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The Power of Both

May 27, 2011

One of our senior associates, Christopher Holshek, wrote this for the Huffington Post:

It’s no secret that success is greatest in synergy. Most of us can recall how Sesame Street taught us the importance of neighborhood cooperation. The Wisdom of Crowds took this to a much higher collective level, explaining more scientifically what we understand intuitively. We Americans like to think we are a country of rugged individualists and great leaders — and, indeed, we are to some extent more than other societies. Yet, our true genius is when we invoke “enlightened self-interest” and engage the panoply of our diversity when taking on divisive socioeconomic issues or finding our place in the world. Our best moments are when we do the right things rightly through a balance of necessity and choice, for pragmatic as well as idealistic reasons. Perhaps we are arriving at another such time.

Some are saying that the death of Osama bin Laden may be providing that opportunity, bringing the country more together. Others, like David Brooks in The New York Times, contend that cooperation is more evolutionary than episodic, intertwined with competition: “We have an incentive to work in teams, even against our short-term self-interest because cohesive groups thrive.” By collaborating, we are better able to compete — as groups more than as individuals.

Signs of more comprehensive and collaborative approaches to more collective problems have been proliferating for some time. The Obama administration has been talking up “national competitiveness” as its primary interest. Its now year-old National Security Strategy “… calls for a comprehensive range of national actions, and a broad conception of what constitutes our national security.” Influenced by the Project on National Security Reform, it emphasizes its foundation as economic, social, and moral, and looks to “… tap the ingenuity outside government through strategic partnerships with the private sector, nongovernmental organizations, foundations, and community-based organizations.”

Nothing new here. Public-private collaboration has long been trademark of the way America operates, when it operates best. From the Transcontinental Railroad to the internet, there are scores of examples of “private roles for public goals,” as John Donahue and Richard Zeckhauser recently pointed out in the National Journal: “From de Tocqueville’s day to the present, Americans’ knack for cobbling together pragmatic alliances has often served to offset our weak suit of formal government.” The Central Park Conservancy, Prescription Drug User Fee Act, charter schools, federal job training policy and the Coast Guard’s approach to port security are more recent cases. Though not always appropriate (or appropriately done), as with some defense and security contracting, public-private collaboration nevertheless “… unleashes the unpredictable resourcefulness of an entrepreneurial people to improvise fresh, flexible solutions,” while it “… deploys America’s diverse palette of productive potential — public and private, for-profit and nonprofit, employee and volunteer — to the pursuit of the common good.”

This is as true abroad as it is at home. Our foreign aid may at last be changing from being dominated by “threat reduction” and rather in line with peace and prosperity on a more human and pragmatic level, such as the U.S. Agency for International Development’s Global Development Alliance and the Millennium Challenge Corporation, transforming foreign aid from a handout to a hand, with far greater return on investment and creating opportunities for more trade and less aid.

As the world becomes more humanized as well as globalized, some are taking the public-private nexus up the collaborative ladder beyond “whole of government” and “whole of nation” to “whole of world.” In addition to the likes of Bono, George Clooney, Angelina Jolie and Sean Penn lending star power to relief efforts, in an unprecedented initiative, major corporations — including American Airlines, Kellogg’s, Cisco, Yahoo, Symantec, Big Y Food, Air Products, Pacific Gas & Electric, Genetech, VSP Vision Care, McAfee, Blue Cross/Blue Shield, Cargill and True Blue Inclusion — are joining a United Nations campaign to promote diversity and inclusion at workplaces at the grass roots level, in honor of the UN World Day for Cultural Diversity (for more, go to the Facebook page, “Do One Thing for Diversity and Inclusion”).

As Jean-Christoph Bas, senior advisor for Strategic Development and Partnerships at the UN Alliance of Civilizations, points out: “As business has gone global over the past few decades, its role in spreading values has gained importance… The corporate sector has been at the forefront in thinking about diversity, because it is vital to their business. There is obviously a transfer of experience that can be organized by doing public-private partnerships.”

Now on an international as well as national scale, corporate social responsibility is less a marketing gimmick than intrinsic to the bottom line. Even overseas, where foreign aid has implications in a much broader national security context than before 9/11, socioeconomic development is as much a business opportunity as it is a foreign policy challenge — finding The Fortune at the Bottom of the Pyramid is as much about creating the ground floor as it is getting in on it. That’s why simply cutting the foreign aid budget can actually do more long-term harm than short-term good. Consider that Africa and Latin America, while major recipients of foreign assistance, are also among the fastest growing regions in a global economy in which the U.S. wishes to find greater export markets and help generate jobs.

Collaborative governance has new impetus for two reasons. First is the interconnected complexity of many problems — and opportunities, involving the core interests and vitality of both sectors, from powering the economy while creating new and environmentally-friendly energy technologies, providing efficient and effective health care for all while reducing costs, refurbishing and reinventing infrastructure, reforming public schools to produce better quality labor, reforming immigration, and so on. What goes around comes around, especially at the state level, where the market place is also the tax base. The effectiveness of the government in generating “a spacious commonwealth” is now as much in the interest of the private sector as is the private sector’s ability to foster wider spread prosperity and economic opportunity is for the government.

The second has to do with resources. Because of the scope and scale of increasingly intertwined socioeconomic issues, neither the public nor private sector has the wherewithal to tackle them alone. For generations, Americans could afford inefficient, redundant and segregated solutions to everything from national security to health care and education. It’s not only that these solution sets no longer work; it’s more that the resources at our disposal, in the face of these exponentially larger challenges, are increasingly scarce. Just look at the deficit. The era of cheap energy and cheap capital is coming rapidly to an end. Both sectors have to adapt a new business model that involves less profligacy and more strategy — politicians can’t just throw taxpayer money at problems, creating one program after another, and then say they fixed it; and overpaid CEOs can’t placate shareholders by just laying off workers and then call that “creative management.”

Roles are being re-defined. Collaboration implies a different, but not necessarily diminished, responsibility for government and a greater public service function for businesses. As Donahue and Zeckhauser suggest, “the public leaders responsible for orchestrating collaboration must be open-minded but tough-minded, steadfast about goals but flexible on means, at once pragmatic and principled. Ensuring that people in both sectors have the smarts, skills and soul to get the best and avoid the worst from collaboration is a big national challenge.” The same is true for companies that are also members of communities. The key word is “partnership”.

Perhaps we can also finally discard our 19th century adversarial labor-management relationship. In Germany, for instance, as part of the “co-determination” scheme, union members sit on the board of directors and profit-sharing is more commonplace. Think that isn’t a good idea? Then get rid of your Mercedes, BMW, VW or Audi. (Similar collaboration in Japan and Korea, by the way.)

The 19th century idea that may, in fact, be more appropriate is the Law of Comparative Advantage. There are some things the private sector does well and ought to be left to do, while there are some things the government is best responsible for. But going beyond that, there are more and more things they do better together. As part of a “comprehensive engagement” strategy abroad, through its greater agility, adaptability, teaming and multisourcing of talent-to-task, the private sector can function as an agent of change, introducing market forces and commercial enterprises as stabilizing and mitigating factors to broadly-defined areas like conflict prevention and other security-related activities featuring heavier economic development content. And the less money we have to spend on guns is more money we have to spend on butter. Moreover, collaborative development efforts internationalize, legitimize and globalize a whole effort whose power far exceeds the sum of its parts.

Whether at home or abroad, the public-private debate shouldn’t be about how much but how. And whether America continues to maintain its greatness by reinventing itself depends on whether Americans can, with characteristic gumption and common sense, come together to apply the grandest of ideals — e pluribus unum. It’s not either/or, but both.

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