Over and over again, Americans laud "business practice" and call for businessmen and businesswomen to fix our government and public institutions. A local government's elected board congratulates itself when they hire an administrator with business experience, not local government experience. They assume that "real-world business practice" will solve the locality's problems. People running for political office tell us that their business experience qualifies them to be the best elected officials. Public institutions--museums and other not-for-profits--hire corporate executives to "straighten out" the institution.
But "business practices," it turns out, are volatile. According to the Bureau of Labor Statistics, almost half of business establishments fail within five years. There were more than 29,000 corporate bankruptcy filings in 2015. The American Productivity & Quality Center study demonstrates that nearly half of all new product launches are unsuccessful and that only 45% of those new products are launched on time. That's what counts for success in the business world.
We don't tolerate that rate of failure in government. A failure of national defenses is catastrophic. We don't tolerate a 50% safety rating for our drinking water (witness Flint, Michigan). Nor is that rate acceptable for roads, public safety (police, fire, and rescue), and the other infrastructure we rely on. When the electricity goes out, we demand accountability. We don't gamble with preservation of our national treasures. And when government fails to pay its creditors, the ensuing economic crisis impacts every citizen. We are outraged if government and public institutions exhibit the 50% success rate of the "for-profit" business world. We expect our public institutions to perform consistently and conservatively.
Most Americans believe that government and public institutions need reform. They need to improve efficiency and accountability. I agree. We cannot do that, however, by simply calling in a few businesspeople. Government and public institutions are not businesses. Government and public institutions are mission-driven--not profit-driven.
Our military forces undertake the sacred mission to "protect and defend the Constitution of the United States." Every single member of the force swears allegiance to that mission. The mission of the local water utility is to provide the public with an adequate, clean water supply. The mission of the local government finance director is to insure that government funds are expended appropriately and with adequate oversight controls. The mission of the local museum is to preserve, display, and tell the story of the collections entrusted to its care. Each government and public institution has a public trust that they must maintain above all other considerations. They cannot cut their losses. They cannot shut down the product line. They cannot declare bankruptcy. They cannot fail.
Our school systems are a prime example. The effort to improve education through business metrics and acumen is not a "best practice" success story. A 2006 Harvard Business Review article summed up the challenge: "Business leaders . . . have been extremely generous with money and counsel for urban districts, only to be frustrated by the results. As some corporate executives are beginning to realize, urban school systems are vastly more complex than businesses. . . ." Still we persist. The charter school movement to privatize public education does not improve student education or outcomes. For-profit universities have exceptionally poor student graduation levels and leave young adults with staggering amounts of debt. And high-stakes testing analytics punish educators instead of helping teachers respond to the instructional needs of their students. We've lost the mission of public education--to create educated, informed citizens for our republic--in a haze of misapplied business clichés.
So let's all stop with the trite platitudes. Just because an individual makes a profit in the entrepreneurial world does not mean that he or she can focus the mission of a government or public institution. It does not qualify them to lead the community, the state, or the nation and accomplish an essential mission. The profit/loss equation may increase the return for a corporation's shareholders, but it will not necessarily accomplish the mission of a government or public institution. Business metrics may say a lot about the delivery of a product or service, but they do not describe the value of a mission.
The broad realization that business leaders do not hold all the answers had better come soon, because reliance on business leaders in government and public institutions is not arresting the alarming deterioration of our public infrastructure and institutions.