The Future of Government: Hayward & the Lean Startup

Guest post by Jennifer Maerz, contributing editor of Lean Startup Co. 

It’s been exciting to watch the Lean Startup movement grow from a practice utilized in the tech world to one implemented in a wide variety of sectors ranging from enterprise to education, religious organizations, nonprofits, and government groups. When we talk about government, we mean both the macro outfits whose work affects the entire country (perhaps you’ve heard of the IRS) and regionally-focused groups alike.

Kelly McAdoo is the City Manager & CEO of the City of Hayward in Alameda County, California. She’ll be speaking during Lean Startup Week at our Ignite Opening Reception on Tuesday, Nov. 1 about how she uses Lean Startup principles to empower government employees and to improve resident satisfaction. As part of Lean Startup Week’s “Future of…” series, we asked Kelly to tell us more about the future of how city governments work with and relate to their communities, what a civic MVP looks like, and why she so badly wants to disrupt how we think about local government.

This interview is part of a “Future of….” series that also includes the Future of Work, the Future of Corporate Agility, Skill-Sharing, and more in the weeks leading up to Lean Startup Week. 

Kelly, your Twitter handle asks, "Can we please disrupt the conversation about local government?" Pretty funny, but I'm also curious what you mean by that statement. 

I’ve been working in local government for almost 20 years now, and I think it’s probably the same situation that exists in most industries. You tend to get stuck in a rut—people get very insular and think that the best ideas may only come from others in your field who appear to be doing unique and creative things. You also can’t just take private sector ideas and overlay them on local government. How do we enable conversations that move us beyond where our organizations have been for the last 50 years?

I’m also tired of the rhetoric about bureaucrats working for government who stand in the way of progress. There are some amazing and committed public servants who work in local government, but many are stymied by an organizational infrastructure that rewards safety and security. My challenge to other local government CEOs is to have conversations about how to create organizational environments that facilitate disruptive change and are more responsive to the changing nature of our communities.

How did you first get interested in bringing Lean Startup into city government?

At our core, local governments are public service agencies, which means that we should be focused on maximizing value for our “customers” (AKA residents). I’ve always been intrigued by the concepts of design thinking and customer empathy and how those concepts might intersect with local government. However, I’ve never quite seen how we could operationalize this in our organization. To me, Lean Startup provides a framework and a methodology for taking customer empathy work and translating that into real and measurable outcomes for our community. It also adds the customer empathy piece that was missing for me from agile or Lean methods.

What kind of reception did you get when you tried to get other government employees on board with practicing Lean Startup? What were the biggest stumbling blocks? 

It’s ironic, but as I’ve talked with others who have been engaged in these types of initiatives in private enterprise, there are many of the same challenges. At the core, we are attempting to change the organizational culture of a large enterprise with all of the associated obstacles and heartburn. For example, we’ve had to deal with getting executive buy-in, creating time and space for people to try working in a different way, and generating a critical mass of people in the organization with the skill sets necessary to move the change forward.

The unique lens applicable to local government is the political and public scrutiny that comes with any new or risky project. This is the beauty of this methodology for me and why it has the potential to be so impactful in local government. Instead of spending hundreds of thousands of taxpayer dollars on major initiatives and failing very publicly, we can spend $5,000-$10,000 on experiments to determine whether we are even on the right track in the first place.

How are you incorporating the methodology now? What does an MVP look like when you're talking about the City of Hayward? 

Right now, we are really working on building capacity and skill sets around using the methodology. We are also having a lot of conversations about when it makes sense to use the methodology in our organization. For example, we aren’t going to run an experiment on how a firefighter starts an I.V. on a patient during a 911 medical call. We are looking to use the Lean Startup methodology on the more systemic problems that need a different perspective and viewpoint to help us get to the root cause.

We are also talking about how we can use the methodology to help us prioritize really scarce resources. Two great examples come to mind that demonstrate how this process has been helpful to our team. The first was one of our teams that was evaluating the need for an online business license application program. Every business that opens in the City of Hayward must register for a business license and pay the associated taxes. Our team had been heading down the path to spend $90k or more acquiring a software solution and spending probably a year implementing the program. The team used Lean Startup principles to evaluate the issue. When they actually talked to customers, they discovered that being able to complete their application online was not the biggest issue as many customers still had to come to City Hall for other reasons. The bigger issue was not understanding what the license requirements were before they got to City Hall or not being able to download an application, complete it, and bring it with them. Within a couple weeks, the team redesigned the website and allowed customers to print out the application forms which can now either be brought to City Hall or emailed directly to staff for processing. While an online application system might be more technically savvy, our team was able to solve a customer problem with a relatively quick and cheap fix.

The second example comes from a team that was attempting to address the issue of people who hoard items in their homes and create public safety concerns. The team had looked at implementing a program from a neighboring community that was touted as a very successful solution to this issue. However, as they started doing their customer empathy work, they quickly discovered that the program was not as successful as they had anticipated, primarily due to a key training and staffing deficiency within the County Adult Protective Services Department. The team estimated that they saved over $200,000 in staff resources by determining within a month that implementing the program would not have had the outcomes that they were originally anticipating and deciding against pursuing an ineffective solution. Instead, they refocused the discussion on how to work with the county to push for the necessary training.

In addition, they made changes to the city’s online reporting systems so that first responders could check a box to identify a property that had hoarding issues. In the future, once the county training resources are available, this change will allow the city to quickly run a report and identify households where hoarding is an issue.

For me, this is a prime example of using Lean Startup to prioritize scarce resources and to focus on the right problems at the right time. Do we want to solve the hoarding issue in our community? Absolutely. Do we want to spend lots of resources developing a program that won’t be successful because a key element is missing? Absolutely not. The Lean Startup methodology helped our team very quickly identify flaws in their assumptions and adjust accordingly.

How does showing that you're approaching your work with an entrepreneurial mind change your relationship with your community in Hayward? 

The number one value add I’ve seen from this process is simply the connection that happens during the customer empathy work. A lot of employees in local government are fearful about the reactions they might get when they go out and talk to the community. So instead our typical solution development process goes something like this: 1) staff convenes an internal work group or task force; 2) task force/work group spends 6-9 months brainstorming solutions, researching best practices, and then developing one idea into the final solution; 3) work group holds token community meeting to present nearly final solution and get “feedback”; 4) solution presented to city council for adoption/funding; and 5) solution implemented with limited success.

What our team has found is that 99% of our community is truly appreciative when you ask them for their input in the process, early and in a meaningful way. And community engagement doesn’t have to take a lot of extra work. That is a big fear in local government—you host a huge neighborhood meeting with lots of targeted outreach and staff work to set up and either no one shows up or you get a large contingent on one side of the issue that may or may not be representative of broader sentiments in the community. When we were looking at changes to our neighborhood preservation/code enforcement ordinance, our 8 Code Enforcement Officers took a part of a day when they were out doing their normal inspections and knocked on people’s doors to ask them a series of questions about the issues in their neighborhoods. They talked to over 300 residents from all over the community and got more direct and impactful insights than if we had held a community meeting at City Hall to share the proposed ordinance changes. It also changed the direction we headed with those ordinance changes.

We need to be thinking about how we can call ourselves a “public service” agency if the employees are scared or nervous to talk to the public. How do we give our employees tools to have productive conversations with the community? Lean Startup methodology helps frame the issues in different ways so that employees can ask more targeted and direct questions about the way in which customers are experiencing a problem in our communities.

In thinking about other city governments across the country, what advice would you give them about getting started, and why they should use these kinds of modern business practices?

In our organization, we started from the bottom up and trained a core group of employees in these methodologies. These were employees who had previously demonstrated a willingness to try new things, came from all levels in the organization, and who volunteered for the initial training workshop. I think it is also crucial to have an executive sponsor who can support the initial teams in their efforts to work differently. It will be frustrating and challenging as you push against the bureaucratic systems and old ways of doing things. Having someone at the top levels in the organization who is committed to the effort is key. I served this role in my prior position as Assistant City Manager. I attended the training with the initial team and hosted monthly lunches to support them in their efforts to work differently.

I have seen a pattern in the way city governments approach problem solving. Someone in an organization will come up with a creative idea and have the wherewithal and stamina to see it through to implementation and will then see some successful outcomes. Other local governments will then hear about this organization’s idea and then we will tend to try and replicate it in our organizations. However, we haven’t really taken the time to understand whether the root causes of the problem we are facing in our community are the same root causes of the problem the original successful community faced. It is critical to create organizations with the skill sets and mindsets to look at and evaluate each issue as it comes up and to design a solution that, while it may be influenced by what other cities have done, is tailored to the needs of our constituents.

What is the biggest stumbling block generally to city governments modernizing their approaches?

One of the interesting dynamics I have seen in local government is that innovation is often driven out of or by IT departments or by the implementation of new technologies. While the IT team is a crucial partner in the innovation process, if you don’t create an organizational culture that understands how and is receptive to partnering with IT on change efforts, you won’t see the impact you are hoping for. It’s similar with private sector or non-profit partners. There are so many startups and companies out there who are talking about making life better in cities but they may be attempting to partner with cities that don’t have an organizational culture to support and maximize the impact of the effort.

I also think politics can derail these efforts by city governments. Many city councils may see any dollars spent on these types of training efforts as frivolous. This is where it is crucial for the project teams to be tracking metrics. What has been helpful with our city council is identifying how many residents or business owners we have talked to during our empathy work. We have also tried to demonstrate a data driven approach to implementing solutions. We spend a small amount of money on an experiment, collect data, and then determine whether to scale efforts accordingly. Talking with our residents also helps us determine whether or not we should pursue certain initiatives, saving the city money in the short and long term. It is also harder for the council to refute feedback from several hundred residents. It gives them evidence so that they can go back to the one or three really loud voices in the community and explain why the city won’t be pursuing a certain effort at that time.

What do you see as the future of how city governments work with and relate to their communities?

We in local government have to adapt to the changing nature of our communities— people are working longer hours, are more digitally connected, and have less time to engage with their government. We have to be careful that the squeaky wheels in our communities don’t drive the conversations and the community priorities. This requires those of us who work in local government to think and act differently. Our methods of “engagement” really haven’t changed much over the last 50 years. It would be interesting to see how we could apply Lean Startup principles to the problem of community engagement.

I also think that for many years, local governments have really driven the agenda in communities. I equate it to Maslow’s hierarchy of needs—when a community is still looking to have its basic needs met, the role of local government (or any government) is relatively simple. Provide food, shelter, and security. As community members have more of their basic needs met and they are on a path to self-actualization, what is the role of local government then? We become a quality of life provider. However, understanding what that means to your community without effective and robust dialogues is impossible. Our challenge as local government leaders will be to help frame these conversations and also to help shape organizations that can be responsive to this changing nature of our communities.

Are there any cities you model your approach on, either in the US or globally, that are particularly innovative?

There are lots of big cities experimenting with innovation labs and the like. New York City’s partnership with Sidewalk Labs, San Francisco’s Entrepreneurship In Residence Program, and Singapore’s experiments with the sharing economy come to mind. However, the challenge with using these big cities as models is that cities like Hayward don’t have the resources, either staffing or financial, to pull off these larger scale efforts. There are only a handful of cities on the scale of a New York or San Francisco but tens of thousands more like Hayward that have the potential to touch even more lives. It is important for smaller agencies to understand how they can implement this type of culture change without a big city budget. For me, the most important step is for local government to start somewhere, try the principles out, and see how they can be adapted for their community. It doesn’t matter if you are strictly rigid to the methodology. If our government simply increases the level of interaction and empathy our employees have for community members, I would say both our organization and our community is winning.

Hear more from Kelly and join the larger long-term conversation at hand by attending Lean Startup Week Oct. 31-Nov. 6 in San Francisco. Register now and take advantage of fall pricing.