Have we moved beyond these cumbersome divisions we call states? In a recent Op-Ed Tom Brokaw proposed that local governments blur their administrative lines and work together to deliver services more efficiently. In discussing North and South Dakota’s 17 colleges and universities, he made the following blasphemous comment:
I know this is heresy, but couldn’t the two states get a bigger bang for their higher education buck if they consolidated their smaller institutions into, say, the Dakota Territory College System, with satellite campuses but a common administration and shared standards?
Jefferson and Madison may be turning in their graves, but Brokaw makes a legitimate case for consolidating costly and overlapping public services. The economics are clearly in favor of pursuing such a system, but politics often get in the way of this kind of progress. As Brokaw points out, parochial interests will be the biggest hurdle to making these changes a reality.
The same dynamics play out in companies. Even when there are known advantages to centralizing activities — even when it makes things cheaper and better — the self-interest of individuals and business units can undermine a centralization campaign. Firms that overcome this tension usually do a few things right. First, they put someone in charge of “shared services” who has the leadership skills to bring a skeptical organization along. Second, they focus on the better as much as the cheaper, on the upside of leveraging learning and best practices across the entire organization.
It’s not only that the Dakotas’ 17 colleges and universities can buy chalk for less when they combine some activities, but also that the Dakota Territory College System can use the knowledge now embedded in each institution to improve the education being offered by all of them. And designed correctly, realizing these “economies of experience” doesn’t have to come at the price of innovation or agility or even customization. Indeed, done correctly, these changes can free up the time and resources for an organization to deliver unprecedented quality to its constituents.