Last summer when this year’s budget was passed, the Citizens Budget Commission, a nonprofit fiscal monitor, pushed City Hall to prepare for a downturn by provisioning funds for a fiscal storm. They estimated a recession would reduce revenues by $20 billion over three years, much more than the city’s reserves.
Now, a recession is here and both corporations and the government will have to pare back costs and budgets. New York City finds itself in a precarious position where a budget that has doubled in under 15 years now has little cushion for a fall, with a more than a $9.7 billion shortfall expected over the next 18 months.
In order to maintain city services, the government will have to move beyond cuts: It will have to become more efficient and innovate. We can use this opportunity to herald an era of “lean government” in New York City.
Ineluctably, expenditures – education and CUNY, health and social services and uniformed services – will be reduced. Yet, while municipal austerity will shrink the operations, they don’t need to reduce the services provided. Budget tightening can economize government and make it adapt to demands through innovative thinking and technology.
The concept of lean thinking was first studied by the researchers James P. Womack and Daniel T. Jones, who defined the paradigm that had been systematized by Toyota to produce vehicles beginning in the 1930s. Lean manufacturing in Japan reworked factory processes through incremental innovation. Iterative processes allowed for smaller-batched deliveries and swifter responsiveness from product changes as a result of customer feedback.
Government typifies a methodology to solving problems that’s described as “waterfall.” But why build 1,000 cars of the same model and style if you’re unsure it will sell and you can build and test with 10 cars, then improve and build 100 more, making changes based on your experience with the first group, and then repeat that process? In practice, this means focusing on the end consumer to test variety and consumer preferences before and after scaling. Whereas Ford’s assembly line could produce only one model for a given period, the Model T, the Toyota Production System could verify or invalidate the assumption that consumers wanted an attribute – more cargo space, for example – and then test the change in a small batch of cars and scale it into production.
Pursuing a lean government is one of the ways in which to balance the budget. At its philosophical core, it’s about doing as much as possible with as little as is available. This is the ethos that has fueled startup growth in Silicon Valley and in New York: Maximize results with fewer people and less time and resources. The value that is produced isn’t defined by what’s saved, it is still defined in terms of quality and informed by the customer – or in this case the citizen – and it’s often realized with the help of technology.
In a $89 billion budget, pension benefits which make up 18% are fixed costs and debt service, which is 7% of the budget, can only be restructured so much. But for the other large city expenses – 28% for education, 18% of social services, 10% for uniformed personnel such as cops and firefighters, and 9% for general services – reductions in staff and resources are fiscally inevitable. Understanding how the government operates and delivers its services allows for inefficiencies to come to light.
Waste and efficiency in government are a consequence of defective data, excess or delayed processing, underutilized employees, overproduction of inventory and travel. The commonality is that they are misallocations of time.
Consider how tech can solve these issues in obvious ways: Excess email and underutilization of employees can be reduced through digital project management tools that make work easier. Data management time and burdensome inventory can be resolved through machine learning platforms. Responsible AI can help identify which areas are of highest risk for traffic, crime, fires, and sanitation if personnel is cut. Travel time can be reduced by defaulting to videoconferences. Paper waste can be eliminated through better digital document management and data collection through online forms. The solutions are limitless and don’t require expensive procurement projects for custom software. They require secure, turnkey software that lives in the “cloud.” These solutions are available as software-as-a-service platforms that are built to solve the same problems hundreds of governments across the U.S. are solving at the same time.
Where technology advances efficiency, lean thinking is the convergence of efficacy. This means creating better processes for decision-making at government agencies and programs. By operating in small-batches, the government can disentangle unnecessary management oversight and complexity – processes that require approval and signatures and involve management employees at every step. That, in turn, motivates government workers and frees up time for higher-value activities. Likewise, setting metric-driven goals will align priorities and forces government workers to ask, “is this the best way to do this and is this working?” Just as a car company wouldn’t build 1,000 new cars for an untested market, the government shouldn't bulk hire employees or allocate considerable resources to an untested program.
New York state’s Department of Motor Vehicles is a good example of lean thinking. A priority on customer service has moved operations online, while an emphasis on key performance metrics – wait times and citizens served – has produced visible whiteboards for all visitors to see as they wait. It represents the core philosophy of lean, that is, focusing on the end user––the citizen.
Being lean as a business requires a single-minded focus on the customer – a zeal that is the hallmark of today’s leading companies, from Amazon to Apple. Lean government demands a citizen-centric, systems-wide approach to taking up the most intractable problems and budget deficits like the one the city is facing now – one that it hasn’t faced since the 1970s. Cities and states around the country have set up “lean offices” over the past decade. These include Iowa's Office of Management which has a division that trains all agencies on lean management processes and Wisconsin's Department of Administration which works with all state agencies to find lean solutions to issues while tracking efficiency metrics in the process.
A budget crisis shouldn’t result in the elimination of essential services for New Yorkers. The old way of doing things has passed, and getting out of this hole will require a leap towards leaner, technology-driven government.