Better Management - Goverment Style (Fort Wayne, Indiana)

When I encounter skepticism that government can be made more efficient, I like to respond with examples like this. Emphasis added by me.

Fixing potholes and processes
Fort Wayne, Indiana, is one of the first major U.S. cities to roll out Six Sigma. Mayor Graham Richard, elected to the position in 1999, had long been familiar with quality improvement. In 1991, while serving as a state senator, Richard helped start the TQM Network, a group of small to midsized companies that used benchmarks to improve their processes. Most of these companies were suppliers to General Electric, a company that famously enjoyed success with Six Sigma. GE’s suppliers in the TQM Network took note, and many of them implemented Six Sigma programs of their own, Richard says. When he became mayor, those successes were still fresh in his mind.

[...]
The city’s first Six Sigma projects, permitting and pothole repair, were chosen for this reason because they were high profile and would provide noticeable results for Fort Wayne’s 250,000 residents. Both were problem areas: Before Six Sigma, it took an average of 50 days to get a city building permit, and it took up to four days for city workers to fill the many dangerous potholes that form on the city’s roads. Of course, before Six Sigma no one in the city’s offices knew these statistics, as no one had ever collectively examined them.

Richard’s goal was to get potholes fixed within 24 hours of their reporting. “Everyone thought I was crazy,” Richard remembers. “Everyone said, ‘You’ll never make it.’” Black Belts mapped the locations of potholes, finding the areas of the city where they happened most often and concentrated their efforts there. Today, most potholes are fixed within four hours after they’re reported.

In addition, Black Belts used flowcharts and maps to highlight redundancies in the city’s permitting system and slashed the amount of time it takes to issue a permit from 50 days to just 11 or 12.

The trick, Richard says, is for public agencies to institutionalize the notion that they are service providers, not bureaucrats.

“When you remember that fact, you’re telling people that you’re there to provide a service, just as anyone in the public sector would,” he says. “People don’t think of government as a business, but they should. We’re one of the biggest service organizations in the area.”

The often-substantial cost of Six Sigma training can be a deterrent to its successful implementation--especially for smaller companies and governments--but Richard found an innovative way to provide it. He used his connections with the TQM Network to have experienced Black Belts provide training, and then reached a deal with Six Sigma giants Raytheon and ITT to allow city workers to attend internal Six Sigma training sessions. A TQM Network Master Black Belt, Roger Hirt, served as a mentor to Fort Wayne’s fledging Six Sigma practitioners, and also offered Green Belt training.

Richard estimates that the training could have cost the city $50,000 per Black Belt, but it totaled less than a tenth of that sum.

In just five years, Six Sigma has revolutionized Fort Wayne’s city government. City workers have completed 60 Six Sigma projects, which have saved upward of $10 million, and there are now 35 Six Sigma belts on the staff. Fort Wayne’s school district is now implementing Six Sigma, and the city gets monthly requests for information from other public administrators interested in modeling Fort Wayne’s success in their own cities.

Fort Wayne’s Six Sigma-facilitated improvements include:

Variation elimination and bottleneck reduction, allowing the fire department inspectors to perform 23 percent more reinspections annually, without any staff increases.

Parks department workers, led by a Six Sigma Black Belt, designed an experiment to determine if city trees were trimmed at the right frequencies, reducing complaint calls from citizens by 33 percent.

Improved accounting in the transportation engineering department freed $150,000 that had previously been tied up due to inaccurate estimations of project costs.

On-the-job injuries have plummeted to one of the lowest rates in the country.

Pdx Trib Assassinates Alexis Dow

In a remarkable piece of yellow journalism, the Portland Tribune decides to take a little-deserved -- and highly one-sided -- whack at what looks like one of the better success stories of Metro, Auditor Alexis Dow.

The real reason, I believe, someone sold the Trib on a political hit-piece just before election season, was to pave the way for a new "reform" candidate who will be a patsy for the folks who don't like Dow's honesty and hard work.

I've never met Ms. Dow. But thanks to this pseudo-scandal story, I can be pretty confident she's good people. Good auditors are seldom popular, and Dow has won four "major government auditing awards" and is described by other auditors as courageous.

No wonder someone's out to get her.

Let's review the charges, and look at how author Nick Budnick uses innuendo to suggest what his facts don't support.

First, a seemingly rhetorical question that Budnick should have actually addressed, but doesn't. It's the headline: Who audits the auditor? It's a fine question -- but it actually has an answer, and the answer undercuts Budnick's thesis that Dow is out of control.

In any organization with an auditor, including the City of Portland which like Metro has a directly elected auditor, there's a budget for the audit department. It's set and approved by someone other than the auditor -- by a chief operating officer, or a chief executive, or a board of directors. Auditors don't get to raise their own revenue. So whoever pays for that function is supposed to exercise normal budgetary controls, including reviewing whether the money is spent within the rules. Dow may be directly elected, but that doesn't place her department budget beyond review.

Budnick could tell readers that, but it would undercut his "Auditors gone wild!" schtick. (Indeed, we learn further down that every one of Dow's expenses "had to be approved by Metro's finance unit" -- but that inconvenient fact is not introduced until the tail end of paragraph 8 on page 8, long after the false thesis has been established.)

The front-page, above-the-fold story opens with a list of overstated charges, each with no more than a grain of truth, each of which Budnick will later undercut or refute himself:

1. Although the Metro Charter prohibits Dow from outside employment, she earns $35,000 to $50,000 a year for serving on the Longview Fibre Co. board of directors and two subcommittees, which meet regularly.

2. Dow appears to be working significantly fewer than the 40 hours a week Metro pays her for.

3. Although Dow has three staff auditors in her office, she has repeatedly hired outside firms both to perform auditing work and to help with presentations.

4. Dow travels extensively and pays lavishly for trips only remotely related to Metro, while spending Metro funds on meals, parking and gifts for departing employees.

By playing these early on the front page and burying the details on page 8, Budnick and the Trib gin up their "scandal" - until you turn the page and discover the bait-and-switch nature of the reporting.

Dow is forbidden to have "outside employment" - except her Board of Directors position is not considered by anybody to be "employment" in any legal sense. And Dow didn't just assume it - she confirmed it with the Oregon Attorney General's Office before she first ran. That would seem to be the mark of a careful person who wants to do the right thing.

Budnick's article can only include a sniffy quote from Jewel Lansing about Dow's compensation: “I don’t think it’s illegal for her — but I think it ought to be illegal.”

Oh. So Dow carefully stays within the law, and that means we should criticize her for -- what, exactly? Failing to obey laws that don't exist?

It gets better.

Dow is supposedly working "fewer than the 40 hours a week Metro pays her for." But Dow isn't paid to work 40 hours a week. Dow is salaried. Salaried workers don't get paid by the hour, and can work more or fewer than 40 hours as they like, so long as they accomplish their jobs.

And the evidence is that Dow actually works more than 40 hours a week anyway. Budnick never tries to question this, accepting (as I do) Dow's contention that she works nights and weekends.

Then Budnick changes the denominator. After talking about working 40 hours a week, he rattles off how many hours Dow might or might not have worked on other tasks ... per month.

Here's a key passage:

Dow cautioned that her calendar is only a “planning tool.” But if she fulfilled her plans, she spent 24 work hours on FEI and Longview business in January 2005; 16 hours in March; 41 hours, including time on OHSU, in May; and 37 hours in September.

So, the worst Budnick can find is an average of less than 10 hours a week of non-Metro meetings, and that's what's scheduled. I looked at my own calendar, and I've got at least that much on my calendar too. But I know that I put those there so that I'll know what meetings I might go to (and to prevent double or triple booking myself), not all of which I must go to.

Budnick never attempts to find out how much time Dow really spends at Metro or how many of the outside meetings she really attends, preferring to rely on second-hand innuendo from two admittedly disgruntled former employees:

...[T]wo former staff auditors, Joe Gibbons and Jim McMullin, said that from their observations, Dow spent no more than half her time on Metro business.

...McMullin [...] worked for Dow for more than five years before quitting in frustration.

...Gibbons [...] said he worked for Dow for seven years before quitting in disgust.

I have to wonder how these two tie in to an earlier passage:

With no experience in government auditing, Dow hired top-notch staff, often veterans of the federal General Accounting Office. With their help, she has won four major government auditing awards.

It's hard to imagine Budnick would have omitted telling us if McMullin or Gibbons were part of that "top-notch staff" or were "veterans of the federal General Accounting Office" - more likely, I would guess, they were slacker hangers-on from before Dow arrived, who couldn't cut it under a hard charging and highly effective boss.

The rest of the article withers away under the light of this one sentence:

The Metro expenses she’s racked up on meals, travel and contracting are all “standard business practice” and, she noted, every expense had to be approved by Metro’s finance unit.

Oops.

So, why is the Trib and Budnick writing this tripe? Newspapers love controversy. This fake story by Budnick is much more fun than an honest one with the headline "Effective auditor shines light on Metro, wins awards, is in wide demand."

But that's the real story, based on Budnick's own words:

“...Alexis [...] cares a lot about Metro as an institution,” said former City Auditor Barbara Clark, who encouraged Dow to run for the job.

“I would describe Alexis as a highly competent professional and CPA in the work that she does,” Rasmussen said. “She sometimes takes stands that may be unpopular and may go further (on audits) than someone else who has less courage.”

...Dow hired top-notch staff, often veterans of the federal General Accounting Office. With their help, she has won four major government auditing awards.

Metro officials resist Dow and are hypersensitive about her recommendations, local auditors said. “I think it would take these guys a long time to admit they might have made some mistakes,”said former staff auditor Jim Luckeroff.

So, why would Dow hire outside PR and audit professionals to help her conduct and present her audits? Perhaps because "Metro officials resist Dow and are hypersensitive about her recommendations."

Personally, I believe there's a cabal of Metro groupies and fanatics -- including current and former staff as well as some elected officials -- who want Metro to be more unaccountable, who see honest folks like Dow as an impediment to their secretive impulses, and who are hoping to torpedo her re-election.

Nothing else explains the sudden appearance of a hit piece like this, at this time, aimed at this target, with so little behind it.

New Interstate Bridge?

Good site suggesting an alternative to the current gridlock: a new west side interstate bridge. See Portland Transport for an alternative, anti-auto view.

Anti-Carousel Demonstrations: is Civil Disobedience Next?

It is astonishing to me that Oregon police officers will staff the illegal Carousels of Information and keep taxpayers out. This implies that I - or you - could be arrested for attempting to access the government services we ARE entitled to, while protesting theft by people who are NOT entitled to those services.

Is the next step going to be trespass and civil disobedience? Will we see Daniel leading sit-ins and sing-alongs of "We Shall Overcome"?

We live in strange times when our own government treats citizens as second-class, and illegals as first-class.

Atkinson's Whiny Day

Jason Atkinson got spanked on the air by Lars Larson on Friday 03-Feb-06. I missed his previous day's appearance so I was catching the story mid-way, but Lars was convinced that Jason was in favor of broad amnesty for illegal aliens.

Leaving aside the merits of the amnesty discussion, I want to look at Atkinson's performance as a public speaker. He was clearly frustrated. His interviewer (Lars) was a long time supporter now grown hostile, or at least adversarial. Atkinson seemed to feel Lars wasn't hearing him; Lars seemed to feel Atkinson was playing word games.

Atkinson sounded whiny. I hate to say it because it sounds rude, but I'm being honest. Atkinson's voice went high and his tone grew plaintive. He felt beat up and abandoned and wasn't afraid to say it; yet he said it in a self-pitying way that wasn't appealing.

This is tough ground. Being at odds with your interviewer can make you seem unpleasant and argumentative. Standing your ground can make you seem stubborn. Yielding makes you look weak. Gentleness can seem wimpy and assertiveness can seem rude.

In this case, Atkinson ended up sounding whiny.

There are some techniques one can use to handle this a little better, but they are tough to do and require a lot of experience and practice. (These are techniques, not tricks. They only work if you're honest.)

One is, restate your interviewer's position, and then touch first on the points where you agree. Don't do it to camouflage the areas of disagreement, but rather to break up the negative back-and-forth rhythm of arguing, and to find at least a little common ground:

"Lars, your position seems to be that tomatos are not a fruit and therefore should not be treated as a fruit for tax purposes. Have I got that right? And I want you to know that I agree with you that it's wrong to take anything that isn't a fruit, and apply a fruit tax to it. It's wrong. Now here is where we disagree: to my understanding, a fruit is defined as the edible flesh surrounding a seed or seeds. By that definition, a tomato is a fruit and must be taxed as one."

In this fictional example, I've stated my position and stood my ground without making myself disagreeable. I've also found something to agree on, and made it clear that I've heard the other side.

Another is the "retrenchment" or slight retreat to a more defensible position.

"Lars, maybe I'm wrong on the tomato. I'm not a botanist. I'm always happy to learn more. But I'm quite certain that I oppose dishonest taxes."

There are others. The point is, a skilled and experienced speaker can manage a tough interview while still sounding statesmanlike.

Unfortunately, Atkinson didn't manage to sound statesmanlike. At least not this time. Fortunately, few elections hinge on a single interview - most campaigns are a marathon not a sprint. He can still shake this off and return to the fray with a renewed focus on calm, poise, and dignity.

The Trib Misunderstands Management

In its recent editorial on the OHSU Tram debacle and the botched firing of a key manager, the Portland Tribune gets it very wrong.

The Trib seems to think the key lesson here is the need to "better manage and protect relationships among the business community, its own employees, nonprofit organizations and other government agencies."

Not even close. Commissioner Sam Adams' attempt to force out Vic Rhodes was based on his belief that Rhodes had lied to the City Council about the project's costs and risks. The principle lesson is on the need for managers like Adams to be able to rely on staff to be honest and candid, and to hold them accountable if they are not.

The breakdowns that occurred with City's and the Tram Board's oversight of the project -- actually four separate breakdowns -- have nothing whatever to do with 'managing or protecting relationships.' (Put away the guitar and douse the campfire.)

Big projects like the Tram have some very specific risks, and managers are on the hook to understand and mitigate those risks. Neither the City nor the Tram Board did so successfully. As Charles Roxburgh writing in the McKinsey Quarterly puts it, there are some very common mistakes that managers make in backing big, strategic initiatives like the Tram - the science of behavioral economics has shown that the human brain is prone to a number of common errors in judgment that are relevant when evaluating strategies.

Here are the four mistakes made in the Tram project so far:

1. Overoptimism - assuming that building a tram larger and longer than any other ever built before would be easy to estimate accurately, underestimating the risk of the technical challenges. No engineering feasability study was even done before the design competition started, according to Rhodes.

2. Mental Accounting (one of Richard Thaler's contributions to behavioral economics) - the City's direct financial exposure to the project was relatively fixed at around $3.5 million. Overruns would be covered by others (OHSU, PDC, taxpayers, etc.) whose money seems less "real" to City employees. This led them to greater laxity and greater risk-taking, as well as less oversight.

3. Anchoring - an effect where exposure to an early number tugs people's estimates toward that number. According to The Oregonian, Rhodes was accused of suppressing key information in order to provide the City Council with a false Tram cost estimate of $15 million. That estimate became a rallying point for the project. The more realistic cost of over $45 million should have been obvious even then.

4. The "sunk cost" trap - throwing good money after bad. Developer Homer Williams was quoted saying that the Tram project had "passed the point of no return" - meaning that, no matter how much more it cost, the project could never be canceled, because a certain amount of money was already sunk into the project.

Each of these errors is one managers can expect to face, and City Councils should too. Each one of these errors can be mitigated if one takes it seriously and puts in place the right planning structures and procedures.

For example, for overoptimism, score the project based on its cost, timeline, level of new technology, and staff expertise. Large and long projects with high costs that are outside staff's experience are much riskier than small, fast, cheap projects that are done routinely. For these large projects, have a formal risk assessment with much broader parameters and test it over many more scenarios (i.e. steel price fluctuations; technical glitches). For large strategic initiatives, require three alternatives be presented using different levels of technical risk. (To this day, no alternatives to the Tram have even been voiced.)

To resist sunk-cost errors, establish "gating" criteria that the project must pass through or be killed automatically, and have the discipline to stick to it.

Managers with responsibility for large and risky projects like the Tram have an obligation to understand these risks and take mitigating steps. The City of Portland should retrofit all its current projects - including the Tram - with mitigation strategies.

And employees who lie to their bosses about the costs and risks of projects should be fired.

Oregonian: the only bad tax is one that wouldn't pass

Wow. According to The Fishwrap, the only thing wrong with Potter's new proposed tax is that it wouldn't pass.

Nothing about the effect on the economy or the business climate of yet another tax in a high tax area.

Nothing about a broken vow to voters - the vow three years ago that the I-tax was "temporary" and would buy leaders time to fix the underlying cost structure problems.

Nothing about the underlying cost structure problems.

What a worthless editorial.

PDC: Why so Dysfunctional?

Got the news yesterday that the PDC (Portland Development Commission) has a track record of miserable cost overruns on projects. Not just the $15 million Tram that's now over $45 million and climbing - even a simple pedestrian bridge over I-5 that was supposed to cost $1.6 million will now exceed $5 million.

Why is there such an epidemic of bad forecasting, overspending, and failure to contain costs?

I'll have to take that up in a future posting. There are lessons for all managers here.

Brilliant Talk by Atkinson

Jason Atkinson's performance Thursday night (26-Jan-06) in front of the Multnomah County Republican Meet-Up group was the best I've seen from him, and perhaps the best of any candidate for Governor of this state.

Naturally I tend to judge candidates against myself, or my own rosy image of myself. Tonight Jason performed better than I think I ever have myself.

I have not seen all three candidates in every one of their venues, so there's a lot I have not seen. And there's much more ahead.

But tonight and for the first time, I can imagine Jason Atkinson actually winning the Republican nomination and the governorship.

I still haven't picked my favorite, and I will enthusiastically support whoever wins the primary. I have things I like about Saxton; I have things I like about Mannix. Now I have things I like about Atkinson too.

What did he do right?

He was both comfortable and confident, exhibiting a sense of leadership and of commanding the room without effort. He knew his material. His plans for the office are more specific than I've previously heard from any candidate, and were delivered with confidence. His phrasing of the role as the "CEO Governor" worked well for me.

Best of all, he had a human story for every question and issue, and put a human face on his answers. He demonstrated a sense of caring (without the bathos of a Bill Clinton) and of deep sincerity.

This party could use a dozen more people like Jason Atkinson. I'm glad the one we have is running for Governor.

Increase Recycling Using Market Forces

When I went in front of the Oregon League of Conservation Voters last week I brought with me a bucket filled with dozens of plastic items. They were different sizes and had different recycling numbers, but they shared one feature: Hillsboro won't recycle any of them.

The way to get more of these items recycled, I said, was find places that already do recycle them, and figure out how they manage it.

Consider a margarine tub. A margarine tub contains the same polymers as some of the screw-top bottles that the recyclers do take. You can tell because they have the same number inside the little "recycle" triangle. The difference is in the manufacturing process - tubs are stamped; bottles are injection-molded. That results in a different end product with a different level of demand by the plastics-recycling industry.

In the case of Hillsboro and margarine tubs, that's no demand at all. Nobody around here will buy them, so Hillsboro Garbage won't collect them from your recycling bin. They have to go in the trash and get buried in a landfill.

However, in San Francisco, you can recycle your margarine tubs at the curb. The difference: in Lodi, California some 80 miles east is Epic Plastics, which turns recycled margarine tubs into a landscaping product called Bend-a-Board.

In other words: there's commercial demand for that plastic.

So the trick to increasing the amount of solid waste that's recycled isn't to spend buckets of taxpayer dollars, nor is it to slap a mandate on the private sector, but to emulate the pattern found in nature, where every entity's waste product is some other entity's food. Find a way to identify or create a product that uses the plastic.

For the Portland Metro area, I would suggest that every area's waste stream be analyzed at least at the granularity of the eight jurisdictions that have solid waste contracts with haulers. Identify the major waste elements that are theoretically recyclable but are not yet being recycled. Partner with the science teachers in each area's high schools and middle schools and hold recycling science fairs to come up with potential commercial products that use those waste materials.

This could also be opened up to the general public. We've seen that average folks will do extraordinary things with little more encouragement than an annual event, publicity, and a small prize (build seige engines; build absurd flying machines; etc.) so this should attract some free creative labor as well.

And since I'm surely not the first to think of it, we should steal any good ideas that look like they've worked for others in the past, whether for recycling rubber, plastic, or anything else.