A New Way of Governing

Remarks by NPR Director Bob Stone
before the Conference Board, New York

March 18, 1997

"A dark legal shadow has steadily come across important institutions of our lives. The simplest task now seems like moving a mountain, usually a mountain of forms and rules. No one, it seems, has the authority to say yes."

That's according to Philip Howard, the author of the 1994 best seller, The Death of Common Sense: How Law is Suffocating America.

That may sound a little severe, even if you're a critic of government. But, the reality is that government needed fixing. That's what I'm here to talk to you about today.

Shortly after his inauguration in 1993, President Clinton asked Vice President Al Gore to conduct a "national performance review" of the federal government and make specific recommendations for change. And, from the outset, they took a fundamentally different view from many of the their predecessors of what running the government entailed. They looked at themselves as CEO and COO of the huge enterprise, USG, Inc. From that perspective, here's what they saw.

The company was in trouble. Sure, it had great name recognition. But, it had a host of problems, as well.

Customer confidence had, over the preceding 30 years, dropped from over 70 percent to under 20 percent. Red ink was mounting. The workforce was getting ever-larger, but the level of service was not growing along with it.

Al Gore saw that his company needed some major changes, and needed them now. And, to get advice on how to bring that change, he turned to CEOs who had faced the very types of challenges now confronting him. He talked to people like Bob Galvin of Motorola; Paul O'Neill of Alcoa; and Vaughn Beals of Harley Davidson.

He asked them how long an effort like this usually takes. They told him it would take at least eight to ten years.

I'm not sure he believed them at first. But now we have all learned how tough a job this really is. I know the Vice President is committed for those eight years. In fact, he's started to think it might take even more than that-maybe as much as 12 years, or even 16 years. He's willing to stay on.

All kidding aside, he has taken this job on the way that corporate CEOs told him it would have to be done -- by rolling up his sleeves, and getting -- and staying -- personally involved.

He soon got a taste of regulation. He found out that the government had a 9-page regulation for ashtrays --actually, the government didn't even call them ashtrays, they were ash receivers comma tobacco comma desk type. And they've got something called "destructive testing" with a hammer, a center punch, and a 1-3/4-in maple plank. When the VP found this out he got involved. He did the testing himself.

But as we all know, he couldn't do all the work himself. He needed a team to do the work. So he put together a team of federal employees. That was a marked change from the past, where "outsiders," like the Grace Commission, conducted reviews of government performance.

He decided the people who had been the whipping boys of every administration in memory --"those bureaucrats" -- were not the problem. They had to become the solution. Just like in your companies, the employees would have to be the ones to actually make it work better and cost less.

So the Vice President went out and toured the work sites like many of your CEO's have done.

He went to every agency in the federal government -- an enormous investment of his own time -- to get this reinvention moving. He spent hour after hour listening to federal workers - to secretaries, to procurement clerks, to front line supervisors, even to lawyers.

As he listened to them he heard the same sort of thing you all have heard from your workers-- they really cared about making the company better and cutting costs, but there were too many bosses and too many rules,. Their suggestions are the basis of everything that we have done so far in reinventing government.

And how have we done? Well, look at what four years of reinvention have accomplished. Over the last four years we have reduced the federal workforce from 2,200,000 to 1,900,000, reversing the steady growth of the previous decades. Today, the federal workforce is the smallest it's been since John Kennedy was President.

And look at the federal deficit through the same period. This was an enormous achievement. Clinton and Gore started right away to reduce it. They invested all their political capital, and the deficit reduction plan of 1993 passed by one vote--Al Gore's vote. The deficit has so far been cut by 60% so far, and is headed for zero.

So how does the company look now? Workforce slimmed down! Red ink stanched! Sound familiar to you? Have you been doing this? That's what I read in Business Week.

But, it can't end there. Government is smaller, but it has to be smarter too. And, by bringing terms like "customer service" and "quality" to government, we're making some headway. You might not have heard about this. Unfortunately, the press doesn't seem too interested in this. That's why we called our last report "The Best Kept Secrets in Government."

I'll let you in on one of those secrets.

As part of reinvention the Social Security Administration made a commitment to providing "world-class customer service," which included responding to 50 million phone calls every year. In the phone service business, L.L. Bean, Southwest Airlines, and Nordstrom's lead the way, right? Wrong.

According to Dalbar Financial Services Company, Social Security was number one in response time and service, beating out L.L. Bean and all the rest.

You may say, so what? What's in it for me -- in all this reinvention business?

Could be a lot.

For example, we want to make it as fast to get a passport as it is to get a pizza. Or maybe you travel a lot, you already have a passport. Well, you can now get a card from the INS that will enable you to walk through customs at the airport just by putting your palm on a screen. Just like Captain Kirk on Star Trek.

If your teenager worked a summer job, they can file their taxes by phone -- no forms, it's more accurate, and they will get their refund sooner.

So --- we're doing a lot of things that'll make it more satisfying for individuals to deal with the federal government.

Well, here's the biggest secret of all. I want to tell you about a really revolutionary change. This one will impact your corporations directly.

I'm talking about the quintessential business of government -- the real hard stuff -- government as sovereign, ordering people about. I'm talking about regulation.

We want to change the regulatory game. Now it's like a see-saw. Sometimes the government is up and business is down -- and sometime business is up and the government is down.

Nobody gets anywhere, nobody wins. We need to find a way to let both win. And, we know that this is possible. You've been through this in your own companies. You've changed adversarial relationships to partnerships. Some of you have gone from arms-length dealings with suppliers to letting suppliers decide when YOU need supplies from them. That's essential to just-in-time inventory control and to lean production.

We've seen it work too, when government and industry work together as partners.

But to work together as partners, government and business have to focus on our common interests. To begin, we must be willing to stipulate that the public and private sectors are both after the same result.

That none of us wants our children breathing unsafe air, or eating contaminated food, or exposed to the drug trade.

So let me give you two examples of how the government and regulated companies formed partnerships and got off the seesaw:

S.D.Warren is a major paper manufacturer in Maine. Under a program called Maine 200, they and their union assumed direct responsibility for worker safety in exchange for OSHA promising to stop playing "GOTCHA!"

Warren has reduced their injury rate 35 percent by forming safety teams of bosses and workers that found and fixed 14 times more hazards than OSHA could have.

Here's something even more amazing: the newly empowered workers were so energized at being valued -- and protected -- that Warren's productivity is up 25 percent.

OSHA, SD Warren, other Maine companies, and their unions are partners now in protecting workers. This model regulatory partnership has been so successful that Maine 200 is becoming OSHA's policy nationwide.

Another partnership story was written at Miami International Airport, where American Airlines has one of its largest and most important hubs. Miami is their gateway for virtually all traffic from the Caribbean and Latin America. As American expanded its operations, the government inspection agencies were overwhelmed. They just couldn't handle the numbers of people coming through efficiently.

As a result, people who had just spent hours flying to the U.S. were then stuck in lines that could last three hours. Not much of a welcome.

American wasn't happy, and neither was the enterprising director of Customs for South Florida. So, she called together everybody who had a stake in the process, the head of Miami operations from American, officials of four government agencies, baggage handlers, skycaps and the airport operator came up with ideas.

American wanted to get its passengers through the process as quickly as possible -- both to keep satisfied customers and to make efficient use of their equipment and people. Customs had to sort through the millions of passengers and tons of cargo to find illegal drugs and contraband. Between those goals, there was a lot of common ground.

It wasn't just American that didn't want to have hundreds of angry passengers standing in lines for hours: Customs didn't either. And, it wasn't just Customs that didn't want drugs coming in on its planes: American didn't either. So, they made a deal: they'd work together, instead of against each other.

By working as partners, they changed processes, and dramatically improved results. Customs is catching 50% more drugs than before. And American's passengers are clearing the airport in under 40 minutes, compared to over three hours before partnership..

THAT'S what partnership can do. That's why government needs your help to make things better for everybody. Now what we need is to make these successful regulatory partnerships the norm, not the exception, across the entire government. Business and government together need to focus on results, not rules.

Does everybody in government sign up to partnership? AS IF!

It's still controversial. Some inspectors think we're letting the crooks into the bank.

Does everybody in business sign up? No!

It's still controversial. Some businesses want the controls off entirely.

It's controversial among other interest groups too--labor, environmental groups, consumer groups, and others.

Regulatory partnership is like the infant heir to the throne. People want to strangle him in his crib. We need you to help protect him so he can grow into adulthood. We need your help to let regulatory partnership grow into the norm across government.

We need you to be willing to work with us and to demand partnership solutions to regulation. Talk about it to your associations and unions. When you deal with the Occupational Safety and Health Administration, the Environmental Protection Agency, the Food and Drug Administration, or other regulatory agencies and they don't treat you like partners, demand it. Tell them you know it's being done in Maine, Miami and other places, and that you want it, too. If that fails, give me a call.

If we can truly change the regulatory relationship to one of partnership, it will mean that the public and private sectors, will have created a new way of governing. That, I think, would be a very big deal.

Just how big a deal was brought home to me recently when I gave the Vice President's hammer award to the Food and Drug Administration's Pacific Region. The hammer award is the VP's top award for reinvention. If you remember the Letterman slide, you know why.

Anyway, FDA inspectors got together with state people and formed themselves into a "Biotech Consulting Team."

Their job used to be finding reasons to flunk companies that wanted to get a new drug or medical product on the market. Now they are working in partnership with biotech companies on how to pass an FDA plant inspection.

The award ceremony was hosted by one of the companies FDA had helped, Advanced Tissue Sciences in La Jolla, California. They've developed an artificial skin that's turning out to be a miracle to victims of severe burns.

The company president showed me photographs and histories of burn victims treated conventionally and with the new artificial skin.

The differences took my breath away. Burns treated conventionally took weeks and weeks to heal; weeks and weeks of suffering and risk of infection or death. But burns treated with the new product were almost completely healed after only five days.

The FDA hasn't yet approved the new product for general use. BUT -- look at this final example of what partnership can achieve -- the FDA office in San Diego has already inspected the manufacturing facilities so that the day product approval is given is the day manufacturing can begin -- speeding this product to market so burn victims can be spared unnecessary pain.

I've told you about partnerships between FDA and biotech companies. Partnerships between OSHA and paper companies. Between Customs and airline companies.

Businesses are benefiting.

That's what the new way of governing can mean. Together, government and business, interest groups and labor, can get out from under that "dark legal shadow" that Philip Howard wrote about only three years ago. Their partnerships can create cleaner air, safer workplaces, better medicines.

And those are results that all Americans want.

Thank you.

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