Executive Spotlight: IBM’s Chuck Prow on “Governing to Win” – Enhancing National Competitiveness Through New Policy and Operating Approaches

Chuck Prow, IBM - ExecutiveMosaic

Charles “Chuck” Prow serves as managing partner of the global public sector and managing partner of North American consulting services for IBM Global Business Services.

IBM says Prow has focused many of his more-than-25-years in executive leadership working to transform complex organizations through improving operations and implementing the use of technology.

This has included clients in federal Defense and civilian agencies and industrial, financial service and healthcare companies.

Prow is the editor of “Governing to Win,” where industry and government experts joined together in an effort to answer the question: How can our nation compete to better win in the global economy today?

ExecutiveBiz recently caught up with Prow about its publishing and how new policies and an “Enterprise USA” approach to government can help enhance competitiveness and promote long-term fiscal sustainability.

 

ExecutiveBiz: A lot is being made of U.S. competitiveness and long-term drivers of prosperity. Governing to win book coverWhat is it about your book Governing to Win that you think is so timely?  And what would you like the public to take away from its structures, themes and outcomes? 

Chuck Prow:  In the early 2009 timeframe through the CEO Technology Council, and then some work that we did here in the Center for the Business of Government, we published something called The Trillion Reasons, which was a look at the cost structure and at ways to drive cost out of the federal government.

We then wrote a paper and attempted to identify $125 billion a year or so of opportunity to improve the performance of the federal government and drive down cost without compromising mission effectiveness.

We had probably a year-to-18 months worth of great conversation with our government clients and with the community in general about the contents of the book.  It made us realize that the conversation had to be much broader than just cost reduction.

Cost reduction is interesting, but cost reduction in itself really doesn’t get at the root of national competitiveness.  So, the reason for this book was to reframe the conversation in a way that would focus on national competitiveness.

The first section of the book really deals with the reality of the current budget and it deals with the reality that irrespective of your politics, from a nonpartisan perspective, the nation is going to have to deal with revenues.  It’s going to have to deal with entitlements.  It’s going to have to deal with regulations and it’s going to have to do so very soon because of the upcoming sequestration and the realities of the current budget situation.

This book is not about offering new and innovative ideas about those three subjects of revenue, of entitlements and of regulation.  It is really about the fact that once you address that you’re ultimately going to face having to operate the government at a much lower cost structure.

IBM Businness of Gov't

It’s probably not $200 billion and it’s probably not $50 billion.  It’s somewhere in-between, let’s say, $125 billion.

 

 

And what this book does in Section II and Section III is to try to frame the conversation in a way that is not entirely focused on cost, but on mission effectiveness.

The second section of the book addresses energy, it addresses healthcare and it addresses education.  In all three cases, the Federal Government is the largest, single consumer of health care.  It’s the largest single consumer of undergraduate talent and is the largest single consumer of energy in the nation.  In fact, it’s the size of the Fortune 11 combined.

The second section is really about what if the Federal Government was an exemplar of the utilization of healthcare and the cost of health care for its employees.  What if the Federal Government was the exemplar of how we utilize and develop that undergraduate talent and align that talent with postgraduate educational Universities?

The final section of the book was really about different ways of operation whether it be the use of technology, whether it be the utilization of supply chains, whether it be the utilization of shared services, whether for the utilization of business analytics, it is all about mission effectiveness at a much lower cost point.

The last point I want to make here is this book was not designed to say commercial entities can do things better than the Federal Government.  In fact, the book is full of examples of where the Federal Government is operating at very high levels of efficiency.

And there are a lot of great practices that the book highlights in terms of how we don’t have to look any further than the federal government for some of these practices.

But the reality is, is that from a systemic perspective, we as a federal government are not operating at a level of performance that would allow us to drive down that cost without compromising mission effectiveness.

Click here to read our July 2011 Executive Spotlight on Chuck where he discussed adapting and driving value and innovation in dynamic industries.

 

ExecutiveBiz:  How can the leaders in the public sector put the ideas from Governing to Win into actions which drive gains and increase mission effectiveness at the lower cost points? 

Chuck Prow:  I spent the first 20 years-or-so of my career consulting to commercial enterprises and one of the largest mistakes I’ve made as I transitioned to the public sector was to assume that federal agencies operated under the same construct as commercial enterprises.

You can provide a lot of the best practices that can be shared between the two, but it is fundamentally different.  Commercial enterprises are driven by EBITDA, how much cash you’re generating and return on investment.

Inside, commercial enterprises are really driven by the value of the mission they support.  What federal leaders and firms that serve our federal clients really need to focus on is mission effectiveness and value.

And value is defined in Chapter 9 of the book.  You can think of it as a very simple equation — on the numerator, you have service and quality, and the denominator is cost and time.

As we work with our government clients and as we focus on our government clients’ missions with them, it’s a clear definition of what generates value and what drives mission effectiveness.

It’s also fascinating to see that as we’ve met with literally thousands of people on this subject since the book was published in April, that this whole dimension of time in the value equation really resonates with our clients.

Government is comprised of thousands and thousands of white collar bottlenecks and logistical bottlenecks.  And this whole notion on reducing time almost invariably results in higher service levels and lower cost points.

Chuck caught up with us in October 2010 about IBM’s pickup of National Interest Security Company. Click here to read why he said the deal was a “complementary fit”.

 

ExecutiveBiz:  In section III of the book, you say the focus is on adding value through key operating models.  How are these models different from how the government currently functions and what is it about them that makes them so transformative? 

Chuck Prow:  You don’t have to look much further than TRANSCOM or DFAS as an example of shared services operating models that are fundamentally transforming the cost structure of the federal government.

Having said that, you can also look outside of government in the areas such as advanced content management and predictive analytics to find new practices that can be applied to existing missions to again drive down time and cost while improving mission effectiveness. Predictive analytics is a very interesting topic.

Predictive analytics as applied to white collar processes can often allow us take entire chunks out of operating models because we can now predict where we can eliminate waste, eliminate duplicate payments and in some cases, eliminate fraud in a way that the government no longer has to spend that money.

The last area and certainly not the least is the move toward the cloud and virtualized infrastructures.  As the government continues to introduce virtualized ways of driving computing performance it is a fundamentally different model which doesn’t apply to every business process.

It is a fundamentally different model of driving technological capability into our government processes in such a way that they are more outcomes related versus inputs or costs related.

 

ExecutiveBiz: One thing that we’ve discussed are the concepts that come out of this idea of Fast government.  How do you view Fast government and could you give us some background?  What are its goals and what’s the general roadmap to accomplish those goals?

Chuck Prow:  Fast Gov, which will be next project of the center, will focus on process innovation, disruptive technologies, predictive analytics and ways that we can work with our clients.  Our clients can begin to fundamentally transform their processes, focused on this whole notion of a cycle time reduction and elimination of non-value added activities.

There are great examples inside federal government, both in terms of claims and payment.  There are great examples in the commercial sectors.  These examples are very clear in terms of how we increase mission effectiveness at a much lower price point with time being the central governing factor in that transformational activity.

 

ExecutiveBiz:  Where can the public sector and private sector align to produce better results for the American public?  Are there opportunities out there for the two to come together to share their best practices with one another?

Chuck Prow:  I think the greatest opportunity is the engagement model.  We talked about acquisition reform and that sounds like such a kind of a daunting activity.

As the government begins to buy capabilities from commercial providers in more outcome or throughput based ways, it really frees the industry up in terms of how we can provide capabilities in a much quicker timeframe and at a much lower cost.

So the the major point that I’d like to make is that it really is in the engagement model.  Engaging with industry in such a way that we’re not going to govern the benefit that we can provide to the government.

Contract with us on a throughput basis or contract with us on an outcome basis.  Contract with us in a way that we can bring all of the best capabilities we have with industry to bear.  And do so in such a way that the total focus is going to be on improving mission effectiveness.

 

ExecutiveBiz:  We touched on a lot of different topics here and things that are really both at the macro and micro level.  Is there anything you’d like to go into more depth at this time?

Chuck Prow:  I think an example is worth a thousand words. Whether it’s examples in the book around shared services, whether it’s examples in the book and in other places about taking cycle times of claims down from 300-plus days to something that look more like 50.

Whether it’s cases being adjudicated and distributed in electronic framework, these examples exist today in government.  And the construct by which we begin to improve governance and the application of the management discipline that will allow us to operate government more systemically, is based upon all of these good practices and is where we really are in this journey.

Right now, there are these case studies where government can operate much more effectively.  There are great case studies where you can apply commercial capabilities to government.  But where we are right now in this journey is how do you take those great examples and scale them in a way that it’s going to systematically change the cost structure of the federal government and do so without compromising mission effectiveness?

 

ExecutiveBiz:  Are you already taking a look at what could be accomplished once some of those models have been scaled?

Chuck Prow:  The entire premise of the Center for the Business of Government is around the management of government.  The focus will continue to be on execution and how can we as industry can help facilitate better execution within government, and how we serve the government in such a way, that we can drive down cost, but more importantly how we can improve the effectiveness of how our government missions operate.

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