Running a state, country or city like a business…but not how you might think.

Years ago I came upon a Harvard Business Journal article that I bookmarked. I still have it bookmarked and refer to it from time to time.

The article is a summary of a meta-analysis done by two senior business consultants. They gathered really big data sets from years of research covering 25,000 companies considered successful performers in their categories.

To simplify their findings, they put their conclusions into three rules; three aspects of business achievement that all successful companies seem to share:

“1. Better before cheaper — in other words, compete on differentiators other than price.

2. Revenue before cost — that is, prioritize increasing revenue over reducing costs.

3. There are no other rules — so change anything you must to follow Rules 1 and 2.”

I think these rules could apply to civic enterprises such as governments, non-profits, and similar organizations.

For example, if one thinks government exists to engage citizens democratically, provide services for the common good and support a decent quality of life (my off-the-cuff definition), a better-before-cheaper approach would be to invest public funds in areas where such an investment makes a community or state more appealing and enjoyable for current and future residents. You attract new people (and retain current residents), you increase your revenue base and your ability to improve services.

This approach shuns a civic mindset of constant cost-cutting, salary freezes, service reduction, all to save money and lower taxes at any cost. I think most governmental units and even political party affiliations share this value of providing more through prudent investment and quality improvement. And I add the caveat that this does not mean wasteful spending and exorbitant expenses cannot be eliminated. Of course, the political difficultly comes, many times, in defining what is exorbitant and wasteful. That will always be the rub.

As for revenue before cost, the revenue part of the equation is the tricky part, as governments cannot just raise prices (taxes) on a whim, pursue new markets or produce more product to raise revenue. And they must serve the entire community, not select target markets. So how to increase revenue?

Aspire to leadership positions in education, business environment, job creation, public safety, infrastructure modernization, public health. They combine to make people want to live there and financially support their community. Or state. Or country. You know the drill. Easier said than done. Such aspirations can take years or decades to realize. But a focus on making things better, not just cheaper, will serve civic institutions well in the long run.

The Harvard article does not say costs can never be cut or prices (taxes) reduced. But it does emphasize looking at quality improvement opportunities before jumping to decisions that can, if left unchecked, create a race to the bottom. No one wants that.