Public Strategies, public acclaim

Consultants steer governments into less bureaucratic and more customer-focused results
DAVE BEAL

Posted on Sun, Aug. 14, 2005 St. Paul Pioneer Press http://www.twincities.com/mld/twincities/business/columnists/da e!beal/12"#14$#.htm

%ot long a&ter the principals at Public Strategies 'roup opened their doors in St. Paul, the( got bad news. )o*&ounders Babak Arma ani and Peter !utc"inson had promised a +mone(*bac, guarantee+ to clients who weren-t satis&ied. An unhapp( customer demanded the( ma,e good on their pledge. .ut toda(, nearl( 15 (ears a&ter its roc,( start, PS' has become one o& the nation-s leading consultants to go ernments. /an( credit Arma0ani and 1utchinson, who ha e wor,ed together closel( since the 1$#0s, &or its success. 2wo wee,s ago, 3owa won an +inno ations in state go ernment+ award &rom the #enned$ Sc"ool of %overnment at !arvard &niversit$ &or cost*sa ing initiati es proposed and ad anced b( PS'. 2he changes ha e sa ed the state 4125 million, gi en ta6pa(ers a better return on their in estment and changed the culture o& state go ernment to &ocus more on results, sa(s C$nt"ia Eisen"auer, chie& o& sta&& &or 3owa 'o . 'om Vilsack. +3t-s a home run,+ she sa(s. (olfgang )pit*, deput( director o& the (as"ington State )ffice of +inancial ,anagement, is another big &an. 2hree (ears ago, PS' redesigned the state-s budget process &or 4250,000. +3t-s wor,ed great &or us,+ sa(s 7pit8. +3t-s clearer, much easier to decide priorities and much more straight&orward to e6plain to public o&&icials and to the public. 3t was high impact &or the mone( spent.+ PS' has become a hothouse &or +big ideas+ 9 a crucial asset &or an( consultanc( that wants to ma,e a di&&erence. Among its partners is /assachusetts*based author David )sborne whose 1$$2 boo,, +:ein enting 'o ernment,+ co*authored b( 'ed %aebler, became an all*time top*seller about best practices in go ernment. ;ast (ear, 7sborne teamed up with 1utchinson on another boo,, +2he Price o& 'o ernment.+ An( state can calculate its +price+ b( adding up all state and local ta6es and &ees, then di iding the total b( its o erall income. 1utchinson came up with the concept 15 (ears ago< toda( 3owa, =ashington, /ichigan and South )arolina are appl(ing the idea in state budgeting. 1utchinson-s ideas and plans ma,e him a man to watch in /innesota. 1e appears set to run &or the -ndependence Part$ nomination &or go ernor in 200>. Bill Bla*ar, the %o. 2 e6ecuti e at the ,innesota C"amber of Commerce, has ,nown 1utchinson since the 1$#0s. .la8ar e6pects 1utchinson to run and sa(s, +he-s clearl( going to tal, about doing things di&&erentl(, and that-ll be a great addition to the debate.+

.D)-/% '!-/%S D-++E0E/'L1. ?or PS' and its clients, +doing things di&&erentl(-- means steering go ernments into a less bureaucratic and more customer*&ocused, results*oriented mode. PS' sta&&ers describe their &irm as @uir,(. Arma0ani, who is the )A7, 0ingles a 2ibetan peace bell to summon wor,ers to meetings. 2he compan( doesn-t ha e &ormal sic, lea e or acation policies. Sta&&ers co er &or &ellow wor,ers who need to be awa( &rom their 0obs. ?ull*timers get base pa( o& 450,000, but can ma,e much more when the( or the compan( do well. Arma0ani remembers when a client agenc( was celebrating with pro0ect sta&&ers &rom PS' and consulting giant Accenture. .oth &irms had wor,ed on the pro0ect, but the agenc(-s emplo(ees hugged onl( the PS' sta&&ers. +1ow come the( ne er hug usB+ as,ed a sta&&er &rom Accenture. +A er(bod( laughed,+ sa(s Arma0ani. PS'-s home o&&ice is in downtown St. Paul. 3t has &i e one*person o&&ices scattered &rom ;os Angeles to =ashington, C.). Arma0ani, 1utchinson and three other sta&&ers wor,ed &or &ormer /innesota 'o . 0ud$ Perpic". 1utchinson was &inance commissioner, and Arma0ani was deput( re enue commissioner. Cespite the &oundersgo ernment connections, PS' is less well*,nown here than in some other states. /innesota accounts &or 0ust 5 percent o& its business. A third o& its 40 &ull* and part*time sta&&ers wor, in downtown St. Paul. /ost o& the others are scattered across the countr( as part o& the &irm-s +:ein enting 'o ernment %etwor,+ o& consultants. 2he compan( has se en owners. 1utchinson is no longer among them. 1e turned his stoc, bac, to the compan( and stepped out o& management a (ear and a hal& ago 9 he had been president 9 to &ocus more on customers. Annual re enue &luctuates. PS' a eraged 45 million o er the last se en (ears, ranging &rom 45 million to 410 million. 2his (ear, the compan( is rebounding &rom about 45 million in 2004. 2he compan(-s onl( loss came in 1$$4, when it ne er reali8ed re enue e6pected &rom the state o& 3llinois. 2hat was also the &irst (ear o& its ris,( deal with the ,inneapolis Sc"ool District, where 1utchinson became the superintendent and his &irm &unctioned as the &irst &or*pro&it business to run a big*cit( school district. 2he arrangement ended abruptl( in 1$$#, with 1utchinson declaring ictor( but others o&&ering mi6ed re iews. 2(picall(, PS' has about 20 pro0ects going at once. 7&ten, it doesn-t get much cash up &ront unless it per&orms well. 3n the 3owa deal, it didn-t get an( mone( until results could be documented. .ut now, it has collected nearl( 4> million and could get more. A ,EE'-/% )+ )PP)S-'ES PS'-s biggest pa(da( came courtes( o& the ?ederal Student Agenc(, the largest unit in the D.S. Cepartment o& Aducation, which paid the &irm 414 million &rom 1$$5 to 200" &or help in becoming more responsi e to

student borrowers. Arma0ani and 1utchinson met and become &riends in 1$#1, when the( were graduate students at Princeton &niversit$. +2he(-re opposites in a lot o& wa(s,+ sa(s 7sborne, the author. 7sborne describes Arma0ani as so&ter and more nurturing than 1utchinson, and more li,e a coach. +1e-s the ,ind o& gu( who, when he pic,s (ou up at the airport, e er( once in awhile he can-t &ind his car.+ 1e iews 1utchinson as harder*dri ing and charismatic, more li,e a classic, results*dri en e6ecuti e. +2he(-re both er( good strategists.+ Sa(s Arma0ani: +7ur big di&&erences are 3 thin, out loud and Peter thin,s to himsel&. Peter li,es to decide things and close things. 3 li,e to e6plore possibilities and ,eep m( options open.+ .oth men see the compan( as a &ront*runner in a mo ement that began in the late 1$#0s to trans&orm go ernment b( dri ing out bureaucrac( and corruption. +=e- e got tremendous prospects,+ sa(s 1utchinson. .ut b( about 2015, the( belie e the wor, o& PS' and others in its &ield will ha e succeeded 9 0ust as a similar re&orm agenda did across the nation a centur( ago. 2hen, according to the compan(-s +2015 strateg(,+ PS' plans to dissol e itsel&. +=e will go on and do something else worthwhile at that point,+ sa(s Arma0ani. +/ight not this ,ind o& thin,ing appl( to some go ernment organi8ationsB+ Ca e .eal can be reached at dbealEpioneerpress.com or >51*225*542$.