Lisagor: The risky business blues

There are not enough incentives for managers to take a risk on unproven firms or technologies

It can be very difficult for small businesses to sell their innovative solutions to the government. Representatives from several Washington state companies expressed their frustration at a recent meeting with their local congressman. They cited numerous hurdles and insisted that the fix, while difficult, was long overdue. Who knows how many potential cost savings and unique approaches have never seen the federal light of day?

Government managers do not have enough incentive to take a gamble on unproven technology. The old saying “No one ever got fired for hiring IBM” still seems to be true given that much of the IT budget goes to several large companies. Yet there continue to be numerous failed multimillion- and multibillion-dollar IT programs. Clearly, relying on the same safe but tired old processes isn’t paying off.

There also isn’t a significant movement across government to identify new solutions or help small companies bring them to the market. I know of several revolutionary software development and database applications that are languishing in obscurity. And, while there are small pockets of Small Business Innovation Research programs and similar contracts spread through various agencies, nothing comes close to a comprehensive, governmentwide initiative. Meanwhile, we are falling behind the rest of the world in some key technologies.

In many cases, the same risk-averse contract and documentation requirements are placed on all companies regardless of size. This is a daunting challenge for smaller companies that lack the necessary overhead. I recently submitted the paper equivalent of two large maple trees to the General Services Administration to obtain a contract under the Mission-Oriented Business Integrated Services vehicle so I could provide reality-based risk management assessments and customized training to federal agencies. The GSA specialist was great to work with, but the contractual requirements were onerous.

Larger companies are required to subcontract a certain percentage of work to small businesses. Unfortunately, the type of work offered is too often the least technical in nature. And smaller companies can have a difficult time getting past prime contractors to familiarize agency managers with their unique solutions.

Many government managers work in change-resistant organizations. Yet it probably requires the same or more energy to maintain the status quo. Thomas Jefferson said there are some reasons for stability, but constant improvements are necessary when the benefits outweigh the costs of change.

It is a manager’s responsibility to be proactive — to respond to outside pressures and the need for change. Take a chance on a different contractor. Try a new product. Fund a risky prototype. Cut through the bureaucratic mire and give small-business entrepreneurs a chance.

Lisagor founded Celerity Works in 1999 to help executives accelerate and better manage business growth. He provides reality-based risk management assessment and training to government agencies and is the author of the just-released “The Enlightened Manager,” which is available at www.celerityworks.com/enlightened-manager.html. He lives on Bainbridge Island, Wash., and can be reached at lisagor@celerityworks.com.

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