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McClure, Chairman of the Center for Policy Studies
Caucus, 8301 Creekside Circle #920, Bloomington, MN 55437
Johnson (Chair); David Broden, Janis Clay, Marianne Curry, Bill Frenzel,
Paul Gilje, Joe Graba, Jim Hetland, Jan Hively, Sallie Kemper,
Jan Malcolm, Joe Mansky,
Jim Olson (phone), Wayne Popham (phone), Dale Shaller, Bob White, John
of McClure's comments:
McClure opens his remarks with an overview of large system architecture,
followed by an articulation of the formal theory and methods behind its
practice. He closes by describing how
can support efforts at large system design in multiple industries into the
Context of the meeting-The
Civic Caucus, and now candidates and organizations throughout the
gubernatorial campaigns, have been talking about the need to rethink and
does things as a state. Walt McClure has spent a career in the design and
change of large systems, and argues that the term 'redesign' actually
needs to be defined further to distinguish between innovation that takes
place inside an existing system, and that which modifies the structures of
the system itself.
McClure prepared a paper on the topic ahead of today's discussion,
together with examples of large system architecture applied to K-12
education and health care, that may be found here:
Welcome and introductions-Walter
McClure is chairman of the Center for Policy Studies, a policy research
organization, based in
but working nationally, that develops and helps apply system reform
strategies for health care and public education. Its public education
reform project Education|Evolving is more commonly known nationally, and
is a joint venture with
McClure received a BA in philosophy and physics from Yale in 1959 and a
PhD in theoretical physics from
Florida State in 1967. He worked on rocket engine problems and nuclear
cluster theory before switching in 1969 from physics to health care reform
policy. He worked at InterStudy on the HMO strategy under Paul Ellwood's
leadership until leaving in 1981 to start the Center for Policy Studies.
He directed the Center until his retirement in 1990.
Center McClure developed Large System Architecture, which is both a
general theory of why organizations do what they do, and a set of methods
to design and carry out system reform strategies. The Center has not been
active in health care system reform since his retirement, but has been
very active in public education system reform under the leadership of Ted
Comments and discussion-During
McClure's visit with the Civic Caucus, the following points were raised:
like the nation generally, confronts a seeming double-bind: either raise
taxes or cut important programs. The resulting political squabbling back
and forth has been interminable. But a third alternative exists and is
finally getting some currency, namely: redesign our important large
social systems - education, health care, criminal justice, welfare, etc. -
to get more for less. In fact, redesign has suddenly become a buzzword and
many of the people using the term have only a vague notion of what it
means. In this discussion I will try to bring some precision and
practicality, born of three decades of experience, to this concept.
has always led in progressive thinking and action, and I hope to suggest a
few ideas on redesign that might keep us in the forefront for the
of redesign are possible
first, and simpler, is "omnibus tinkering": if a system appears
reasonably sound, we simply look for every place that improvements seem
possible that raise its performance or reduce its cost. Omnibus tinkering
allows continuous fine-tuning, and in some cases, over time, can achieve
quite worthwhile savings and performance improvements. The disadvantages
are that such efficiencies tend to be small and one-time only. Worse, the
system requires continual external policy surveillance and intervention.
The system is not itself hunting for these improvements and efficiencies
(if it were, tinkering from the outside would be unnecessary). Often as
soon as external vigilance is relaxed, a system may begin to return to its
less efficient ways. And, in the worst cases, organizations in a seriously
malperforming system simply resist all external private and public
attempts to improve their performance and efficiency.
example, despite decades of tinkering in education and health care, the
two largest items in State budgets, where we absolutely know from research
excellent measures to improve each of these systems, the organizations -
schools and school districts in the one, providers in the other - have
simply evaded, distorted, or diluted to tokenism, all such measures. None
of the improvements have taken hold in any substantive way. These systems
have remained stubbornly resistant to change, so that more of the same old
policy efforts (only harder and better this time) seem fruitless. So
what's missing, and what can be done?
brings us to the second and more difficult approach to redesign, namely: "system
reform." I think we all have intuitive notions about what comprises
system reform, but I would like to sharpen our ideas and make the term
quite precise. And this brings me to the notion of Large System
Architecture: Large System Architecture comprises two components,
first, a theory of why organizations do what they do; and second, if they
are not performing as society wishes, methods for designing and executing
strategies to alter their behavior to the desired performance. I will
discuss three things: the theory first, next the methods, and finally some
of the ingredients that seem to me necessary if
Minnesota is to be a leader in system reform.
organizations behave the way they do
start with the theory - why do organizations behave the way they do - and
begin with a little insight-building. How often have you heard that
malperformance of various poorly performing large systems is due the moral
failings or corruption or incompetence of the organizations and people in
the system. Take, say, the health care system: its variable quality and
access and especially its runaway cost escalation are variously ascribed
to greedy providers or the big bad for-profit insurers or the
unhealthy-living, over-utilizing patients.
examine such explanations with a counter-example: a really
well-performing system, say, the auto industry. The world simply couldn't
make better cars for the money in the variety that people want than the
auto industry does today, and its productivity keeps rising; it keeps
doing better for less. Now, does anyone think this is due the altruism and
purity of auto executives? Further note: it is a profit-making industry.
And: it has as much greed (and as much altruism) as any other large group
of human beings. So it can't be greed or profits that stops a system from
performing well. In the auto industry if a company can't make a car that
people want for the money, that company is out of business - ask General
Motors, whose incompetent leadership over several decades ran this great
company into the ground, requiring a government bail-out and overhaul to
save it - giving new meaning to the term welfare capitalism.
Clearly, the motives of the people in a car company make no difference;
whatever their motives, whether altruistic or greedy, if their company
can't make a good car, they are not around very long. The companies that
survive and prosper in this industry must perform well.
Surprising to many people, the flip side is equally true, as we shall see
shortly. In a malperforming system, no matter how dedicated or selfish the
people in an organization may be, if the organization does not malperform
in the way observed in that system, it is not around very long, and soon
the only organizations that survive and prosper are the malperforming
what determines why organizations in good systems perform well and
organizations in bad systems perform badly? That is what the theory is
supposed to tell us, because if we understand that, then we know what to
change to make the system perform the way we want.
jump ahead of the formal details for a moment and put the conclusion in a
nutshell. The reason organizations do what they do is not because of
their "innards." It is because of their "out-ards." The
larger system places powerful incentives on them that determine what they
must do to survive and prosper, and they have no choice about it. The
innards of any particular organization merely determine whether that
organization will adapt to these incentives or perish. This is an enormous
simplification for policy. We do not have to beat up on the thousands of
organizations in one of these malperforming large systems. We "only" need
to architect - i.e. intentionally design and restructure - the large
system so that its incentives reward the organizations within it for doing
what society wants them to do. This is what I define as system
reform, and it is a quite precise notion.
has yet to really become aware of the presence and power of these
underlying incentives. The great error in much policy effort to date has
been to order organizations to act counter to the incentives of their
macrosystem. Organizations cannot seriously comply with such orders or the
macrosystem will hurt or kill them, which is why many malperforming
macrosystems have so strongly resisted decades of policy attempts to
system reform design, we have learned from experience, is a complex
professional discipline. An effective system reform plan can no more be
cobbled up in a legislature or citizens committee than a moonrocket. To
pursue system reform successfully,
Minnesota will have to foster policy analysis groups specializing in
system reform strategy, to whom public and private policymakers can turn,
reserving, of course, final say on any strategy not to these architects
but to our legitimate, established public and private decision makers.
let us lay out the theory in a little more formal detail. Please forgive
the didactic formalism; it's the way I think. I came to health care reform
from theoretical physics and found myself the only hard scientist in the
field. If you ask a physicist to solve a problem, the first thing he looks
for is a theory that explains why the problem is occurring so he knows
what to change.
shall begin with three empirical observations that make up the starting
assumptions (postulates) of the theory, from which we will be able to
explain and predict the behavior of organizations.
Organizations exist in a larger system - call it a macrosystem - whose
structure they cannot alter by their own action alone. Thus schools and
districts exist in a larger macrosystem we call the public education
system, which has a very definite structure. And health care providers
exist in a larger macrosystem we call the health care system, which also
has a definite structure (quite different than the education system). If
you doubt these larger macrosystems have a definite structure, you haven't
tried to change it.
The structure of this larger macrosystem creates and places powerful
incentives and restraints on the organizations within it, powerful enough
to punish or kill organizations the more they act counter to them, and to
make prosper organizations the more they act consonant with them.
if a macrosystem's incentives reward the organizations within it for
performing as society wishes, and punish them when they stray, then we
have a well-performing system. The auto industry is one such macrosystem.
Organizations in such a macrosystem do what society wants; they do it on
their own volition; and they do it far better and more innovatively than
policy outsiders could ever order them to do. And if they do not do it,
they are not around long. In this felicitous situation the only policy
task is oversight - to make sure that the structure of that macrosystem
remains sound and is not inadvertently (or deliberately) altered.
course in the less happy situation, the converse is equally true: If the
incentives of a macrosystem punish the organizations within it for the
performance society wishes, and reward them for some other behavior
undesired by society, then we have a malperforming macrosystem. No matter
how well intentioned the organizations within it, they survive and prosper
only if they engage in the undesired behavior, and if they do not, they
are not around very long. In such a case the policy task is much more
demanding. It requires system reform as defined above: i.e. systemic
change in the structure of the macrosystem to alter the incentives and
align them with the goals society has for that system.
thus arises the name Large System Architecture. We must architect unsound
macrosystems; that is, we must: (A) come up with a future design for the
structure of the macrosystem that would, could we wave our magic wand and
have it replace the present structure, place stringent incentives for the
desired performance on the organizations within it; and, since we lack any
such magic wand, we must also (B) come up with a practical strategy to
leverage the system from here to there. In short, we must first know
exactly where we want to go, and then devise a way to get there.
brings us to the third observation:
3. The structure of a macrosystem can be altered by sufficient
other words, while one organization alone within a macrosystem cannot
alter that macrosystem by its own actions, if enough organizations within
and without it act collectively, it can be restructured. Organizations
already know this, whether policymakers do or not. You will note that
virtually all macrosystems are rife with multiple trade associations of
the organizations within them. And one of the chief aims and activities
of such collective activity is to alter the structure of their macrosystem
in ways favorable to the organizations; these may or may not be favorable
to the public. Public policy must be given the tools to assure that all
collective action, including its own, is brought to bear for the public
theory is nothing but a small set of postulates (starting presuppositions)
from which by deduction one can explain and predict an enormous number of
empirically observed effects. These three observations, whose empirical
truth (and limits) the reader can see for himself, constitute the
postulates of Large System Architecture Theory. By examining the structure
of a macrosystem, we are able to discern the particular incentives and
restraints that it exerts on the organizations within it, and from those
incentives we can predict the performance of those organizations for good
you look through the lens of this theory, you no longer need blame the
malperformance of any macrosystem on moral failings, stupidity,
incompetence or corruption of the organizations and individuals within
it. You do them grave injustice if you do, and you haven't a prayer of
altering their behavior because you are looking in entirely the wrong
place for a solution. No large group of human beings has a monopoly on the
virtues or vices of the race. There are quite as many brilliant,
exceptionally competent and highly motivated people in the education
system and health care system as in the auto industry, and just as many
incompetents and miscreants. The difference is not the people, it is the
incentives of the macrosystem structure they operate in: what performance
it rewards, and what it punishes. You cannot change human nature, but you
can change the incentives of a macrosystem and then the same people will
Designing a Future Model
addressing a malperforming macrosystem, the large system architect has two
main tasks: The first is to come up with a "future model": a design for
the macrosystem's structure that will place stringent incentives for the
desired performance on the organizations within it. The second task is a
strategy to make the future model happen: to devise "change strategies"
that move the present system to the future model, and to assist those in
position to help make this happen. We'll start with devising the future
model and address change strategy below.
devise a future model, the architect must (1) determine the problem
behavior of the organizations in the system and then (2) identify the
underlying cause of these behaviors, namely: the underlying incentives
selecting for the problem behavior, and the macrosystem structural
elements that give rise to these incentives. (Using a medical analogy,
before we can prescribe a therapy Rx we must identify the
symptoms Sx and determine the diagnosis Dx .) This
faulty underlying structure is what must be altered in the future model in
order to correct the performance of the system.
macrosystem may be defined as a set of organizations
which interact strongly to accomplish a definable purpose for society.
That purpose is spelled out by the performance goals society desires for
that system. A problem may be precisely defined as a
discrepancy between goals and actual performance. Thus before we
can determine the problems (symptoms) of a macrosystem, we must determine
the goals society desires of that system. Then we can seek performance
measures to see how well the system is doing against the desired goals.
Thus to identify all problems and the perverse underlying incentives
creating them, the first step for the architect is to specify a complete
set of goals for the system.
a complete set of all goals is even more important when we begin devising
a future model with correct incentives. Politicians are always eager to
work on the easy and more popular goals and defer on the politically more
difficult goals, thinking they can be added later and become someone
else's headache. This is usually a recipe for failure in system reform.
Because goals often conflict and require trade-offs, it is usually
impossible to tack on additional goals to a completed future model design
aimed at only one or two of the desired goals.
this sense macrosystem design is like rocket science; the design must
incorporate all goals simultaneously. If you have a rocket design, and
afterward decide you want to double the payload or double the range, you
cannot just tack on a fix. You must redo the entire design because all
parts depend on all other parts. Macrosystem design is similarly complex
and requires professional expertise, study, and experience. A future model
can no more be cooked up in a legislature or lay citizens committee than a
rocket or an automobile. What legislatures and citizen groups can do is
express what they think are the goals society desires and set the large
system architects to work, and then approve, or reject, or request further
study and work, when the architects submit a proposed future model and
this is what Congress did when it created NASA to conduct the moonshot; it
did not try to design the rocket itself in committee. Because lay groups
have more familiarity with macrosystems, they usually assume, with
unfortunate results, that they can jerry-rig together a strategy
themselves. That is why we have made so little progress on our most
difficult problem systems like health care and public education despite
decades of effort. Akin to NASA, we need a profession of large
system architects - policy analysts and researchers who specialize
in study and development of reform designs for particular problem
macrosystems - to whom this specialized work can be delegated, while all
final approval remains, as it should, in the hands of established public
and private decision-makers.
example, just arriving at a complete set of workable goals and measures is
complex and may require months of work, iterating between problem
analysis, incentive diagnosis, and potential future model designs, before
resolving into a practical set of goals. In practice, in many cases we
must settle for proxy goals and measures. Society seldom speaks with a
uniform, let alone informed, voice, and each special interest group has
its own notions about what the goals should be. The architect must arrive
at his own best formulation of the goals he believes society has expressed
desire for, goals that serve the public interest rather than some
particular special interests. He can then state that if society wishes the
goals he has set out, here is a proposed future model design likely to
achieve them. Legislatures and citizens groups can then select amongst
rival designs for the one that best reflects their opinion about the goals
and of how likely the design is to work in practice.
the goals, problems and underlying causes have all been identified, there
is no recipe for devising a future model, only knowledge of what needs
altered to eliminate the existing perverse incentives, and knowledge of
all the performance goals that the new incentives must select for.
Arriving at a structure that entrenches stringent new incentives for these
goals depends on the skill, imagination and experience of the architect.
Devising Change Strategy
model design follows a fairly definite iterative procedure - identifying
goals, problems, underlying causes, and then design - which proceeds more
or less as a research and analysis project. But change strategy - to move
the present system to the future model - puts us immediately in the world
of action; it is much more of a moving target and may require shifting
gears frequently. Nevertheless certain principles offer useful guidance.
first rule is to have the future model design in hand at the start.
All parties involved in facilitating the change must know with precision
where we are trying to move the present system. Thus we can constantly
monitor if actions are leading in the right direction, and alter course
when they are not.
second rule is always work on the front log in the jam. We may
liken the task of change strategy to breaking up a log jam. Working on a
back log does nothing to unstick the jam. We must find the front log and
move that one. By "front log" I mean the step or action most likely to
unbalance the status quo holding the macrosystem in its present form and
produce the most response in the direction of the future model.
"Working" on the front log means finding and persuading those parties
of interest with the power and motivation, to take the needed action.
Parties of interest may include public and private interest groups and
various levels of government or its agencies. This usually requires a lot
of educational work, diplomacy and consulting assistance, to show the
advantage to a party of interest of taking the action, and the
disadvantages of not taking it, and then to help in actually taking the
action. If successful, and the action is taken, the log jam shifts,
sometimes predictably but often not.
shift usually brings a new log to the front of the jam. Again the
architect must identify this new front log and then identify the coalition
of interested parties with the power and motivation to move it. Those
parties interested and capable of moving the new front log may be the same
or a completely different coalition of interested parties as took action
on the first front log.
architect is now chasing a fluid situation, attempting to identify each
new front log as it comes to the fore; then identifying the interested
parties that might move it or fortify the action; continually assessing
whether the resulting movement is in the right direction toward the future
model or has resulted in a reversal of progress; and altering and adapting
course to keep the change strategy moving and homing on the future model.
Government may play a more useful role by leadership than by legislation,depending
on the nature of the problem macrosystem and the desired future model.
Legislation tends to reduce flexibility. Often a coalition of public and
private leadership can produce better, faster, more agile progress. But
also in some cases legislation done well can help or be crucial.
architect and advocacy groups working for reform must always also work
steadily on the rhetoric battle.
Rhetoric addressing all relevant parties as well as the general public
must be created to build understanding and support for the proposed system
reform. Every special interest will attempt to capture the rhetoric and
try to put its own spin on it to favor itself and oppose change
threatening to it. Interest groups may expend considerable effort and
money on propaganda and disinformation to muddy the waters. The forces
advocating for system reform must be prepared to counter such efforts with
equally frequent and skillful rhetoric.
Finally, wherever and to the extent feasible, it is best that change
strategy be staged.
As much as possible, one would like to create discrete local
demonstrations of any proposed new future model and test and refine it
before scaling up to more widespread implementation. One does not build a
new moonrocket and load the nation on board on the first launch; one runs
tests and gradually scales up as the design is refined and proved out. For
the same reason, given the complexity of a macrosystem design, we would
prefer, to the extent possible, to establish limited test beds first to
assess and refine a proposed future model, and then gradually implement
it more broadly, monitoring and refining it along the way if and as
Supporting System Reform
wishes to be in the forefront of system reform efforts, then it may wish
to see to the fostering, care, and feeding of large system architecture
groups here. The Center for Policy Studies is such a group and has
developed and assisted interested parties across the nation with proposed
system reform strategies for each of the two largest items in State
budgets: public education and health care (a capsule description of each
is appended). In other words, this discussion is not about some ivory
tower exercise; for three decades we have been doing in the real world
what I have been talking about here. I would like to share a bit of our
experience in playing large system architect to indicate what such groups
senior associate Ted Kolderie has led our Education/Evolving group on
public education system reform strategy. He began in 1982 and he and his
colleagues are still at it, working on change strategy to move our
proposed future model for public education into being here and around the
Minnesota's State government and private leaders recognized early the
promise of this reform strategy and have been bringing it into being with
our assistance. Minnesota was thus the test bed for the strategy and it
has been refined and improved with our growing experience. An important
part of the strategy involves state-authorized chartered public schools,
and we have assisted many States in enacting chartering legislation based
on the Minnesota model. We have also developed many tools to assist
charterers and organizers of charter schools.
responsible for our proposed health care system reform strategy. I started
on the problem in 1969 at InterStudy under Paul Ellwood's leadership and
then left to start the Center in 1981. Our first big initiative at
InterStudy was to get HMOs started as new integrated health care players
to compete with the traditional fragmented provider system. I wrote the
enabling legislation for Medicare and the HMO Act in the early 70s.
Later, at the Center, I was finally able to crystallize Large System
Architecture theory, and realized that introducing new actors like HMOs,
even if they had better "innards", into a system with the same old
perverse incentives was not going to solve the problem.
the insurance industry was rapidly eroding the HMO concept of integrated
managed comprehensive care providers into policed insurance plans with
bureaucrats second-guessing doctors. In retrospect, our HMO work was a
good thing that I now feel was a false start. Thus the appended strategy,
tagged with the unlovely name Buy Right, was developed to alter the
perverse incentives in health care to reward providers for better care for
less. During the '80s we got the first step, severity-adjusted outcomes
assessment, implemented in three places: Medicare,
and Cleveland. The remaining two steps, cost assessment and consumer
insurance incentives, were not taken because I fell prey to major clinical
depression in 1986 and was knocked out of the saddle by 1990 and progress
ground to a halt. Remarkably, a remnant effort continues in
but Medicare and Cleveland abandoned outcomes assessment under industry
we conclude from this experience?
some macrosystems have obvious reforms, or an excellent reform design has
already been demonstrated elsewhere. For example, the British have shown
how to reduce prison violence while virtually eliminating the barbarous
practice of solitary confinement, producing better performance for fewer
prison dollars. These easier cases we can move on right away. On the other
hand, developing and implementing a workable system reform design for a
really difficult macrosystem can take years, with not much to show for it
for some time. And one can expect some false starts, though we now have
theory that may reduce such occurrences. Thus we will need architects,
and knowledgeable funding support, willing to stay the course. And we
will need leaders ready and proud to take initiatives that may take beyond
their tenure to complete, and proud to claim them as their legacy.
the difficult macrosystems require immersion and a team. I did not try to
work on education; Ted did not try to do health care. We have to get
architects up to speed. One tries to build a team: a creative system
reform architect, coupled with an experienced veteran professional of the
system who knows how it really works, along with a "go to" guy with
diplomatic, executive, and political savvy, to assist with the consulting
and change strategy. These people will need adequate staff, all of whom
will need considerable on-the-job training. (A problem is that this
training and experience will make staff quite valuable to organizations in
the macrosystem, which can offer them salaries not possible in the usual
shoestring non-profit outfit like an architect group. This is loss of a
heavy investment for the architect group. Thus care must be taken to bring
on highly committed staff who also want to stay the course.)
large system architecture seems to need its own independent home. It
doesn't work well housed in academia. The time demands are heavy and
irregular and cannot accommodate teaching schedules and faculty committee
meetings and academic overhead. Moreover, if effective, the work can be
controversial, making a university department skittish. Ted tried a
university base for a few years and then, to my great delight, asked if
the Center might want to give him a home - it did, instantly. For similar
reasons, an architect group is not well housed as a sidebar in some larger
organization with a different operational mission, particularly one in the
macrosystem under study.
doing large system architecture needs steady core funding
have great trouble with capricious support that is big on them one year
and on to something else the next. They do not need, say, a million
dollars for a year, they need a hundred thousand for ten years. This has
three effects: It provides support for the kind of basic research and
spadework that no one else will pay for. It allows them to hire and train
staff without fear they will have to be laid off at at the end of
short-term grants whose renewal is problematic. Finally, the group can
spin up the core grant, often effectively doubling it, with project
contracts when a client is found who wants assistance acting on the reform
strategy. But the presence of core support allows the group to choose only
projects that move the strategy. One is not left scrambling for irrelevant
projects just to cover payroll, nor figuring out whom to charge when you
go to the bathroom.
pioneers of this profession have had a tough time making it. We had to
come up with the ideas, a time-consuming exercise; we had educate and seek
potential clients (those who could move the front log) all over the
country; we had to conduct consulting projects assisting them to implement
our reform ideas; we had to run a small non-profit, non-profitable
organization; and we had to beg for core money all over the country from a
largely uninformed foundation community for ideas considered
controversial. A knowledgeable community of government and private leaders
and foundations could assure a much stronger, vibrant set of architect
groups, who could work both locally and nationally.
ingredient in any architect group is the lead architect
final analysis I believe the key ingredient in any architect group is the
lead architect. I had the intention for the Center, as soon as I knew it
might survive, to add education and welfare as program areas along with
the health care program that I was laboring on, since the theory, which
arose out of the health care work, seemed to me quite generally
applicable. I thought the Center could become a place that would train up
new large system architects by letting them learn on the job from
experienced architects who were actually engaged in reform work. But to
start such a program, what I needed first was not money or staff or a
proposal, but the guy - a guy with imagination and experience, a committed
visionary with a visible track record. When Ted Kolderie approached me
looking for a home, I knew I had my education reform program and instantly
and support one or more system architecture groups to work on each
suggest to everyone - public, private and foundation leaders and citizens
- whoever wishes to foster system reform in our several problem
macrosystems in the state, you need to foster and support one or more
system architecture groups to work on each. (Perhaps government should
have besides a council of economic advisors, a council of large system
architecture advisors.) You need to build public understanding and support
for such work. To build such a group, bet on the man, or woman, not a
proposal. (Basically the proposal is, this guy will think about reforming
macrosystem X for five years and tell you what he comes up with; that's
what you're betting on, so try to find the right kind of guy.) What's his
or her track record of innovative thought, deep and lasting commitment,
and accomplishment; if it's there, that person is worth a bet. Find that
person - they are rare - and help them build a group and give them their
head; stay informed of progress and as long as you see promise there,
provide steady core support. I venture if you build several such capable
groups around proven, imaginative lead architects, to work on system
reform for problem systems in the state, they will cross-pollinate and
keep Minnesota ahead for years.
Can you describe further what
Pennsylvania has done in health care that is so interesting?
In the 1980's we were trying to get our Buy Right future model in place
(http://tinyurl.com/29mjlab). I must have given 100 speeches a year to
interested groups. These brought in unrestricted funds that we could put
in the center. In every case we were looking for partners, asking: would
your town want to do this? I ran into Bill Roper who had started political
life in the Executive White House as Reagan's health care staffer and was
interested. So I'd go to his office and we'd talk about it. Then all of a
sudden he got made head of Medicare.
Right has three components: can you measure severity-adjusted outcomes,
publish cost vs. quality reports, and provide incentives to choose for
Roper's support from Medicare. We got it in
Pennsylvania when the executive director of the Pennsylvania Business
Round Table got us to decision-makers at the top, and got it in
because a senior vice president of a major company got us to the top.
strategy began in five
cities, but the State started a state agency. That may not be the best
idea. Don't legislate outcome assessment-it will freeze technology.
Understand, it is important to avoid legislation whenever possible. The
systems we worked to create began to come unwound after my retirement.
When a system relies on a single individual-a super human architect-the
project risks failure. That's a problem with top-down design. What about
grassroots pressure for change? In K-12, people that have voted with their
I don't disagree with that at all. With the budget I had, I could scarcely
mobilize leadership let alone grassroots. Grassroots is a heavy lift, and
to get public to understand is difficult. Alternatively I advocate trying
to take actions so that organic grassroots exercises push the system
changes. For example, choice in public education makes it possible to open
more good schools and drive out bad schools. In health care providing
information about who is better for less allows people to make the kinds
of decisions that change behavior of providers.
Does there need to be a way to limit consumption, with new technology and
new advances expanding the scope and breadth of services?
There are tools to limit consumption, so that people are not consuming
more than the system can provide or afford. The architecture assumes
people will make reasonable cost/benefit decisions. The key is to make
consumers aware that they have to judge value-quality for money. If I gave
you auto purchase insurance and the premium was fixed, would you buy a
Mercedes or a Yugo? It matters when you're spending your own money. For
many a Honda is enough, and they will move on and spend money elsewhere
instead of on premium maintenance.
What about early childhood?
not an expert on that. But I do know that research says it's not about
early-childhood education, but early-parent education. A chapter in the
book Disrupting Class reports that the most important age is 0-1,
and how much the parents talk to the infant. Chatter about what's going
on, causing connections in neurons.
Is early parenthood a separate system design strategy from K-12?
Yes-The best model I've seen was set up by Ann Ellwood, who set up the
MELD system with support groups for new parents. It didn't survive her
because there were no incentives to keep it going intrinsically. It is
critical to institutionalize changes so that they live beyond the
best educators are in the video game industry. Every healthy infant wants
to learn. Kids want to learn if they're motivated. Video games have found
how to engage students intrinsically-not by force. That is the essence of
For-profit schools, and in particular online universities, need to be
carefully studied to see their strong points and weak points to serve the
What would you say if you were advising the people behind the candidates
for governor? They are facing a challenging situation, and it does not
seem they have any idea where to go.
That's a fascinating question, because you don't want a candidate fed a
sound bite who doesn't know what it means. Candidates are using term
'redesign' and 'system reform' and don't have the foggiest what they're
Okay, so let's go a step beyond the election. Imaging you're the Gov, and
you've just been elected. We've got this McClure guy that has this large
system architecture proposal. What would we do to start working in the
If we want to reform the health care system we need a czar in the Twin
Cities. We've got all the components here, but they're disparate and
isolated. We need to focus on the region. I wouldn't pass any legislation
in health care-I'd find a czar, and find people in the business and
foundation community, and have them put their weight behind him, to put
the pieces together properly.
Understand, it is about finding the right people with the capacity to come
up with the right kind of proposals. The process of large system design
does not easily lend itself to sound bytes, but the proposals that come
together as a result of the process of redesigning in turn may.
capture a vision for long-term reform of a large system, President
Kennedy's statesmanship of the NASA program could be a model. He knew upon
launching the moon shot that he was sowing the seeds of an initiative
whose fruits would manifest after he left office. Such a charge might look
going to put in place a staged process that in ten years will completely
transform our public [education/health-care/etc] system for superior
performance at a cost we can afford. I don't expect to be in office when
it's complete. It will be my legacy."
Is what Michelle Rhee's trying to do in
Washington, DC omnibus tinkering, or system reform?
I think it's omnibus tinkering-unless it leads to a change in the system.
There are all these people who have done and are doing good things in the
district. Here's a way to test whether it's tinkering inside the
mal-performing system or if it is systemic reform: You've got a good model
but when you leave-or the mayor leaves, in the case of DC-does it go back
to the way it was? Without change of the system, that's most always the
Relatedly, the charter sector has allowed for different schools to form.
That systemic reform didn't itself improve student learning, because
students don't learn from reforms. They learn from what they do and
experience, hopefully improved by a school. If school has to fundamentally
improve, then it will need to be able to change. The chartering strategy
makes change possible, and through the right of parents to choose schools
it puts a powerful incentive for those schools to change toward for
close, a participant posed a question about the conditions for system
fiscal climate. Q: A challenge of your strategy is the length of
time. We don't have the culture of patience, as a public or community. How
do we do find the commitment to stop changing direction every 18 months?
This is a critical question, and I don't have an answer. In the scientific
area nobody minded that it took us 10 years to get to the moon. Somehow
we've got to teach people that the macro system is just as complicated.
Back to Kennedy's example, the guy who sets the goal will likely be
setting it to occur after his term. Politicians want to get returns while
they are still in office. We've got to convince them it's worth being the
person who started the process, not the one who was around when it came to
fruition. This may be possible.
you to Mr. McClure for the visit.