President Roosevelt’s call for outside assistance had a precedent—in World War I, President Woodrow Wilson recruited industry leaders as “dollar-a-year men,” named as such because, by U.S. law, government employees need some compensation to bind their contract.3 And, as in World War I, many of the nation’s most accomplished and prominent people, from a variety of fields, reported for government duty, undeterred by the pittance paid. By the end of World War II, there would be more than 300 business leaders in the program, under the supervision of Sears Chairman Donald M. Nelson, who had succeeded GM President William S. Knudsen. Seventy percent of those participants were experienced manufacturers, many of them with a research and development background, and their ability to apply newer mass production techniques and supply chain management manifested itself in a dramatic increase in manufacturing output. For the government, they served a translation function, a communication bridge between the public and private sectors, between military planners and industrial producers.
Take aluminum, one of the staples of modern warfare, used extensively in aviation. In 1939, the country produced no more than 350 million pounds, only one-quarter of Defense Department projections for the necessary amount in the coming years, and almost entirely from Alcoa Corporation. Nelson’s team of dollar-a-year men, including Alcoa’s Arthur Bunker, worked with the Defense Plant Corporation, under considerable scrutiny from the press and public due to the monopolistic nature of his company. Still, it was hard for anyone to argue with the results. In the spring of 1944, the Truman committee investigating the war program revealed that, in 1943, the supply of aluminum had grown to 2.79 billion pounds, such a significant surplus (620 million pounds) that it recommended releasing some to manufacturers of civilian articles. The committee commended Alcoa for “the prompt and effective manner in which it expanded at its own expense its annual production from 350 million pounds to more than 850 million pounds, as well as the expedition with which it constructed the Government-owned aluminum and alumina facilities.”4 The committee also concluded that “plants built by Alcoa for the Defense Plant Corp. are equally or more efficient than those owned by Alcoa itself.” Also, for all the concern about Alcoa acting as a monopoly, the war program actually created competition. Other suppliers, including Reynolds Metals—which had urged increases in aluminum production capacity—gained strength as a result of the effort.
World War II was a victory for America and the allies well beyond its borders. But, while we recall many of the heroes and battles fought in faraway lands, the domestic lessons are often lost, such as the good that came from civility and collaboration between those from the private and public sectors and those from different political parties. Here was Roosevelt, considered the classic liberal and a proponent of expansive government, ceding coordination responsibilities to largely conservative business leaders. And here were those business leaders, many skeptical of government, serving it in its time of greatest need. At a press conference on April 15, 1941, Roosevelt joked about the preponderance of Republicans on the dollar-a-year list.5 He said he asked Knudsen why there weren’t more Democrats and was told: “There’s no Democrat rich enough to take a job at a dollar a year.”
Presidential administrations since Roosevelt may not have confronted world wars, but all have faced varied and vexing challenges, domestic and abroad, that forced them to recognize the need to venture outside their comfortable circles of party loyalists, campaign volunteers, and policy advisers to tap into the expertise of those not already working in government. They have gone to great lengths to frame government work as honorable and appealing, with rewards beyond the financial, in order to attract the interest of premier talent among the general populace.
This came into play in the 1960s, when President John F. Kennedy instructed his brother-in-law Sargent Shriver to head a Talent Hunt Committee for filling Cabinet spots and other key positions in his administration.6 Shriver started by securing a list of first-team academics from a Harvard professor, but he didn’t want to rely on one person’s recommendations. He sought a diversity of opinions and candidates. He told a staffer, Harris Wofford (a future U.S. Senator from Pennsylvania), “We’re going to comb the universities and professions, the civil rights movement, business, labor, foundations, and everywhere, to find the brightest and best possible.”
Once he identified those people, he needed to sell government to them. That may have been a bit easier in those days, as even Shriver acknowledged at a JFK legacy seminar a quarter-century later.7 At the dawn of the Kennedy administration, government was not, as he put it, widely perceived as the “capital of an evil empire of bureaucrats and dunces and incompetents.” Plus, Shriver could sell the opportunity to associate with a charismatic President. That allowed for selectivity, and they filled more than 200 positions, many with people who shared the administration’s optimistic, almost idealistic vision. As Shriver later recalled, “If you believed in America’s destiny, the efficiency of democracy, this was truly a glorious time to be alive.” In his inaugural address, President Kennedy famously bellowed, “Ask not what your country can do for you—ask what you can do for your country.” The underlying corollary, when it came to his administration’s evaluation of potential employees, was that a person needed to be good enough for government, not the other way around.
Times and attitudes changed over the course of the next four decades, with scandals, incompetence, and media-amplified polarization dragging down government’s prestige and popularity, but the election of President Obama—on a platform of Hope and Change—signaled a fresh opportunity for government to polish its reputation. As candidate Obama said at the ServiceNation Presidential Forum at Columbia University during the 2008 campaign, “Part of my job, I think, as president, is to make government cool again.”8 That had to start somewhere, and Valerie Jarrett, the cochairperson of the transition team, started here: “I think we’re open to innovative ideas for new ways of government doing business.”9 That was appealing enough to convince entrepreneurs to invoke the spirit of the dollar-a-year men, and leave more lucrative private sector opportunities behind for a role in Washington. In turn, the administration could be selective, populating government with those who had demonstrated an ability to use the latest technology to strengthen or further an enterprise, whether a startup, a new product, or a social cause.
President Obama started with his own White House, recruiting Internet-savvy entrepreneurs to serve as Chief Technology Officer (me), Chief Performance Officer (Jeff Zients), Chief Information Officer (Vivek Kundra), and Director for Social Innovation (Sonal Shah), among other senior positions. And he directed his Cabinet to do the same, including the previously mentioned CTOs at HHS (Todd Park) and the VA (Peter Levin). More than 50 other entrepreneurs would fill senior roles, reporting directly to department and agency heads, and tasked with applying technology and innovation to advance that agency’s mission. The White House supported these policy entrepreneurs in two ways: one, by providing them “air cover,” or a Presidential license to innovate; and two, by convening them on a monthly basis via an Innovation Cohort, to exchange their best practices so they could scale across the government.
The participants brought a wide range of experience. Jim Shelton, the cofounder of the school management company LearnNow and the educational manager for the Bill & Melinda Gates Foundation, joined the Department of Education to design the Investing in Innovation competitive grant program. That vehicle would provide seed capital for promising ideas and provide scaling capital for those, like Diplomas Now (DN), already proven viable.10 DN developed a predictive model to flag children at a high risk of dropping out as early as sixth grade—based on the ABCs of Attendance records, Behavior, and Course failure in math—and pair them with nonprofit social service groups to monitor and improve their situations. DN received a $15 million validation grant to scale the program across the 2,000 schools that account for a majority of high school dropouts, partn
ering with those schools to develop and execute customized strategic plans for students. Those interventions have already significantly cut the number of students failing math.
Maura O’Neill, who had started companies in electricity efficiency, customer information systems, e-commerce, and digital education, joined the U.S. Agency for International Development.11 There, she founded Development Innovation Ventures with a similar, staggered model to Shelton’s program for education, allocating more funding to the best defined, developed, and tested projects. One was Mere Gao Power, a startup that uses microgrid technologies to replace kerosene with cleaner, renewable energy; early results, across 1,000 rural village homes in India, showed more than a 50 percent weekly reduction in costs, and earned the company the White House spotlight in a June 2013 We the Geeks Google Hangout.12
Alec Ross, who had cofounded the global nonprofit One Economy to close the digital divide for the poor, joined the State Department under Secretary Hillary Clinton, to lead her 21st Century Statecraft initiative, designed to take advantage of this “Internet Moment” in foreign policy.13 His team intervened to delay Twitter’s planned network maintenance in June 2009, to keep the social media platform open to Iranians during their uprising, allowing them to communicate with each other and the rest of the world. He also championed the administration’s text messaging initiatives during international disasters, with the effort following the Haiti earthquake contributing to more than $32 million in donations.
The entrepreneurs who joined the government brought more than their respective skill sets. Many also brought a different way of working, one with its roots in Silicon Valley, and its fertile field of technology startup companies. Eric Ries, an entrepreneur, adviser, and author who had moved to that area in 2001, called that philosophy and methodology “lean startup.”
When I first met Ries on my first official trip to Silicon Valley as the nation’s CTO in the summer of 2009, he had little experience with established organizations, and had given little thought to applying his lean startup principles to government. In defining a startup as “a human institution designed to create something new, under conditions of extreme uncertainty,” he had always left the identity of that institution open-ended, whether for-profit or nonprofit, private or public sector. Still, over time, even he was surprised by the proliferation of the principles and how they were applied by many “in situations that I considered to be quite strange.” Those tinkerers included division managers at major companies, foundation directors, policy makers—and, well, me. Eventually, Ries would come to understand this hunger for a new approach, especially in areas in which the traditional ways of working were proving insufficient or even obsolete.
“People talk about the twentieth century being the management century, and I really think that’s true,” Ries said. “We’ve become so good at general management, you think about the global supply chain to keep us all alive, you think about the government programs that have lasted decades and really provided for the welfare of a large number of people, that’s a real accomplishment to be celebrated. But those tools are really based in planning and forecasting, which makes it work well under conditions of nice, stable environments. Nothing changes too fast. So those tools are not really the best for situations of disruptive innovation, technological turmoil and change—the new paradigms.”
He believes his lean startup strategies are better suited to handle uncertainty by leaders in all walks of life: “What we want to do is grow a management discipline that can be just as good as general management has been in the twentieth century, but with some tools that are more appropriate for the twenty-first.”
What we wanted, in the wake of Wall Street reform and the 2010 passage of the Dodd-Frank Act, was a new agency that stood up for the American consumer in the increasingly cloudy and confusing financial marketplace, protecting citizens from predatory lending by financial service companies. President Obama tapped Elizabeth Warren to help establish and organize the agency, which would be called the Consumer Financial Protection Bureau (CFPB). She requested the assistance of my deputy, Eugene Huang, himself a successful tech entrepreneur, in modeling the agency more after nimble Internet startups than plodding government bureaucracies—leveraging technology, data, and innovation to maximize efficiency and impact. In August 2010, Huang and I attended a small dinner in Silicon Valley, where technology leaders offered suggestions about how the CFPB should operate. Ries later recalled his advice in The Lean Startup, his 2011 book: “Treat the CFPB as an experiment, identify the elements of the plan that are assumptions rather than facts, and figure out ways to test them.” For instance, one of the elements of the CFPB was a call center to field consumer complaints about credit card companies, mortgage brokers, and other financial services. To establish staffing levels and budget authority, Congress needed to assume a certain level of call volume, but those assumptions were really just guesses, with no way to accurately account not only for how many citizens were victims of fraud, but how many would actually pick up the phone to inform the government. Instead, Ries suggested a more targeted approach that might avoid understaffing and the risk of caller frustration, while also avoiding overstaffing and the corresponding waste of man hours and tax dollars. His impromptu suggestion of a minimum viable product would consist of creating a simple mobile app, saturating one neighborhood with flyers, asking anyone with financial issues to call a simple hotline number on the Twilio.com cloud-based communications platform, and then extrapolating the number of actual callers to what might occur with expansion to the larger population.
“That microexperiment would be cheap, and it’s better than market research, because you’re not asking what you would do or putting out a survey,” Ries said. “It’s actually an experiment where people reveal their behavior through their actions. And if they don’t agree with you about what topics they want to talk to you about, they’re right, not you.”
With Huang acting as an advocate, CFPB adapted Ries’ experimental, incremental approach in a slightly different way, by initially rolling out the call center (and web) complaint service for credit card issues only, so that it could be used as a test bed and training ground for other financial services issues, such as those related to student loans, vehicle loans, mortgages, and debt collection. But it played an even greater role in an initiative mandated by the Dodd-Frank Act, one aimed at removing complexity and confusion from the mortgage process. As Warren said: “With a clear simple form, consumers can better answer two basic questions. Can I afford this mortgage, and can I get a better deal someplace else?”14
The agency engaged those who would use the new forms—consumers, lenders, mortgage brokers, and settlement agents—through a website called Know Before You Owe, posting two prototype loan estimates for review and input.15 Then it took the testing on a nationwide tour, meeting with small businesses, adding elements, and posting the revised products for further feedback. In sifting through more than 25,000 comments over 10 months, the agency was able to hear, and then heed, requests for clearer language and cleaner design, to make cost comparisons easier. In February 2012, President Obama held up the latest incarnation of the redesigned mortgage application form at a Falls Church, Virginia, community center, hailing it as a key component of the “Homeowners Bill of Rights.”16 He recalled how he and Michelle, two trained lawyers, had struggled with the complexity of the documents required for buying their first home, and the President argued that a new form where “terms are clear” and “fees are transparent” would keep consumers from getting “cheated.”17 In later months, he would speak on the campaign trail of the ways that Know Before You Owe was expanding to college financial aid letters—the Student Loan Fact Sheet—and credit card agreements, all aimed at allowing borrowers to make the most informed choices.
The CFPB officially got the lean startup seal of approval during one of Ries’ trips to Washington as an informal adviser. As he sat in the bureau’s off
ices, the environment reminded him of Silicon Valley, in the manner that people worked and spoke, obsessed with experimentation and rapid iteration. He was amazed by the integration of his philosophy in other agencies as well, even by those employees who didn’t know his name—people who had come from entrepreneurial backgrounds or longtime government employees whose entrepreneurial instincts had been awoken. He saw these seeds growing up healthy in what many assumed to be impossibly hostile soil.
“I was really skeptical,” Ries said. “I didn’t believe it when people would tell me that government is innovative. But there are honest-to-god real-life entrepreneurs working in the federal government.”
We had seen the Ries philosophy, experimental and incremental, planting itself in what he would call “a green field opportunity,” an agency starting from scratch. But what about more established agencies and departments, those defined by entrenched bureaucracy? In those legacy institutions, there’s often a way to do things, because it’s the way they have always been done, even if that way isn’t particularly efficient and hasn’t always worked out well. It was easier to turn something on, than to turn it around.
Two agencies would represent this truer test of the latter around, because they had a reputation for constraining the innovation economy: the Food and Drug Administration (FDA) and the United States Citizenship and Immigration Services (USCIS). That’s why we targeted those two agencies with our Entrepreneurs in Residence (EIR) program, which married external and internal talent, and asked them to apply lean startup principles to a clearly-defined mission over a six to nine month period.
The administration did not discriminate based on attitudes toward government. Otherwise, Dean Kamen never would have become one of the 20 people chosen for the EIR program in the FDA. The inventor of the Segway and numerous medical device products had been among the most vocal critics of the painstaking approval process for new medical devices, claiming that the continuation of business as usual would result in more innovation occurring outside the country.
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