I’m delighted to be here today and share this venue with so many talented people committed to public service and to our obligation to improve the efficiency and effectiveness of the Federal Government’s business operations.
From a personal standpoint, there were many factors that influenced my own decision to join the President’s leadership team, but when Secretary Shinseki asked me to help him transform the Department of Veterans Affairs, I saw an opportunity to make a difference, to be a catalyst for change and progress.
President Obama’s management agenda is clear — to build a “high-performing government.”
At VA, this means transforming our agency into a 21st century organization, and ensuring that we provide high-quality care and timely delivery of benefits to Veterans over their lifetime, from the day they take the oath of allegiance until the day they are laid to rest.
Here are some of the important challenges on our plate:
The President’s remarkable 2010 budget — the largest increase in 30 years — demonstrates his personal commitment to Veterans and their families even during times of tremendous budget pressure. Building on Congress’s own enhancements to VA budgets for 2008 and 2009, the President’s 2010 budget has provided VA an extraordinary opportunity to begin reversing years of accumulated neglect and preparing VA to care for Veterans well into the 21st century, with new priorities and new capabilities, new challenges and new opportunities.
Overview of VA
Let me tell you some things you may not know about VA.
VA is the second largest agency in the Federal Government, with nearly 300,000 employees and a budget for 2010 of $113 billion. If we were a private corporation, we would rank in the Fortune 15. We are organized in three main operating units: Health (called VHA), Benefits (called VBA), and Cemeteries (or NCA).
The health organization is the largest unified health-care system in the world, maintaining 153 major medical centers, 765 Community-Based Outpatient Clinics, and 50 mobile health clinics. Just under eight million are enrolled in VA health-care programs. We treat 5.5 million Veterans per year in our hospitals and clinics. VHA conducts about a billion dollars in research each year that has lead to inventions like the CT Scan, advanced prosthetics, and breakthroughs in treatments of Veterans with spinal cord injuries, diabetes, and Parkinson’s disease.
The benefit organization contains the eighth largest insurance company in America, overseeing more than seven million life insurance policies with a face amount of $1.3 trillion. Three million Veterans receive VA disability and compensation checks every year. VBA guarantees nearly 1.3 million home loans, with an unpaid balance of $175 billion. It is second only to the Pell Grant Program in providing education benefits totaling $8 billion annually.
The National Cemetery Administration is responsible for maintaining America’s 130 National Cemeteries. Nearly three million Veterans are interred or inurned in our National Cemeteries. Last year we conducted more than 103,000 interments — a number we expect to rise as our population of World War II Veterans declines at about 900 a day. NCA recently earned the highest score ever in the American Customer Satisfaction Index (ACSI) performed by the University of Michigan Business School. The NCA score of 95 beat out such well-known leaders in customer satisfaction as Lexus (89), Google (86), and Apple Computers (84).
VA’s mission is inextricably linked to DoD’s mission. We are not an independent operator. We administer the Servicemen’s Group Life Insurance (SGLI) program covering the 2.25 million men and women of our Armed Forces. Our budget requirements are largely determined by DoD’s operational missions. Our health-care providers work closely with DoD’s health-care providers to care for wounded warriors returning home from Iraq and Afghanistan. The future will see VA and DoD working even closer together, as we fulfill the President’s requirement to create a single Virtual Lifetime Electronic Record (VLER) to follow Veterans from their day of induction to their day of interment.
Most importantly, we keep the obligation that our country makes to each Soldier, Sailor, Marine, Airman, and Coast Guardsman. This is a moral obligation. It must be fulfilled in good times and bad: make to each other: to care for him who has borne the battle.
VA has had its share of problems:
The long-term solution to these problems is business process redesign and information technology — one of reasons I was hired as COO.
Our efforts will align with the goals of OMB’s Chief Performance Office, to include improving acquisitions, getting more from our IT investments, and improving the way citizens interact with their government.
All this will require tremendous improvement in VA’s management and operations.
VA’s Approach to Enterprise-wide Improvement
So how are we making all these changes happen? I’d like to share with you some of the experiences we are having at VA to achieve our own breakthroughs. To do this I would like to refer to some elements of the Malcolm Baldrige National Quality Program — arguably the premier performance excellence program in the world.
The Baldrige Award was established by Congress in 1987 to enhance the competitiveness and performance of U.S. businesses. Originally, three types of organizations were eligible: manufacturers, service companies, and small businesses. When I served as a National Board member for the Baldrige Quality Award in 1999, we expanded the program to include education and health-care organizations, and again in 2007 to include nonprofit organizations, including charities, trade and professional associations, and government agencies. The award promotes excellence in organizational performance, recognizes the achievements and results of U.S. organizations, and publicizes successful performance strategies. Since 1988, 75 organizations have received Baldrige Awards.
Recipients of the annual Baldrige Award are the cream of organizations in everything from leadership to workforce satisfaction to knowledge management. The award is based on seven areas of excellence that together define what organizations do to achieve superior performance.
As I thought about what would most interest this audience and best align with your mental model of quality improvement, I decided to use these Baldrige performance criteria as a structure for my remarks today: a virtual tour, if you will, of the challenges VA is facing and what we are doing to address them. The seven areas are:
Those of you who have worked closely with Secretary Shinseki, when he was COS of the Army, will recognize instantly that subordination of self to the mission is a core element of his leadership approach. He is constantly asking us to think deeply about what our mission requires in terms of our Veterans. He brings to VA a new perspective on VA’s role vis-à-vis Veterans. Too often in the past, VA has appeared to Veterans as their adversary. Secretary Shinseki sees himself as their advocate, and he expects VA to be their advocate, too.
Our advocacy takes on immediacy in time of war. The overarching principles we use to test our leadership decisions are whether they are: Veteran-centric, results-oriented, forward-looking.
My role as Chief Operating Officer and day-to-day “change agent” for the department is to imbue these three principles into the synchronized planning and execution that will achieve the VA’s most important goals.
Our operational strategies and approaches … and transformative initiatives … are blueprints for better, more responsive Government for our veterans and the American people.
Addressing Challenges, Leveraging Advantages - Unlike DoD, VA does not have a well-established strategic planning process. So when Secretary Shinseki and I started to work at VA, we realized that we were not going to have a chance to start at the beginning; we had to start in the middle. That is to say, we would not have the opportunity to first develop our vision, a supporting strategy and then translate that into a set of requirements we could resource through the budget process. Instead, we would have to build the bridge as we crossed the river.
So we implemented a new Strategic Management process to enable us to write a strategy, submit two budgets and translate these into operating plans in the space of nine months.
Further, we settled on a strategy to: “proceed on many fronts and exploit opportunities as they appear.”
Customer Focus – Engaging Customers for Long-Term Success
At VA we call Veterans “clients” instead of customers. A client is someone with whom you have an ongoing relationship. And in our case, all the clients have prepaid for their care and benefits by virtue of their service to our country. Many of our clients are with us for life.
We have made “client focus” one of the three core principles that guide all our work at VA. This focus is recognized as the right value and a natural desire of every VA employee: It’s part of our culture. But the ability to act on that desire can be diminished by poor systems, policies, and lack of training.
So Secretary Shinseki and I are leading a review of all assumptions … testing … probing … looking for ways to realign and becoming a more forceful advocate for Veterans. We are asking why, 40 years after Agent Orange was last used in Vietnam, we are still adjudicating claims for service-connected disabilities that have now been determined presumptive. And why, 20 years after Desert Storm, we are still debating the debilitating effects of whatever causes Gulf War Illness. If we don’t stay attuned to the health needs of our returning veterans, 20 or 40 years from now, VA could be adjudicating presumptive disabilities from our ongoing conflicts.
In the past, VA has been very reluctant to admit a connection between exposure to Agent Orange and a number of different health complaints. We’re taking a different approach now, acting more as advocates for Veterans than as their adversaries. Just this week, Secretary Shinseki added three more illnesses — B cell leukemia, Parkinson’s disease, and ischemic heart disease — to the list of service-connected disabilities presumed to be associated with Agent Orange. This decision will simplify and accelerate the application process for benefits for affected Veterans.
Measurements, Analysis, and Knowledge Management
We are realigning the existing performance management system to focus on outcome-oriented measures like client satisfaction and quality.
VA is taking on the tough issues with greater transparency. For example, we recently instituted a Performance Management and Accountability System (PMAS) to strengthen our IT oversight and performance. In June, we placed 47 projects under the PMAS; in July, we paused 45 of them. Many were over a year behind schedule. Some are too important not to get done. Over the last 60 days, 17 projects were committed to near-term dates, and 15 met their committed dates. We have re-planned and restarted 13 projects, and we have halted or cut funding for 15 or 1/3 of the original 45 projects. We mean business; and we will hold ourselves and our private sector partners accountable for cost, schedule and technical performance.
We are building an environment conducive to high performance. This requires a focus on people.
We surveyed 20,000 employees, with a response rate of over 50 percent, to learn about our culture.
We implemented a web-based software tool called the “Idea Factory” to listen to our employees and ended up collecting 2,100 “Big Ideas” from employees all over the country in one week.
We will make one of the largest investments in training and development for our career civil service of any agency in government. Our view is that the benefit of investment in human capital far outweigh the costs. And that training and development are essential to achieving the mission of the VA.
Process management, the next area of the Baldrige Award criteria, is essential to synchronize and manage our many moving pieces.
We've set up a management process to coordinate the execution of our major transformation initiatives.
To help us execute FY2010 funds, we have developed Operating Plans for each of the 88 initiatives that comprise the Transformation effort. Each Operating Plan accounts for one year in VA’s five-year Strategic Plan, based on projected annual appropriations.
With appropriate process management, these Operating Plans are the link between strategy and budget execution. They translate the vision into operating terms: who does what by date certain.
Disciplined operational planning, performance, management, and execution are essential to Transformation.
Finally, we have results
Part of the leadership challenge has been getting the VA management team focused on measurable results. To that end, Secretary Shinseki convened a series of 21 four-hour meetings with the heads of our Veterans Integrated Service Networks (VISNs) to review results they are achieving.
In summary, we are working systematically across the key performance criteria of the Baldrige award organized around the core principles: “People-Centric, Results-Oriented, and Forward-Looking.”
Performance improvement is related to leadership, strategic planning, customer focus, measurement, workforce focus, process management and results. You need all of them to succeed.
Transformation is a challenging task; it shakes up the status quo; it upsets traditions. As they say: “Hard work is hardly ever complete.”
But it has been done and, together, we are doing it at VA.
Again, thank you for inviting me here today. You are doing important work for DoD, for the Federal Government, and for the American taxpayer. I hope that in the coming years, I see the names of your agencies among those leading the way to improve performance.
And now, if you have any questions, I’ll try to field as many as I can.