Magazine article Government Finance Review

Entrepreneurship, Management, and the Public Sector

Magazine article Government Finance Review

Entrepreneurship, Management, and the Public Sector

Article excerpt

Entrepreneurship, Management, and the Public Sector The Lean Startup Eric Riles Crown Business 2011, 336 pages, $28

Public and private organizations can learn lessons from each other by sharing management principles - lean management is a good example. Consider a key point of The Lean Startup by Eric Ries, with its striking relevance to both the public and private sectors: "We have wildly divergent associations with these two words, entrepreneurship and management... It is time to look past these preconceptions."

Entrepreneurship and management should be part of what motivates employees in any public or private organization. Organizations should consider eliminating the perception that the functional role of entrepreneurs and managers are mutually exclusive. The Lean Startup explains that innovation isn't solely the realm of entrepreneurs, and managers aren't limited to bureaucracy.

The public sector can apply Lean principles can to potentially overcome the bureaucratic barriers that governments sometimes face through innovation and experimentation. With constituents increasingly demanding innovation, and public resources becoming increasingly scarce, the Lean principles Ries discusses can provide governments with new solutions. Lean management fosters the development of experiments to make organizations sustainable. For example, as governments begin to shift toward innovative methods of long-term financial planning with forecasts and risk-based fiscal reserves analysis, they can use some of the lean startup principles in Ries' book to guide their efforts.


In the first part of the book, Ries argues that "entrepreneurs have been trying to fit the square peg of their unique problems into the round hole of general management for decades." As governments face increasingly complex issues, public employees may be inhibited in forming solutions by a form of bureaucratic management that stifles innovation.

To see government employees as empowered entrepreneurs who have the ability to start solving problems, we need a new way to look at them and what they do. "Intrapreneuers" are the people who produce innovation within an organization, according to Ries. The actions of these employees make them entrepreneurs. Within a government, many people could be thought of as intrapreneurs, particularly as they navigate the implementation of policies and programs - which is similar to entrepreneurial management in that it requires charting an entirely new course.

The third chapter of the book tackles learning. "Unfortunately, 'learning' is the oldest excuse in the book for a failure of execution," Ries says. To address this concern, he discusses the Lean idea of validated learning, in which learning occurs in the present and future, rather than after the fact. In terms of government, this shifts the focus from ex-post policy evaluation to constant and ongoing evaluation during program implementation.

In one sense, constant evaluation of programs should validate the next steps rather than waiting months or years after the program is implemented to evaluate it. Of course, there are constraints to the ability to evaluate social programs in government, given unique institutional difference, and the need to capture changes over time. Still, knowledge of this lean principle can be used in advance of developing a program or policy to ensure that learning is constantly occurring at an organizational level.

A final aspect of the Vision section is to experiment, the topic of Chapter 4. After determining the vision of an organization, employees should proceed to develop hypotheses and then test them in terms of product development. In terms of a government, the experimentation phase may include phasing in a new software product or program, and experimenting with different aspects of implementation. The goal is to start experimenting early, and change over time.

The experiment principle may seem challenging to follow in a government, but given the recognition that public employees engage both administration and politics, there is little reason to believe that experimentation in government cannot occur. …

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