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Does Barack Obama Understand Innovation? Maybe Not.

Posted by: Bruce Nussbaum on January 12, 2009

Barack Obama’s appointment of a 30-year lifer from McKinsey, the management consulting firm, to Chief Performance Officer of the United States is, well, awful. At a time when the US desperately needs serious innovation to restart and reset the economy, the President-Elect is turning to an efficiency expert for advice. Yes, of course, the bureaucracies of the country could use fine-tuning. Which bureaucracy, private or public, couldn’t use some shaping up? But government efficiency is not the most important issue facing us. Anyone with elderly parents know that they get their Social Security checks on time and Medicare, however much some doctors double-bill, works more smoothly than most of our private HMOs.

Corporations for nearly a decade now have expressed disappointment with the McKinseys and Bains and other traditional performance consultants because they all leave heavy books of recommendations (for very hefty prices) on their desks—and then leave. IDEO, ZIBA, Continuum, Smart, Jump, SYP and schools such as the Institute of Design, the Rotman School of Management, the University of Cincinnati, the Stanford D-School and others are being called in by smart companies to show they how to change, how to innovate.

Why? Because the greatest economic value today lies with innovation, not efficiency. And that’s true of an entire economy, an entire nation, as a single company.

So I worry about the economic package that will soon be passed to get the economy going again. We’re already giving billions to Detroit but nothing to the new electric car-makers, such as Tesla, or pioneers in batteries. Electric cars are a disuptive collective of technologies. We should promote them. There’s going to be a lot of money going into infrastructure, but how much into subways and trolleys (go to Portland where people jump on and off trolleys for free—and they are packed, freeing up the streets from cars), bike lanes or electrification (so electric cars can juice up). There are smart transmission lines to be built, battery transfer stations to be built, broad-band lines to be laid.

We need a huge overhaul of TSA and Homeland Security systems, so people will want to come to the US again to study and work. Fast-pass security is still in its infancy.

We need to finance new and better Teacher Education programs and graduate a new generation of better-educated educators. Right now Stanford, Harvard and Columbia Teachers College provide excellent grad programs but most teacher ed schools are mediocre at best. Classrooms have to be completely rebuilt to reflect how children learn today—not how courses were taught in the 19th century (yes, there is talk of doing this but will it be sweeping, big and impactful?). And every high school graduate has be to guaranteed a spot in college. Every one.

We should also be building a whole network of boarding schools overseas for poor children, giving them a modern education—and paying their parents money for each kid in school.

None of this has much to do with performance. I’m hoping Google’s Eric Schmidt, who is close to President-elect Obama is talking this stuff. But I don’t yet see much evidence that the Obama administration, which is full of middle-aged and elderly Clintonites who formed their intellectual POVs in the 90s, really gets it. Larry Summers is a brilliant economist but he doesn’t understand the role of innovation in growth. And McKinsey’s Nancy Killefer, who also served in the Clinton Administration, is “an expert in streamlining policies and wringing our inefficiences,” as Obama puts it, but she doesn’t have a background in creating new options to deal with a new, uncertain world.

The Obama administration has to do better. And soon.

Reader Comments

Gong Szeto

January 13, 2009 7:07 AM

oh come on nussbaum, get real. you have a patient with major head trauma (our country), bleeding out as i write this and you stand there waving your arms around wanting someone to come up with a disruptive blood-clotting technology that will change the lives of millions?

you want to re-invent government? fine. but even on a good day, it can't and won't be done in a single term. right now, this country is in triage mode, with bureaucracy corrupt and inefficient as ever. the role is what is important here (measurement against stated and codified standards, ie performance expectations in the TOTAL ABSENCE THEREOF), not the person. past events cannot be a gauge of future performance - look at your arc - socialist who morphed into a capitalist. anything can happen.

i do not disagree with the need for innovation vision. but for the love of G--, stabilize the patient first. no matter what nutso next-gen ideas you fantasize about, execution and measurement of success absolutely has to be a discipline in place already, otherwise you're setting up a situation where success cannot be provable.

without disciplined and rigorous measurement practices, innovation effort is merely massive experimentation on someone else's dollar accountable to no one and appealing only as another BW fluff piece. it is just as easy to discredit mckinsey's tomes as it is to discredit IDEO's spiral bound collection of photos of post-its. neither party is truly accountable for their recommendations, but a cabinet post is. at least that is what it and all other cabinet posts - should be. they carry title AND portfolio and the court of public opinion, not just shareholder gains, matters here.

Think of Killefer as the HR director you avoided eye contact with in the hallway because you know you took one more personal day than you were supposed to. She's got your report card on file and she knows who's wheat and who's chaff.

Imagine if she were kicking ass BEFORE Paulson got our money.


January 13, 2009 9:33 PM

I certainly could not agree more that our country needs a strong dose of innovation. Institutions are broken, and we are facing severe financial crisis. Unfortunately the changes that are needed to correct these issues will not be painless. Innovation needs to be implemented to improve the country's future, but to say that innovation alone can solve our present problems would be to overlook their urgency.

I also agree that it is next to impossible for much reinvention to be effected within a single Presidential term. Obama's campaign spread the message of change, and infused the country with hope. While these new ideas have been powerful motivators during the campaign, it will be necessary to adopt a more long-term outlook during Obama's presidency.

My best advice? Temper your expectations now--the next four years will be better than the last, but part of that relies upon your own expectations

Robert "Jake" Jacobs

January 14, 2009 6:39 PM

I'd argue that all three of you: Nussbaum, "Gong Zeto," and Megan are all right. The problem? Each of you is only part right.

The country right now needs both triage to both stanch the current bleeding and be working on disruptive blood clotting new technologies.

Choosing one and ignoring the other is a false choice. Yes, resources will have to split in some way. Take your pick. Survive today with no solution to prevent the same problem tomorrow. Or never see tomorrow but have a great new innovations just around the corner.

Neither is particularly appealing. I put a post up on my blog

wondering why there has been so little talk about this new appointment (Bruce, from my cursory research you seem to be in a minority of caring about this...even if you think Obama has blow the appointment).

Finding ways to solve today's problems and at the same time work on ways to prevent them in the future -- now that's real innovation with a very practical twist.

I've posted to my blog about this appointment and how it's not picking up much interest...innovative or not.

As well, I'm not too worried about Obama and innovation. Check out today's papers about his "hiring" all of his volunteers from the campaign back to help press his agenda for change in the country.


January 15, 2009 8:58 AM

Obama is right,you need to do both simultaneously, ie. drive efficiency and drive innovation, as any reasonably smart company executive knows.
Whether hiring somebody from consulting instead of someone with real experience is something else.
I do agree with the critique on consulting companies: if ever there was an industry with little or even negative added value, then certainly the big consulting companies.

Destiny E.

January 16, 2009 5:05 AM

For the first time, President-elect Obama gave a ballpark price tag for his massive economic plan aimed at generating jobs and jolting the country out of recession. Aides have said it could cost as much as $775 billion over two years. One person who won't be needing payday loans for some time is Nancy Killefer. Ms. Killefer has been picked to occupy a position in Obama's Executive team, but it bears an odd job title – Chief Performance Officer. Not many companies keep one on staff, but what a Chief Performance Officer does is ensure that products and services rendered to customers performs up to standards, like getting payday loans quickly when you need them. The products and services she will be overseeing will be that of the policy of the Obama Administration, a good deal of which will be putting in policies to revamp the sluggish economy. In order to fight the recession, Obama is putting together a healthy stimulus package that will hopefully give the boost that we all dearly need. To find out more click payday loans.


January 16, 2009 2:41 PM

Transformation is only limited by the willingness of the stakeholders. Look at what Paul O'Neil was able to do with Alcoa by making a firm "top-down" commitment to employee safety and holding all accountable. Alcoa quickly went from an industrial dino to a wall street darling...he went on to apply the same methodology in health care with astounding results in costs avoided and patient and employee safety drastically improved and quantifiable bottom line reflecting outsized returns. Aside from accountability, innovation and optimizing efficiencies are going to be key in this admin and the appointment of a McKinsey lifer is as smart as any choice. Also, close examinatiion of many world-beaters will show a high % implemented the recommendations in those heavy albeit expensive leave behinds...
Obama has demonstrated a refreshing awareness of what needs to be done to reshape American industry and I've participated in a community discussion around health care in NJ at a hosted "sensemaking" discussion with many of the bright minds in and around NJ's health system. The Obama transition team provided moderator guidelines and participant guidelines that fostered constructive and informative and multi-perspective discussion. Out of these sessions will come consistent themes and contextual input from those closest to where fixable problems exist and innovation come. I'm encouraged and motivated. just my 1/50

Christopher Fahey

January 18, 2009 6:55 PM

I'm the first to question the value of big consultancies in almost any context, but I still remember how shocked I was when I learned that Accenture was the force behind the astoundingly successful implementation of New York City's 311 system. If I recall correctly, the project took from start to finish about 6 months. Perhaps the consultancies work best when they work with profoundly dysfunctional systems, as New York City's citizen service was before 311.

(The story of 311's design and implementation is one of the most fascinating and inspiring stories of how smart business analysis and interaction design cut through perhaps billions of dollars of red tape).

Another critical factor behind 311's success was, I think, the Bloomberg administration's attention to detail and value for the buck for outsourced services, a trait the Bush administration sorely lacked (or even, I think, deliberately and larcenously suppressed). By all accounts and evidence, including this appointment, Obama is on track to turn that pattern around.

I agree with Gong Szeto that your initial assumption (that efficiency in government isn't a problem) is profoundly mistaken. Innovation is hardly a solution for organizations who can barely get an email from one desk to another successfully. I don't know much about the Chief Performance Officer's qualifications, but the idea that a person with a history of managing efficiency would be put in the job of managing efficiency makes perfect sense to me.

What's more, you of all people should know that for the vast majority of organizations, and almost all large ones, innovation doesn't come from the top. The top is responsible for creating an environment where innovation is possible. The first step to creating that environment is making sure it is populated by good hard-working people who are in the right places doing the right kind of work with the right kind of support system around them.

April 17, 2011 8:31 AM

Does_barack_obama_understand_innovation_maybe_not.. Ho-o-o-o-t :)

April 22, 2011 4:13 AM

Does_barack_obama_understand_innovation_maybe_not.. I like it :)

May 4, 2011 4:55 PM

Does_barack_obama_understand_innovation_maybe_not.. Super :)

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Want to stop talking about innovation and learn how to make it work for you? Bruce Nussbaum takes you deep into the latest thinking about innovation and design with daily scoops, provocative perspectives and case studies. Nussbaum is at the center of a global conversation on the growing discipline of innovation and the deepening field of design thinking. Read him to discover what social networking works—and what doesn’t. Discover where service innovation is going and how experience design is shaping up. Learn which schools are graduating the most creative talent and which consulting firms are the hottest. And get his take on what the smartest companies are doing in the U.S., Asia and Europe, far ahead of the pack.

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