Trump’s new innovation effort has a difficult mission.

By David Besanko
March 29, 2017

When President Donald Trump named his high-profile son-in-law, Jared Kushner, as head of the new Office of American Innovation, he signaled that this initiative to streamline government is a top White House priority. But adding the goal of reshaping the federal bureaucracy to Kushner’s already substantial portfolio of responsibilities raises concerns about his available bandwidth of time and energy.

This elevates the stakes for the talent Kushner needs to bring to his leadership team. He should focus on appointing three key roles: a high-caliber technology expert, a senior and experienced federal government official, and an organizational leadership expert. Kushner is a 36-year-old real estate investor and former publisher of the New York Observer with no experience in government. And despite playing a key behind-the-scenes role in Trump’s presidential campaign, Kushner has little experience in any formal management or leadership capacity. This triumvirate of expertise would bring necessary depth that he lacks.

The Office of American Innovation is being organized as a “power center” within the West Wing, reporting directly to Trump. This will make it highly visible and undoubtedly subject to media scrutiny. It’s already been described as a “SWAT team of strategic consultants,” and will be headed by Trump staffers with extensive business experience: Dina Powell, senior counselor to the president for economic initiatives and deputy national security advisor; Gary Cohn, director of the National Economic Council; and Chris Liddell, assistant to the president for strategic initiatives.

The choice of Kushner to lead the effort doesn’t seem to fit in with his other responsibilities. Kushner is already serving as a foreign policy contact for the White House and was put in charge of brokering a peace agreement between the Israelis and the Palestinians. He was also the back channel in U.S.-Mexico relations. Now Kushner, who reportedly has a deep bond with Trump that elevated his stature during the campaign and in the first months of the Trump administration, is suddenly front and center in overhauling government bureaucracy.

The firepower for getting things done, though, will have to come from Kushner’s senior team. One important member should be a former undersecretary or assistant secretary from a large government department such as State, Justice, or Health and Human Services. The federal government is very different from private sector organizations and is vastly bigger in scale and complexity than even the largest U.S. companies. As Elaine Kamarck observed in The Atlantic, “a real government-reform effort must be led by people with in-depth knowledge of the government itself.”

Technology is another obvious area for the Office of American Innovation to focus on. The government needs an upgrade from notoriously old technology—some as much as 50 years behind the times. Better technology in government could streamline bureaucracy, similar to how the private sector strives to gain or maintain a competitive advantage by upgrading its technological capabilities.

A heavy-hitter from the tech sector would bring the kind of expertise that the Obama administration sought when it recruited Google engineer Mikey Dickerson to rescue the HealthCare.gov website in October 2013. In addition, Obama was the first president to appoint a chief technology officer.

In the third area, organizational leadership, an expert could be recruited from one of the top business schools to address issues such as how to motivate government staff who, as civil servants, are not eligible to receive bonuses or similar incentives. Improving organizational and individual performance means amplifying an esprit de corps and sense of mission often only associated with government professionals in organizations such as the U.S. attorney’s office or the foreign service.

 

While these may sound like vague leadership concepts, they are highly relevant to government workers, who are among the hardest to motivate due to frequent changes in top leadership and civil service rules that limit bonuses and make it virtually impossible for individual employees to capture monetary value from innovation. As management experts understand, the key to organizational leadership is to inspire others to transcend their own self-interest for the good of the whole.

Kushner’s effort will also explore the privatization of government functions. This is an area where much caution is warranted. Privatization is often seen as a way to benefit from “hard-edged” incentives that private firms have to control costs. But academic research by 2016 Nobel Prize-winning economist Oliver Hart shows that privatization aimed at reducing costs can sometimes compromise other important social objectives. For example, a for-profit private prison may have a strong motivation to reduce costs, but the pursuit of cost-reducing innovations may worsen recidivism. In light of these tradeoffs, privatization can be inferior to traditional public services.

The Office of American Innovation’s success will hinge not only on bringing in talented leaders, but also overcoming another potential impediment: funding. Republican administrations historically favor limited government and advocate spending cuts. Trump’s proposed federal budget, austere in most areas of discretionary spending other than for the military, could potentially undercut the office’s mission and any recommendations for investments to upgrade technology.

But perhaps with Kushner at the helm, the Office of American Innovation will be able to capture Trump’s attention enough to receive sufficient funding for its ideas. This would greatly enhance the office’s ability to invest in change and improve how the federal government functions.

David Besanko is IBM professor of regulation and competitive practices at the Kellogg School of Management at Northwestern University.

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