The Performance Difference between the Public & Private Sector

17 May 2009

The conventional wisdom is that the private sector is much more efficient than the public sector. Everyone has horror stories of public sector employees that don't work, that do as little as possible, etc. (Of course, we all see this in the private sphere too.) And this is true that there is more of this than there should be.

The public sector also faces the very real problem that people are punished for mistakes but not rewarded for successes. So the incentive for people working in the public sphere is to be very careful and avoid mistakes. Because you cannot at the same time both push the envelope to find better approaches and at the same time avoid mistakes.

But…

Let's talk about something the federal government does much better than private industry. And I single out the federal government here because it's efforts here at not matched at all by state or local governments. (I'm sure some do, but I've yet to see one.)

I'm the CEO of a small software company and we recently started reaching out to the federal government (as they have all the money). We have sold to the feds before, but it was always them coming to us, not us reaching out to them. So this whole process is new to us. We have no skills on this, no knowledge, nothing.

The SBA

First off there is the Small Business Administration. They have people everywhere. And with the rare exception, they have been very helpful. I have had people spend 10, even 20 minutes answering my questions, thinking up suggestions, giving me people I should contact, and forwarding our information on. And this isn't just a canned response – what we sell is specified before it gets to the purchasing person so we need to reach past purchasing to the I.T. staff. And these people on the SBA staff have drilled me with questions and then work with me to figure out what to do.

Now compare that to a fortune 1,000 company where they won't even put you on their list of products (that they then ignore). Large private companies are structured to shut out any new products. The federal government is structured to help bring them in. Small businesses are responsible for virtually all the innovative new products in this country and it's the federal government with an infrastructure in place set to bring these ideas in to expose them to people.

Let me describe a couple of my favorites just because it is such a nice story. One person walked me through how often to email him to pass on to his POCs (Points Of Contact), what to put in it, how to mix them up, etc. And he finished it telling me that I will get replies saying once is enough – and to ignore that feedback because the repetition is key. This is based on his being on the purchasing side for 15 years before switching over to the SBA. He told me what to do to be effective rather than what he in his old position would prefer to receive. Very funny guy too, and had some great ideas on wording for our stuff.

Another person was talking to me about how to reach the OCIO (Office of the CIO) for his (Cabinet) Department. He gave me three different avenues to try. And then he told me that if they didn't respond and say they would take a look, to call the office of the Secretary and tell them to exert pressure. This is an individual who works as a small business advocate in the Department and boy is he an advocate. To him someone not looking at something new is unacceptable.

A third person walked me through all the major parts of the major agency she works for, and told me which ones were more open to new ideas, which were more likely to need our software, etc. This was a 10 minute picture that it would normally take a sales rep a year to work out – just handed over. And it was bluntly honest based on what she said about some of the sections. A tremendous help for us as we're a small number of people half way across the country from D.C.

An SBA director did a superb job of first getting a picture of where we are as a company with some good suggestion for us as a business as a whole. And then looked at us strategically and where he thought the government most needed us – giving me names of people to contact and where I should reach in. And one of his major suggestions was the SBA itself (which we're working on).

I could go on, there's probably 30 people that have been a major help in the last month. The point is, the difference between this and what you see in private industry (or state and local governments) is phenomenal. And it is receiving both guidance and assistance. For a small company this is invaluable. And for the government it is key to getting exposed to better solutions.

Office of the CIO

Ok, so lots of help on the purchasing side. For a lot of companies that works great. For us it's not as useful because software like ours is generally selected by an I.T. person and then the RFP lists it by vendor. Or it is purchased direct by credit card or from the GSA Schedule with no RFP (that's how we've sold to the government in the past). And so, that requires getting word of what we have to those IT people.

The suggestion I heard from person after person was to reach out to the OCIO. Each department and agency has an Office of the CIO and they provide (as I understand it) IT leadership for the department/agency. Therefore, in a case like ours where we have a software product with a significantly better way of solving a common need, the OCIO is the means to get the word out.

Ok, sounds simple, but what are the odds of getting in? Turns out, pretty good. The Department of the Treasury was the first one I tried and for 6 weeks it was pretty de-motivating. Lots of calls and no real progress. Calling numerous times to reach someone. Then talking to the administrative assistant who then promised to forward it on "to the right people." Well ok, that's better than we ever heard from a fortune 1,000 company but I was assuming that the odds were about zero.

And then we got an email back asking us to come present to three people at the OCIO (Treasury rocks!). Compare that to banks like CitiGroup, Bank of America, etc, where we get low-level managers from those companies contacting us weekly because they see a need for our software, but we can't get anyone in the CIO's office to even pretend to look at our software. But at the Treasury Department they are open to new approaches.

And it's not just Treasury. With their asking us to present that got us to kick it in to gear hitting the other Departments and major Agencies. At over half our info is being looked at to see if they are interested including at the Department of the Interior where it is being looked at by the CIO himself. And based on the reply from the administrative assistants when I call to check, I believe them (they tend to say hold on, no not there, wait… nope not there, found it, ok it's with…).

Of special note is the Veterans Administration where their system is the information is forwarded to all in the CIO's office and if anyone sees an immediate need the company is invited in immediately. If there is no immediate need the company is added to a queue and when it rises to the top (in 3 – 4 months), the company is invited in to present to a group in the CIO's office. In other words, they will look at you regardless.

If an organization is insistent on doing things the same old way, then it is not going to improve. And in fact it will fall behind as other organizations are improving and accelerate past the hide-bound dinosaurs. This effort and willingness to look at new products is a significant difference between the federal government and most large private companies (and most states and local governments). The federal CIOs operate as all CIOs should, and yet so few do.

And so we get

This combination of active help for small businesses and openness to new ideas by the OCIOs does a couple of things. First, it provides strong support to the small business community which is the source of innovation and new jobs in this country. Not a source, but almost exclusively the source. And it does it not with quotas or an unfair advantage but merely by giving small businesses a shot. It stops them from being shut out by the large companies they compete with.

While by comparison, for most large companies, they do shut out small businesses which not only hurts the economy, but it hurts that company.

Second, by bringing in new ideas, new approaches, new ways of accomplishing tasks, the government is able to improve on how it delivers to us. It doesn't mean it jumps immediately on every new approach that will improve things. But it does mean that it will tend to be looking at and using new approaches long before many large companies. And that lets the federal government do a better job.

Finally a thank you to all those I have talked to, traded emails with, etc. And thank you to those they passed our info on to who have looked at it and are considering it. Your efforts to give us a fair shot are so appreciated by all of us small business people out here.

And for those small business people who have avoided the federal government because you've heard it's very difficult to do business with, don't believe it. (Unless you're a competitor of ours – then yes, run away, run away.)

The conventional wisdom is that the private sector is much more efficient than the public sector. Everyone has horror stories of public sector employees that don't work, that do as little as possible, etc. (Of course, we all see this in the private sphere too.) And this is true that there is more of this than there should be.

The public sector also faces the very real problem that people are punished for mistakes but not rewarded for successes. So the incentive for people working in the public sphere is to be very careful and avoid mistakes. Because you cannot at the same time both push the envelope to find better approaches and at the same time avoid mistakes.

But…

Let's talk about something the federal government does much better than private industry. And I single out the federal government here because it's efforts here at not matched at all by state or local governments. (I'm sure some do, but I've yet to see one.)

I'm the CEO of a small software company and we recently started reaching out to the federal government (as they have all the money). We have sold to the feds before, but it was always them coming to us, not us reaching out to them. So this whole process is new to us. We have no skills on this, no knowledge, nothing.

The SBA

First off there is the Small Business Administration. They have people everywhere. And with the rare exception, they have been very helpful. I have had people spend 10, even 20 minutes answering my questions, thinking up suggestions, giving me people I should contact, and forwarding our information on. And this isn't just a canned response – what we sell is specified before it gets to the purchasing person so we need to reach past purchasing to the I.T. staff. And these people on the SBA staff have drilled me with questions and then work with me to figure out what to do.

Now compare that to a fortune 1,000 company where they won't even put you on their list of products (that they then ignore). Large private companies are structured to shut out any new products. The federal government is structured to help bring them in. Small businesses are responsible for virtually all the innovative new products in this country and it's the federal government with an infrastructure in place set to bring these ideas in to expose them to people.

Let me describe a couple of my favorites just because it is such a nice story. One person walked me through how often to email him to pass on to his POCs (Points Of Contact), what to put in it, how to mix them up, etc. And he finished it telling me that I will get replies saying once is enough – and to ignore that feedback because the repetition is key. This is based on his being on the purchasing side for 15 years before switching over to the SBA. He told me what to do to be effective rather than what he in his old position would prefer to receive. Very funny guy too, and had some great ideas on wording for our stuff.

Another person was talking to me about how to reach the OCIO (Office of the CIO) for his (Cabinet) Department. He gave me three different avenues to try. And then he told me that if they didn't respond and say they would take a look, to call the office of the Secretary and tell them to exert pressure. This is an individual who works as a small business advocate in the Department and boy is he an advocate. To him someone not looking at something new is unacceptable.

A third person walked me through all the major parts of the major agency she works for, and told me which ones were more open to new ideas, which were more likely to need our software, etc. This was a 10 minute picture that it would normally take a sales rep a year to work out – just handed over. And it was bluntly honest based on what she said about some of the sections. A tremendous help for us as we're a small number of people half way across the country from D.C.

An SBA director did a superb job of first getting a picture of where we are as a company with some good suggestion for us as a business as a whole. And then looked at us strategically and where he thought the government most needed us – giving me names of people to contact and where I should reach in. And one of his major suggestions was the SBA itself (which we're working on).

I could go on, there's probably 30 people that have been a major help in the last month. The point is, the difference between this and what you see in private industry (or state and local governments) is phenomenal. And it is receiving both guidance and assistance. For a small company this is invaluable. And for the government it is key to getting exposed to better solutions.

Office of the CIO

Ok, so lots of help on the purchasing side. For a lot of companies that works great. For us it's not as useful because software like ours is generally selected by an I.T. person and then the RFP lists it by vendor. Or it is purchased direct by credit card or from the GSA Schedule with no RFP (that's how we've sold to the government in the past). And so, that requires getting word of what we have to those IT people.

The suggestion I heard from person after person was to reach out to the OCIO. Each department and agency has an Office of the CIO and they provide (as I understand it) IT leadership for the department/agency. Therefore, in a case like ours where we have a software product with a significantly better way of solving a common need, the OCIO is the means to get the word out.

Ok, sounds simple, but what are the odds of getting in? Turns out, pretty good. The Department of the Treasury was the first one I tried and for 6 weeks it was pretty de-motivating. Lots of calls and no real progress. Calling numerous times to reach someone. Then talking to the administrative assistant who then promised to forward it on "to the right people." Well ok, that's better than we ever heard from a fortune 1,000 company but I was assuming that the odds were about zero.

And then we got an email back asking us to come present to three people at the OCIO (Treasury rocks!). Compare that to banks like CitiGroup, Bank of America, etc, where we get low-level managers from those companies contacting us weekly because they see a need for our software, but we can't get anyone in the CIO's office to even pretend to look at our software. But at the Treasury Department they are open to new approaches.

And it's not just Treasury. With their asking us to present that got us to kick it in to gear hitting the other Departments and major Agencies. At over half our info is being looked at to see if they are interested including at the Department of the Interior where it is being looked at by the CIO himself. And based on the reply from the administrative assistants when I call to check, I believe them (they tend to say hold on, no not there, wait… nope not there, found it, ok it's with…).

Of special note is the Veterans Administration where their system is the information is forwarded to all in the CIO's office and if anyone sees an immediate need the company is invited in immediately. If there is no immediate need the company is added to a queue and when it rises to the top (in 3 – 4 months), the company is invited in to present to a group in the CIO's office. In other words, they will look at you regardless.

If an organization is insistent on doing things the same old way, then it is not going to improve. And in fact it will fall behind as other organizations are improving and accelerate past the hide-bound dinosaurs. This effort and willingness to look at new products is a significant difference between the federal government and most large private companies (and most states and local governments). The federal CIOs operate as all CIOs should, and yet so few do.

And so we get

This combination of active help for small businesses and openness to new ideas by the OCIOs does a couple of things. First, it provides strong support to the small business community which is the source of innovation and new jobs in this country. Not a source, but almost exclusively the source. And it does it not with quotas or an unfair advantage but merely by giving small businesses a shot. It stops them from being shut out by the large companies they compete with.

While by comparison, for most large companies, they do shut out small businesses which not only hurts the economy, but it hurts that company.

Second, by bringing in new ideas, new approaches, new ways of accomplishing tasks, the government is able to improve on how it delivers to us. It doesn't mean it jumps immediately on every new approach that will improve things. But it does mean that it will tend to be looking at and using new approaches long before many large companies. And that lets the federal government do a better job.

Finally a thank you to all those I have talked to, traded emails with, etc. And thank you to those they passed our info on to who have looked at it and are considering it. Your efforts to give us a fair shot are so appreciated by all of us small business people out here.

And for those small business people who have avoided the federal government because you've heard it's very difficult to do business with, don't believe it. (Unless you're a competitor of ours – then yes, run away, run away.)