Value-Based Management in Government

CHAPTER SIXRisk Management

FOR MANY, TODAY'S PUBLIC sector management challenge is greater than at any time in our lives. That is certainly true in the United States, but is also true for much of the developed and developing world. Decades of deficit spending resting on the belief (or at least the hope) that “investments” would result in increased productivity generating revenues greater than costs have failed to come true. National governments have awoken, even if slowly, to the recognition that nations, just like individuals, cannot spend indefinitely at a rate higher than incoming revenues. While local governments may not be able to engage in deficit spending, they are nevertheless impacted by national governments that do so.

We have long heard the calls from leaders and consultants to “do more with less.” Yet such a goal requires productivity to increase faster than the rate of reduction in budgets. For most of our lifetimes that was feasible. Increasingly, however, it appears that budget challenges are making such a goal no longer credible. Given our introduction of the concept of value-based management, this battle cry should change to “do more of value with fewer resources.” While perhaps not as memorable, this phrase is much more meaningful in terms of solutions to the challenges that lie ahead.

Leaders must be driven not by a focus on spending less or doing more, but rather on creating increased stakeholder value through the balancing of results sought, resources available, ...