NPM’s guiding principles for creating a “Slim” State: What Marshall, Tipple and Rotor should have known?

I am certain that many of us who have tracked the ongoing saga of the Government of Canada’s Way Forward initiative over the years has undoubtedly read Kathryn May’s article regarding former PWGSC Deputy Minister David Marshall’s testimony at the Federal Labor Relations Board Hearing regarding the dismissal of Douglas Tipple and David Rotor (Ottawa Citizen, September 27^th, 2007).

I know that the catchy headline, “Public Works makeover gamble failed” certainly got my attention as I was waiting for my car in the reception area of a local auto repair shop (which by the way is a story for another place and another day).

David Marshall’s public confession that going outside for advice in terms of his vision for transforming public works was a mistake may be laudable in some circles.  Some of my less forgiving colleagues will undoubtedly have another word for his admittance of fallibility.   The real question however is whether or not the mistake was “preventable.”  Given the purported expertise of Marshall, Tipple and Rotor – at least a $360,000 salary, accommodation allowance, club membership and a directors course at the University of Toronto’s Rotmans School of Management would seem to imply some level of expertise – it is a fair question.

New Public Management (NPM)

Regardless of the moniker, the Way Forward initiative’s elemental roots can be traced back to the New Public Management (NPM) ideology in which efficiency, accountability, decentralisation and marketisation are the main components or drivers (J.E. Lane, Public Sector Reform: Only deregulation, privatization and marketisation, Public Sector Reform, 1997).

Since the early 80s the NPM “philosophy” has been viewed as the vehicle for “redefining managerial and governance practices in the public sector,” so that said practices would be more “in line with objectives typical of market economies” (D. Osborne and T. Gaebler, Reinventing Government: How the entrepreneurial spirit is transforming the public sector, 1992).

It is in the context of the NPM ideology that I am going to dissect and “read between the lines” so to speak the key highlights from Ms. May’s article.  Hopefully this exercise will not only shed some light on why the Way Forward initiative failed, but will ideally help to illuminate a path to future understanding.  After all, given that a 2007 paper (referencing both industry studies and interviews) indicates that 85% of all government information technology projects worldwide have failed, a strategic pause for thought seems both prudent and timely.

The format of this post will follow the pattern of introducing a key NPM principle, followed by a direct reference(s) from the May article and conclude with my take (commentary) on its overall meaning.

NPMIdeologyPointNo. 1: Redefining Practice

“NPM proposes a project of reforms to redefine managerial and governance practices in the public sector in line with objectives typical of market economics.” (D. Osborne and T. Gaebler, Reinventing Government: How the entrepreneurial spirit is transforming the public sector,1992).

Citizen Article Reference(s)

“A former deputy minister admitted his gamble to recruit a high-priced real estate executive to help remake Public Works was an expensive experiment that failed.”

“Rather, he (Marshall) said the kerfuffle over the London trip forced him to take stock of his pricey experiment to bring in high-flying private sector executives to lead the transformation of Public Works real estate and procurement arms.”

“He (Marshall) said that he wanted a seasoned private sector executive who knew the pitfalls of massive overhauls to help the department quickly revamp its real estate operations.”

Commentary

Marshall stated that he wanted a “seasoned private sector executive” who knew the “pitfalls” associated with a “massive overhaul” such as the ones proposed as part of the Way Forward initiative.

Reading his explanation for hiring Tipple and Rotor, I could not help but wonder if his decision to look outside was due to private sector bigotry in which there is a general perception that private sector processes are somehow superior to public sector bureaucracy.

Obviously he wasn’t familiar with the failure of the private sector-based Covisint initiative (see my posts titled Dangerous Supply Chain Myths (Part 2) from May 29^th, 2007 and Dangerous Supply Chain Myths (Part 7) from July 4^th, 2007 referencing Covisint).

Nor does it seem that he was aware of other private sector failures involving organizations such as VF Corporation, Cisco or Colgate Palmolive.  The fact is that the only difference between failures in the public sector and failures in the private sector is the degree of exposure.  Or has one private industry executive put it, “we do not tend to advertise our failures to the general public.”

Armed with this information, perhaps the “costly mistake” could have been avoided or at least mitigated through a more concerted effort to engage all key stakeholders both within and external to the GoC?  More specifically, instead of relying heavily on outside help, Marshall should have also looked for areas of expertise within the GoC.

NPMIdeologyPointNo. 2: Introduction of Contrasting Ideals

“These new objectives (re redefined managerial and governance practices) embed ideas that contrast with the traditional administrative practices that have historically been driven by assumptions of bureaucratic efficiency, and also of democracy: the delivery of public services according to principles of impersonality, equality and fairness.” (P. du Gay, Making up Managers: Bureaucracy, enterprise and the liberal art of separation, The British Journal of Sociology, 2004).

Citizen Article Reference(s)

“After a few months, Mr. Marshall said he was worried that Mr. Tipple and his proposed reforms weren’t meshing with the department and its day-to-day operations.”

Commentary

Once again I cannot help but think that if we consider the purported level of expertise of the individuals involved (as well as the corresponding remuneration packages) it is hard to understand why it took a “few months” for Mr. Marshall to reach the point of “worry.”  (Note: I am particularly skeptical with Marshall’s reference of a “few months” as the Way Forward program was first introduced in the fall of 2001.)

Part 2 of my series The Changing Face of Procurement is titled The Change Management Myth: Why e-Procurement Initiatives Fail.  One of the important findings that I present is the fact that a strategy which is dependent upon a change management program rarely succeeds.  Dr. John Potter, a leading change management advocate, asserted that it was critical for a program to demonstrate clear benefits to stakeholders within the first three to six months of being introduced.  If the program failed to overtly demonstrate meaningful benefits within that initial time period, (something that is difficult to do given that initiatives of this nature usually span several years), it would not gain the necessary buy-in to establish sustainable traction.  (For those of you familiar with Jim Collins’ book Good to Great, he refers to the above scenario as a Doom Loop.)

Alternatively, pundits may point to Gleicher’s Formula as a reliable indicator of the Way Forward’s limited potential for success.  Based upon the concept that “the combination of organizational dissatisfaction, vision for the future and the possibility of immediate, tactical action must be stronger than the resistance within the organization in order for meaningful changes to occur,” Richard Beckhard and David Gleicher’s Formula for Change should certainly have set off a few alarms.

Regardless of how one defines change management, by his own admission Marshall knew that the undertaking he was charged with leading represented a “massive overhaul” of the Government of Canada’s bureaucratic process. It appears that he was also aware of the potential “pitfalls” (translation – resistance) these changes would encounter.  I am reasonably certain that both Tipple and Rotor were also aware of and therefore capable of handling the magnitude of the undertaking, otherwise why would they have been hired by Marshall.

And even if they weren’t fully attuned to the heightened level of stakeholder resistance, readily available case histories as well as a plethora of research material such as B.G.Peters and J. Pierre’s 1998 paper, Governance without Government? Rethinking Public Administration (Journal of Public Administration Research and Theory) would have helped to clarify the situation.  In the Peters and Pierre paper, they stated in no uncertain terms that “the process of organizational change needed to achieve the expected result (associated with a Way Forward type initiative) has in fact been more profound and complicated than expected.”  Ironically, a similar statement was made when the consortium of automotive industry heavyweights announced that they were abandoning the private sector Covisint program.

Given these as well as other historical points of reference, at the very least Marshall, Tipple and Rotor should have asked the hard questions including why the Way Forward initiative would succeed where the majority of similar programs in both the public and private sectors had failed.

NPMIdeologyPointNo. 3: Transformation and Decentralization

“The most evident transformation proposed by NPM is to promote a management culture for the public sector that, as in the case of the private sector, becomes results driven, where the efficiency of the management supersedes the need of effectiveness in the delivery of public services.”

“It also suggests structural or organizational choices that promote decentralized control through a wide variety of alternative service delivery mechanisms, including quasi-markets with public and private sector providers competing for resources from policy-makers.” (A. Cordella, E-government: towards the e-bureaucratic form?, Journal of Information Technology, 2007).

Citizen Article Reference(s)

“To make matters worse, his (Tipple’s) proposals were creating upheaval in the department among employees and unions who feared job losses.”

“He (Marshall) said the Harper government had little appetite for Mr. Tipple’s major proposals, which revolved around outsourcing jobs and creating a Crown corporation to manage the federal real estate portfolio.”

Commentary

When I was 10 years old my father purchased an electric lawn more (yes the kind with a long extension cord).  After badgering him half the summer to let me try it under the auspices that I really wanted to mow the lawn he finally relented.  I immediately proceeded to run over the extension cord severing it and any chance of me using the lawn mower again before the age of 16.  His response was classic . . . “what were you thinking?!”

The very same question might also be asked of the Way Forward three, especially Mr. Marshall.  Unlike me who had never used a power mower of any kind before the “incident” as it became known in our house, Marshall as well as Tipple and Rotor supposedly had extensive backgrounds in the area of process oversight and transformation.

Given this vast pool of “collective” experience surely they knew that if there were any potential for significant job loss as a result of the introduction of a new program, it would potentially inspire a seditious response.  This is one of the likely “complications” to which Peters and Pierre had referred to in their research article.

The question is then “knowing what we know, how should we proceed?”  It appears that Mr. Marshall decided to “damn the torpedoes,” and proceeded “full steam ahead.”  (Thank you David Glasgow Farragut.)

NPMIdeologyPointNo. 4: The Seeds of True Reformation

“NPM has several manifestations, but most typically it is a management theory about how to reform government by replacing rigid hierarchical organizational structures with more dynamic networks of small organizational units; replacing authoritarian, top-down decision and policy-making practices with a more consensual, bottom-up approach which facilitates the participation of as many stakeholders as possible . . . adopting a more customer-oriented attitude to public services, and applying market principles to enhance efficiency and productivity.”  (C. Pollit and G. Bouchaert, Public Management Reform, OxfordUniversity Press, 2004).

Citizen Article reference(s)

“Many have argued someone can’t be thrown into the public service to navigate the transition to a very different management culture than they are used to.”

Commentary

Using a sporting analogy, CFL football fans will certainly remember the Vince Ferragamo experiment in the early 1980’s.  For those of you who may be too young to remember, the old Montreal Allouettes signed QB Ferragamo to a generous “remuneration package” after he led the 1979 Los Angeles RAMS to the Super Bowl (where they lost to the Pittsburgh Steelers).  Unfortunately his accomplishments in the NFL did not move north with him to the CFL.  The experiment failed, and not long afterwards so too the Allouettes.

The point I am making here is that bringing in an outsider who many considered to be (at least at the time) a bonafide NFL superstar, seemed like a good idea.  However, the strategy’s flaw wasn’t necessarily in the concept itself but in the player’s ability to execute in a different environment.

The same can be said regarding the Way Forward initiative and in particular an NPM strategy.  In practice, transparency, efficiency and quality combined with expenditure reduction are all goals worthy of pursuit. One of the most important elements of a successful strategy towards achieving these goals however, is found in a willingness to engage and fully understand stakeholder interests and objectives.  Revisit my recent Yes Virginia posts for an example of how this can be accomplished.

And it is in this area where I believe that Marshall, Tipple and Rotor failed to execute, which ultimately contributed to their own demise.

Rather than “replace or dismantle the hierarchical structure” of the GoC, they fanned its fires and in the process alienated key stakeholders both within and external to the government.  This is hardly the ideal platform from which one should champion an initiative.  It also goes a long way towards explaining why we are where we are today, and why Canada is falling behind other nations in important areas such as SME engagement, cluster development and overall practice unification (re front line operational autonomy within the framework of centrally established objectives).

Closing thoughts

In all of the materials I have reviewed and all the meetings I have attended pertaining to the Way Forward initiative, the NPM concept was never mentioned by name.  That said the GoC strategy certainly encapsulated many of the guiding principles associated with an NPM-centric program.  And as is the case with all strategies, NPM has its strengths and weaknesses.

It is therefore the responsibility of leadership to recognize this fact and diligently seek to understand and respond to the diverse and at times seemingly conflicting interests of a disparate group of stakeholders.  This is the only way to ensure both the short-term gain, and long-term viability of any program.

Antonio Cordella’s 2007 research paper not only recognized this basic truth, but within its pages he presented the concept of developing an NPM strategy which is designed “to support rather than reduce the role played by bureaucracy in Public Administration.”

So while Mr. Marshall attributed the problem to a “change-weary Public Works,” in reality it was his inability to identify and effectively address key stakeholder concerns from the very beginning.  He didn’t and that is why he is now Canada’s high commissioner to Barbados, Tipple has engaged the services of a lawyer and the GoC is back at square one.

Conference Notice:

The Canadian Business Information Technology Network (CABiNET) will be hosting a breakfast and presentation on October 22nd from 7:30-9:30 AM at the Hampton Inn on Coventry Road near Riverside.  As the featured speaker I will be sharing my research on and assessment of the GoC procurement model and how it compares to those of other public sector organizations from around the world.  In particular, I will focus on the current GoC model’s impact relative to SME engagement.  This session will be a good complement to today’s post as I will expand on the NPM concept.