By Tory Newmyer
December 3, 2016

Saturday Morning Post: The Weekly View from Washington

Donald Trump won on a pledge to bring business rigor to government. And he’s following through in part by tapping a handful of private-sector successes to fill out his cabinet, a roster that includes Goldman Sachs alum and hedge fund founder Steve Mnuchin for Treasury, billionaire investor Wilbur Ross for Commerce, and billionaire charter school advocate Betsy DeVos for Education. So far, none, however, has the experience that the current Secretary of Veterans Affairs brought to the job. Bob McDonald, a West Point graduate and Army vet, spent more than three decades climbing the ladder at Procter & Gamble, a run that ended with four years in the corner office. President Obama named McDonald to lead the VA in July 2014 after a scandal erupted there over wait times veterans faced to receive medical care. In the two and a half years since, he’s worked to wrench the federal government’s second-biggest bureaucracy into the 21st century by applying best practices from the corporate world.

The VA, by McDonald’s own acknowledgment, still has its work cut out. But the early returns are encouraging. In a wide-ranging interview with Fortune on Friday afternoon, McDonald argued for running the department like a business — “if you took our budget as it if were revenue, we would be Fortune 9,” he notes, with more employees than any company besides Wal-Mart — since it serves 21 million veterans. “Our vision is to be the best customer service organization in the federal government,” McDonald says. He’s moved the organization in that direction by replacing its top ranks with similarly-experienced businesspeople and introducing concepts like human-centered design and Lean Six Sigma. Yet McDonald has also come to believe privatizing the VA’s core functions, as some in Trump’s orbit have suggested, would spell disaster not only for the department but for the American medical system broadly. The VA now spends $1.8 billion a year on research and development, an investment that’s yielded breakthroughs the private sector would otherwise miss, while training 70% of U.S. doctors.

In the presidential election, Trump romped with veterans, as exit polls showed he carried former service members by 26 points. By comparison, Mitt Romney won them by 20 points in 2012 and John McCain, the last veteran to win a major party nomination, only won them by 10 points in 2008. The results suggest Trump’s bashing of the department’s performance resonated, and McDonald says, “I’d be the first one to say that we still have a ways to go.” He’s also keen to see the reforms he’s instituted carried forward and indicated an openness to staying on, as names of replacements like Sarah Palin and former Massachusetts Sen. Scott Brown swirl. You can read an edited transcript of our conversation here.

Tory Newmyer
@torynewmyer
tory_newmyer@fortune.com

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