Debunk the Cliche– Government Should Run Like a Business: Ignorance About the True Missions of Both These Enterprises…

An often-repeated cliché–government should run like a business–reveals ignorance about what either government or business or both, really are… According to Seth Masket; business exist to turn profit… conversely, government exists to provide the public– goods and services– government is inherently an unprofitable enterprise… It’s totally different mission statement… Not only does government have a different mission, it’s accountable to far more people than just shareholders, employees, customers…

According to Charlie Kufs; government can employ many of the same tools as the private sector, such as– goal setting, process, analytics… but performance measures must be different… You can’t apply private sector benchmarks to government performance… According to Eric Zorn; business and government are not only two different professions, but they have opposite goals…

The proper goal of a business is to earn a profit. If it also does some social good or produces a socially useful product, that’s great, but it’s icing on the cake. Profit is the goal, and a business person is judged on the profits made… The goal of government, on the other hand, is to– deliver services, fight wars, stamp passports, pave streets, end recessions, collect taxes… If the government can do this efficiently and at a minimum cost, that’s great, but again, it’s icing on the cake… Government leaders are judged by whether they deliver the services, not by whether they make a profit doing it… Business leaders and political leaders do different things and success in one doesn’t qualify a leader to do the other…

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Government shouldn’t be run like a business– not even a good business– because it’s not a business… Government should be run like a good government… According to Brandon Jubar; business can stop providing an unprofitable service, but the government cannot stop providing its services… Governments must figure out how to make things work, regardless of unfavorable rules, onerous regulations, or non-existent budgets… At the most basic level, that means that if a service isn’t being effectively and efficiently provided to the citizens, than it needs to be fixed…

According to Jim Mintz; those who advocate that public sector managers should operate like their private-sector counterparts without understanding the context of how political and administrative institutions function are clearly misinformed. There is no question that there are opportunities for government to adopt business practices from time to time, but government is not a business and those who continually argue for government acting like a business are offering a misguided solution… According to John T. Harvey; does it make sense to run government like a business? Short answer is ‘no’…

Bottom line– the Constitution was designed to make the federal government less efficient through– separation of powers, partisan political system, need to serve everyone (not just profitable ones),  maintain- nurture public trust… All of these responsibilities work against operating government like a business… Here’s novel idea– let’s operate government like a good government…

In the article Government Should Run Like a Business–Not Way You Think by Eric Schnurer writes: Government is everywhere and it’s an enterprise in serious trouble… If governments were private businesses, they would be facing the prospect of either takeover to ‘rescue’ them, or death in highly competitive marketplace…

However, many businesses have qualities of de facto government, e.g.; top-down decisions, no consumer voice, little transparency, trampling of individual rights like privacy, and no viable means of escape… So it’s not too big a stretch to say that governments face pretty much the same challenges as many businesses… In order to sustain viability, all enterprises must– satisfy their customers by serving them well, improve and innovate their products and services, and most important develop and maintain a high-level of trust…

Any enterprise that ignores these realities will eventually ‘go out of business’ — whether or not it’s a government or business… In many ways there are strategic and operational overlaps and most enterprises require the same basic ‘business plan’, for example:

  • Resize the enterprise to current realities — stop the bleeding, cut fat, get existing operation on stable footing. Then, start thinking about the future — or, more accurately, the present that’s already arrived while the enterprise remained stuck in the past…
  • Redesign the enterprise, its products, services, and organization, to meet current and future demand — you wouldn’t keep selling buggy whips if people wanted cars…
  • Redefine and reposition the enterprise to compete effectively against new competitors, new markets, globally…

In the article Should Government Run Like a Business? by Jeff Neal writes: We have heard people for years arguing– government would be much better off if it could just get its act together and operate like a business. If they did, the government would be more efficient, customer (taxpayer) service would dramatically improve, the cost of government (and taxes) would be lower… and it would be a much better world… Yes, the government could adopt some business-like practices to improve how it operates, but the fundamentals of running a business are not the same as running government. Businesses exist to return value to its stakeholders…

Growth is one of the most powerful drivers for a business: It pushes the business to learn, innovate and become more efficient… to find new lines of business, new products, untapped markets and new goods and services and ways to deliver them, better… It’s a powerful force that drives the best (sometimes the worst) of business… The purpose of government is not to grow itself… The factors that drive business and those that drive government are fundamentally different, and it’s neither possible nor desirable for government to operate like a business…

Good businesses know how to squeeze costs and eliminate under-performing lines of business. They watch the bottom line and make the hard calls necessary to let the business thrive. Critics say government is too full of bureaucrats to do that… However, reality is that some parts of government do operate very much like a business, for example; some government agencies/departments operate on a fees earned basis, and they do– reduced costs, improved services, consolidate-eliminate underperforming or obsolete activities… but unfortunately, in most case, it’s not enough…

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In the article Should Government Run Like a Business? by Tom Egelhoff writes: Government is a lot like an octopus. Some arms work better than others. Due to the lack of competition, and the ability to spend what they don’t have, it makes government extremely inefficient, in most cases… You could try to run government like a business, but where is the incentive to improve? If you run the department under budget you won’t get as much next year, so the incentive is to spend every single dime before next budget... Whereas, business must watch every penny and run mean and lean. Business invests its surpluses; government spends it… Business conserves; government waste is undeniable…

Business rarely has overlapping policies and procedures… Whereas, government, for example, has 126 separate agencies that administer some type of poverty programs… Business investors tend to vote out boards of directors that send the company in the wrong direction. Voters, for some strange reason, keep sending the same board of directors back to Washington every 2, 4 years… The question is probably not; Should government be run like a business? The question should be; Can we ‘stop’ doing business as usual in government?

In the article Signs You’re Running Your Business Like Government by Andy Birol writes: Nothing irks private business more than the federal government, and the impact of taxes, regulations, and government shutdowns compounds the apparent waste, inaction and irresponsibility in how leaders run the country… Many businesses say; if I ran my business like the government, I would be out of business…

But, some business people ‘do’ run their companies far too much like government — and, far too often, they ‘are’ in danger of going out of business… When griping about government, just be sure you are not running your business the same way… Here are five signs that your business is looking too much like the federal government:

  • Leadership is paralyzed to make hard choices that require sacrifice by everyone and impacts pet projects and sacred cows. Rather than make token changes by terminating one underperforming employee or shaving 5% off of a training budget, is it time to outsource an entire department or shut down an unprofitable product line?
  • Leaders and employees have become self-entitled to benefits, perks and rewards they haven’t earned. Despite shrinking gross margins, is your company still buying season tickets, guaranteeing bonuses, or traveling first class when the business is running on empty?
  • Company has become unaccountable or oblivious to unhappy customers, employees or bankers whose satisfaction is critical to the company’s profitability. Is your firm walking away from those making new demands instead of meeting them?
  • Managers are in denial of shifts in customer tastes, increased costs of doing business, or whether vendors are responding to your firm’s needs. When your firm accepts that its business is changing, can it react and respond– or does it believe its future will mirror its past?
  • Company is too distracted by what is happening at home or in the community to get the job done. Is your leadership taking extended vacations, overly focused on social causes, or a fixture on the golf course?

The argument that businesses are necessarily more efficient is a sweeping generalization, and simply being in the private sector does not guarantee being– effective, efficient, competitive… According to Aubrey Bloomfield; government can often be dysfunctional, but so can business… making government operate more like a business is not the solution and it ignores the distinct priorities of government…

According to Tom Newell; routinely citizens decry the inefficiency of government. Why, they ask, can’t it be run more like a private sector company? Indeed, privatization– the decision to contract out government operations to private, profit-making firms– is the darling of many who have given up on government doing things right or just assume that private sector can do it faster, better, cheaper

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According to Mark Shields; if, in fact, the decision was made ‘to run government like a business’, then which particular business would be the best model? How about Merrill Lynch or Bank of America? How about JPMorgan or Goldman Sachs? Citigroup could be a possibility, and please give some consideration to General Motors… Enron is probably not the role model we’re looking for… Nor is Lehman Brothers or even WorldCom.  Or maybe one of those defense contractors that have piled up cost overruns on weapons programs of $billions…

According to Eric Schnurer; there is no sugar-coating facts that we need to make tough choices for more effective, efficient, fair… government. However, the answer lies neither in attempt to have– government should run like a business, or preserve government as we came to know it in the 20th century, nor trying to tear it down and roll it back to imagined 18th-century ideal…

But government must be more competitive in 21st century… To do that, we need to– reinvent, reposition… government for 21st-century’s challenges, opportunities… Abe Lincoln said it well: government must be… of the people, by the people, and for the people…