The Future of the Future: Government as a knowledge enterprise

We’ve spent a good deal of space in this column looking at how business needs to transform itself to compete in the global knowledge economy. This month, let’s take a look at how the same trends are forcing major changes in government.

In many ways, government agencies still operate as monopolies. However, they are starting to face some serious competition, on a variety of fronts.

First of all, there is global tax competition. Yes, you heard that right. Resources (both financial capital and knowledge capital) are migrating to countries that have instituted low-tax, business-friendly and socially responsible policies. The days of paying for the inefficiencies of a growing bureaucracy, either by raising taxes or borrowing, are coming to an end.

Next, the value of a country’s currency (its global purchasing power) plays a major role in the prosperity of its citizens. Currency values are mainly determined by open markets, influenced by a variety of complex factors. Those include inflation, reserves, debt, balance of trade, interest rates, political stability and the like. While there can be significant short-term fluctuations in a currency’s value, those factors are particularly important to sustained prosperity over the long run.

Then there’s the old notion of customer satisfaction. According to a recent study by O’Keeffe & Company, 89 percent of Americans give the U.S. federal government a grade of C, D or F, in both fiscal responsibility and management efficiency. Sixty-six percent indicated they either did not understand or were unsure of how the government spends their money. Overall, citizens and constituents want better results, faster, without having to fork over an increasing percentage of their hard-earned money in taxes.

Those forces are not going away. They are only going to grow in intensity. The message is clear: Government needs to do more, and better, with less.

Now for the good news. A government agency is a true knowledge enterprise. The majority of its assets are intangible, including human, social, organizational and structural capital.

Successful government requires all four asset types working together:

• Human capital--achieving the greatest leverage from an agency’s work force, through continuous learning and innovation, and the development of skills and competencies for doing so, while remaining focused on the overall mission.
• Social capital--It’s not what you know. It’s not whom you know. It’s what you know about whom you know that produces results only possible from leveraging a world class brain trust.
• Organizational capital--improving efficiency and effectiveness through streamlined, self-managed processes.
• Structural capital--ensuring smooth communication and integration, across all organizational systems and elements.

Here’s an analogy. We’ve said before that technology often fails when viewed as an end-all, rather than as an enabler. The same goes for government. Government can no longer be the savior everyone is hoping will bail it out. The world is too complex, with too many interdependencies. Like technology, government needs to be an enabler--a means for bringing the best minds together and giving citizens the tools they need to prosper in all areas of life.

Government has already made excellent progress in some areas, such as e-gov. For example, at the national level, 22 out of 26 U.S. agencies received at least a "yellow" (mixed results) rating on the President’s Management Agenda for e-government. Improvements are even more dramatic in the human capital area. In 2001, when the President’s Management Agenda was introduced, 23 out of 26 federal agencies were given a "red" (unsatisfactory) rating in human capital. As of September 2007, none was "red" and 16 were "green" (successful).

Borrowing from successes in the corporate world, here are some additional steps governments at all levels--federal, state and local--can take to get the most out of their intellectual capital:

• Turn away from localized goals (silos) and redirect everyone’s attention to the core mission.
• Understand the critical role of leadership: to create change by example.
• Move from a knowledge hoarding to a knowledge sharing mentality.
• Make learning a habitual part of every work process.
• Adopt an innovative mindset, as opposed to "playing it safe."
• Learn from mistakes, instead of hanging people out to dry.

I know what some of you are thinking: "No way! If I dare to be different or try anything new, my next office will be a small, dimly lit room, with no window." Well, the harsh reality is we are all going to be left in the dark if we don’t change … and soon.

Enlightened governments see the need for creating an environment that attracts, retains and grows human and financial capital, for the benefit of its citizens, its regional neighbors, its trading partners and all of humankind. Because knowledge is an infinitely renewable resource, it presents an unprecedented opportunity for the creation of sustained wealth on a global scale.

By institutionalizing those principles, governments can look forward to:

• the dissolution of old organizational barriers and improved cross-functional collaboration;
• more rapid response to changing conditions;
• faster, more effective and more consistent decision-making;
• greater clarity of vision and improved execution of strategy;
• improved morale and greater passion;
• less time, money and effort wasted;
• increased chance for mission success;
• improved overall satisfaction with government services by all stakeholders.

Let’s not be the last to leave the station. We need government just as much as we need business and non-profits. All three are essential players in today’s global knowledge economy. Let’s put KM to work and co-create the future, by forming a three-way brain trust to take us into this exciting and challenging new century.