Memo to OMB: Speed Kills

As was largely expected, the first budget proposal from the Trump Administration calls for major cuts across the civilian agencies and a substantial increase in defense spending. Less a budget than it is a broad spending outline, the proposal, even despite its lack of detail, has already generated fierce debate between the parties and within the GOP itself. Indeed, while the budget outline as constructed might be dead on arrival, it is clear that the goalposts have moved and the parameters of the spending debate have significantly changed.

But the challenges with this budget outline are significant. While the document allots 180 days for agencies to develop their detailed spending plans, the reality is that the legislative budget cycle is already underway and will be over by the time those analyses are completed. Further, the administration has committed to submitting a more detailed plan to congress in less than 60 days, raising questions about the ultimate relevance of the agency plans. In other words, we have two carts before the horse. As we have seen over and again, when organizations are given only a short time to hit tough budget targets they tend to default to spreading the cuts relatively evenly across the enterprise, with little regard for priority or program impact. That is both non-strategic and inevitably counter-productive. In addition, because time is so short, organizational thinking tends to remain within the bounds of what exists rather than what could be.

Setting aside the debate over what should be funded (or not), much could be achieved if the administration took a longer view. There are several strategies that offer real opportunities to save substantial amounts of money while still improving, and limiting reductions in, service. But they will take time to implement—time­ the budget outline does not today make available, but should going forward.

One good example lies in digital transformation. The government is just beginning to dip its toes into the digital waters, and while some progress has been made, there is a long way to go. The changes involved will be difficult and themselves highly challenging. But if a burning platform is the first requirement for enabling such major change, we have it in the budget outline.

Across the economy today, companies are employing a vast array of new digital capabilities that are driving a powerful combination of cost savings and performance improvement. From infrastructure management to supply chains and core business processes, the use of digital tools, including machine learning, language processing, predictive analytics, advanced censors, process automation and more are delivering extraordinary returns in virtually every aspect of operations.

From a government perspective, the potential is extraordinary. Think of how much could be saved if we were to adopt automated business processes of the type now becoming the norm in the commercial sector. Think of the savings available in the government’s huge and complex set of supply chains through real time data harnessing and utilization. Think of how the emergence of the internet of things enables unprecedented improvements in energy management, facilities support, and so much more. In 2015, the Defense Business Board concluded that the department could save $150 billion or more, largely through the aggressive modernization of its core business processes and increased reliance on best commercial practices. Some in the department bristled at the report and much energy was spent debating whether the savings figure was real. But that misses the point. By any measure, the potential savings are massive if there is a concerted and coordinated strategy to drive the necessary changes.  But again, it will take time. Setting spending goals for two or three years from now makes sense; demanding that those goals be hit in just a few months is a recipe for disaster. 

Finally, some see the budget outline’s focus on evidence and performance as the foundation of a meaningful management agenda; and they could be right. But leaving aside the irony of using the term “evidence-based” while presumptively terminating numerous programs specifically designed to provide evidence for important policy decisions (think climate change), it is difficult to see how an evidence-based process, which takes time and analyses, aligns with immediate and draconian budget cuts.

We can substantially reduce the cost of government, but doing it wisely requires clear direction and time. And that is something the administration’s budget does not consider. Taking an axe to spending—without first putting in place the building blocks that assure success—simply won’t get us where we need to go. Quite the contrary.