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This is an archived USAID document retained on this web site as a matter of public record.
Statement of John Marshall
Assistant Administrator-designate
Bureau for Management, USAID
Before a Hearing of the
Senate Committee on Foreign Relations
November 7, 2001
Mr. Chairman and members of the Committee, it's a privilege to appear before you today as the President's nominee for the position of Assistant Administrator for Management of the United States Agency for International Development (USAID). I am grateful for the trust President Bush and the USAID Administrator, Andrew Natsios, have placed in me to fulfill this important responsibility.
Over a twenty year period, I've had the privilege of serving the Federal Government in a variety of capacities focusing on improving management performance. This has included tours at the Department of Education as Special Assistant to the Deputy Under Secretary for Management; the President's Office of Management and Budget as a financial management analyst; and the Department of Agriculture, first as Deputy Administrator for Management of the Agricultural Stabilization and Conservation Service, and later as Chief Executive Officer of the Federal Crop Insurance Corporation.
My eleven years of private sector consulting experience has included affiliation with the government practices of the management consulting firms of Booz-Allen & Hamilton, Inc., McManis Associates, and IBM Consulting Group. During this period, I also had the honor of serving on then Virginia Governor George Allen's 1994 Commission on Government Reform and its workforce committee developing recommendations to "rightsize" staffing levels and improve working conditions for state employees.
From 1995 to 1997, I returned briefly to government to serve as a senior advisor to the Chairman of the Senate Committee on Governmental Affairs where I advised the Committee on applying private sector reengineering and restructuring principles to improve the performance of the Federal bureaucracy. Since 1997, I've been a member of the leadership team of IBM Consulting Group's Federal Government consulting practice. This practice was created to deliver to Federal clients the same best practices and intellectual capital that have been at the heart of IBM's transformation from its "near death" experience in the early 1990s, to becoming the most successfully reengineered corporation in history, through its recent emergence as the world's largest dot.com.
A common thread throughout my work experience has been improving the performance of public sector organizations through the introduction of private sector management practices. This chain of experience, I believe, has prepared me well for the challenges I will be facing at USAID, if confirmed by the Senate.
USAID Administrator Natsios has been quite candid in describing the challenges facing the Management Bureau. In his statement before the Foreign Relations Committee at his confirmation hearing, he observed that USAID must do business differently. He described the state of disrepair of the agency's administrative systems and committed himself to their comprehensive overhaul and reconstruction. Accordingly, under the Administrator's direction, the Management Bureau is in the process of re-assessing its systems improvement plans to make sure initiatives are aligned with the agency's evolving missions and programmatic requirements, and that investments are focused on the highest payoff opportunities to address the nation's foreign policy objectives and the agency's performance improvement needs.
There are four things that I will bring to these formidable challenges that, if confirmed, I think can help make a difference.
1. Successful experience as a turn-around manager. I became head of the Federal Crop Insurance Corporation in 1988 after a period of rapid privatization that transformed the agency from a direct provider of government insurance services into a reinsurer of the private crop insurance industry. To meet growing demands for insurance services in the farm economy, the agency and insurance carriers initially concentrated more on delivering services to farmers than on operating the program in a sound, businesslike way. The program was actuarially unsound and fraught with fraud, waste and abuse in claims processing. It had become such a political football that the future of the privatized program was at risk. My mission was to fix what were perceived as management problems, and we made significant progress. In a Senate Agriculture Committee hearing before I departed, General Accounting Office auditors testified to significant management improvements, stronger oversight and enforcement of industry insurance practices, improved employee morale, and a substantial reduction in overpaid claims under my leadership.
2. Familiarity with the USAID business environment. If confirmed, I will bring a degree of familiarity with the USAID business and cultural environments to this important position. My first exposure to USAID was as a member of a Booz-Allen consulting team working for the director of procurement services in the early 1980s. I was struck by the high ideals and professionalism of the work force and the challenges of managing change in a culturally diverse, global enterprise. In 1998, I managed an IBM consulting team that performed a technical and management assessment of the New Management System, a failed effort to develop an enterprise financial management system. We identified and tested various turn-around scenarios and developed a business case supporting the best value solution. This study laid the foundation for much of the progress made recently by the re-christened Phoenix financial system project, and was considered by our client, the USAID Director of Information Resources Management, to be the most successful consulting engagement he had ever witnessed.
3. Knowledge of the IBM transformation model. IBM's transformation experience provides a useful reference point for understanding management challenges facing USAID - and, I believe - a roadmap for successfully addressing them. There are striking parallels between the situations faced by IBM in the early 1990s and USAID today.
In 1993, IBM was at a crisis point. It had missed the boat on the personal computer revolution and was perceived by the market as stuck in an obsolete, big mainframe mindset. Its financial condition and market value had eroded to the point that it was not expected to survive. Investment bankers anxious to spin off IBM business units were circling like vultures over a wild beast in its death throes.
The effort to save IBM required reevaluating and reengineering every facet of the enterprise. IBM was a maze of complexity. It had nearly 400,000 employees doing business in more than 160 countries. It went to market as 20 different businesses, each with its own unique business systems, information technology (IT) structures and marketing strategies. More than 100 IT staff bore the title "Chief Information Officer" (CIO) within their own individual business units and geographies. There was very little integration of systems, and vast inconsistencies and redundancy. IBM's internal complexity was difficult for the company to manage, and it made doing business with the company a nightmare for customers. There was no integration point capable of bringing together all of the corporation's vast resources on the customer's behalf.
To survive, IBM had to do a better job of integrating its global enterprise and delivering value to customers. This required restructuring the administrative and IT environment to create efficiencies, improve communications, and free up resources to shift to higher value activities. IBM consolidated 155 data centers into 28; replaced 31 segregated networks with a single integrated global network; appointed a single CIO responsible for driving transformation across the enterprise; and restructured the IT governance system to ensure that IT strategy and investments were consistent with the enterprise business strategy. Tangible results included reductions of 25% to 67% in IT related hardware, facilities, and labor costs. These savings allowed employees to move into customer service delivery positions where they could generate greater business value.
The second stage of IBM's transformation began in 1998 when the company made a total commitment to becoming an e-business. This required integration of web technologies into core business processes, a fusion of business and IT strategy. IBM learned to move with greater speed, agility, efficiency and intelligence. The results of becoming an e-business have been extraordinary. Moving to a web-based "e-procurement" environment has: reduced average purchase order processing times from 30 days to one day; cut contract cycle times from 6-12 months to 30 days; slashed the average length of contracts from 40+ pages to 6 pages; and reduced the rate of "maverick purchasing" (dissatisfied employees purchasing outside the procurement system) from 30% to less than 2%, while increasing employee satisfaction with procurement services from 40% to over 85%.
To become a fully integrated e-business, IBM had to break down organizational barriers inside the company, rebuild itself to adapt to continuous change, and leverage simplified and integrated business processes to become a leaner, smarter, more market responsive enterprise. The most important lesson of IBM's transformation, particularly for USAID and government agencies, was the necessity of breaking down walls between operating units. "Stovepipes" are ubiquitous in government, and they are the single greatest barrier to successful transformation in the public sector.
USAID is in some ways a microcosm of the old IBM. It is an enterprise of worldwide scope, but with obsolete, redundant, and incompatible processes and systems in different locations around the world. Its management environment is rife with stovepipes and turf sensitivities. It has a history of questionable investments and results; its viability as an enterprise has been questioned. Like the old "Big Blue," USAID has noble aspirations, a proud legacy of success, and a deep reservoir of good will - intangibles that can unite employees, customers and stakeholders in support of fundamental change.
Just as IBM updated the Selectric typewriter with the Thinkpad laptop, USAID can retool to become a world class 21st Century development and humanitarian assistance organization. Mr. Chairman, I pledge to you that, if confirmed, I will endeavor diligently to meet this challenge.
4. A positive, team-oriented leadership style. I'm not interested in finding fault or fixing blame for the current state of affairs, but in building on the positives -- and there are many at USAID. I don't have all of the answers, but I'm pretty good at asking questions, admitting what I don't know, assembling a team with complementary skills, and achieving success through people who share my commitments and values. Effective teamwork has been absolutely essential to every success I've been associated with. I try my best to display, and I expect from others, the highest standards of honesty, integrity, collegiality and professionalism.
I'm committed to establishing the same open, honest communications with my oversight community that I've enjoyed in the past. I welcome your suggestions and concerns. In my earlier life at USDA, I embraced my colleagues in the Inspector General's office; they had important insights to offer and I welcomed them. I listened and made friends on both sides of the aisle in Congress. The Chairman of one of my oversight committees applauded my "refreshing candor" in a hearing after I told him the unvarnished truth about some of the challenges I faced. I pledge to do the same with you.
I also hope to bring to my position and the Management Bureau a renewed level of excitement and enthusiasm about our challenges. I expect to have fun in this job! Ralph Waldo Emerson once said, "Nothing great was ever achieved without enthusiasm." One thing that unites all of us who believe in the enterprise of USAID is a shared sense of the enormous responsibility and opportunity we have to make a difference in the world. I am enthusiastic about the USAID mission and the role the "M" Bureau can play in meeting our global development and humanitarian objectives more efficiently and effectively. This is truly a great and noble human enterprise, and we can make it even greater.
Another quality I will bring, if confirmed, is a sense of urgency. The Administrator has pledged to fix the agency's administrative challenges as quickly as possible. His commitment is based on a sincere intention not merely to save USAID as we know it, but to transform USAID into a smarter, faster, more responsive and consequential foreign policy instrument. I share his commitment. I also share his conviction that the urgency of these efforts has increased by an order of magnitude since September 11th.
Mr. Chairman and members of the Committee, it is indeed a privilege to appear before you today as the President's nominee to this important position. Working together, we can make a difference. Let's begin.
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Last Updated on: January 02, 2009 |
