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Category: Government

Diagnosing a crisis is the first step to solving it

Thad Allen, SF ’89, is known as something of a superhero when it comes to turning around major disasters. Barack Obama chose Allen, the former Commandant of the Coast Guard, to serve as the National Incident Commander for the coordinated response to the Deepwater Horizon oil spill in the Gulf of Mexico. As successful as he was in mitigating that disaster, Allen, who is now a senior executive at Booz Allen Hamilton, is perhaps best known for turning around another national crisis—Hurricane Katrina.

Days after the storm barreled into New Orleans in the late summer of 2005, Michael Brown, President George Bush’s FEMA head, was finding the situation increasingly unmanageable. Secretary of Homeland Security Michael Chertoff tapped Allen, then chief of staff of the U.S. Coast Guard, to turn the disintegrating situation around.

“The hurricane made landfall on the 29th of August. I dispatched on the 5th of September,” Allen remembers. “What I found was a complete breakdown of law and order. Chaos in the Superdome. Press reports were showing the same human remains on street corners day after day. We were dealing with the equivalent of a weapon of mass effect—but the terrorist was nature. New Orleans, in effect, lost continuity of government.”

The first step in any turnaround, Allen says, is to correctly identify the problem. “One of the things that crippled the government’s initial response was that the leaders in charge did not get the problem right. We were dealing with the loss of civil institutions and the lack of local government capacity—not a hurricane. You must understand the challenge before you can even begin to turn a situation around.”

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How successful is that social program? Check the data.

Smart data, and lots of it. Brian Beachkofski, SF’ 12, and John Grossman, SF ’12, are leveraging it to improve the human condition. Beachkofski (senior director) and Grossman (co-president and general counsel) work for Third Sector Capital Partners, Inc. The nonprofit consulting firm evaluates extensive sets of data to guide governments, social service agencies, and private funders in building social programs that successfully address critical challenges.

John Grossman

John Grossman

The innovative “pay-for-success (PFS)” social service model works this way: A government agency identifies a critical social need—chronic homelessness, for example. Then, funders like banks or charitable foundations provide upfront capital to a high-performing social service provider that can help meet that need. If the providers achieve predetermined outcome levels, as verified by an independent evaluator, the government repays the private funders’ initial investment. Third Sector, a leader in developing PFS initiatives, serves as a facilitator and advisor to all parties in the process, using data as the basis for modeling the project and projecting the benefit to the at-need population.

Brian Beachofski

Brian Beachofski

One example of the success of the PFS model is a Third Sector project in Cuyahoga County, Ohio. Beachkofski, Grossman, and their team partner with nonprofit and government agencies to reunite families with children who have been placed in foster care. The children originally were removed from their homes because their families were struggling with domestic violence, substance abuse, and homelessness. Data indicates that such children spend significantly longer lengths of time in foster care and suffer the loss of consistent caregivers.

Using a PFS model, the county government partners with a local nonprofit service provider to support these fragile families with access to housing, mental health, and other social services. As a result, they are reuniting families faster and improving lives while creating greater accountability for government spending.

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Leveraging a pro-innovation regulatory environment in a major energy market

David ParkinRegulation is generally considered a dirty word in the realm of big energy. “Regulation stifles innovation,” is a common mantra throughout the industry. But David Parkin, SF ’12, has a different perspective. When Parkin worked for a natural gas startup earlier in his career, innovations related to carbon footprints and renewable sources didn’t figure into his strategic vision. “There’s a bit of irony in my current position,” says Parkin. “Here I am with the UK’s largest natural gas provider in a strictly regulated environment, and I have to be more nimble and innovative in my thinking than when I was with a startup.”

As Director of Network Strategy for gas distribution at National Grid UK— a government-regulated energy monopoly—Parkin, has to innovate within the confines of comprehensive criteria. “Our performance,” Parkin explains, “is measured by the security of the supply, affordability for consumers, and the extent to which we are minimizing greenhouse gas emissions. We have to balance all three within an eight-year price control structure. Regulators set our revenue based not on what we spend to provide natural gas service but on what we achieve for our customers on those three criteria.”

This recently established regulatory framework exerts a strong influence on National Grid’s entrepreneurial thinking. “Historically, we were driven by the same imperatives propelling most large companies—minimize expenditures and maximize revenue,” says Parkin. “Now, we have to identify and develop innovations that deliver beneficial outcomes across several performance metrics through an eight-year cycle.”

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The political health of a nation dictates other vital signs

Alan_Doss_closeMany associate the African continent with political volatility, but while it is the tension that makes headlines, peace and progress reign in many countries on the world’s second largest continent. Kofi Annan Foundation Executive Director Alan Doss points to nations like Liberia and Sierra Leone as reasons for optimism. Doss is encouraged by the fact that those nations have recently elected leaders according to a peaceful and transparent process. “These officials have come in with the confidence of the people,” he says. “Now they have to build productive partnerships—locally and globally—to produce the sustainable results their citizens are expecting.”

Doss observes that nations like Liberia, Sierra Leone, and Ivory Coast only recently have emerged from periods of terrible violence and enormous human suffering. “To create a dynamic of sustainable progress,” he says, “they need to rebuild sound governance and avoid slipping back into conflict.”

If Doss understands African challenges, it’s because he has devoted much of his career to the continent, promoting peace, sustainable development, and human rights. Before taking on leadership of the Geneva-based foundation established by Kofi Annan, SF ’72, Doss was the Special Representative of the Secretary-General of the UN in the Democratic Republic of the Congo (DRC) and head of the peacekeeping mission there.

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The Singapore Miracle: Is it sustainable?

One of the world’s smallest countries, Singapore is also one of its great economic powerhouses. That dichotomy is frequently referred to in the business press as the “Singapore Miracle.” Often voted the best global city in which to do business, Singapore has a state-of-the-art infrastructure, a well-oiled and corruption-free bureaucracy, and a forward-thinking environmental policy that has made the country one of the world’s greenest places to do business.

Kiren KumarKiren Kumar, SF ’12, Director of InfoComms & Media at the Singapore Economic Development Board (EDB), says that Singapore is determined not to become a victim of its success. Over the last 50 years of Singapore’s independence, he says, it has attracted investment and jobs by being cheaper, better, faster. “We were a perfect host for many companies’ manufacturing headquarters. But we’ve also been aware of the fact that we can’t maintain this particular value proposition indefinitely.”

One of Kumar’s jobs is to change how Singaporeans look at Singapore. “We’re proud of what we’ve achieved,” he explains, “but there’s a risk in becoming too comfortable in the niche we’ve carved out for ourselves—especially when the pace of change in our region is accelerating so rapidly.”

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Reinventing the battle plan for the war on drugs

Of all the continents on Earth, Africa is particularly blessed with an abundance of natural beauty and resources. Often, it is heralded as the cradle of civilization. There is no dearth of human talent in any sector of this, the world’s second largest and second most populous continent. But for all its vast potential, Africa seems to be beset by the greatest number of challenges, one of which is the war on drugs.

kofi-annan-thumbKofi Annan, SF ’72, former Secretary-General of the United Nations and chair of the Kofi Annan Foundation, questions whether Africa should be waging a war on drugs—or a war on the war on drugs. At least as that war has been fought for the last generation. After years of witnessing the escalating drug crisis, Annan, a native of Ghana, is convinced it should be the latter. “The ‘war on drugs’ strategy, which focuses heavily on the suppression of drug shipments, has not enabled West Africa—or any other region of the world—to meet and overcome the drug threat,” he said recently in an official statement.

Pointing to a United Nations report that estimated cocaine trade through West Africa at $1.25 billion a year, Annan notes that the sum is higher than the combined government budgets of several countries in the region. The situation, he says, threatens to corrode institutions and the culture itself, undermining economic progress and democratic practice in a region that has only recently emerged from decades of violent conflict and instability. “The region’s political and security institutions are struggling to respond to these threats,” he points out, “and are not always well equipped to mount adequate preventive measures.”

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The U.S. Coast Guard: Steering a big ship into new waters

The inability to adapt to a rapidly changing competitive landscape Eric Jones MIT Sloan Fellow 2005has doomed many seemingly unstoppable business giants, observes Eric Jones, SF ’05, executive assistant to the Coast Guard’s Deputy Commandant for Operations Vice Admiral Charles Michel.

“Sustaining the effectiveness and agility of a large enterprise is a continuous challenge in any realm,” Jones says, “but a large government organization like the U.S. Coast Guard faces additional hurdles.” While most mariners hope they never need the help of the Coast Guard, he notes, “We must be prepared to perform to our full capabilities at any time of day and every day of the year in unpredictable, and often perilous, conditions.” And that’s before taking into account the continual external forces at play, like terrorism, transnational organized crime networks, climate change, the fossil fuel renaissance, and the need for greater maritime governance because of an expansion in global trade.

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Rethinking the way we invest in social services

Lynn Dovey, MIT Sloan Fellow Class of 2002Lynn Dovey, SF ’02, Associate Deputy Chief Executive at the Ministry of Social Development in New Zealand, is forging a new path in the delivery and funding of social services, and governments around the world are following suit. Dovey’s goal is to create an investment strategy for social services that will ensure that every dollar spent delivers maximum value to constituents.

New Zealand’s social development activities, like those in most countries, are geared toward the care and protection of vulnerable children and young people, employment, income support, social security services, student loans, and social housing assessments.

“We use a significant portion of our discretionary budget to contract services from not-for-profit and for-profit providers,” she says, “and like social services agencies around the world, we haven’t always known how to measure the outcomes for individuals and families. To put it another way, we don’t always understand the return on our investment.”

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Governing in an Interdependent World

Autonomy is so 20th century—at least in terms of governing nations. A half century ago, governments were relatively independent entities. They could make fairly autonomous decisions about their nations’ economic futures. MIT Sloan Senior Lecturer Otto Scharmer, a noted economist, sees a new world order today in which individual governments no longer enjoy the same kind of economic independence they once had.

OttoA world economy, Scharmer explains, is one in which capital accumulation proceeds throughout the world, while a global economy has the capacity to function as a single unit “in real time on a planetary order.” A world economy has existed for five centuries, he points out, but a global economy has been in place for only the last two decades, driven by new infrastructures built on advances in information and communication technologies.

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The World Bank: Reinvention in response to global pressures

It’s common to criticize many of the world’s mega-organizations for being resistant to change, but reinventing large organizations—across borders, across cultures, across governments—can be a daunting feat. Nevertheless, the World Bank Group, with 188 member countries, is tackling an unprecedented reinvention in an effort to boost the organization’s impact.

0115-wassimyAs the Middle East North Africa regional manager for the Trade & Industry Competitiveness Program of the International Finance Corporation (IFC), the private sector investment arm of the World Bank, Hazem ElWassimy, SF ’09, is on the front lines of the historic transformation at the World Bank Group (WBG). For the last two decades, he has been working for and with multilateral organizations and government entities to generate investments and spark innovations that help countries modernize and expand economic opportunities.

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