What do you do if you're a leader in a large, successfulorganization with an entrenched bureaucracy, and you see the need forinnovation? Can you change the way a large organization — such as the federalgovernment — does its work, when all the forces are arrayed for stability andconservatism?
Consider the story of the Business Transformation Agency of the Department ofDefense, which was founded in 2005 under Defense Secretary Rumsfeld, and"disestablished" in 2011 by Defense Secretary Gates. The Business Transformation Agencywas populated by people brought in from the commercial sector. They were boldand brash and injected fresh new ideas that challenged existing policy andpractice in many quarters of the Department of Defense administration (such asfinance, human resources, procurement, and supply chain processes). They raninto many of the familiar challenges of making changes in the federalgovernment: the difficulty of firing; the complexity of hiring at many levelsof management; the need for contracts to be put out for competitive bidding;multiple stakeholders including civil servants, appointees, contractors,regulators; and Congress to be considered in almost all decisions. Unlike atcommercial companies, there was no senior leader who could mandate changes. TheDeputy Secretary of Defense that originally sponsored the agency under Rumsfeldleft, and the new leader was less enthusiastic, ultimately leading to theagency's demise. The entrenched culture of the Department of Defense defeatedattempts to change it.
The Internal Revenue Service (IRS), however, was successfulin transforming its bureaucracy. The IRS had two advantages: Congress provideda strong mandate for change (the U.S. IRS Reform and Restructuring Act of1998); and an outstanding, senior executive from the private sector, Charles Rossotti, was appointed for a five-year term todrive the changes. Under Rossotti's guidance, the IRS reorganized from ageographic structure to fournew customer-oriented operating divisions. IT also upgraded oldtechnology and processes, achieving significant improvements in service andcompliance. For example, it implemented an Internet service that answers thequestion "Where's my refund?" that has had over one billion hits and freed up 800 customerservice representatives to handle more complex issues.
So, what makes the difference between success and failure?Based on long experience working with government agencies and with large organizations of all stripes,I have seen that big changes to the way work is done require:

• a team of insiders and outsiders     to come up with new ideas
• a clear external motivation to do something
• strong leaders who believe in the     ideas and push the bureaucracy to implement them consistently over a     number of years
  

Sometimes (but not often) bureaucracies do make incremental changes to theway they do work, but they are usually not sufficient to meet citizen-customerneeds. An innovation teamcomposed of the "best and brightest" (like the "bold andbrash" Business Transformation Agency) can identify bigger changes, butthose cannot be implemented inside a strong bureaucracy without a strong andclear motivation to change. Now, in a competitive free-market environment, afor-profit company can be motivated by threats to its survival, or by decliningmarket share and profitability. The big challenge for a government agency,however, is that the motivation needs to be a congressional or administration mandate. I'd like to tellyou there's another way to motivate change in case you don't have such amandate, but in the extreme environment of an entrenched bureaucracy, I haven'tseen it. Thus, needed process changes within bureaucracies should always bebuilt into such initiatives. Probably most important, though, as in the exampleof the IRS, a senior leader is absolutely essential to drive the change andsharpen the organization's focus on citizen-customers — to overcome the naturaltendency of bureaucracies to focus internally. And as the IRS and Department ofDefense stories illustrate, the bureaucratic ship won't turn on a dime — leaders needto sustain focus on the changes over the long term, likely for five years ormore.
Leaders of big bureaucracies need to get — and keep —everyone enthused, create and communicate a future vision, assure supportduring the transition, insist on excellence, create demands on managers, andconvince everyone of top management's conviction and commitment to change.These leadership challenges may seem familiar, but in a bureaucracy they are,if anything, magnified. To sustain momentum in this special context, leadersmay need to adopt the behaviors of a fanatic — as Winston Churchill said,"A fanatic is one who can't change his mind and won't change thesubject."
Of course, the federal government provides an extremeexample of entrenched bureaucracy with an established way of doing things. Butit offers lessons to any organization that is mature, successful, and set inits ways, yet recognizes the need to transform itself.