By now, we all know the paradigmatic story of the Silicon Valley startup thwarted by irrational political opposition or bogged down in bureaucracy. The trials of companies like Tesla and Uber are front-page news: innovative business models stymied by vestigial regulations and political interests established long before these companies came into being.
For the last decade, I’ve partnered with entrepreneurs solving complex social problems. I believe in the transformative potential for innovation to deliver public good — and have seen my share of outmoded or just-plain-indefensible government decisions. But all too often, government is unfairly painted as the villain. CEOs often mistake complexity for dysfunction — and, as a result, investors and technologists are warned-off of addressing public challenges that can yield the greatest impact.
Smart investors like Formation8’s Joe Lonsdale, however, see economic opportunities in “businesses that are creating the most value for society.” In the education context, GSV’s Mike Moe looks for “return on education.” I’d like to encourage more entrepreneurs and investors to consider partnering with the public sector, understand its order, and master the sometimes Byzantine systems that will enable them to make an impact. Here are five recommendations for CEOs considering government challenges — or opportunities:
1. Pay attention to timelines. Entrepreneurs with promising ideas often complain about slow sales cycles and decision making. More often than not, I’ve found that frustration with timelines stems from a lack of experience, and, in turn, an inability to set expectations with anxious board members and investors. Understanding the actual — and often immutable — timelines for government action reduces stress and lets business leaders manage risk and allocate resources. Setting artificial deadlines or threatening price changes may be effective negotiating tactics in the private sector, but they most often backfire with government customers.
It’s important to remember that procurement and rule-making processes, while often outdated, were set up for good reasons. They help to create a more transparent process for taxpayers, prevent cronyism, and ensure that government makes better decisions.
Thoughtful public-private partnerships can lead to long-term investment on both sides and meaningful opportunities to prove outcomes. Remember, slow sales cycles or regulatory processes correlate with big opportunities and can also establish powerful barriers to entry for would-be competitors.
2. Know the boundaries of influence. The mythology of the “fixer” can have a disastrous impact on the success of entrepreneurs working with government. CEOs imagine a political operative or lobbyist wielding influence in the background; if only they could get to that person, processes would be expedited and problems solved. Smart executives often suspend everything they know about decision making when it comes to dealing with government. Perhaps there was a time when more decisions were made in smoke-filled back rooms — but these days, process is power. Substance is influence. Study the role of key influencers and how they fit into the decision-making process.
Public opinion also matters. A well-placed op-ed or social media chatter can change the political calculus for decision makers. Just like good CEOs, policymakers consider the perspectives of those impacted by decisions, and rely on the expertise of staff that know the issues. Focus less on winning over the boss; get to know the real decision makers and address their substantive concerns.
3. Keep it real. Entrepreneurs love hyperbole. Words like disruption and innovation may win over consumers and investors ,but they rarely influence government action. The old adage, “no one ever got fired for hiring IBM” still rings true. Risk-averse staff are suspicious of claims that sound too good to be true (and sometimes are). Use simple, clear language. An objective assessment of potential impact shows policymakers that you’re taking a thoughtful approach and willing to invest in a long-term partnership and aren’t just out to make a quick buck.
4. Don’t take it personally. Government’s seeming irrationality can infuriate entrepreneurs and CEOs. But policy-irrationality often stems from statutory requirements or political realities more than personal preferences of bureaucrats. For better or worse, public sector decision making has to assume the lowest common denominator. Rules are established for businesses that don’t have your integrity. Don’t just ask how a policy or decision would affect you, consider the impact on your least scrupulous competitor.
5. Listen. Entrepreneurs that succeed in solving big, complex challenges won’t do it alone. They will partner with public officials to apply the genius of Silicon Valley to specific challenges and realities of the public sector. Government decision makers are, almost by definition, not going to have deep expertise in emerging technologies or next-generation business models. Let the tenets of design thinking inform your partnership with government. Translate, educate, and tap into their expertise to inform your pitch and product development strategy.
Despite the challenge, more and more entrepreneurs are pioneering tools and solutions every day to help the public sector do its job better, smarter, and faster. As a result, government — at all levels — is adopting new approaches to improve service delivery, from parking meter apps to personalized education or fraud prevention. The challenge is not insignificant, but the economic and social rewards are great. To me, there is no higher calling for an entrepreneur.
Ben Wallerstein is co-founder of Whiteboard Advisors, a Washington, DC-based consulting firm that helps entrepreneurs, investors, and nonprofit leaders understand the intersection of policy and innovation.