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The Government Wants to Be Your Customer4 min read

Sebastian Vanderzeil, MBA Class of 2015
Executive AVP, Government and Business Association

The signal of governments can be hard to discern amidst the noise of the political cycle. But as future business leaders, understanding governments as regulators and consumers is essential. In 2012, consulting firms Deloitte LP and Accenture, organizations that perennially recruit from Stern, generated $1,089 million and $900 million respectively as contractors for the Federal Government*.

This essay is not a discussion about the size of government, despite this being an important conversation in its own right. Its purpose is to look beyond the budget negotiations, debt-ceiling standoffs, and recent healthcare debates. This is an examination of the machinery of government in the context of a business education: how government works, what makes it different from the private sector and from broader society, and the opportunities for your career.

In the private sector, profit maximization is considered to be the purpose of economic activity. Delivering returns on capital above the risk-free rate of return focuses business and enables business leaders to plan accordingly. In government, there are driving forces that are no less important for the organization but very different. One of the dynamics in Government is the active consideration and deliberation of the net public good, defined here for brevity as providing the greatest good for the greatest number of people (present and future) net of all of the costs. While political maneuvering may muddy this concept, it does not reduce the importance of understanding that this concept holds true/exists and is important.

The consideration of the net public good occurs across a range of entities in government. It is seen in domains such as business, defense, housing, infrastructure and environment, creating tensions and complexities that we can see in the news everyday. This tension is important, as each entity, whether it is the Department of the Treasury or the Department of Commerce, are the proponents of their respective areas, ensuring that their concerns are heard and integrated into the process.

If this environment and process appear unwieldy and slow, that is because they are. However, the development of policy, legislation, regulation and other forms of government actions requires careful consideration. The US government has separate branches and a bicameral legislature in order to create checks and balances and to foster debate and coalition building in order to ensure that only laws with a broad base of support can be enacted.

This does not mean that government cannot make rapid decisions or take quick but significant actions. This speed can be seen in government response in bank bailouts, rebuilding after disasters and military action, albeit not without controversy. There are few organizations in the world that can authorize a $700 billion line of credit to support the financial system in the space of two weeks.

If we, as business school students, increase our understanding of government to our advantage, the next question is how this advantage can be best leveraged in our careers. There are the direct careers such as working in strategy, government relations and communications with Fortune 500 companies. For example, Mona Sutphen is a former White House Chief of Staff of Policy in the Obama Administration and currently a Managing Director of UBS AG. It may also be a transition into a new challenge once you conquer the business world. There are real and powerful opportunities, even if they are a few years down the road.

In the meantime, and perhaps more urgently, understanding government may enable you to differentiate yourself in your chosen industry, for example:

  • Determining the impact of a government policy on a firm or industry as part of a equities research pitch
  • Managing the implications of potentially tighter regulations in the banking sector to maintain compliance and avoid penalties
  • Responding to a significant request for proposal from a government as part of your role in management consulting with a proposal that addresses the challenges faced by government decision makers
  • Understanding interactions with governments during the development of your social entrepreneurship venture in a developing nation.

In much of the major emerging markets, the government is the largest client in many leading industries. Relationships with government are a critical element of business for sovereign wealth funds, energy companies and other natural resource extractors. Understanding monetary and fiscal policies is vital in a range of individual positions from a foreign exchange trader at Goldman Sachs, a distressed debt analyst at PIMCO to managers at Unilever, Rio Tinto or LVMH.

Your career can benefit from understanding the motivations of such a significant stakeholder. It is also useful information as government actions impact other areas of our lives including personal, digital and financial. Having the knowledge to understand its motivations and effectively question its actions seems crucial in these complex times.

Reference:
*US FPDS, 2013, Top 100 Federal Contractors, Federal Procurement Data Services, US Federal Government,
https://www.fpds.gov/fpdsng_cms/index.php/reports
**EPA, 2013, Environmentally Preferable Procuring, Environmental Protection Agency, http://www.epa.gov/epp/pubs/about/about.htm

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