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One Saturday morning last year, about 90 leaders of neighborhood associations in San Jose gathered in small groups to play a game. Each person had a roll of fake money, from which he or she could pay for city services—like beat cops or libraries. Each group lacked enough money to cover the city’s budget. “We intentionally, just like reality, gave them far less money to buy the things they wanted,” says Kip Harkness, San Jose’s senior project manager.
By morning’s end, all the groups had agreed to run the city’s fire trucks with one less fireman each to save money. City council members adopted that change in San Jose’s actual budget last summer. At the same meetup this year, residents agreed to eliminate paid overtime for city managers, and six of 10 groups were willing to raise their sales tax by 0.25 percentage points, which the city is now considering. “I really haven’t had anyone tell me this is a waste of time,” says Harkness. “That’s pretty incredible when you’re talking about budgets.”
Mathew Scott for Bloomberg Businessweek
Luke Hohmann originally designed the game, called Buy a Feature, for corporations. His Mountain View (Calif.) company, Innovation Games, counts as customers Adobe (ADBE), Hewlett-Packard (HPQ), Cisco (CSCO), SAP (SAP), Alcatel-Lucent (ALU), LexisNexis, Mass Mutual, and Charles Schwab (SCHW). Tom Wesselman, an executive at Cisco who used a Hohmann game to make decisions about design features in the company’s Cius tablet, says Hohmann helped overcome a cultural hurdle: Every department expected perfection. But to ship the product, everyone had to accept a little imperfection. “We learned there were deep tradeoffs,” he says.
That’s Hohmann’s specialty: getting people with seemingly competing interests and vastly different viewpoints to understand tradeoffs and make hard choices. It’s a skill he thinks government needs right now. “We’re just a little Silicon Valley company with a little dream to have 200 million Americans all playing a game together to fix Social Security.”
Like many U.S. cities, San Jose lost revenue during the recession and faces growing employee retirement expenses. The city is projecting a deficit of $22.5 million in 2013. Prior to 2011, its community budget meetings typically featured PowerPoint lectures, a Q&A with the mayor, and an open forum for public comment. That format gave the most weight to “the most vocal people,” says Harkness. “That’s a bad sample. People can say whatever they want without having to wrestle with complexity. It encourages extreme thinking.”
Photograph by Shari Levin
Hohmann’s Buy a Feature changed everything. The rules require specific cuts: “close libraries one hour earlier,” rather than “cut library budgets by 5 percent.” This keeps players from passing the hard choices down to the library and requires them to confront the impact of their decisions. Each group has up to 10 players, who have to agree unanimously to cut a service or raise revenue. By design, most services are too expensive for a single player to pay for alone. That discourages posturing. A citizen can’t just make a viewpoint known; he has to persuade others to adopt it. “It forced participants to confront realities,” says Harkness. “It’s a lot different than standing up and saying, ‘You should do this or that.’”
Politicians generally prefer polls to gauge public opinion. But polls allow voters to insist on both better services and lower taxes. Games in small groups lead to compromise. More important, says Hohmann, they make elected officials feel as if they’ve been given permission to make decisions—such as taking a fireman off a truck to save money—that are politically difficult.
San Jose plans to expand its game to at least 2,000 participants next year. Denver has contacted Hohmann about running a game of its own, as have Austin, Tex., Baton Rouge, Chicago, Portland, Ore., and Seattle. Now Hohmann is taking on a much bigger project: Congress. This fall, he’s working with the Kettering Foundation to develop an online game for balancing the federal budget.
That’s ambitious. Hohmann’s customers to date have advantages over Congress and the president. The market punishes businesses that avoid tough decisions, and a city such as San Jose doesn’t have the federal government’s generous line of credit. Companies and cities don’t have the luxury of hunkering down in a stalemate. Hohmann points out that the citizens of San Jose didn’t approach him for help; the city’s elected officials did. “The reason why most of these local government change initiatives fail is the same reason you can’t tell your alcoholic brother to stop drinking,” he says. “Either he wants to, and he’ll figure it out, or he doesn’t, and he won’t.”
Budgeting is necessarily a compromise. It’s what game theorists call a “cooperative game,” one in which players voluntarily agree to follow rules and abide by a result. Tennis is a cooperative game. “Non-cooperative” games have no rules, and no referee. Congress and the president have decided that agreeing on a spending plan isn’t as high a priority as a non-cooperative game called “get reelected.” Neither party is giving its politicians much room to maneuver, and voters have been rewarding candidates who disparage compromise. This has been the central feature of national politics for two years now, and it’s tempting to conclude that Americans are irreconcilably divided on taxes and spending. Hohmann’s experience in San Jose suggests the problem may not be the players, but the game.
The bottom line: Game developer Luke Hohmann has taught companies to break spending impasses; now he’s focusing on government.