By Cris Johnsrud, Ph.D, Pathfinder principal
Time, Risk & Costs: Government Perspectives Vs. Business Expectations
Before collaborating with government agencies, learn how they view time, risk and costs!
Much of my study and work has focused on the key differences between how government (the public sector) and business (the private sector) seek to accomplish goals. Understanding these differences is important for smaller companies seeking government grant funding or contracts, as well as for us citizens who elect leaders, support private or public initiatives, and must live with the consequences!
For my doctoral dissertation, I examined President Reagan’s Commercial Use of Space policy. It directed NASA to encourage businesses to use the space shuttle’s facilities for R&D in hopes that experiments conducted in the low gravity of space would lead to new or improved products. In fact, the greater visionary goal was to establish future factories in space.
Implementing this grand policy turned out to be hugely difficult, due in large part to conflicting perspectives held by government leaders and business managers regarding time, risk and cost. Launching a commercial experiment into space on the space shuttle was extremely expensive and often a lengthy process, since it could take many months, even years, to design and build experiment hardware according to the weight, power and size requirements of the shuttle. For most small companies, technology experiments and manufacturing in space was simply not an option.
Why is this story important?
For me, the story illustrates many of the deep differences between the private and public sectors. For- profit companies—especially small firms—strive to be agile, quick to market, and profitable while being frugal with money and resources. They are focused on short-term profits and long-term growth through a variety of mechanisms.
On the other hand, government agencies strive to implement visionary programs over longer periods of time with significant human and capital resources. Key drivers are strategic deployment of resources and generation of measurable outcomes that demonstrate the program’s contributions to national security, public safety, national economic growth and/or improved quality of life for all citizens.
Consequently, for-profit companies and government agencies often seem at odds with each other —even when ‘collaborating.’ They don’t share the same goals, don’t operate on the same schedules and time frames, and don’t share the same attitudes toward risk. Business executives typically view government as overly regulatory, slow and an obstacle to profitability.
During the past couple of decades, there have been increasing calls to make government organizations run “as efficiently as business.” Or, put another way, there are those who want to have government run as agilely, quickly, and frugally as for-profit companies. But this perspective ignores the broader-scale roles that governments can and do play in making large scale strategic investments in innovation and absorbing the early high risks that for-profit companies seek to avoid.
Check out the book, The Entrepreneurial State: Debunking Public vs. Private Sector Myths by economist Marianna Mazzucato for a well-documented and very readable discussion of the roles of government and business.
