Federal Diary Live

How do you manage the federal government that does less itself as it relies more and more on outsiders? In the age of the Internet, is "government by network" a more realistic model than the enduring top-down bureaucracy?

Authors Stephen Goldsmith and William D. Eggers joined The Post's Stephen Barr, who writes the Federal Diary column, to discuss their new book, "Governing by Network: The New Shape of the Public Sector," at noon Jan. 12.

Goldsmith and Eggers served as government reform advisers to President Bush during his 2000 campaign for the White House. Goldsmith directs the Innovations in American Government Program at Harvard's Kennedy School of Government and is chairman of the Corporation for National and Community Service. Eggers is a director of Deloitte Research, Public Sector, and a senior fellow at the Manhattan Institute for Policy Research.

The transcript follows.

Editor's Note: Washingtonpost.com moderators retain editorial control over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions.

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Stephen Barr: Welcome all, and thanks for joining us in this discussion today. A special thanks to Stephen Goldsmith and William Eggers for teaming up to discuss their new book, "Governing by Network," and what their ideas could mean for federal employees. Let's start with two questions for our guests. Stephen, would you give us the premise of the book and a brief overview? William, would you pull an example from the book for our readers today? My thanks to both of you for taking time from your schedules to join us.

William D. Eggers: Complex public-private, network-to-network collaboration models operate, with varying degrees of success, in nearly every area of public policy. The building of NASA's Jim Webb Space Telescope involves multiple governments (the Germans are supplying many of the instruments and the French the launch vehicle), multiple contractors (Northrop Grumman is the prime contractor), several universities as well as NASA's in-house capabilities (the agency is doing the testing itself). Medicaid is a federal-state program in which healthcare services are delivered by private and nonprofit organizations, while a third-party processes claims. Likewise, most job training programs are funded at least partially by federal and state governments, administered by local workforce boards and actually delivered by networks of private and nonprofit providers.

NASA and the U.S. Department of Energy both spend more than 80 percent of their respective budgets on contracts. The Department of Energy has only 16,000 employees; contractors at the agency outnumber employees by more than 130,000 people. These two agencies have become de-facto contract management agencies. How well they manage networks contributes as much to its successes and failures as how well it manages its own public employees.

At the state level, Wisconsin's welfare delivery model engages multiple levels of government, multiple state agencies, a handful of nonprofit and for-profit administrators and dozens of community-based subcontractors. In short, as governments confront increasingly complex problems and technology facilitates more sophisticated responses, government's use of third-party public service delivery models also grows in complexity.

Stephen Goldsmith: thanks for having me

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Washington, D.C.: Mr. Goldsmith, have you taken a page from Al Gore with this book? I recall he believed in the same idea and the creation of a Virtual Government, where leaders would be hooked via the Internet when close networking was required to solve crises.

Stephen Goldsmith: our book is about managing partnerships where technology plays a very important role; i think mr. gore's work is helpful, and virtual govt important but our approach looks at other issues as well

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Stephen Barr: At the risk of asking you to repeat yourself, would you share with us why you decided to write this book and the premise its rests on? Thanks much!;

Stephen Goldsmith: i am involved in the Innovations program at the Kennedy School and noticed that many of the most important innovations involed how well the government official conceptualized the value she was trying to produce and how the partners who were managed; we noticed that government really could not do what it needed to do even with a well managed and professional bureacracy, without leveraging others

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Kearney, Neb.: I apologize that I haven't gone out and bought this book, but what I would like to know is what kind of controls need to be looked upon to prevent a continuence of this problem.

Stephen Goldsmith: participating with partners does not sure success; there can be problems with any model; we in the book look in particular about what control structures can manage risk and still allow the necessary discretion for innovation

government has an obligation to make sure that outcomes are clear, measured and inspected; it has a duty to its citizens to insure due process, equity and the like; the work of the public manager in this sense is very challenging, and more important, not less

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Washington, D.C.: Thanks for taking questions. Stephen's column today pointed out that the government's real problem may lie in leadership. How would your concept of networked government solve that problem?

William D. Eggers: Governing by Network demands a fundamentally new role for government leaders. It places more—not less—responsibility on public officials. It requires them, often with declining resources, to provide more public goods than before, but produce less of it themselves.

This in turn demands an entirely different set of governmental abilities. As a threshold, it requires public leaders who understand their job is to produce public value and not merely to manage activities. Leaders like Washington, D.C. Mayor Tony Williams who created a network of private hospitals and community-based health clinics to widen the health care safety net.

Secondly, this new breed of leadership must recruit a cadre of managers skilled in negotiation, contract management and risk analysis who will tackle unconventional problems, focusing on results rather on than defending bureaucratic turf.

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Potsdam, N.Y.: Can significant improvement in public sector performance be achieved without changing the basic nature of public service employment, to increase incentives for hard work, achievement and risk?

Stephen Goldsmith: i dont think there is a single answer to your important question. managing and rewarding performance even inside the existing bureacratic model is important; but probably not sufficient. the public work force needs to be transformed; both for purposes of meeting new and complicated challenges and in order to make public work more satisfying; you are right that incentives for hard work need to be in place, but even more so risk; and still though it is finding leaders who ask "how can i produce public value" not how do i produce more of the same activities and then as we suggest in the book thinking how to leverage and convene the partners necessary

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Capitol Hill, Washington, D.C.: Bill Eggers--would you swap big government for a small government staffed with experts paid along the same lines of major corporations and think tanks? I believe Paul Volcker has pointed out that law schools pay their deans more than the we pay federal judges.

William D. Eggers: Governing by network will have profound and far-reaching effects on the makeup of the public workforce. They boil down to this: government will need fewer people overall—particularly at the lower and mid levels—but more highly skilled individuals at the top.

The public sector will need to raise pay at the senior levels to attract more of the best and brightest. The skill sets government increasingly needs don't come cheap, and, in some cases can most likely be found in the top business and law schools. To attract this kind of talent, governments will have to compete with consulting firms, Fortune 500 companies and investment banks for talent. This doesn't mean the public sector will have to achieve pay equity with these professions but it will need to become more competitive. In the long run it will be much cheaper to pay more money to get the best people than to endure the continued project failures and billions of dollars worth of wasted tax dollars that go along with poorly structured public-private partnerships.

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Washington, D.C.: Have reviews of "Governing by Network: The New Shape of the Public Sector" appeared? What journal or paper? Is your book in stores? William D. Eggers: First, take a look at our book website: www.governingbynetwork.com. Articles and reviews there.
Second, below are links to a few of the reviews and articles about the book that have appeared.

Washington Post
http://www.washingtonpost.com/wp-dyn/articles/A955-2004Nov20.html

Public CIO
http://www.public-cio.com/story.php?id=2004.11.11-92114

Public CIO
http://www.public-cio.com/story.php?id=2004.11.10-92107

Government Executive
http://www.govexec.com/dailyfed/1104/112904k1.htm

Governing.com
http://www.governing.com/books/netwint.htm

Washington Technology
http://www.wtonline.com/news/19_18/federal/25126-1.html

Bacon's Rebellion
http://www.baconsrebellion.com/Issues04/12-13/Thompson.htm#jump

Blueprint: New Democrat magazine
http://www.ppionline.org/ppi_ci.cfm?knlgAreaID=115&subsecid=900025&contentid=253072

Fort Worth Star-Telegram
http://www.dfw.com/mld/dfw/news/columnists/ok_carter/10453738.htm

Governing Magazine
"Networking," by Peter Harkness
http://www.governing.com/archive/2005/jan/pubdesk.txt (January 2005)

http://www.framewelder.com/clients/fanniemae/goldsmith/flash_bb/frame.html (Council for Excellence in government interview)

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Washington, D.C.: Mr. Barr: Stephen Goldsmith and Anthony Williams have a lot in common. They both ran for mayor (Goldsmith in Indianapolis and Williams in D.C.) on platforms that pledged improved performance through privatization and managed competition. This threat to privatize would, they thought, shake up the work force, keep it on its toes, and improve performance. Both quickly came to the conclusion that there is a better way -- cooperation among employees and partnership with their unions. Fortunately, AFSCME, which represents the majority of employees in both cities, has long committed itself to improved public services through labor-management cooperation. The experience in Washington, D.C. and Indianapolis suggests that we need look no further than within ourselves for the answers. Sincerely, Al Bilik

washingtonpost.com: This question appears to raise the issue of how some of the changes you recommend impact unions and employees. What's your view, Stephen?

Stephen Goldsmith: thanks for the question; i really dont look at this as a heads i win tails you lose conversation; in indy, eventually, i developed a wonderful appreciation for the skills of my AFSCME workers, and their leadership became true partners. let me make a few points, though:
government must change; too many demands, too little money;
public employee retirements allow, if there is flexible labor policies, the introduction of private and not for profit partners without layoffs
public employees take their jobs in large part because they want to do good; yet we force many of them into narrow silos, small cubicles (figurative) and repetitive work; private public networks allow those jobs to be reeevalutated in a way that increases the discretion of the workers, and thus their sense of satisfaction;
i could add details; However, none of this happens correctly unless both political leadership and union leadership share a similar progressive goal and trust each other; i did step back for a sheer privitization agenda, which was fortunate, though competition helped as well

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Washington, D.C.: The inherent tension is between having the appropriate discretion to run a cost center's human resource function--hiring and firing (and in between)--and establishing an employment process that serves as an example of "employment relations done right." I suspect that changing the front-end (hiring) function would offer the most scope for improvement. As it exists, "personnel" sets position characteristics and wages (with input from managers) and acts as the gate-keeper by deciding whom the manager can interview. This function should be turned over to the manager who will supervise the incumbent. Would your research confirm or cast doubt on these observations?

Stephen Goldsmith: very sophisticated question; would require a few hours of typing; as Mayor of Indianapolis I initially found an HR department that viewed itself as a form of policeman; make sure all rules were followed no matter how nonsensical the process might seem; i tried to convert them to an internal consulting group that would help the program managers solve problems with advice about hiring, performance pay, training and the like. i dont know whether front end hiring is the most broken part; because i would confess that discerning quality at the front end is a bit problematic; i do agree though that discretion and public value go together and the work of the last 50 years to reduce discretion;

William D. Eggers: I think we also need to create a new, more strategic role within HR that focuses on human capital needs and looks at longer term issues, workforce trends, workforce makeup and generally takes a more strategic view.

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Reston, Va.: I know there are always discussions in the works, but I would be curious as to how these new cadre of government employees would be recruited? I have an MPA with a focus on contract mgmt AND govt contractor IT experience in software development--and I could not get into federal govt at ANY kind of management level. I think there is a resistance and would like to know what hope there is for pulling this talent into govt? I work for the private sector.

William D. Eggers: If you read our book I think you will see that you have precisely the type of skills we believe the federal government now needs. We devote an entire chapter to this issue because we believe it is extremely important to the future of government performance.

A major part of the public-sector workforce restructuring should involve attracting more people with sophisticated skills in team-building, project management, risk analysis, negotiation and other areas so critical to network governance. Today most governments don't have nearly enough individuals who can manage multiple partners with dexterity and adroitness, or who have sufficiently deep and broad relationships in the marketplace to know who should participate in providing the answer. The dearth of such skills represents a gaping hole in government's capacities, especially as the public sector shifts from narrow, production jobs to network management positions.

What can government agencies do to plug this gap, particularly in the midst of a tight labor market?

The first thing they'll need to do is change government policies to encourage, not discourage, people from moving in and out of the public sector. This means restructuring retirement systems to allow more pension portability, and reinventing personnel systems to eliminate the strong bias against short-timers. Many states and the federal government have laws that appropriately try to make sure that employees don't leave and turn insider knowledge or relations into profit. But these laws often sweep so broadly and are enforced so bluntly that they inhibit talented individuals from doing stints in government.

The public workforce needs more change and mobility: the ability to move within government less restrained by narrow work bands and differing tenure rules, as well as the ability to move from the outside into government to accomplish a project, without being penalized when leaving.

Stephen Goldsmith: We are recommending that more often program management and procurement be integrated; the old ways of thinking of contract management in just technocrat terms will not work;

executives need to employ folks with training and skills like you suggest and even create seprate office to sponsor, run and manage the major tranformation projects;

i know OPM is sensitive to the skill miss match issue

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Arlington, Va.: Is anyone on Capitol Hill interested in your ideas? How about OMB?

Stephen Goldsmith: i know david walker at GAO is very interested and GAO has done some very good work on partnerships;

we are just begining to talk to congress and would assume that Mr. DAvis would be interested, among others. Congress has a very important role here; i.e. they need to allow the agencies more discretion in how they do their jobs and at the same time more clearly focus on outcome accountability.

and even more complex: some work crosses multiple committees each with a slightly different view;

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Albuquerque, N.M.: What one piece of advice would you give to mid-level managers as they try to move into this "new role" with respect to dealing with higher level managers still in the old mindset?

Stephen Goldsmith: i think there are too many and too few middle managers; too many in the sense that they occupy layers in the old model where they passed information up and down and were there to control people.

however too view in the sense that managers need to manage relations, not just people; that some of the repetitive work needs to be outsourced and a higher percentage of the workforce involved in value added work;

William D. Eggers: As they shift over to managing providers, a challenging and important responsibility filled with opportunities where civil servants can make a difference, many middle managers will be able to contribute more to public value, and will find more satisfaction in their jobs, but only if fundamental human resource changes accompany this transformation.

First, skills should take precedence over job description. Second, to a much greater degree than possible today, employees need the ability to move from project-to-project without sacrificing career advancement. Highly restrictive human resource and civil service rules need to be changed to allow managers and employees to bring broad skills to their assigned projects, unrestricted by the narrow "bands" in which they are employed.

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Washington, D.C.: How can any Administration expect any performance management system to work if there is little to no effective accountability of political appointees at all levels?

Most of them are nice people who work hard, but what do they accomplish with what they are entrusted? Without strong accountable leadership from the top, down the line, little of substance is accomplished. The bureaucracy is very expert at growing itself.

At past Excellence in Government Conferences here in DC, the audiences told VP Gore directly that the White House had to hold their appointees directly accountable for the performance of the elements they were placed in charge of. He said he agreed, but then nothing happened.

William D. Eggers: I have always liked the approach used in Commonwealth countries where Ministers and Chief Executives of agencies negotiate between each other very detailed, performance-based employment contracts that put part of their pay at risk based on performance. It is generally viewed as having worked quite well.

Stephen Goldsmith: Political appointees provide an important source of policy oversight, and a great deal of energy. I have learned though in my service as Chairman for the Corporation for National and Community service, a quasi government federal agency, that there is almost no good idea for which there is not some archane obstacle; thus the blend between policy oversight and technical skills is important;

i beleive all of us in government should be held accountable including political appointees

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Washington, D.C.: Since you have obviously thought about this, what attributes do government executives and managers need today in order to advance the public interest (and survive!;)?

William D. Eggers: We discussed this a little in earlier replies but here are a few more attributes:

• Big picture thinking
• Coaching
• Mediation
• Negotiation
• Risk analysis
• Contract management
• Ability to tackle unconventional problems
• Strategic thinking
• Interpersonal communications
• Project and business management
• Team building

William D. Eggers: Conceptualizing a network also requires senior public officials who can see through restrictive government walls into relationships that might produce value and ask the basic questions—often overlooked in government—of what results are to be produced, who should perform the necessary activities, where should they be performed, and in what sequence.

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Alexandria, Va.: As a mayor, Mr. Goldsmith, you compiled a contentious record in fashioning public-private partnerships. What makes you think the federal government can scale up to do what you tried in a city government? I mean, look at the Department of Homeland Security--beset with turnover and still struggling to get organized.

Stephen Goldsmith: oh contentious is a bit harsh; but the question is good;

I dont think the government has any choice but to produce value by networks; the problems are too big, even the complexity of helping an unemployed mom get and keep a good job might involve a dozen agencies, and an equal amount of problems, so we need partners

fighting terrorism must include thousands of partners in different areas: state, local, utility, private, trucking etc

the real question is how do we configure these; how do we put them together, how to we enforce accountability when public money is involved; some of these are a bit adverserial at the first instance because a change in the status quo is necessary;

but i believe if done thoughtfully, if we look at ways to help labor succeed there are possibilities; i have been working on a joint opinion piece with a union leader on this very issue

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Oreland, Pa.: I wonder if you beleieve that the Management/Leadership books and articles so prevalent in the 1980s, authored by Tom Peters et al, are still in line with your current thinking on improving leadership within the government sector? In Search of Excellence was/and for the most part still is a guide for me, ie MBWA, LBWA, Management by wondering around and Leadership by Wondering around.Stephen Goldsmith: there are so many really good questions:

briefly: yes i still believe in those books; in fact MBWA may be the single most important advice, because in part it gets information directly to a leader; the knowledge management issues are huge; and i find mid managers inevitably screen information; not on purpose usually but nevertheless;

i would however take the Peters ideas a step further; government must operate as a network operation; so walking around the vendor is really important; using tech tools to break down boundaries; leadership involves inspiring your employees but it also involves concetualizig the network, choosing the partners, leading the collective enterprise;

William D. Eggers: Elaborating on Steve's answer, certainly a lot of that thinking is still relevant, however the performance movement in government, sometimes also termed "reinventing government (more broadly)," has been underway, in fits and starts, for close to a decade and a half. Governments have experimented with performance budgeting, some personnel reform, better asset management practices, reforming their financial systems and a host of other changes to make government better and more effective.

The result?

To be sure, some definite improvements--but few would say transformational improvements--and a continuing and growing imbalance between citizen demands and government resources.

Why hasn't government been truly transformed? Why does it sometimes feel like we've been running in place? The answer: we've been using vertical thinking to try and solve horizontal problems.

In our book we suggest an alternative construct, one in which governments focus more on being generators of public value. This reflects a fundamental change in mission and requires a fundamental change in thinking. It means framing each challenge in the form of what is the best way to maximize public value—as opposed to how to improve public sector service provision.

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Arlington, Va.: I've noticed a fear in managers on different levels (GS-14 to SESers) to trying something new if the time pervails. I'm an applied mathematician. I've been in different organizations and the one constant is this fear of a new idea. The circumstance doesn't allow for creativity and improvement - even if free time exists so trying something new doesn't interfere with priorites. In my case, I haven't been able to get managers to investigate a new idea, not even getting to a decision point of implementation. How can the federal government expect to progress and also keep the most talented employees is the management is afraid to examine something new ?

Stephen Goldsmith: Right!
lots of possibilities:
* create a "venture fund" where internally public entrepreneurs can shop for resources
*allow people out of their day to day work for a period of time
*create project teams all of the time, i.e. take folks out of their silos assign them to projects, and have the leader provide executive sponsorhip that will innoculate against risk and break down the problems
*reward failure
*celebrate success, really, with articles, celebrations, money, recognition;

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Washington, D.C.: Is it possible to establish a federal model, like the CitiStat model found in Baltimore, and being replicated around the country? Doesn't the CitiStat model find the balance between management systems and actual management that you are talking about?

William D. Eggers: The answer in short is absolutely. With Citistat, Baltimore Mayor Martin J. O'Malley uses a data-driven, information and management system to publicize and diagnose everything from potholes to police responsiveness. Citistat makes everything public on the city's website, preventing territorial managers from hiding embarrassing data and giving equally deserved attention to innovative supervisors. This kind of IT-driven performance and transparency is crucial to improved performance.

Stephen Goldsmith: THe Kennedy School at Harvard is doing a case study on Citistat in Baltimore which took many of the elements from the celebrated CompStat in NYC; it also won an innovations award last year and on our web site you can find out more information

elements: accountability and clear metrics, discrete problem (even form a group around the problem) executive buy; peer participation (positive peer pressure)

but it does not work without good data, and excellent follow through;

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Washington, D.C.: To make all this work, I think you need Trust. How do you get all the players at the federal level, including unions and employees, to take a leap of faith on partnerships and networking?

Stephen Goldsmith: first let me do a plug: we are taking applications for the Harvard innovations awards on our site at the Kennedy School these questions suggest many of you run programs that should apply for the recogniztion and the $100,000 awards;

i dont think you can change government at one time; we need to find agencies, groups, small departments, and other places willing to set an example. If either the union leader of the political executive are locked into the past and if the congressional oversight is rigid the agency is not a good candidate;

at the same time broad based training, changes in recruitment, other suggestions in the book worth doing pervasively

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Washington, D.C.: Would you be so bold as to identify a Bush administration official who understands what you are talking about? What success stories does your book identify, too?

William D. Eggers: There are a number of administration officials who really understand this model. In fact, much of the administration's second term agenda, from social security reform to the faith-based program, is based on the notion of leveraging private sector resources and skills to enhance public value.

Here are a few officials who seem to really understand the new model and are taking steps to implement it:

Lynn Scarlett, Asst Secretary, Dept of the Interior
Kay Cole James, OPM Director
Vice Admiral Art Cebrowski, head of force transformation at the DoD
Several folks at OMB including Clay Johnson,Robert Shea and Tim Young.

And then we profile in the book a lot of career federal employees who really get it.

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Arlington, Va.: Rep. Tom Davis is interested in giving the president executive branch reorganization authority, sort of like BRAC. Is that old thinking, from the context of a networked government?

William D. Eggers: Great question. I think the answer in short is not necessarily. What your question does raise, however is an important point. Namely that with current networked capabilities before deciding to consolidate agencies, reorganize physically etc the question should first be asked: can we achieve the same goals by tying the agencies, divisions etc better together using IT and other tools into a functioning network. We will be doing more work looking into this question in particular. Look for something in six months or so.

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Washington, D.C.: While there no doubt is some truth to your argument, you seem to duck the basic issue of how to decide what work should be performed by the government and what should be left to the private sector. Mr. Eggers, do you believe that the TSA, airport screeners, should be federal or private employees? If they are federal employees, as the Republican Congress deemed them, should they also have a right to join a union and bargain over their working conditions?

Stephen Goldsmith: the network model and the question of unionization are different; the network model is necessary and needs to work in both places;

THANKS FOR YOUR TIME

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