2 min read

Why Municipal Governments Need to Be More Like Startups

By govpilot

Municipal governments and start ups are two completely different animals, yet they share common goals and characteristics. Both entities exist to maximize value for their stakeholders. For startups, these stakeholders include their founders, investors and early employees. For municipal government the stakeholders are the locality's constituents.

Both startups and  local governments are cash-strapped. Startups need to grow as fast as possible or face an imminent demise. This survival instinct has bred a “Lean” framework that’s rooted in calculated risk taking and data-driven performance analysis. Local governments can learn a great deal about efficiency just by adopting philosophies that drive some of the fastest growing and disruptive start ups.

Governments Need To Be More Lean

In local government parlance, “lean” pertains to cutting costs and services. For startups “Lean” is an ideology based on the streamlined production framework developed by Japanese car makers in the 1980s. The framework’s objective is to remove uncertainty from an unknown outcome by taking a “Build-Measure-Learn” approach. This approach is a continuous feedback loop of building your ideas, measuring the impact and learning from the results. By establishing and reestablishing benchmarks, startups can reach their objectives faster. A large part of the “Measure” aspect of the Lean approach is getting feedback directly from the startup’s customers.

Much like a startup, a government has constrained resources and needs to balance decisions with resources and output (productivity). Local governments build every day, though I rarely have seen any (in New Jersey) that measure. Data is usually paper byproduct, relegated to a filing cabinet in a dusty basement.

Famed management consultant W. Edwards Deming once said “You can’t manage what you can’t measure”. This should be pasted on every wall of every city hall in America.


Startups Use KPIs Religiously. What’s a KPI?

A KPI, or key performance indicator, is typically a simple metric that measures performance. Startups rely heavily on KPIs because they turn data into actionable insights. There is no blueprint and a lot of uncertainty.

Startups rely on KPIs to measure efforts, recalibrate strategy and drive decisions. KPIs should be relevant; measuring something that matters to the business or entity’s success. They should be responsive. When something goes right or wrong, it is easily recognizable in the KPI and its inputs. They are also easy to understand. KPIs should be created so there is no ambiguity.

Local Governments Should Use KPIs Too

We meet with alot of municipal Business Administrators. When discussing efficiency and accountability,  I occasionally ask what KPIs are driving their decision making. More often than not, I get a blind stare. Most municipalities, while striving to be efficient and constituent-friendly do not have a simple framework in place to measure performance.


With startups, aggregating data for KPI inputs is relatively easy. Analytic and CRM platforms do alot of the heavy lifting. This reporting is necessary for extracting insights. With local governments, departmental-level data fragmentation severely challenges the ability to unify reporting. While top-level KPIs may be a bit of a challenge to report in real time, service and department level KPIs aren’t.


There are definitely some examples out there of municipalities taking a KPI-driven approach to performance optimization. Saginaw, MI, regarded as one of the most dangerous municipalities in America, published an excellent Performance Management Plan that clearly conveys the city’s efforts to quantify its performance in a transparent manner.


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Tags: Government Efficiency