What does the superintendent do . This was second grade. They will answer anything. Every hand in the room went up. Write down in front was this little guy named michael. He was trying to follow the rules. He is just trying to get called on. He jumps up and says, i know. The teacher says, all right what does the superintendent do . That is the guy in charge of super nintendo. [laughter] it sounded like a better job. This brilliant teacher says, that was a creative interpretation of the language, but actually the superintendent is the leader of the schools. Does anybody know a leader does what a leader does . There was a little girl sitting in the back. As far back as he possibly could. She had her hand raised so high. The teacher called on her. The teacher says, ok what does a leader do . She looks at me and says, a leader is someone who goes out and changes being to make things better changes things to make things better. I have read probably almost every leadership book there is and that is the single best definition ive ever heard. I got all the principles together and i said i got good news and bad news. The good news is, we have a new job section, make things better. The bad news is the second graders already know. Where we live, out with the people we serve, they already know. They do not elect you to maintain the status quo, they elected you to change things and make them better. Delivering results is how we do that. The better we are looking for is what we make the extraordinary ordinary. They do not expect us to do it all tomorrow, or all at once. They expect us to show up and make one thing better in the direction of making the extraordinary, ordinary. When we do that we win the fundamental competition for public support. And then we strengthen the institutions that are the essence of our culture. And that is worth getting excited about. Thank you very much. [applause] [applause] thank you peter for you limit eating and eliminating an illuminating presentation. We can now have questions. When you look back over your work, where do you think relative to State Government where is the greatest opportunity . Where do you get the biggest thing bang for your buck . Peter hutchison in State Government, what we do is educate, medicaid, we incarcerate and we obligate. If you think about your budget, that is probably 90 . K12 and higher, your Public Safety systems, pensions, and other obligations. We need to target those cards of the territory. That is where the action is. That part is easy. I think the two things that are hard are actually the governor of iowa told me this story, he said the thing you need to remember to do in these jobs you need to touch people where they touch government. We dont have the luxury of doing that everywhere. Much money passes through to someone else. So the second part of the answer, we should touch of them brilliantly where we do touch them. Those things where we actually touched human beings, tuition payments, all of those things. We should make those experiences as easy and simple. I believe that the goal for the Public Sector is no touch service. Getting to the point where we can literally pull out the phone and do what we need to do. We are close to that today. I will say and 10 years we could do that everywhere. But there is a fundamental challenge i think us in government. The government we have today was invented 100 years ago. Our government is a reaction to the corruption and the trust and terrible things that happened at the turn of two centuries ago. We elected people like Teddy Roosevelt to kick up dust and fix things. We went from a government of chaos and corruption to a government of control. If you think about if you think about the dna of government, that is fundamentally about control. All kinds of control, control procedures, we are focused on controlling things and we needed that. We call it bureaucracy. The color red tape. It worked. We dont have that kind of corruption today. We do not have arbitrary things going on like it was. But the world changed. This is not the same world. We are trying to run current governments with early 20th century systems. The hardest challenge, while we win the right to do this in the way that we touched citizens behind that we have to get out the dna of bureaucracy and replace it with the dna of results. We are doing it. All of you are doing pieces of this. All of you know what has to happen. But we are not systemic about it. It will happen. This took time to come into being. It will come into being, because citizens will demand it and we will have the capability to do it. Governor herbert and Governor Nixon. Thank you for sharing your expertise. When you talk about leadership, making things better, i think that all of us have been involved in efforts of campaigning saying, elect me. I will make things better. And then there are debates on those issues with whoever. Whoever is involved in the campaign. How much of it being a leader is based on personality . You hear about the charismatic leader, the natural born leader how much of that is an eight part of your personality and how much is learned . Can leadership be learned . We talk about a lack of leadership in politics and certain areas of politics, mainly washington, d. C. Can we improve leadership capabilities and how . Peter hutchison that is a profound issue. I think that the answer is yes and yes. I believe the qualities that we have, they are what we are born with or what we grew up with depending on family circumstances. And we learn along the way. I dont think of myself as a great leader, but i do think that i chose a lot. When i was younger, i thought that i knew the answers. Now i know that i dont. And i believe my ignorance is my greatest weapon, that i learned from my warehouse example, i didnt need to know the answer. I needed to make it possible for people who knew the answer to go to work. I think that is the secret to success. It is not about serving were being smarter, im not smarter than anybody, but if we can organize the way that things happen in our organizations so that those who are smarter can do what they know how to do and feel like they have the authority and power to do that, then my experience is, you can count on people too. Off. That seems counter intuitive based on usual definitions of leadership, that it is a person riding in on a white horse to save us. I actually think that it is a person writing in on a mule, that is tearing down the things in the way of our organizations letting people do what they want and what they are capable of. A friend of mine said that a leader is someone who makes fires and that makes it possible for people to do the right thing. That is learned. I think that you learn to do that. You learn how to not not do what everything in you tells you to do. I cannot tell you how much i wanted to get in there in that warehouse and organize the thing. But it never would have happened. They had to do it. I had to get out of the way. To make it possible. I was a just not use the fire analogy in the summer meeting. [laughter] but an alternative definition of leadership that i got a couple of months ago is, a leader is someone that persuades someone to think and do something that they otherwise did not believe. It takes it back down to the granular level and talks about does everybody have an opportunity to lead in some way . If you convince people that everyone is a leader, you open up the field. Some Major Industries have gone through a transition over the last few years. We have had to downsize. Governor nixon what insider advice do you have motivate folks to motivate folks during that had the process and it is difficult during that time , what advice do you have when it is clear at the end of the process that the same or even more work will be done with your people getting paychecks . Peter hutchison two things Governor Nixon how to motivate them. Peter hutchison 10 years from now the government will be smaller than they are today. It is inevitable. We will not have the resources to afford the scale of government we have today, but more importantly technology will drive work away from human beings and into the hands of technology. Over time, we will not have people doing those things. We will get smaller. I have been through this personally, the key is to keep people connected to those they are serving. What allows people to move forward is their passion and commitment to purpose, their belief in what they are trying to achieve. Part of our job is to help people disconnect themselves from the process we are using today, because those processes will not be the ones we use 510 years from now. Technology will replace things. We will use evidence to make it target new resources and so on. What i hear when i work with organizations downsizing, people are worried about their jobs, but they are mostly worried about that the rivers will be dirty, the air will be foul people do terrible things if we dont keep doing things the way we have done for the last years. We need to help people realize that in the course of getting smaller, we are not giving up on big ideas. We have new capabilities that will allow us to deliver Better Outcomes than today, but differently. Different approaches. Back to my warehouse if you are tight and fixed on outcomes and loose on means, people will figure it out. This is human nature. They want to push back and say, you figure it out. But we have to resist temptation. And say, we have an obligation to the people we serve, here are the resources we got, figure it out. It is a design problem. Most people will do that. They will rise to the occasion. They want to know if at the end if you have these people getting laid off, they want to know yes or no, but i know that the answer needs to be no. This guy gave me advice, he said cut once, dont cut again and again, you will lose people. Peter, please tell me that when i got call you to say he had fixed that meter, you hired him. I had a golf that i had a guy in my State Government coming you was hired because he did Something Like that. Peter hutchison to make sure this is clear how systemic this is, in my family we call 311. They called me three times. I called them 10 00 at night when night, in the morning they were there replacing a lightbulb. And we found a dead animal, my family was concerned, my wife called 311, this guy could not have been, there is no way that this guy was reading from a script. Whoever hired this person hired someone who was naturally sympathetic. In that moment, that is what we needed. 343. Whoever is organizing this ring they get it. It is about those people. It is about their experience. We can do this. I would love to have them in virginia. I would argue if you can call at 10 00 at night and its 00 in the morning, they are 6 00 in the morning, they are doing the job, you might be overstaffed. I would also say that my First Response might have been, dont call citizens before 7 00. [laughter] they are more laidback in colorado. We will leave it at that. Other questions . Yes . Peter, you were the financial officer, to ask you what you think the longterm outlook is for state budgets . Do you think there is an inherent desire for more services and at the same time, lower taxes inevitably it drifts in the unending deficits and more of a federal government type of problem longterm . Peter hutchison three things, the first is no question on average state are not going to be in a fiscal bind. The underlying costs are rising faster than the underlying revenues. That is a condition. I dont see any reason why that would change. There are so many other things going on in the economy that will suppress the growth rate. And there are so many things going on in society that are pushing up the costs. That is the condition we face. We cant print money, so we have to deal with it. I think the central challenge this is what will probably happen over time, in most states when we begin the budget process , we say, how much did we spend last year . And him we look at how much it will cost to do the exact same thing next year, and the answer is more. It is a was more the and we have. And then you as a chief executive, your job is to figure out of that more keep doing what we need to do, how much more can people not have . When you start announcing those things he arent things you are not going to do, those are cuts. It is the system we are mostly operating in. I think for our own selfpreservation you should end that system, stop asking people how much would it cost next year to do exactly what we did last year. Instead, you should say to people, heres how much money we have. Heres how much money you have. What i need from you is the same quality of service that we delivered last year, if not better, with the money we have. People should be coming to you not with proposals to spend more, but with ideas about how to redesign their services so they can deliver more with the money they have. The shorthand is right now we have budgets that are paying for costs and we convert to budgets that purchase results. Were just not doing it. And states that have tried this, and counties and cities, you get amazing results, but it is like the example of the warehouse. You got to change the rules of the game. The rules are stacked against governors. They put you into the position of having only to say no to people. When i got to be finance director in or minnesota, we had a time which is one of the craziest experiences. We had about 500 million available. We had 4 billion in requests. Basically 3 4 of the requests will get turned down. We have people thinking they are going to get something they will never get, and our job is to say you will not get it, and they will say this is not we have got to change the rules. Who pays the debt service on these bonds . We do, so the people who are asking for this money have no obligation to pay it back . I want that deal. We have changed one rule. The next day 2 billion was the request that disappeared. Disappeared. If it was not free, and i had to think about if i wanted to spend the money. It is about changing the incentives inherent in budgeting systems. I believe we are ultimately going to alter how you do budgeting and move away and the reason for this system is that bureaucratic thing about controlling costs. We need to focus on buying results, making sure we are getting our moneys worth. We have to make it the essence of how we spend. We have to say theres no other way unless it results we expect a quality product. Right now they are not set up to do that. You have a chart of accounts . You have no chart of accounts. You have no chart about results. Our system is not designed to focus on results. Until they are, we will probably not get them. One thing we all have, a retirement rate over the next 10 years that will allow us to use technology to do things, not all things, and that is more of an optimistic side. Governor hutchinson . Governor hutchinson great presentation, very thoughtprovoking. When you talk about government getting smaller reduced money, technology assisting, i thought of two challenges. When you are looking at Transactional Services like collecting taxes, license fees delivering licenses and so on, it is all transactional technology. The answer, i can see that. When you are talking about child protective services, human touch is required to go in a home and see if a child is well taken care of. Processes in court, human delivery, i see greater challenges. The other challenge is Higher Education because many of us do not have a level of control over that. What is it going to take to get this message of efficiency of technology, of changing to a resultsoriented environment in Higher Education is there any hope in that environment . Mr. Hutchinson yes, but i want to talk about child protective services. One of the challenges even in those parts of what we do is the amount of administrative stuff that our caseworkers are going to do. We have caseworkers who are spending 50 of their time doing administrative work instead of taking care of kids. That is where we can offload a fair amount of time and repurpose those resources back to kids. Higher ed and education, this is my passion. It makes me nuts. On the one hand, our k12 system is not producing the results we need. They are being lied about what is happening in the k12 system. We have a different problem what happens after that. What governor fallon asked us to focus on, a major disconnect between the requirements of the work system and what is coming out of our higher ed system. We are graduating people with all kinds of degrees with jobs that do not exist. That is much more evident today than in the history of the country. It is not anybodys fault. It is in the design of the system. We have tools that can assess what the Labor Force Needs to look like, the ability to help employers what are the skills and competencies i am looking for . We now have the capabilities to tell young people what skills, competencies do you have, not what degree do you hold, not what your major was, but what can you do . We have to change the conversation from degrees and Graduation Rates to the acquisition of competencies required in the workforce. If we can arm both sides of that transaction to talk turkey about what it is i need to be able to do and what i need you to be able to do and change the way those two things are connected with one another, what will happen is students will push the higher ed system to change. They will drive the outcome. They have been doing that in a sense because there was a time when everybody thought being a lawyer was a guaranteed road to success, and now they found thats not true, and legal enrollments are in decline because there are no law jobs. And the ones that are there are terrible. The word got out. That is the power of not the market, but of the young people to drive the way our systems change. I think our job is to get the transparency out there so people can see what is labor force is going to need to be able to do and what are our systems to producing, and who does it best . If you need a numeric control operator, who is the best person in the state to get that done . If you need higher order data skills, that is the best place in my state to get that done . Young people will drive this then, because they know about the system. I am sensitive to this legal thing because it costs so much to become a lawyer, and i cannot get paid. The system is wrenching itself without anybody passing a law to make that happen, because the transparency caught up with the reality. There are new tools available to look at higher ed curriculum and connect it to competencies, to look at skills and capabilities of people in the workforce, the capabilities coming to the jo