Patrick Lester’s recent article, “The Promise and Peril of an Outcomes Mindset,” raises concerns about the promotion of outcomes-based financing—which he likens to pay-for-success—for government and the social sector. In reading it, we found ourselves nodding in agreement to many of his arguments.
Our paper, “Smarter Government for Social Impact,” aims to address these concerns and calls for government to shift from a mindset of compliance to one that focuses on outcomes, and embraces cutting-edge data and technology to make better, smarter policy and funding decisions. The paper reflects our vision of a public sector for the future—one that takes a systemic and integrated outcomes-focused approach to decision making, pays for results, and relies on feedback loops from citizens to modernize and adapt services to deliver solutions that improve lives.
Lester argues that government has pursued outcomes-based policy in the past and rightfully cautions that we must first learn from our mistakes. We agree. There is much we can learn—both what to do and not do—from prior efforts. That said, our experience tells us it is time for a bold approach. We have slow-walked this idea of paying for outcomes for decades. We need to begin working at an informed pace and scale to accelerate learning and progress toward greater impact.
While Lester perceives the proposal for an outcomes mindset as primarily concerned with program-level outcomes, we are advocating for something different: a focus on systemic outcomes. Program-level outcomes cannot serve as the proxy for overall impact. We need to measure systemic impact. Individual government programs and initiatives are showing evidence of results, but these do not demonstrate systemic change. If we rely on program-level evidence only as the measure of improving outcomes for society, we will not get there. We must take in all the elements that inform policy decisions—including evidence, administrative data, non-government data, knowledge, technology, and citizen feedback—to determine impact and guide future efforts.
Why an outcomes mindset matters
Where Lester sees cause for worry, we see a path to new solutions. Focusing clearly on achieving outcomes—with the right incentives, better data, and leadership—is exactly what we need to create the public sector of the future. This requires a shift in thinking.
Business as usual is not working or producing results. Government largely focuses on compliance and oversight, and the majority of public dollars pay for prescribed activities that may or may not be producing desired outcomes. Adopting an outcomes mindset—meaning government defines the problem it wants to solve, identifies the desired results, and creates the appropriate incentives to pay for those outcomes—is a way for government to target resources toward identifying and growing systemic solutions. Government can procure outcomes by providing the right incentives and investment—all with an eye to improving lives while improving efficiency. It cannot afford to maintain its current funding system, which spends less than one percent on outcomes-focused initiatives. We agree, as Lester says, that this status quo is “unacceptable.” We can and should do better.
Looking back on the track record of outcomes-based policies, Lester has identified cautionary tales and pitfalls. The pitfalls he cites—external influences, cream-skimming, gaming and fraud, tunnel vision, and superficial and short-lived outcomes—are real and exist within the current system. The Beeck Center’s 2014 report, “Funding for Results,” documents government efforts over the last 20 years to implement outcomes-based agreements, and looks at the challenges and opportunities involved in transitioning public programs to outcomes-focused approaches. The report provides guidance to help leaders mitigate challenges through up-front design choices and iterative implementation of outcomes-focused policies.
Implementing an outcomes mindset does not require breaking new ground. It requires a deliberate approach. We need a policy environment that adopts and rewards the pursuit of outcomes and that values data, evidence, and knowledge; collaboration; dynamic iteration and learning; and bottom-up solutions as strategies to get there.
Data and technology can drive an outcomes mindset
The context to implement outcomes-focused policies has evolved significantly, and we have an opportunity to iterate and improve upon them. Government has the potential to leverage data and technology to enable new solutions and advance a new way of doing business. These are not silver bullets, but they are available tools that can help modernize and improve a public sector whose effectiveness is constrained by relying on legacy systems and outmoded practices.
As Lester points out, advances in data systems have not necessarily led to improved social outcomes in health and education. Nonetheless, he acknowledges, substantial progress has been made. We agree. Disruptive innovations, coupled with new models of civic engagement, are improving service delivery and changing how government and citizens interact. We discuss some of these community-driven innovations in our recent SSIR series.
Government is already using data, evidence, and outcomes to drive policy, but this way of doing business is not the standard. We still have a long way to go to achieve better outcomes at scale. And while data and technology alone won’t get us there, they will help.
Today’s outcomes-focused policies did not happen overnight. They evolved from tested ideas, some of which met with great success and some with failure. But what is new is the opportunity to connect the continuum of initiatives that seek to pay for outcomes—such as Pay for Success, evidence-based policies, results-oriented programs, and Innovation Funds—to innovative applications of new data and technologies that offer the potential to transform our public spending and delivery systems, and achieve comprehensive solutions to our greatest social challenges.
Like Lester, we are hopeful. This is more than “Outcomes Mindset 2.0”—it is about transforming the public sector to create systemic impact. There is economic incentive to change, and doing so has the potential to improve the lives of millions of American citizens.