Chapter 2 Putting Customers First


Step 1: --Giving Customers A Voice-- And A Choice

Step 2: --Making Service Organizations Compete

Step 3: Creating Market Dynamics

Step 4: --Using Market Mechanisms To Solve Problems



We are going to rationalize the way the federal government relates to the American people, and we are going to make the federal government customer friendly. A lot of people don't realize that the federal government has customers. We have customers. The American people.

Vice President Al Gore Town Meeting, Department of Housing and Urban Development March 26, 1993

All of us--bureaucrat or business owner, cabinet secretary or office clerk--respond to incentives. We do more of what brings us rewards and recognition, less of what brings us criticism. But our government, built around a complex cluster of monopolies, insulates both managers and workers from the power of incentives. We must change the system. We must force our government to put the customer first by injecting the dynamics of the marketplace.

The best way to deal with monopoly is to expose it to competition. Let us be clear: this does not mean we should run government agencies exactly like private businesses. After all, many of government's functions are public responsibilities precisely because the private sector cannot, should not, or would not manage them. But we can transplant some aspects of the business world into the public arena. We can create an environment that commits federal managers to the same struggle to cut costs and improve customer service that compels private managers. We can imbue the federal government--from top to bottom--with a driving sense of accountability.

Is it really possible to reinvent government in this way? Horror stories about government waste are so abundant that many doubt its ability to change. For some, the only solution is to cut or abolish programs wholesale. In some instances those cuts make sense and we are recommending them. But alone they do not address the problem we face or move us decidedly toward a government that works better and costs less. We propose a different approach. we must make cuts where necessary; we also must make our government effective and efficient. Some programs clearly should be eliminated, others streamlined. We will offer many proposals to do both in chapter 4. But reinventing government isn't just about trimming programs; it's about fundamentally changing the way government does business. By forcing public agencies to compete for their customers--between offices, with other agencies, and with the private sector--we will create a permanent pressure to streamline programs, abandon the obsolete, and improve what's left.

This process will be neither quick nor easy. But as it unfolds, a very different type of government will emerge, one that is accountable to its true customers--the public.

We propose four specific steps to empower customers, break federal monopolies, and provide incentives for federal employees to better serve their customers.

First, we will require that all federal agencies put customers first by regularly asking them how they view government services, what problems they encounter, and how they would like services improved. We will ensure that all customers have a voice, and that every voice is heard.

Second, we will make agencies compete for their customers' business. Wherever feasible, we will dismantle government's monopolies, including those that buy goods and services, acquire and maintain office space, and print public documents. These internal monopolies serve their customers--government workers--so poorly, it's no wonder those workers have such trouble serving customers outside government.

Third, where competition isn't feasible, we will turn government monopolies into more businesslike enterprises--enterprises in closer touch with both customers and market incentives.

Fourth, we will shift some federal functions from old-style bureaucracies to market mechanisms. We will use federal powers to structure private markets in ways that solve problems and meet citizens' needs--such as for job training or safe workplaces--without funding more and bigger public bureaucracies.

Together, these strategies will enable us to create a responsive, innovative, and entrepreneurial government. If we inject market mechanisms into federal agencies as we are cutting red tape, we will create new dynamics--and a new dynamism--throughout the federal government.