It has certainly been an interesting year in Indiana state government.  In the wake of an electoral outcome that brought a new party to the governor’s office, as well as a majority in both houses of the legislature, the changes in just about everything – people, attitude, and results – have been dizzying.  We may not all be happy with every change that has taken place, but it’s been interesting – and even a little exhausting – keeping up with them all.

The preference of the new administration for individuals with success in the private sector to lead the major agencies in state government is a change that asks a very old question.  Do business people make good bureaucrats?  The outstanding team that the Governor has assembled to manage the state’s largest and most important agencies come up short in one area – public sector experience.  How that blank spot on their resumes figures into their job performance is something we are about to find out.

There are plenty of reasons to be optimistic.  The private sector has always been the engine of innovation in our economy, and the injection of that management expertise into state government promises to bring new ways of organizing and carrying out the business of the public sector.  The state of Indiana is a $20 billion enterprise, after all, whose daily back office operations of record keeping, purchasing, and payroll can always benefit from a critical examination from a skilled pair of eyes.

On the front end, those who have been successful in the competitive business environment know how important it is to please the customer.  As a monopoly provider of services and information, the public sector doesn’t always teach that lesson very well to it managers.  After all, if the agency processing your permit, or the court adjudicating your lawsuit, or the assessor preparing your tax bill does a poor job responding to your wants and needs, what is your alternative?  The government doesn’t have any competition.

Of course, that’s not exactly right.  There is competition – namely from other communities and other states.  If we do a poor job in providing public services, we risk driving talented people and new investment away, and shrinking the pie for everyone.

More ominously for government workers, private sector managers are used to making cuts.  Closing inefficient, money-losing operations in private sector companies frees up capital for more productive purposes.  It’s a harsh fact of life in the business world that doesn’t always transfer well to the public sector.  After all, most public sector activities – from building roads to providing health care to people who can’t afford it -- are money losers from the get-go.  That’s how they ended up in the public sector in the first place.

But that can’t be an excuse for inefficiency and bloat.  In government, like everywhere else, the dollars wasted on services of marginal value are ones that cannot be spent for more productive purposes.

Finally, some private sector managers can bring a zeal for quantification, and a focus on concrete, fully specified goals, that doesn’t always mesh well with their government assignments.  Can we apply break-even analysis to the support of public education?  Perhaps.  But if we pour our energy into challenges that fit well with the private sector issues we are comfortable with, we risk neglecting much of what government is expected to perform.

Of course, the real challenge for private sector managers who land on public payrolls is the political realm in which they ultimately operate, where shaping perception can be more important than shaping up balance sheets in ensuring success.  It’s an aspect of their new jobs they won’t miss when they land safely back in their old board rooms.