Viewpoint: Public sector operational excellence – the 21st century management method
Facing a 25 to 30 percent reduction in resources, the Maine state government is in the familiar position of having to do more with less. However, a pilot program started a few years ago in a few departments could hold some answers for meeting the challenge statewide, and it could be useful for other governments facing similar circumstances.
In 2004, the Maine Department of Labor (MDOL), in partnership with the Maine Department of Health and Human Service (MDHHS), elements of the Maine Department of Transportation (MDOT) and the Maine Department of Administrative and Financial Services (MDAFS), developed a pilot program to demonstrate that, when a robust transformative improvement effort is employed, there is a realistic opportunity to reduce costs by 50 percent or more, or conversely, to increase capacity by 25, 30 or 50+ percent.
The pilot program is called Bend the Curve (BTC). BTC is a way for governments to deliver greater quality service while reducing costs. At the heart of BTC is the belief that, ultimately, increasing quality saves money.
Maine is bending the expense versus revenue curve. At MDOL, the difference between the expense and the funds curves was extensive. Given that a change in funding was unlikely, a minimum 20 percent reduction in expenses would be required. It might be possible to reduce expenses using the traditional tools and methods — consolidating services, introducing tighter controls, instituting more direct oversight — but the savings would be only in a range of 2 to 7 percent. Such small changes often only delay the impact of a cost reduction and do so by reducing the quality of service, or worse, not delivering services at all. When considering changes, both the methods used and the success of delivering governmental services must be considered. Public value — the belief in the organization created through customer satisfaction, efficiency of service, compliance with laws, and balanced budgets — has to remain strong.
The underpinning of BTC is operational excellence, aka lean production. Operational excellence is designed for government, though applicable to any service sector entity.
In general, BTC engaged more than 40 teams, directly involving between 250 and 300 employees (union representatives, managers, leaders, staff, lead persons, professionals, etc.), in improving their processes by using a variety of methods, such as value stream mapping, Kaizens Events, rapid improvement methods, and/or 5S method. The teams were guided by a cadre of 15 to 20 internally trained Continuous Improvement (lean) Practitioners (CI-P). As a result, in 2008, MDOL had saved nearly $6 million each year starting in 2005, a rounded 20 percent reduction in operating expenses and, as planned, achieved the savings without layoffs.
Before BTC began, the possibility of process improvement — never mind radical process improvement — was unheard of. Now, it is accepted by a growing number of Maine state government employees, and the ongoing challenge will be sustainability, i.e., uninterrupted continuous improvement. To boost the likelihood of sustainability, Maine’s Training Department is developing a syllabus for managers, leaders and supervisors on operations management methods, and one of the state’s universities is developing similar instruction to add to its undergraduate and graduate Management and Leadership curriculum to develop the next generation of government leaders.
In the end, continuous process improvement will require a different kind of leadership. It will entail a deep commitment to fundamentally change every element of the system — how and what members of the system think, what the system does, and how it rewards, measures and executes its processes. The solution is far-reaching, dramatic and challenging, but it is needed and, more importantly, very doable.
- View a white paper with more information about Maine’s program.
Arthur Davis is director of operations for the Maine Department of Labor.