Governing by Network: The New Shape of the
Public Sector
Steven Goldsmith and William D. Eggers (Brookings Institution Press,
2004)
Reviewed by Kenneth D. Mitchell
Authors Goldsmith (a former mayor of Indianapolis turned innovation researcher
at Harvard University’s Kennedy School) and Eggers (a senior policy
researcher at the Manhattan Institute) describe what they deem as the next
significant wave of change and management innovation for government. They
recommend a combined approach of contracting out and network structures
to replace bureaucratic ones. Their perspective examines and advocates
contracting out program delivery to commercial companies and nongovernmental
organizations (NGOs). This is overseen and managed using networking among
the partners. Hence networks, they argue, can deliver cheaper, faster,
and yes, better solutions for the taxpayers. They supply case examples
supporting this approach that come from local, regional, state, US federal
programs; with additional studies from the United Kingdom brought in as
well.
The key concepts presented to underpin the development for these successful
governance networks include design intention, flexibility, adaptation,
and focus on outcomes for public good (they emphasize not focusing on processes,
which automatically creates a requirement for bureaucracy). The critical
key holding this arrangement together is the strong management integrator.
It is this role that is especially crucial and admitted by the authors
to be very tricky to establish. They do present methods on how this is
to be accomplished.
IRS Tax Modernization Program
A couple of the examples cited have well known histories to this reviewer.
The U.S. Internal Revenue Service (IRS) tax modernization program has the
arrangement of oversight governance with a private sector company as integrator
over a network of contractors. The program is well known for many delays,
cost overages, and the mistrust between IRS and the prime contractor although
this project did bring in very innovative companies resulting in new technologies
for the IRS. Also cited is the Groundbreaker project at the National Security
Agency (NSA). This is an IT service outsourcing contract for nonclassified
services and is constantly being expanded. Groudbreaker established a model
for greater efficiency and paves the way for more transformation. Now a
fairly good success, the early going was quite rocky. Some of the issues
included the difficult transfer of long-time government employees to private
sector jobs, issues of mistrust among contractor business partners and
NSA, significant pay incentives issues, and working with small businesses.
Time, practice, and money did improve the governance network capability
of Groundbreaker. It should be added that a significant amount of brain
power and four to five years of effort went into the design (from both
NSA and prestige management consultancies) to also accomplish the project.
Governing by Network
Governing by Network describes changes that we all know have been underway
for a number of years. Nothing is new here. These arrangements of contracting
have grown through the years because of the rise of NGOs (or thirdparty
governments), joined up government (increased use of the U.S. federal system
to deliver services), the rise of the digital revolution (making it cost
effective to collaborate in real time), and increased demand and attention
given to customer service. More so, with the rise of complex problems,
the older forms of government management structures can no longer be counted
on to react in needed ways. One only needs to look at the recent failure
of the U.S. Department of Health and Human Services (HHS) to provide flu
shots and its lack of preparedness leaving much of the public out in the
cold. Presumably a network structure would have possibly averted or quickly
provided a viable solution. Saying we will do better next year no longer
is acceptable.
Networking proves itself a very effective and efficient human endeavor.
No doubt technology further augments the speed by which things can be accomplished.
Witness the impact “blogger journalism” has on our news media.
Human interaction and trust are crucial features, through which networks
perform well. Admittedly the authors discuss how the constraints of the
real world of competitor organizations impacts networking in government.
As business partners come together to team or create networks for government
contracts, distrust abounds. For many if not all government contracting
firms, and for the government, this is a large obstacle which only time
and effort may diminish. The scholar Francis Fukuyama’s book Trust,
written several years ago, does provide a theoretical basis for how American
and some Western European cultures through their histories have encoded
foundations for basic trust creation.
Nonetheless the practicalities of years of government contracting cause
fear and paranoia to creep into all parties’ behavior when it comes
to relating to one another under government contracts. Some agencies do
have seamless bonds between them and their contractors. Other agencies,
such as the Department of State and the IRS, have been so genetically wired,
they will always seek out wrongdoing by other partners and hence undermine
the necessary features and behaviors required to develop the necessary
trust bonds. The trust necessary to create the network structures prescribed
by Goldsmith and Eggers can be accomplished, but it won’t come quickly
or cheap.
Another prerequisite to successful network structures and the government’s
ability to provide oversight are high level skills (such as negotiating,
ability to function in agile environments, leadership, and foresight in
recognizing innovative approaches—not to mention eliminating the
game “gotcha”). Again, these skills are finely honed in highly
entrepreneurial private organizations and presently in short supply in
most governments. The federal government is trying to address this through
its human capital projects aimed at restructuring much of the civil service’s
classification system. But recruiting the numbers of skilled network players
and eliminating those without these inclinations and skills will require
a fair amount of personnel change.
Still, when present government service delivery and rudimentary processes
are the problem, or when it requires fighting a network (and its speed
and agility), it takes a countering network. When constituents are demanding
dramatically improved services, and everyone knows that tinkering with
the current approach and process to delivering services will be too little
to late, network approaches offer certain advantages. I would, therefore,
recommend a readthrough for managers embarking or planning networks. The
book is a good read and formatted for picking up good pointers.
Kenneth D. Mitchell has been a longstanding contributor to Views. He is a
management consultant for organizational change and lives in Orlando, Florida.