The Sovereign Seed Fund

Why "Run Government Like a Business" Asks the Wrong Question

The phrase "run government like a business" is rhetorically appealing and analytically incomplete. Its implicit premise—that the private sector represents the optimal allocation of capital—misses a more fundamental truth: that governments are, in practice, the pre-market investors whose risk tolerance and time horizons make private markets possible in the first place.

The evidence is not subtle. The internet began as ARPANET, a Defense Department project. GPS was a military satellite network made available to civilians. Lithium-iron batteries, mRNA research platforms, high-speed rail—each traces its commercial lineage to public funding. A study published in the MIT Science Policy Review found that nearly a third of all patents filed in recent years cite federally supported research, and that close to 90% of high-impact research papers authored by corporations were written in collaboration with scientists at academic or government laboratories. The private sector has been building on a public foundation for decades. The question is not whether that foundation exists. It is whether the people responsible for maintaining it are being measured on whether it holds.

How can we maximize the possibility that governments make wise upstream investments? By installing rigorous requirements on the bureaucrats making them. Steve Brockelman, whose career spans Fortune 500 boardrooms and the upper reaches of the federal bureaucracy, makes this point implicitly in a recent episode of the CX Pod: the disciplines that matter—measurement, accountability, outcome orientation—are not the property of the private sector. They are the property of well-run organizations. What distinguishes government's role is not its management style but its mandate: to invest where the market will not, and to hold the gains as a public good until the private sector is ready to take over.

As executive director of the President's Management Advisory Board under Obama, Brockelman helped pair a dozen Fortune 500 CEOs—from Motorola, Adobe, and Pfizer, among others—with the deputy secretaries running the largest federal agencies. The CEOs' most insistent observation was structural: before any discussion of strategy or service delivery, government needed consistent standards for the people running it. At the time, federal senior executives were evaluated against roughly 40 different performance management frameworks scattered across agencies and sub-agencies. The board worked to consolidate them into a single, unified system. That system remains in place today.

The instinct behind it is one that any senior executive would recognize. Whether the organization sells enterprise software or administers veterans' benefits, the absorbing preoccupation of leadership is the same: how do you know if it's working? Brockelman's later role at the General Services Administration—as Deputy Performance Improvement Officer—sharpened that question considerably. At GSA, he worked to push performance measurement past inputs and outputs toward outcomes: not how much was spent on federal buildings, but whether the workers inside them found them productive; not how much flowed through procurement schedules, but how much agencies saved by using them. The distinction sounds bureaucratic. It is, in practice, the difference between accountability and its appearance.

The right question is not whether government should run like a business. It is whether it is investing well enough to give the private sector the runway it needs—and whether the people making those investments are being held to account for the results.

What we’re into this week

Ana

I have to say, working with Steve was one of the highlights of my federal career. His perspective makes me think of Mariana Mazzucato’s The Entrepreneurial State, which argues that, far from lagging behind the private sector, the public sector is actually the most important forum for pre-market value in any economy. 

Scott

Eugenia Kyuda, who founded Replika, recently talked about the challenges faced by private companies when they run ahead of law and policy (my words not hers). I just hope that civil servants with long-term, strategic views like Steve’s still exist.   

Aaron

Those civil servants still exist, Scott. Don’t worry. And the part that’s almost never discussed is that the waste of any exploration and market creation is inherently part of its drive towards eventual value. Scientific American points this out in The Slop Cycle—How Every Media Revolution Breeds Rubbish and Art. While it’s true that a lot of the stuff we see (or that the gov invests in) turns out to be slop, the process also turns out immense value in the long run. 

Credits

Guest: Steve Brockelman
Host: Aaron Meyers
Producer: Ana Monroe
Article: A. Adams
Artwork: Ground Floor Plan for Torre Quatro Venti c. 1905 Elihu Vedder via the National Gallery 

Why this artwork? Steve Brockelman’s sketch of his work on SES performance reminded us more than anything of an architectural diagram. This work by Elihu Vedder shares the friendliness and accessibility of Steve’s verbal rendering paired with just enough detail to be able to visualize the finished whole.