I have to say up front that this article is inspired by a message I received from a state government employee in North Carolina. If you are a subscriber to my e-newsletter, you probably read (I hope so at least) the July 2011 opinion piece it contained entitled “One Percent Success Rate.” The article was about the lack of success of the majority of government programs (around the world) on building private-sector businesses. It was inspired by several communications with various entities around the world and by one particular country/situation. The day after the newsletter was published, I received an “impolite” e-mail about the article from a government worker—let’s call the worker “Sam”—that my company and I have done business with for many years. Sam responded to the article as if he, his program and his organization had been named specifically. As a colleague put it today, sometimes articles hit close to home even when they are not directed at someone.
This is not the first time an article has generated such a response. About five years ago I attended a networking event and had a lively discussion with a CEO of an early-stage technology company. The next day he read one of my articles on a regional news site. He immediately e-mailed me wanting to know if the article was about him. As in this case, I was able to respond “no” it was about an entirely different situation and company, but I would be happy to speak with him and his team if they were having the same issues.
Words have power and opinions matter. I have strong opinions about how governments around the world are impacting the viability of business and ability to innovate by their regulations, policies, “business” practices and influence on how, when and where businesses compete. Over the years numerous entities and individuals have written to ask how to compete with a government funded non-profit or a government entity providing services for free. I have had other conversations on how much damage has been done by receiving “free” advice from government agency employees who are untrained, lack knowledge on the rules and regulations and have no experience in the private sector. There have been many instances in which the cost to a company to compete in an “open” market in their country has caused them to lay off employees or even close their doors because they could not overcome the advantages of having taxpayer dollars, tax-exempt status, and preference related to advertising and funding given to the government and non-profits.
Below are two of the examples that have inspired my opinion on government programs. These items are paraphrased from the original documents to protect confidentiality and identification of the original authors. Italicized words indicate a replacement of entity specific titles, programs, or other identifying information that has been changed to generic terminology.
South Africa, Economic Development:
“I have a situation where the finance minister pronounced that all employees, including the board members in economic development arena, should declare conflict of interest … most are in business.
People in the sectors which drive a huge portion of our economy…Now because… some of the projects funded/ financed by the Government…these entities will have influence over the economy.”
Northern Ireland, Entrepreneur:
“I found your article on competing with not for profits very interesting indeed. I own a small (4 people) consulting firm based in Northern Ireland. Our firm has been trading since 1995 but over the last few years we have seen a growth in government funded agencies. These agencies began life with the intention of helping the unemployed, because of their not for profit status these agencies have been very astute in positioning themselves… When funding becomes available to provide support to local businesses, government agencies are sitting on the very panels deciding how the money should be spent…and surprise, surprise it involves them getting large chunks (and sometimes all) of the funding. In fact they have such easy access to the funding they are increasingly offering more and more services competing against private industry. They do not seem to be subjected to the same degree of monitoring as private for profit firms either.”
These are just two examples of entities in very different countries experiencing the impact that government and its employees have on competition, job creation, economic growth and doing business. Where the mission of government and non-profits use to be for public benefit, all too often these organizations’ (and yes, it can happen in a different way with for profits) mission is to exist and protect that existence. Where are the metrics, the measures, the goals and the performance criteria for measuring effectiveness and results? It seems the only place we can measure their impact is in the declining state of the economy and the cliff that we all are dangling off of.
I do not believe governments are meant to be the economic engines. They are meant to provide defense and the opportunity to succeed. If you do your job well—regardless of what type of entity you work in— then well done. If your do your job well on a program that is damaging the economic welfare of your country—then I wish you weren’t.
Author: Lea A. Strickland, MBA CMA CFM CBM GMC
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