Dear Mr Bill Gates,
I don’t like writing open letters, but I don’t have any other choice this time*. Should I write to you personally, the email may get lost in an overloaded inbox. The matter that I want to bring to your attention is simply too important to risk getting lost. I sincerely hope you are not offended by the fact that thousands of readers of the Lithuanian magazine “Verslo klasė” saw the short version of the letter before you have had a chance to read the full version bellow.
I’d like to tell you a story about the president of a country. It is fiction so any similarities to real people or events are purely coincidental.
That said, we will probably avoid any coincidences as this country is very specific. Taxes seem too high for its residents while salaries are too low. There are more bureaucrats than businessmen here. The newspapers are dominated by stories about the scandalous waste of taxpayers’ money. The country’s democratically-elected parliament is only able to work productively for half of a term because its first year is wasted on oversight while its final year is devoted to election campaigning. The elections themselves are always won by the parties that make the biggest promises.
After the president has finished complaining, he sighs deeply and looks into the eyes of his companions – the leaders of two other countries. No one better understands the head of a country than the leader of another country. The three of them became friends at an international conference and now meet at least once a year for consultations and to complain. Because they come from different continents, their conversations are always guaranteed to be about global issues while the gifts they bestow upon each other are always exotic.
The president fiddled with a 200-year-old bottle of rum, suggesting that he wanted to open it there and then. But the king, who gave him the gift, asks him to wait because in his country rum is only drunk after supper has finished and when the master of ceremonies proposes a final toast to deep and restful sleep.
Tradition is strong in his country. Once, the king was proud of this but he recently changed his mind. His people resist change, fearing that it will destabilise their way of life. Rum can now only be bought by visiting shops in neighbouring countries. The country’s young people want to become lawyers, managers, political scientists, but, finding no such jobs available, emigrate. They don’t want to clean out oak barrels at home so end up washing dishes abroad. The county is wracked by massive unemployment, overcrowded jails and low pensions. The subjects demand that the king takes care of them because they cannot imagine their country being run any other way.
The president places a special souvenir bottle on the table where it will remain unopened until supper has finished. Maybe, the king reflects, his country has problems but at least the climate is conducive to the cultivation of sugar cane.
The third man present – a dictator – thinks the king’s problems are insignificant. If anybody has cause to complain, it is him. Does anybody think that he suspended democracy because things were going well? Political instability, a divided society, chaos… all these ended as soon as the dictator decided to devote the rest of his life to his people. But despite the reestablishment of order and several reforms, the population continues to live in poverty.
The supper continues as it does every year. During the toasting, each of the three leaders argues that he is worse off than the others. Each of them calls up Wikipedia on their phone to prove how badly off he is. Today is the only day each year that the leaders can stop pretending that everything is fine in their countries, stop speaking platitudes and admit that the situations are much worse than the cosy images presented by their foreign affairs ministries. There are no investors, party colleagues or voters in the room – they can speak the truth.
They carry on talking, frequently interrupting each other and often raising their voices. They don’t notice the time and suddenly it is midnight. It is now difficult to remember who said what but it is clear that the following problems were brought up:
- The amount of tax collected is not sufficient to cover the budget
- There isn’t enough money to finance society’s needs
- People complain that they can’t find desired jobs
- Employers complain they can’t find suitable employees
- People blame the government for their problems
- Society is riven by conflict
- The courts are overloaded with cases
- The delays in the courts cause anger over a lack of justice
- There are long queues at hospitals and clinics
- Government institutions are inefficient
- The workforce is unproductive
- People don’t know what they want
- Reforms taken many years without achieving anything
- The governmental term is too short to complete large projects
- People emigrate to more developed countries
- Fertility is falling
- Public authorities including the police and hospitals are riddled with corruption
The president strikes his wineglass and calls his colleagues to order. He has two proposals: firstly that next year the three of them are to talk about solutions rather than problems and secondly that it is time to open the vintage rum!
His two friends ignore the first proposal but enthusiastically approve the second. Tomorrow, when he is sober, the president will write down all of the problems that they have discussed and give the list to the other two as a souvenir.
Who will open the rum?
The president hazily recalls what happened next. He takes the vintage rum and tries to pull out the cork. But during the last 200 years it has become lodged in the bottle and won’t budge. The king tries but also can’t open the bottle. Then the dictator takes the bottle in his right hand and wedges the cork between the door and doorframe. Half-closing the door with his left hand to squeeze the plug, he then takes the bottle in both hands while holding the door with his foot. He turns the bottle anticlockwise and the cork comes out.
When the president was a child he used to read fairy-tales about genies living in bottles and now his grandchildren are reading the same stories. Now a genie, just a moment ago hidden in the bottle, is standing before the three astonished leaders. None of them thinks to pull out their phone and take a picture of the genie to ensure that they are believed when they come to tell their story.
The genie looks somewhat different to those depicted in the fairy tales. Some 180 cm in height, of medium build, clean shaven and with a paunch, if it weren’t for his turban complete with emerald you could be forgiven for thinking that this is the guy from the Carlsberg advert.
The genie is polite and tells the leaders that he can grant three wishes but only under specific conditions. Each wish must solve the root cause of the country’s problems, it must be measurable and it must significantly improve the life of all the country’s inhabitants.
What if the wishes don’t meet the requirements, ask the leaders? Well, the genie says, in that case he will simply destroy their countries. So now, he adds, what are your wishes gentlemen?
The king immediately announces that he won’t take part in such nonsense. There is more than one problem in his country – indeed there may be 1,001 of them so this Scheherazade imposter can take his bottles and clear off because the king is not going to be blackmailed.
The dictator won’t play the game either. He doesn’t want to hear about goals or measurements – these are in the realm of management theories that haven’t been invented yet. He orders the genie – Aladdin, Ali Baba or whatever his name is – to leave or he will call security.
The president is the only one to have kept quiet. On the one hand, he is approaching the end of his term so if the genie destroys his country it will be on somebody else’s watch. On the other hand, if he significantly improves the lives of his people he will go down as the best president in his country’s history. And he is a very good negotiator.
“Genie, now that my two friends have refused to negotiate, does this mean that I can use all three wishes? According to the rules of my country, any institution has 20 working days to respond to inquiries. Genies are not exempt from this rule so do you agree to wait for one month for me to present my wishes?”
The genie agrees. The president is delighted – he will come up with an idea in a month for sure and his country will flourish. He must exploit this miraculous opportunity.
As he leaves, the genie says: “Focus, Mr President,” and now these words will not leave our hero in peace.
The following morning, the three leaders are too shaken by the previous night’s events to discuss them. The bottle has gone and the only evidence that any of it took place – the mark of the cork on the door – is not enough to convince anybody else of the story. Besides, the president feels uncomfortable that he has got three wishes while the other two have none.
He finds that the first wish is easy. If you want to increase government spending to invest in infrastructure and improve public services, then you have to increase the state budget. To do this, you have to collect more taxes but there’s no room for further taxation. So you have to increase the number of taxpayers and increase the average amount of tax collected from both employer and employee. To do that you have to create more jobs and you need higher salaries and company profits. And you need to ensure that each person and business is creating more added value. If they don’t create value then they won’t pay any more tax.
So the first wish is obvious: create more jobs and create more added value from those jobs.
This will please the genie because we can measure our wish in units and dollars. But will it improve the lives of everybody? Of course it will because everybody uses hospitals, schools, ports etc. And if people earn more, they live better lives and if companies make higher profits, they invest more back into development and create more new jobs.
But two measurable wishes plus the definition of the root of the country’s problems are still missing.
Two weeks pass as if they are a single day. The president is forced to attend endless receptions for international delegations, a minister resigns and there is a shale gas discovery. All of these urgent tasks prevent the president focusing on the important matters at hand.
However, if it wasn’t for the annual report of the Bill & Melinda Gates Foundation, the president would probably have forgotten his obligations to the genie.
“In the past year I have been struck again and again by how important measurement is to improving the human condition. You can achieve amazing progress if you set a clear goal and find a measure that will drive progress toward that goal (…) This may seem pretty basic, but it is amazing to me how often it is not done and how hard it is to get right,” – these Gates’s words aroused the president’s suspicion that he wasn’t the only who had been contacted by a genie recently. Maybe the answers to the genie’s questions lie in Gates’s report?
After he reads the report at http://annualletter.gatesfoundation.org/ for the third time, the President becomes disappointed. Gates indicated how to go about finding a solution but did not present the solution itself. He found that using measurements allows focus but did not indicate what set of global measurements a country should use.
Focus. But on what? The country’s State Department of Statistics employs thousands of indicators and the president has just two weeks left to solve the genie’s exercise.
The president cancels all meetings. He switches off his computer and puts his phone on mute. He puts his head in his hands and tries to focus.
Will people be happy with a job and a big salary? He had a well-paid position for many years but only felt happiness last year. If it hadn’t been for heart surgery he would never have known the happiness of seeing his grandchildren growing up. Three months of disability is as nothing compared to what might have ended up as an obstruction to his blood supply.
If it was within my power, I would ensure that people never became sick and lived for an average of 100 years.
Can this be the president’s second wish? The less time people spend at hospitals or incapacitated at home, the more time they are able to work. When working, they create value and pay taxes. When people are sick they create nothing and not only don’t pay taxes but receive benefits. The longer a person lives, the longer he or she can enjoy their grandchildren or maybe even live long enough to see great grandchildren.
Is it possible to measure this wish? Of course. The Department of Social Security knows how many days a person has worked. While the Residents Registry knows how many days he or she has lived. If there is an improvement in these two measures, the state budget would increase, also more money could be used to finance pensions. And what if if the improvement was dramatic? It makes the president shudder when he imagines how tired his country’s retirees look compared with German pensioners who are off travelling the world as soon as they stop work.
The president breathes a sigh of relief and writes down the second wish: A longer average lifespan and longer in work.
His muted phone shows that he has missed 15 calls. A meteorite has fallen to earth somewhere and hundreds have been injured. Luckily it is in Chelyabinsk. Well, we would probably surpass Chelyabinsk in a measurement of the average amount of time worked this month!
What could the third measurement be?
This is now the hardest period in the president’s entire life. His mind has become completely tied up with thoughts about the third wish. He can’t sleep at night and becomes uncommunicative during the day. He spends hours staring at the list of problems made on the day of the genie’s appearance. To help find a solution, he connects the problems with cause and effect arrows. But the tree is still missing something.
Browsing the State Department of Statistics databases makes the president mad. Numbers, numbers, numbers. It seems that he cannot see the wood for the trees. Why is there not a monthly report on the improvement or otherwise in people’s quality of life? How can we improve what we don’t measure?
Anybody facing the most important question of his career could be hit by insomnia and after some channel surfing the president suddenly stops clicking the remote control. A recording of the Super Bowl is so much better than thoughts about the pointlessness of a career in politics, he finds.
You need to be American to know the rules of football.
But the president knows the rules despite not being an American. As a grandfather he spent one happy week playing an NFL video game with his grandson during the last summer holiday. The boy had told him that it had been the best holiday ever despite the president thinking that it had been an absolute waste of time.
Do these guys running around the football field also think they are wasting their time or do they have some meaningful goal in mind, he wonders.
Of course they have. Both the Baltimore Ravens and the San Francisco 49ers want to win the game. How do they measure their performance? The answer is on TV: Jacoby Jones fields the kick and promptly returns it 108 yards for the longest play in Super Bowl history. The ball gets into the end zone, meaning that the touchdown is worth six points to the Ravens.
Offensive points and defensive stops – these are the goals of a football team and are obvious to anyone watching the game for at least 10 minutes. But scoring can be accomplished in several ways and this, along with complex rules, makes the football system very complicated.
A sudden power outage at the stadium causes play to be suspended and the president gets a couple of minutes to think logically: If he was a coach, how would he improve the team?
Focus, coach. Running the team shouldn’t be more difficult than running a country.
In order to focus, there should be a simpler system. The president is sick of the complaints by government agencies saying they are unable to focus and measure their efficiency because they have too much to do. It is true, he thinks, because the complexity of government work prevents its agencies from defining a clear goal and then developing the tools to measure performance and track progress.
The president’s thoughts return to the football field. Which way of scoring is the most desirable and statistically the most popular? The touchdowns, of course. It doesn’t mean the other ways of scoring aren’t important, it just means touchdowns are the most important.
As a system, the team should aim to produce more touchdowns to reach its goal of winning the game.
Something is still missing and so the president isn’t satisfied with his conclusion.
The match is still suspended and the commentators – without anything meaningful to say – are using every infographic they can find to fill time.
One such graphic being shown is statistics on Third Down Efficiency. A commentator says: “This is a measure of excellence, and the Ravens seem to play with a better quality.”
A measure of Third Down Efficiency is used by analysts to determine how good a team is at converting third downs. Converting a third down is important because it is typically a team’s last opportunity to hold on to possession of the ball. If they fail, they will most likely have to punt the ball away to the other team, or settle for a field goal. The better the conversion of third downs, the longer the team’s drive, and the more scoring plays.
I’ve got a missing quality measure.
As if reading his mind, the TV starts showing an advert for Toyota, the most quality-oriented brand in the world. The firm pioneered the Toyota Production System which significantly improved the approach to manufacturing that had previously been created by Ford. Toyota focused on the production flow while day by day, year by year continuously eliminating waste in inventory, transportation, movement and rework. This created a culture of continual improvement which none of its competitors could match and less waste meant faster production and lower costs.
Toyota spends up to $3.8 million for a 30-second spot during the Super Bowl. This is not waste but should be a great investment with a tangible return.
The commercials finish and the commentator now starts talking about the team’s budgets. The Ravens have a budget of $130.9 million while the 49ers have $124.4 million. The president searches online to find out who won the Super Bowl.
It was the Ravens. If they had lost, it would have meant that the 49ers would have achieved an even better result with a lower budget which would have made them the better team.
Isn’t it the answer to the question of how to improve the team as a system?
The team as a system should produce more touchdowns as the goal units (or throughput – T), increase third down efficiency as a quality (Q) in order to reach the goal of winning the game with lower operating costs(OE).
Can these measurements be applied to any governmental agency? This is a topic for tomorrow. Before switching off the TV, he creates a note on his phone: “The goal of any agency is to continually deliver improving services at lower cost.” The president then falls asleep.
In the morning, he is in no doubt that he has got key indicators for government agencies. But these should be subordinated to something more global. After all, he has two global wishes but the genie demanded three.
Any hope of discovering what the final wish should be evaporated on day of the deadline set by the genie. An improvement in any other measurement would not improve the life of everybody in the country, the president realises. With a sinking heart, he knows that all options have been analysed and none is right. The genie has won and my country’s very existence is now to be extinguished.
Suddenly, the cabinet door opens and an assistant bursts into the room with a stack of papers. Personal correspondence hasn’t been read for two weeks. Didn’t they teach you to knock at school? Perhaps, thinks the president, a lack of lessons on ethics is the reason that this person is only an assistant and earning 500 dollars a month. He recalls his father telling him: “Either you are a beauty, or you will need to learn.” But these days you’ll find yourself slapped with a sexual harassment charge for making such a joke. The president swallows the joke, smiles and asks the attractive assistant to close the door on her way out.
One of the letters in the pile of correspondence is from Bristol University, one of the most successful universities in Britain. It mails every graduate and, despite the enormity of such an operation, asks each one of them to complete a form.
The president, a graduate of the university, starts to fill in the form. His eye is caught by question 14: “What was your average salary in 2012?” He has answered the same question for 30 years but this year, for the first time, he wonders why it is important for Bristol to know this information.
If a graduate’s salary increases then this reflects well on the university’s methods, thinks the president. The higher the salary, the higher university’s rating. The higher the rating, the more expensive the education is and the bigger a student’s investment. The more he or she invests, the more effort he or she is likely to put in to get a return on that investment – the efficient use of the skills acquired to create value. And the more value a graduate creates, the more income he or she will earn.
It means that a return on investment in education can be measured by the increase in graduate salaries. Why have we never measured this in my country?
It is not difficult to measure investment in education. The number is highlighted in the state budget with the word “Education” and state and private universities and schools compete for 1 billion euros every year. But how can we calculate the return on that investment? Nobody will send a form to every citizen for the rest of their lives, will they, particularly if salary data is stored at the Social Insurance Department. If only local universities shared their lists of graduates with the Social Insurance Department then the solution would be purely technical.
If government investment in science and education results in an increase in added value by the people who took advantage of that spending to increase their salaries. And if this sum can be measured in dollars then it means that that investment was right. So all decisions over education should be subordinated to the main goal: “Will this allow people to increase their salaries and create higher value?”
Could this be the third wish, he wonders: a higher return on education investment, measured by an increase in graduate salaries?
Eureka, yes! The President tries to summarise:
If people live significantly longer and are capable of working for longer, if state investment in education allows graduates to increase their salaries and if more people are employed and creating significantly more value in their jobs then the consequence is…
The president rushes to the phone and sets up a conference with the king and the dictator. He starts shouting: “Guys! I succeeded! I discovered all three wishes on how to improve the lives of people! I also discovered the root cause of any country’s problems –it is because global measurements of quality of life are not implemented and the people don’t demand improvements in them. I now know what to tell the genie!”
“What genie?” the two reply, “What are you talking about?”. When the President reminds them of their adventure and his obligations to the genie, there is an uncomfortable silence. Then the two at the other end burst into laughter.
“So you saw a genie? Ha, ha, ha! I saw a white horse that night. It rides to me several times a year!” says the king crying with laughter.
“And I saw two drunk donkeys. One pursuing a genie, the other trying to catch a white horse. Later on I put both of them to sleep. It was a hard party,” said the dictator He always took care of the weaker ones.
Allowing the other two to taunt him and threatened not to mention the genie to anybody else, the president bids them goodbye.
There’s a tree** listing a country’s problems on his desk.
And a definition of three global measurements. Perhaps there never was a genie but his last words to the president will become the new strategy for the country anyway: FOCUS.
*I will probably present this topic at American Public Efficiency Conference to be held in Utah somewhere in fall 2013. Hope you be there. If not, you should personally meet Utah Governor Gary Herbert – he and his team do amazing things in terms of focussing on goals and measurements in public sector in your country.
**This tree was first introduced by Prof. Rimvydas Jasinavičius in 2012. There’s an upgraded version here.