BP and the Mismanagement of Complex Systems Systemic failures indicate inability to understand the true nature of problems, in industry as well as in government

WASHINGTON – The story of the BP Gulf platform explosion and never-ending spill has been presented to the public as a clearcut, if tragic, case of corporate malfeasance. Here is the “official narrative”. BP, a major, accident prone, (due to lax internal standards), multinational oil corporation, trying to squeeze maximum profits from operations, did not spend adequately in creating a safe well for oil extraction in a very challenging deep water environment in the Gulf of Mexico.

Terrible accident

Because of this reckless behavior, a terrible accident occurred. In its aftermath, the company showed to be equally unprepared to deal with the consequences of its (criminal?) actions. Hence the 60 days plus oil gusher, and the almost incalculable environmental and economic damage to all the coastal states, (Louisiana, Alabama, Mississippi, Florida); and to tens of thousands of individuals and businesses caused by this environmental disaster, already ranked the worst in US history.

Blame the rascals

The media, the experts and the US government –we are told–have rightfully singled out BP as the only culprit. BP, constantly referred to by its old corporate name “British Petroleum”, (may be there is comfort in pointing out that the bad guy is a foreign firm) has been publicly vilified by the White House. Its leaders, starting with CEO Tony Hayward, have been paraded and humiliated in front of a variety of congressional committees as the villains in this story. Later on BP management has been compelled to publicly agree to massive payments, (at least $ 20 billion), using an unusual format, an independent body that will dole out the payments, that in other circumstances might have been challenged, as it has shaky legal justification.

BP gets the blame

So, the consensus, (as the wise people knew all along), is that BP, just like other oil companies, is a greedy scoundrel interested only in maximizing profits even when decisions to operate below reasonable safeguards create the preconditions for horrible accidents such as this one. After all, this is how oil companies behave; and why would you expect anything different? The solution? Restrict offshore drilling. Impose new, really tough regulations. Better yet: stop consuming oil and put the criminal oil companies out of business. Simple, no?

Assigning blame or identifying causes?

Well, not so simple, both regarding diagnosis and cure. The cure may be correct in the long term. But it is going to take a long time before we can get out of a hydrocarbon based economy. As for the diagnosis, no disagreement as to the obvious BP responsibility in all this. But I disagree with this simplistic narrative. Indeed, this oversimplification, by focusing entirely on assigning blame for the accident to BP, discourages a deeper examination of faulty systems and practices, at BP as well as within the US government agencies charged with oversight responsibilities of all oil operations that most likely created the environment that allowed a relaxed attitude about safety standards.

Dig deep to understand systemic failures

My point is that catastrophic failures and other less visible but equally damaging systemic failures, (such as, for instance, the now well documented, chronic under performance of the US public education system), originate in flawed institutional cultures, outmoded models and corresponding bad value systems. These are hard to pinpoint and deal with, because usually deterioration is a slow, incremental process that is not easily captured, unless we have a trained eye used to vigilance. And even if there were red flags, how does one deal with huge, malfunctioning systems, with the complexity of a cultural and psychological make up, with entrenched ways of doing things? There is no “How To Manual” for any of this.

Experience shows difficulties in fixing failure rooted in institutional cultures

Armies of seasoned management consultants, usually dealing with  shortcomings much narrower in scope at the corporate level, often have a really hard time in understanding and then correcting bad practices related to entrenched ways of doing things, and, more to the point, showing concrete results in “turning things around”, changing attitudes and systems. So, one can speculate that, as the challenge of making even larger changes in bigger institutions may be considered too big of an effort, the attitude is that we may as well not even try. But, by giving up, we also have to accept systemic under performance and bad outcomes as the new norm. And, if so, we may also have to accept the occasional mega-accident that is almost certainly the product of dysfunctional systems produced by dysfunctional cultures and values.

Identifying deep causes too difficult; vilification of the bad guys easy

Because of all this –difficulties in understanding dysfunctions, difficulties in devising corrective action– there is no clear consensus as to the need to investigate more deeply and then attack root causes. In the case of a major event, such as this mega accident in the Gulf, because of the public outcry, there is a frantic, irrepressible desire to quickly identify a culprit and to finger him as the scoundrel who should pay for the misdeeds. Once we are satisfied that we got “the bad guys” and that adequate penalties and restitution will follow, then the public feels vindicated. Case closed. Let’s move on to something else, without any need to go any deeper regarding root causes.

We do not engage in objective research aimed at understanding deep flaws

This narrow approach prevents a fuller and deeper examination of the dynamics that lead to bad performance or much worse. The truth is that the causes of sub par practices and performance leading to several huge disasters or just bad performance are manifold, usually layered over time, and therefore not easily pinned on this or that stupid, negligent or criminal decision-maker.

Indeed, we have to come to grips with the fact that problems occur not just because a single, (or a few), wrong decision, but because we allow the development and the implicit acceptance of bad standards and improper ways. And this is in part due to the sheer complexity of large multi-layered processes entrusted to a variety of different specialists, themselves often relying on ever more complex technologies. In this complexity where there is no one standard that fits all interlocked sectors, it is difficult to quickly identify bad practices. There is no one person or group that can competently understand all.

Easy to ignore slow deterioration of standards

For these reasons, sub par operations may creep up unnoticed and then they become established. But usually, when these practices make slow, incremental advances, we do not pay attention. Everybody discovers everything only when the spotlight is firmly trained on the bad guys, now under the microscope. For example, now that BP is under fire, all of a sudden we have countless news stories that tell us in detail how bad its safety record has been for years and –even worse—how all this was well documented.

Failure to report? Failure to take action?

Well, if this is indeed so, this becomes a fundamental issue that warrants serious scrutiny. If indeed government regulators supervising all these oil exploration and production activities knew about serious shortcomings within BP operations, why is it that nothing of real consequence was done to stop and correct such glaring bad behavior? Had action been taken, it is quite possible that this accident might have been prevented, as BP would have been forced to use really safe technology and standards in this as well as other operations. But somehow, as we have now the culprit before us, there is no serious appetite for a more comprehensive analysis aimed at understanding why the regulators failed.

We believe too much in our technologies

An additional blinder is our almost total trust in the value of our superior, high precision technological tools, so that we come to believe that we are capable of creating error free systems. Therefore, we create the fanciful myth that, as a norm, nothing bad should happen. If something does happen, it must be the fault of some negligent or wicked individual. But it is not quite so. We are so entranced with the notion that almost everything new is or should be “plug and play” that we fail to appreciate that almost nothing really is.

So, while it is essential to invest in and to encourage innovation, including in deep water oil drilling, we are having various reminders as to the inherent difficulties in any attempt to create management systems that can adequately oversee complexity that in large part rests on new technologies.

In the end good judgment still counts

In the end, although this may appear unsophisticated, much still rests on human judgment. And so “how” judgment is reached and its connection with value systems and institutional cultures within ever more complex systems should be the focus of much more intense reflection. Can we manage the complexity that we created as we keep pushing the envelope? This should be properly investigated, as the record, not just based on this extraordinary event, is not at all reassuring.

But we do little of this.

Superficial debates on what works and what does not

Instead, by and large we confine ourselves to sweeping, mostly ideological generalizations regarding the inherent superiority of reliance either on “private sector-led” or “government-led” solutions to almost anything. The underlying assumption held by both schools of thought, such as they are, being that systems that are inherently good will also be more effective and self-correcting; whereas systems that are inherently bad will also be plagued by dysfunction and poor performance.

This is usually how deeply the analysis of the inherent value of public or private systems goes. As it were, the prevailing opinion on whether the private sector or government are inherently good or dysfunctional, is largely determined by which one is pushed forward by the more fashionable ideological wind, as opposed to any real analysis.

Private sector systems not in fashion

And so, until not too long ago, the accepted wisdom in America, (and from America in many other parts of the world), was that the private sector had all the answers, while government was inherently cumbersome, inefficient, slow-moving and way too expensive. Then we had the epic financial debacle of 2008 – 2009 and that erased the private sector’s good image of competent stewardship. So, the private sector was not just incapable; but inherently prone to madness and excess; driven by greed and shortsightedness with a good dose of criminal intent, and bound to lead us all to ruin, unless we keep it on a very short leash. Hard for the private sector to re-emerge with a credible, clean image after this historic debacle.

Government is good, after all

But if the private sector failed, who will lead us? Well, after another major swing, the new consensus was that the much maligned government, finally led by competent people who believe in its inherent virtues, will take care of things. The policy wonks, the savvy technocrats will capably handle this mess and deliver us from evil.

The US presidential elections of 2008 were mostly about the resurrection, if not the triumph, of this idea of competent government; once treated by Ronald Reagan as a joke. (“We are with the Government. We are here to help”. Reagan used to tell this funny story to his audiences who broke in a roar of laughter. “Government” and “Help” could not possibly go together. Every sane person knows that).

The (brief) triumph of the technocrats

Do you remember when Barack Obama made campaign appearances talking about his courageous economic plans with at least 20 leading academic and policy geniuses lined up, right behind him, on the same stage? Well, this was a clever message. After the ruin caused by the bankers and the failures of General Motors and Chrysler, the calm army of technocrats standing behind the next president, all ready to go, conveyed, (at least on TV), an image of competent, poised determination. The message to the viewer was: “Rest assured. We know this stuff. We shall take care of things”.

Policy wonks stuck in the sand bar

But then, guess what? The policy wonks, while well-meaning, after all do not have “the magic touch”. And this is not because of lack of good ideas; but because of the inherent difficulty encountered in implementing vast changes, relying on not so good vast bureaucracies that are not up to speed. Government, it turns out, is slow; much slower than it would be desirable, and quite inefficient. Programs are enacted; but not implemented. Money is appropriated but not spent; or spent not entirely in the intended way or with the desired effect. Predictions about almost anything are usually wrong.

Resurgence of anti-government feelings?

But having noted all this, it is far too easy to conclude, along with the ideological opponents of this administration, that: “We should scrap everything. Wrong approach. There is no effective public policy solution to these issues”. Such blanket rejection is a sure way to avoid any serious analysis as to why certain things go wrong. But this ideological rejection is pretty much the extent of the constructive criticism offered by the Republican opposition in Congress. Their counter argument is of course to go back to the Holy Orthodoxy of low taxes and small government; and –honest– this approach will work like magic. If this is indeed the level of the debate, there is little hope of making progress in any attempt to improve the quality of systems.

BP would show that the private sector is still bad

In this ideologically tainted atmosphere, the BP debacle does not help the cause of the ideological proponents of private sector-led solutions to anything. Thanks to BP, the private sector these days is getting another huge black eye. According to the “Market Gospel” proponents, a huge mess like the one in the Gulf is what you expect of incompetent government. The private sector is another story. It runs things efficiently and smoothly.

Assigning total blame to BP avoids serious investigations

Whereas BP shows us that the private sector can be enormously incompetent. Still, from this to conclude that BP, (and by association, all the other oil companies), is essentially a criminal enterprise whose aim is to siphon off oil and gas and-who-the-hell-cares-about-consequences is a bit much. And yet this is the most convenient, crisp and short explanation for all.

BP: convenient scapegoat

In fact, convenient for the government that needs a clear political scapegoat; but also convenient for the defenders of the private sector orthodoxy who can explain away this disaster on the ground that it was an aberration caused by bums who should not have been in charge in the first place. This way, reassured that now we know all we need to know, we fail to undertake the more complex work of investigating the root causes of systemic failures which in this case involve, at different levels, both BP and the government.

Government responsibilities overlooked

Indeed, there are government responsibilities. But they have been completely overshadowed by the anger against BP. By leading the charge against the callous oil company, the US government cleverly managed to deflect any attention from its own egregious failures in the exercise of its statutory functions of oversight on the very activities of this oil company that eventually led to this disaster. Unfortunately, as all the focus is on BP, the public is not getting the full picture of all the key dynamics leading to this tragedy.

The US government clearly failed in its role of steward of the public interest. If BP went ahead with reckless plans, these very plans were vetted and approved by the Minerals Management Service, MMS, a branch of the Department of the Interior. MMS should function as the oversight government body created with the precise objective of making sure that safe procedures would be followed.

Why MMS did not fulfill its oversight mandate?

Why all the regulatory checks on BP failed? How is it possible in these days of mandatory disclosures, multiple reporting obligations, required vetting and authorizations, for a huge, high-profile multinational corporation operating all over the world to routinely engage in semi-criminal behavior without being caught and stopped? Again, now, with this immense disaster before our eyes, everybody is an expert at reading a long trail of damning evidence. But how about beforehand, especially if there was indeed so much available proof pointing to chronic malfeasance?

So, either the alleged BP reckless behavior is now conveniently exaggerated, or the various oversight and control systems in the US and around the world failed miserably in carrying out their statutory responsibilities. Either way, all this should warrant deeper investigation, so that we can find ways to correct aberrations.

We should investigate and analyze

Indeed, a deeper, truly comprehensive investigation would allow us to better understand the failures of oversight bodies, such as the MMS. But the fury against BP has shifted the spotlight away from the role of the US government in all this. We have essentially forgotten that, in principle at least, all of the activities of all oil companies involved in any type of exploration on the outer continental shelf, are supposed to be under the supervision of The Minerals Management System. And that is the Federal Government, otherwise known as the Obama administration.

The MMS website indicates that the MMS has a strong institutional presence in the affected Gulf of Mexico region: “The Gulf of Mexico Regional, GOMRD, Director [of MMS] is Lars Herbst.  Many disciplines are utilized to conduct the program.  Occupational categories include Petroleum Engineers, Geologists, Geophysicists, Inspectors, Physical Scientists, Technicians, Environmental Scientists, Oceanographers, Meteorologists, Marine Biologists, Economists, Mineral Leasing Specialists, Archaeologists, Paleontologists, Computer Specialists, Information Specialists, and Administrative Specialists, and a variety of clerical positions.  The GOMR currently has 542 employees on board.  The GOMR has District Offices located in Houma, Lafayette, Lake Charles, and New Orleans, Louisiana, and Lake Jackson, Texas“. So, MMS has jurisdiction and staff. Where were they?

MMS chief fired

As this accident quickly became political, at the end of May, the first political victim was indeed the incumbent head of MMS, Elizabeth Birnbaum, unceremoniously fired. Whether or not Ms. Birnbaum was directly culpable, MMS failed. It is true that the now controversial “long string design” for this particular BP oil well, (deemed by experts to be less safe than others), was reviewed and approved by MMS. If indeed that design was to be considered inadequate from a safety standpoint, then it was up to MMS to point that out and compel BP to adopt a better, more secure system –a judgment call that might have avoided this tragedy. But they did not do any of this, while they failed to act on other issues as well. And may be this is why the head of MMS has been thrown out.

Interior Secretary distances himself from MMS

And yet, in all this, it is almost bizarre that Birnbaum’s boss, Interior Secretary Ken Salazar, talked about the MMS, this agency under his supervision, as an alien body that he knew not much which apparently engaged in obscure practices that, as a minimum, would suggest improper ties with the oil industries that it is supposed to supervise. But, hey, he –Secretary Salazar– knew nothing about it. Was he supposed to? Of course he was; they work for him.

And so, here is the emerging picture. MMS, a critical piece of the puzzle, representing the crucial function of government control, inspection and supervision, failed in a stupendous way. But, somehow, the media gave cover to the Obama crew, stating that bad, unethical practices within the MMS started under president George W. Bush, who, as you all should remember, was a product of the Texas oil industry, and thus guilty of any sort of favoritism towards his friends.

MMS relaxed standards really George W. Bush’s fault?

May be so. But last time we checked Barack Obama has been President of the United States as of the end of January 2009. This accident occurred at the end of April of 2010. Whatever the alleged and real flaws of the disgraced former president George W. Bush, doesn’t this administration bear responsibility for the poor performance of its own MMS watchdog; a watchdog placed there, let’s not forget, to safeguard the public interest? Of course, it does.

But, somehow Obama has been given a pass by the generally sympathetic media. And this is wrong, because this omission of government failures –present as well as past administrations all included– creates a distortion, allowing everybody to concentrate their rage on the easy target, the big and fat (and conveniently foreign) oil company, without properly examining how the regulators, those who are paid to protect the public interest, completely failed in their primary mission.

Systemic failure not properly looked into

This gist of all this is that with the easy demonizing of BP, already convicted many times in the court of public opinion, we are not focusing on the relevant components of this problem which is “systemic failure in the management and oversight of a complex operation”.

The fixation is and will be on “Who did precisely what at what precise moment”; without full appreciation that the causes of systemic failure rest in habits and ways of doing things that tend to be created over time. Accidents of this magnitude are fortunately rare; but their genesis usually can be found in a series of smaller or bigger aberrations carried on over a long period of time.

Gulf clean up operations also sub par?

But we are not done with the “Gulf Spill” yet. There is more, concerning techniques used to manage the oil spill. A retired CEO of the Shell oil company, John Hofmeister, in several media appearances has forcefully said that the techniques used by BP and the US government to contain the impact of the spill are old and ineffective. He also indicated that the Jones Act, an old law of 1920 that forbids the use of non US flag ships in US waters, so far prevented the US Government from accepting many offers coming from a variety of countries, such as Belgium and the Netherlands, that do have vessels better equipped to vacuum oil from the sea surface.

Clean up efforts also sub par

Likewise, several media accounts indicate that local elected officials and ordinary citizens are not happy with the speed and effectiveness of actions now under the general direction of the US Coast Guard. So, while the focus is now on how much money will BP have to cough for restitution and compensation, we are still not using the best technologies to effectively mitigate the consequences of this spill.

Uninspiring picture

If this is indeed true, and this critique comes from a former industry leader as well the people affected, then we have another type of systemic failure that would point to lack of understanding and mastery of international best practices related to oil spills on the part of the US authorities officially in charge of the post spill operations, coupled with crippling and outmoded legislation that should be either suspended or repealed. We had a show of massive government failure in 2005, in the organization of the post hurricane Katrina relief operations. Now, while this is a different type of emergency, we still see a combination of bad planning and poor execution.

This is not an inspiring picture in a country supposedly built on solid foundations of reason, checks and balances and accountability; and certainly no indication of a healthy attitude aimed at understanding causes and remedy deep-seated problems, as opposed to shaming the guilty.

Systemic problems in the public sector, says OMB Director

On a different but related topic, on June 8, Peter Orszag, the Director of the Office of Management and Budget, OMB, the functional equivalent of a Minister of the Budget in the US government, gave an interesting speech at the Center for American Progress in Washington about effectiveness of public policy.

The juice of that presentation was that Government may have great ideas, but, if they are not properly implemented because of ineffective delivery systems, then there is little or no practical added value from the adoption of such policies.

US patents in three years

He proceeded to tell the audience that the US government as a whole is way behind the private sector in productivity. He cited as an example the inability to consolidate and streamline IT operations in various agencies. He also said that the US Patent Office, while it accepts filing done electronically, since it lacks proper IT systems, it then has to store filed forms manually. Yes, you got that: they print what they receive, and then store it manually. Average processing time: 3 years.

He also said that in 2006 the US government authorized a big project to produce computers to be used for the Census project now underway. Well, $ 600 million was spent on this with no results; and so the program was cancelled with no visible product, while “census workers out there today are still using pen and paper”.

Dysfunctions in the public agencies we increasingly rely upon

Now, all this is interesting. Mr. Orszag does not have “Line Ministry” responsibilities. He is the big picture guy who is supposed to put all the numbers related to public spending together so that there is policy and fiscal coherence. Fine.

But he was talking about the US government as some kind of bizarre specimen that he just run into, and not as the system that he and many others are running and on whose efficiency we all depend.

In truth, Orszag also talked about many administration initiatives aimed at improving this rather uninspiring picture; but they do not appear to be treated as matters of high urgency.

The problem

And here is the problem, magnified by the fact that this very administration of which Mr. Orszag is a senior representative was elected largely on the assumption that public institutions would be capable of rectifying the damage caused by the reckless private sector.

Therefore, fixing key components of public administration should be a high priority. Mr. Orszag told us about glaring inefficiencies. And it is good to begin by recognizing them. But how fast are we going to reach a higher level of performance? One thing is certain: not anytime soon.

Any quick fix…..?

True, in the cases that the OMB Director brought up in his speech there are no examples of dramatic errors that cost lives and environmental catastrophe. But it should be clear that embedded in all these dysfunctions there is the insidious, if hidden, damage caused by slowness, inefficiency, waste of resources, poorly used human capital, and bad allocation of money.

While Peter Orszag was performing a public service by pointing out these failures, it would be reassuring to learn that adequate resources are devoted to work on solutions. But we are not there. It seems that only crises require furious reaction. The malfunctions that set the stage for crises are largely ignored.

(In all this, it is of no great comfort that several days after delivering this speech, the news appeared that Peter Orszag is about to leave the Obama administration, the highest ranking member of the economic team to resign).

Apparently not……

OK, where am I going with all this? It is very simple. Government, just like an oil company, or a US Coast Guard managed oil spill mitigation operation, has become an ever more complex system that we do not know how to run well –and much has to do with its sheer magnitude and myriad of component parts, each with its own specialized technologies, its own quirks and its own “culture” and communication systems. But unfortunately we are unable to have a proper conversation about the malfunctions originated by complexity.

No honest debate about how to make large systems perform better

In part this is due to a political climate inauspicious for serious non partisan analysis. For a while at least, we accepted with almost blind faith, (except of course for the vocal ideological opponents), this idea that President Obama and his crew of supposedly competent, “with it” technocrats wisely maneuvering the levers of public policy were absolutely capable of rescuing us from the horrible damages caused by the insane leaders of a private sector that appeared to be a criminal enterprise.

They said they could do all

For a while at least, we were willing to believe that huge public policy rescue programs announced right after the November 2008 elections were going to not just extricate us from the financial catastrophe created by the evil Wall Street gang, but that this Wise Government had the smarts to address and fix all major problems:

  • education
  • health
  • employment
  • energy;and, last but not least
  • the systemic fiscal imbalances due to the cost of huge entitlement programs exacerbated by the growing numbers of senior citizens requiring more and more costly public services.

And they would do so competently, with an appropriate mix of near term fiscal stimulus, somehow magically blended with long term fiscal austerity. And this careful balance was supposed to convey to the markets that we needed to spend a lot now to revive the patient. But later, after normality would have been reestablished, we would deal with the systemic problems of growing public spending.

Record not so good

Well, while progress was achieved in many areas, most notably avoiding financial catastrophe and reconstituting some trust in the broader economy, practically nothing worked exactly as planned.

The vast short term fiscal stimulus was applied; but the actual scope of the recession was misdiagnosed, and the stimulus impact therefore much smaller than anticipated. The recession turned out to be worse and the rate of unemployment much higher. Thus a very, very slow jobless recovery.

Health care reform was passed with the promise of reduced costs down the line. Nothing so far indicates real cost savings. New initiatives are underway in education.

But the very nature of this sector does not allow us to see measurable near term results. Nothing much was done on energy. Nothing at all on immigration reform.

Domestic counter terrorism operations seem to be accident prone, with sloppiness in catching even amateur criminals with modest training.

In foreign policy, President Obama, declared that Afghanistan is a “war of necessity” and ratcheted up the war effort, with enormous military and fiscal consequences and trust in a strategy that in his intentions is magically supposed to do the trick before next summer when we shall start withdrawing troops. A fanciful target at best.

Bad reviews on Afghanistan go unnoticed

Indeed, on Afghanistan, another example of systemic failure. A recent report from the Special Inspector General for Afghanistan Reconstruction concluded that the metrics used to evaluate combat readiness of NATO-trained Afghan troops were wrong, thus vastly overstating Afghan capabilities.

The metrics used to create a rather optimistic capabilities assessment measured length of training and equipment provided; but failed to evaluate how all this works in actual combat operations.

Readiness exaggerated

This created an over optimistic picture of growing Afghan army capabilities, while the actual quality of training and thus combat effectiveness of many units remains modest.

The implications of this finding are immense and they clearly affect the key assumptions of a strategy largely based on our ability to turn very soon operations to a capable Afghan force, as we think about a draw down that should supposedly start in the summer of 2011.

Big news?

This report indicates that we cannot reliably turn much to an unprepared, not combat ready, Afghan military. This is big news. This is the stuff that should invite a comprehensive reappraisal of the whole strategy.

And yet, while such an exercise may very well be going on behind the scenes, this news item came and went, without any significant ripples or outcries. So, double damage here. A huge hole in the strategy is revealed indicating systemic failure in determining capabilities, and nobody thinks much of it.

Underperformance rampant in private and public institutions

All these examples indicate that the very government whose ability we want to rely upon to correct the crisis created by the private sector does not work so well either.

So, where do we go from here? Well, at the very least we should recognize that we do not really know how to manage complexity very well, be it in government or the private sector. It is quite obvious that the most technologically advanced nation in the world is not living up to its image of competent management.

Which model? 

If we agree on this, at the very least we should behave like adults and stop treating this as an ideological battle. There is no “Private sector-led only”, or “Government-led only “viable model. The future is not about “either, or”. We need both; and both clearly need fixing.

A better future rests on our improved ability to understand institutional cultures and how they may be improved upon in order to enhance clarity of purposes, priorities, positive feed back and responsibilities. The examples of the last few years show huge systemic failures of operations run by a variety of institutions, private and public, supposedly designed to deliver results while containing risk and avoiding failure.

As a minimum it would be good to acknowledge that we have a serious problem here.

We have to find better ways

While this picture is worrisome, we know that the United States has the intellectual capacity and the innovative drive to successfully address all of this. But first of all we should stop ideological fights between the “private sector-led” or “government-led” supposedly more efficient model and get to work realizing that systemic failures occur in both spheres, while they originate in a lack of proper understanding of institutional cultures, their difficult interactions with one another and the psychological make up of leaders and line officers in both Government and the private sector.

End the ideological fight: look for real root causes

This is where the real investigative and analytical work should be; and not in selling or debunking this or that supposedly superior model –an exercise whose only objective is to reinforce established biases, with the hope of winning an ideological fight, and with that the next election.

As the OMB Director correctly indicated, in the end the value of public policy is in its results. If our systems are flawed, you cannot expect good outcomes even from the most clever, innovative ideas.

And the same applies to whatever the private sector undertakes. If we want better results, it is time to study how people think and how they interact.

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