-sector businesses create shareholder value, has revealed some key ingredients for creating high performance organizations. Be outcomes-focused and citizen-centric. An organization needs to deliver the right outcomes to the public. Allocate your budget, in other words, to deliver programs that truly reflect the priorities of your customers (i.e., citizens, another government agency, etc.). The right outcomes for an urban transit system, for example, may require a finely tuned portfolio of travel options that includes buses, trains, airports, light rail, highways, bike paths and pedestrian sidewalks. As another example, officials in France set out to alleviate immigration and naturalization delays. Public leaders wanted a Home Office process that 4

Figure 1: Performance anatomy

The Third Lever Distinctive Capabilities Performance Anatomy 1. Operational Excellence 2. Agility 3. Workforce and culture

Outcome-Focused and Citizen-Centric

transactions worldwide. One of the most important uses of DLA resources would be building expertise in supply chain optimization, since that is the agencys distinctive capabilitythe most critical thing to fulfilling its mission. Possess a powerful performance anatomy. A performance anatomy gives an organization the elements needed to deliver outcomes exceptionally wellwith the highest quality and productivity levels, it also calls for agility to respond to shifts in public needs and preferences. A performance anatomy for a national institute of health, for example, calls for the ability to rapidly and effectively review proposals and award grants, and to provide for worldclass oversight of diverse research projects. Given budgetary limitations, leaders of the institute need to adopt methodologies that help them optimize outcomes.

The comparison between value and cost is becoming increasingly important in the public sector. Managers and leaders are under constant pressure to decide where and how best to allocate limited resources. In government organizations, investment and spending decisions are often complicated by regulatory requirements that mandate how funding must be allocated. This further pressures organizational leaders to make the right choices leading to favorable outcomes within funding limits. Key attributes of organizations that achieve operational excellence include:
They understand and communi-

They constantly evaluate their own performance. They have identified metrics linked to strategic and operational goals, and monitor the metrics regularly to evaluate progress and gaps. They link improvement efforts to strategic priorities. Improvement efforts at every level are linked; each effort drives the execution of agreed-upon strategic objectives. For example, New Yorks Metropolitan Transportation Agency saved $40 million in 2010 by eliminating 141 of 280 projects, thereby focusing limited resources on the top transit priorities. Working toward operational excellence has many beneficial side effects. Think about the training runners go through to improve their time in a 5K race. They need to make a number of operational improvements: develop more efficient strides, control their breathing and develop better running technique. As they make these

cate what is important. They have a clear sense of mission, have identified their customers (the people and groups who use their services or products), and have expended the effort to deeply understand what customers value most.

Essential components for a strong performance anatomy

Three components comprise an organizations performance anatomy for achieving high performance. The three components are operational excellence, developing agility, and creating a supportive culture and workforce. Heres a closer look at each. Component 1: Operational Excellence You might have heard this term before, perhaps framed as the ultimate goal of adopting a particular continuous improvement methodology. Some related terms are process improvement, Lean Six Sigma (LSS), Lean Transformation and business reengineering. We use the term operational excellence in its broadest sense to mean maximizing outcomes for the cost.

Figure 2: Benefits of operational excellence

Effectiveness
Primary Benefits Secondary Benefits Improved quality Improved speed Increased customer satisfaction Enhanced customer-centricity Enhanced/improved features Reduced complexity Improved reliability Increased flexibility Improved sustainability

Efficiency
Improved process speed Decreased operating costs Improved productivity Increased throughput Improved process cycle efficiency Improved decision-making productivity Improved asset management Decreased risks/improved certainty of outcome

improvements, they see additional benefits, such as better muscle tone, fat loss, decrease in resting heart rate, shorter recovery periods, and so on. Those long-term benefits come along with achieving their key short-term 5K-race goal. Similarly, high performance government organizations gain from operational excellence in secondary ways. Besides the direct benefit of delivering on current outcomes with improved efficiency and effectiveness, they display execution excellence in other aspects (see table below). Consider the case of a public safety organization that would like to reduce crimean outcome. It conducts a survey to find out what citizens value most, which turns out to be quicker response after incidents are reported. After identifying a range of possible actions to speed response (a citizenoriented outcome), the organization makes operational improvements that consistently decrease response time. That effort leads to greater citizen satisfaction, a side benefit of a chain that started with a strategic focus on a citizen-oriented outcome. Component 2: Agility As the world grows more complex and intertwined, the pressure to be agileto respond quickly to new and evolving demandsgrows by the day. Challenges can occur without warning. Agility allows an organization to adapt, change and innovate quickly. For all the known challenges that public sector organizations face, many cannot be forecast. Two weeks before

the collapse of the banking industry, for example, the US Secretary of the Treasury had no idea that his office would soon be in charge of $700 billion in bank bailout funds. High-performing government organizations possess the ability both to respond rapidly in the short run and to plan for change emerging on the distant horizon. The US Army provides a great example of an organization that has mastered agility in equipping soldiers. After deployments in Iraq and Afghanistan, Army soldiers and leaders quickly identified modifications and improvements to their equipping sets (i.e., suites of assets required by a combat unit, including tanks, guns, spare parts, etc.). Rapid changes in battlefield conditions meant that they needed to be able to change the combination of assets in each equipping set with lightning speed. However, traditional operations were focused on the long term and were not well suited to the fast-changing short-term needs of battlefield soldiers. In response, the Army created the Rapid Equipping Force (REF) to work with soldiers and leaders in combat situations. A separate organization with its own funding and processes, the REF can provide exactly the right equipment to meet critical needs at the right time. REF addresses problems much faster that anyone had imagined possible. The organization is converting what started as an asset for short-term agility into an asset for long-term agility that will benefit the Army for years to come.

Component 3: Workforce and Culture At the foundation of the performance anatomy is its workforce: people, culture, capabilities and attitudes. Many public sector leaders are in a quandary. They must balance the discipline to meet todays mission in a reduced-cost environment with an innovation-friendly perspective for understanding tomorrows opportunities. The challenges dont stop there. Leadership also has to create an environment where the workforce can thrive, both today and in the future. All employees need the opportunity to develop new skills and competencies, and to become more connected with their customers. How you measure performance of both processes and people is a big step toward creating a future-ready workforce and a culture focused on strategic priorities and meeting customer preferences. Sound targets and performance metric communicate standards and objectives, establishing the basis for how the organization is doing and what it can do better. A workforce responds to performance metrics and targets that are aligned to strategic goals, and monitored and rewarded by leadership. People react positively when they understand how their own work contributes to the achievement of greater outcomes.

The time to act is now

Everyone knows how high the stakes are these days for government and public service agencies at all levels. Budgets across the board are being pinched. Priorities are shifting constantly. The public sector has been abuzz about the new normal: a condition where budgets will never be as flush as they were in the past, where the mantra of doing more with less is replaced by a never-ending call to improve productivity or do even more with even less. Given the reality of the new normal, continuing the status quo is simply not an option. Change is a constant, and the ability to react quickly is an essential survival skill.

To achieve high performance, governments and public service organizations must clarify which outcomes they want to achieve, and what it is they will do and will not do to achieve those outcomes. They need to deliver the most services possible for taxpayer dollars, and they have to do it with an effectiveness and efficiency that is on par with the best companies in the world. The need for public sector organizations to achieve high performance has never been greater. As a result, leading public sector organizations are looking to transform their practices to capture greater efficiencies. They are innovating to find ways to increase operational efficiency and improve service levels. They are looking to the tools that power profitability in the private sector to power high performance in the public sector.

Figure 3: Components of high performance

High

High Performance organization

Impact on Outcomes
Low

Where are you today?

Low

Cost-Effectiveness

High

About the Authors

Mark Price
is a senior executiveAccenture Management Consulting and coauthor of the bestselling The Lean Six Sigma Pocket Toolbook.

Walter Mores
is a senior executiveAccenture Management Consulting supporting Health & Public Service clients, who joined Accenture after serving as an officer in the US Navy.

Hundley M. Elliott
is a senior executive and is global lead of Process Performance services within Accenture Management Consulting.

Copyright 2011 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.

For more information about High Performance Government, scan this tag with your mobile phone.

About Accenture
Accenture is a global management consulting, technology services and outsourcing company, with more than 215,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the worlds most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$21.6 billion for the fiscal year ended Aug. 31, 2010. Its home page is www.accenture.com.