Budget Cuts as an Imperative for Business Model Innovation
Here at The Business Innovation Factory (BIF), we believe in R&D for new business models to better serve users before existing models are eclipsed by more future-facing ones. We encourage and assist leaders by making that exploration safer and easier to manage. While adapting to changing times is necessary for survival, we are strong advocates for staying ahead of and even leading the change. Because not only is constant innovation necessary to stay relevant and competitive, but, we believe, it allows organizations to better serve those they aim to serve, regardless of sector, and thus drive change that has a greater potential for social transformation.
This is as true in the public service industry as it is anywhere.
This month, President Trump’s budget proposal was released, and it includes significant cuts across many agencies. While these cuts pose substantial and, in some cases, even existential threats to existing models for serving citizens, funding cuts and other internal and external factors are realities to which public service agencies must often adapt. Although the scale of these particular proposed cuts is disconcerting, reducing the budgets of some agencies by up to a third and proposing to eliminate 19 independent agencies altogether, they provide an imperative to transform existing models of public service.
Here at the BIF Citizen Experience Lab (BIFcxl), we see decreasing budgets as an illustration of why we need to explore new models of service delivery within newly given constraints. These cuts might threaten the existing way that many agencies operate, but they can also force us to rethink and recreate the way government and other service providers do business in order to ensure that the citizens that public services are designed to serve are in fact still served effectively.
Take the $4.3 billion proposed cut to the Department for Housing and Urban Development’s budget. This decrease, representing a 12% decline from its 2017 funding levels and an almost 15% decrease from its funding requests for 2018, could eliminate housing assistance programs like Community Development Block Grants, HOME Investment Partnerships, the Self-Help Homeownership Opportunity Program, and the U.S. Interagency Council on Homelessness — with the potential of leaving more than 200,000 beneficiaries of these programs at immediate risk to homelessness if we don’t transform the existing models for serving them. Such a risk could raise rates of homelessness to levels unseen in decades, since the Reagan era, if nothing is done to innovate current models for providing affordable housing. To avoid leaving these citizens without housing, we must invest in finding new and more efficient ways to serve them.
Another public service subject to budgetary disruption are the job training programs run through the Department of Labor such as Job Corps for disadvantaged youth or the Senior Community Service Employment Program (SCSEP) for low-income citizens over age 55. Faced with severe cuts, these programs will be forced to transform their models for delivering their services if they hope to continue to serve these groups effectively. The Department of Labor, whose mandate and budget they fall under, will need to invest in exploring new, innovative, and less costly training programs and models for providing them, if they hope to decrease unemployment in these populations and intend to continue preparing them effectively to enter or re-enter the workforce.
While the proposed budget cuts at first glance might induce panic in agency heads, service providers, and citizens benefiting from public services alike, and may indeed wreak havoc on existing models for providing citizen services, here at the BIFcxl we believe that if we have leaders more adept at exploring new and better models for public service delivery, even considering newfound budgetary constraints, the outcomes will be better for everyone. Since potential cuts would not be implemented until FY 2018, there is still time for public service agencies to start proactively exploring innovative and more future-facing business models. Here at the BIFcxl, we are standing ready to help leaders design, prototype, test, and scale their “next practices” for public service provision, especially considering upcoming budget cuts, because we know citizens in need are waiting. Budget cuts, like other constraints and forms of disruption to existing models, are no reason to stop serving citizens in need — it just means it is time for new, and better, more future-facing models of public service.