CityWatch, May 26, 2009
Vol 7 Issue 42
Los Angeles is big.
It's the largest City in the most populated State in the most powerful Country in the world.
Los Angeles is actually bigger than big. Los Angeles is BIG!
Which means that when LA is in financial trouble, like now, it's in BIG financial trouble.
As LA's leadership lumbers through the budget morass, the public keeps hearing that the crisis is especially difficult for LA because the City is so big, so cumbersome, so complicated. Solutions don't come easily and change takes time, after all, LA is BIG!
All of which sounds plausible. As we're often told in budget meetings, it takes time to turn a battleship and, well, they're also very big.
After all, smaller cities can throw a bake sale or fire the dog catcher and balance the budget but LA, well, it's so BIG!
And yet ...
Fast Company magazine featured the travails of some companies that are also recognized as being big. Some of them have pretty big budgets, perhaps even bigger than that of Los Angeles. They've weathered financial storms just like LA and they've prevailed, even grown from the experience.
Why not LA?
After all, the City of LA is actually a $7 billion service industry corporation, bound by the simple mandate to increase revenue and/or reduce costs, all while efficiently and effectively servicing the four million customers/stakeholders who own the company.
Fast Company's "Through the Fire" article looks at the experiences of Cisco, Corning, IBM, Intel and Schwab, and offers up five strategies for exiting the storm even stronger.
Intel's 1st quarter revenue was $7.1 billion, down 26% over last year. They responded by doubling down, investing more in their core but hedging the bet by backing it with a commitment of collaboration with their customers, turning an 18 month game plan into a long-term plan. Key take-away, a collaboration turned the customers into partners and the load lightened.
Los Angeles, by way of contrast, threw kidney punches and alienated stakeholders rather that drawing them in as partners. The Mayor's budget process is a sham, guaranteed to alienate participants so that their term of duty rarely exceeds one year. The budget survey's superficial review of the process is an insult to a city full of talented innovators, professionally committed to making this a Great City but denied that same participation at the civic level.
Corning went through the budget crisis drill just a decade ago when its revenue went from $7 billion to $3 billion in just 18 months. They said never again. They instituted an early-detection system and positioned four "operational rings of defense" that started with simple spending cuts and hiring limits, moved to reduced work weeks, limited use of contractors and temps and finally resulted in layoffs resulting in staff cuts of 13%. As dramatic as the current crisis is, they had a plan and they avoided the 4th ring, which was to sacrifice their core: Research & Development.
LA, by way of contrast, floundered as the moment of decision approached and was still debating "share the pain" staffing reduction plans from departments that had no "rings of defense" strategy in place, just departmental commitments to survive, even at the expense of the host.
Schwab found itself in a tough place, asking people with less money and less confidence to trust them as they struggled to be optimistic and honest in a bleak financial environment. Schwab's solution was to engage in conversations and to provide information at lightning speed. People are hungry for relationships they can trust and Schwab satisfied that need by engaging its customers and allowing a community to evolve.
LA, by way of contrast, allowed the budget battlefield to, again, break down into dueling departments and constituencies, rather than simply engaging the customers in the process and allowing a community to evolve. Confidence was never the commodity associated with City Hall and the City’s leadership spent more time producing panic rather than hope. It was the Neighborhood Council leaders who called on the City to "Partner in Greatness," not the Mayor and the City Council.
IBM employed a "follow the money" strategy and focused on its core strengths, going after the significant IT money being spent as part of the stimulus package. Of course, this required focusing the energy of the entire company on a specific strategic plan, which it had in place. IBM's Smarter Planet initiative was launched this past November and positioned the company to go after new business such as energy and utilities.
LA, by way of contrast, has no long term strategic plan, lacks a clear idea of its strengths and still uses a fragmented IT strategy that has departments unable to communicate with themselves, all of which leaves us far behind while smaller cities innovate and partner and put technology to work. IBM partnered with Dallas and is implementing smart utility metering that offers feedback on cycles as tight as 15 minutes which positions the city to realize a 10% reduction in utility usage and the resulting environmental benefits, all as the result of IBM's "getting smart" and "following the money" strategies.
Cisco simply survived the meltdown by embracing technology, creating community and personalizing the experience. Cisco's Mike Metz explains "There aren't enough salespeople in the world for what we need to do." Cisco's "market transition" has resulted in more efficient delivery of services resulting in hundreds of millions of dollars in revenues.
LA, by way of contrast, still employs a Council District Deputy system that has "handlers" hustling down the delivery of services and the facilitation of solutions, typically duplicating the 311 service but actually just adding another layer of bureaucracy to an already swollen and compartmentalized system.
For too long the people of Los Angeles have heard "LA is so BIG!" as an excuse for mediocrity and, in the current budget crisis, as an excuse for catastrophe. Larger entities with equally daunting challenges have survived the meltdown and come out stronger and in better position.
Why not LA?
Through it all, it's important to keep in mind that the differences between the five companies referenced in this exercise in innovation are many, including the fact that they all faced significant reductions in revenue while the City of LA has been enjoying a dramatic increase in revenue over the past five years. LA's problem is that increases in costs and obligations have outpaced increases in revenues.
LA's fork in the road is to look for inspiration in the success stories of companies that have employed the full spectrum of innovations or take the path of GM and to embark on the road of desperation.
Either way, it's our choice.
It's time for Los Angeles to demand a vision, a strategic initiative, and a long term plan for exploiting opportunities and for weathering the inevitable storms.
It's time for the leadership of Los Angeles to personalize the experience of living in LA, to make communication the foundation for community, not simply a Brown Act required exercise in process, and it's time to partner with the innovators and the problem solvers and the community leaders who are committed to making Los Angeles a Great City.
It's time for us to Partner in Greatness. (Stephen Box owns a marketing and communications company and is a CityWatch contributor. He can be reached at Stephen@ThirdEyeCreative.net)