Public-service institutions are out to maximize rather than to optimize.
The most important obstacle to innovation is that public-service institutions exist, after all, to “do good.” This means that they tend to see their mission as a moral absolute rather than as economic and subject to a cost/benefit calculus. Economics always seeks a different allocation of the same resources to obtain a higher yield. In the public-service institution, there is no such thing as a higher yield. If one is “doing good,” then there is no “better.” Indeed, failure to attain objectives in the quest for a “good” only means that efforts need to be redoubled.
“Our mission will not be completed,” asserts the head of the Crusade Against Hunger, “as long as there is one child on the earth going to bed hungry.” If he were to say, “Our mission will be completed if the largest possible number of children that can be reached through existing distribution channels get enough to eat not be stunted,” he would be booted out of office. But if the goal is maximization, it can never be attained. Indeed, the closer one comes toward attaining one’s objective, the more efforts are called for. For, once optimization has been reached, additional costs go up exponentially while additional results fall off exponentially. The closer a public-service institution comes to attaining its objectives, therefore, the more frustrated it will be and the harder it will work on what it is already doing.
ACTION POINT: Prison Fellowship seeks to reduce the rate at which released prisoners are incarcerated again because of new crimes. Why would it be unwise for Prison Fellowship to try to eliminate so-called “recidivism?”
Innovation and Entrepreneurship
* Source: The Daily Drucker by Peter F. Drucker