Trenton has the feeling of a business on the skids

The following is an excerpt from “Leading a Turnaround” by Harvard Business School professor, Rosabeth Moss Kantor:

In organizations in decline, a kind of learned helplessness sets in. Secrecy, blame, isolation, avoidance, passivity, and feelings of helplessness combine to perpetuate the poor performance.

This “death spiral” typically starts when a company begins to neglect the fundamentals—for example, letting communication deteriorate, starting to pull decision making back into the hands of smaller and smaller groups that make decisions behind closed doors. This undermines the organization’s problem-solving capability.

If you didn’t know this was from a study of poorly performing businesses, you’d think it was Trenton.

Many of Trenton’s activist citizens have grown frustrated and jaded with the city’s revitalization efforts. Some have moved away and others swear that things will never change.

There is distrust between the city administration and its citizens

This is evidenced by the schism between and a newly resurgent city council and the Mayor’s office. Recent disputes have included a debate over residency requirements, a poorly managed budget review process, a crisis over the future of the public library, an ill conceived municipal wi-fi proposal and the use of city owned cars.

Other recent examples of distrust are imbued in the sale of Trenton Water Works and the city’s interest in Trigen. In fact, almost every sale of city property is accompanied with questions of propriety even when they are good deals.

The atmosphere in Trenton is so bad that when a local activist submitted questions about a real estate development to the administration in a public forum, a city business administrator threatened to sue the citizen.

This level of distrust is endemic of the lack of openness Prof. Kantor describes.

Many futile attempts to revitalize the city have been made

Over the years the city and county have proposed numerous development project meant to revitalize Trenton. Yet none of them have succeeded or come to fruition.

Theses plans have come top down and often, as in the case of the ill-fated HOPE VI and Leewood Village projects, were met with contempt by the neighborhood which they were meant to revitalize. Big projects such as Trenton Town Center, Manex, Champale and Performa just haven’t happened and have left the public wondering if the city knows what it’s doing. Other big ticket publicly funded projects such as the arena, ballpark and Marriott Hotel have not made a dent in attracting new business investment.

Relying on big “top-down” schemes planned by government officials and their appointed developers is the example of closed room decision making endemic of a organization on the skids.

Since nothing has worked, we need a new approach

As is often said about Trenton’s revitalization strategy, “Doing the same thing over and over again and expecting a different result, is the definition of insanity”

The evidence is clear that administration’s approach has not worked. Over the last eight years:

• Population has decreased by 1,900 between 2000 and 2006 (US Census Bureau)
• Per capita income has lost ground compared to the NJ between 2000 and 2006. Trenton increased 9% to $15,933 and NJ increased 17% to $25,267 (US Census Bureau)
• The tax rate has gone up 29% (City of Trenton)

Recently Trenton’s Mayor disputed Census figures showing the population loss and every year he disputes the Morgan Quitno crime analysis that shows Trenton’s poor results. By refusing to recognize these hard realities and admit that a new approach is needed the administration has lost its credibility.

Again from Professor Kantor:

“As communication and the willingness to face problems openly deteriorate, infighting and finger-pointing increase.”

Trenton needs a leader with a business turnaround approach

The leadership demands of an organization change over time. In Trenton’s case, it’s quite possible that it needed Mayor Palmer in 1990 to build bridges between the black and white communities. That may have been an important leadership trait then, however now, we need something different.

As Prof. Kantor points out, a turnaround artist isn’t necessarily a change master:

“Flashy personalities and bold visions are overrated. To turn a culture of decline into one of success, you have to restore employees’ confidence in the system.”

Business turnarounds are examples for cities

Kantor gives the example of Gillette’s turnaround earlier this decade.

By the time a new CEO took over Gillette, in 2001, the company had been in the doldrums for years. The centerpiece of the new CEO’s turnaround effort was to eliminate secrecy and denial. He instituted report cards that openly measured various aspects of the business.

In addition he worked to open up channels of communication between teams. Furthermore, rather than make sweeping changes, he relied on openness to instill confidence in the workforce. The theory was that openness would allow employees to work together and do the right things.

Accountability and openness were the cornerstones of Gillette’s eventual success.

Business discipline has been critical to other city turnarounds

The story of Cleveland is illustrative of the need for a business approach. In the late 1970’s the city was bankrupt and in a death spiral. The city’s business leaders stepped in to form a leadership group that started a chain of turnaround events. In the last twenty years, Cleveland has become a desirable place to visit, live and start a business.

At first, the business leadership group did this by exerting political muscle and electing a mayor that could work with the business community. Then it started an organization that undertook a carefully selected portfolio of projects calculated to revitalize the city. This portfolio approach is how sophisticated corporations chose between the multitudes of opportunities they might pursue. In fact, the Cleveland business group initially employed well respected McKinsey & Co. Consulting to run this portfolio management operation like they would for a corporate client.

The result was targeted investment in residential real estate development, in public venues including a new stadium and in the Rock and Roll Hall of Fame. Along the way a venture capital fund was spun off to fund new business opportunities in Cleveland.

This approach forced the group to make hard choices. They didn’t pursue some areas of need including the school system, which the business leaders felt was beyond their ability to help.

A well managed and open portfolio management system will not only focus limited resources but will serve to build confidence in a leader’s ability to make honest decisions.

Trenton’s turnaround will be unique and need new thinking

Cleveland and other cities do provide lessons for Trenton but we must be careful not to just copy their tactics. Attracting a national tourist attraction like the Hall of Fame sounds nice but may not make sense for Trenton. Relying on an arts school for revitalization like Savannah did is a pleasant thought, but might not help. Creating a San Antonio style river-walk would be fun but may not move the needle in our economy.

To think our way out of the mess we’re in, we need to create the right environment for progress and teamwork.

First we need goals

These goals must be measurable. Vague goals like “happy citizens” or “safe streets for our children” don’t work. Better, more measurable goals are higher per capita income, fewer index crimes, higher sales tax revenue and higher assessed property values.

Second, we need open methods for measuring success. The best measures are those which we don’t conduct ourselves. The Census bureau, FBI, Association of Realtors and NJ Dept. of Education and NJ Dept. of Revenue could all be helpful in this regard.

Third, we need more open evaluation on how we’re performing as city both as a government and as citizens. Are the police catching criminals? Are the prosecutors getting them locked up? Are inspections and economic development departments attracting new development? Are dog catchers catching dogs? Are citizens reporting property use violations? How well has the city responded to citizens complaints? Are parents checking their children’s homework? Is the library lending books? There’s no reason we can’t measure and report aspects of city life like this.

However, in every case, the functions we evaluate must be linked to our measurable goals. If there isn’t consensus on the linkage then managing to the number is useless. If we don’t know how the dog catching rate affects per capita income then why evaluate dog catchers? Or taken to its logical end, why have dog catchers at all?

Finally, we need a business community that can coalesce itself into thoughtful leadership that undertakes a portfolio of initiatives with the city that help us reach those goals.

Leading the Turnaround isn’t about one person’s visions

Leading is about allowing all the stakeholders to buy-in to a set of goals. A good leader will help stakeholders understand the trade-offs that will have to be made in a portfolio approach. The leader will force the discussion of linkages between our actions (and our budget) in the city and our measurable goals.

For instance, everyone would like to spend more money on police, schools and social services. But spending more money will raise taxes and raising taxes discourages investment. If the goal is to improve the economy then raising taxes may not be the right strategy. The question is, “What choices will best achieve the goal of improving Trenton’s economy?”

Trenton’s turnaround leader will force this discussion to happen in a transparent way. Transparency will give the public confidence that whatever plan we pursue, will work. More importantly, new leadership will help the public monitor Trenton’s progress and be the first to suggest new approaches in the initial ones don’t work.

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