New Bottom Line Volume 4.3 – Business Process Re-Engineering Comes to Regulatory Reform

February 7, 1995

Regulatory reform is a hot topic with the new Congress. But just as war is too important to be left to the generals, regulatory reform is too important to be left to politicians. Take a look at the approach of the facilities directors of Silicon Valley’s leading electronics companies.

Bob Kraiss of Solectron, and Rick Austin of Komag worked recently with city staff to radically streamline the permitting process in Milpitas, CA. The results were stunning: “Tenant Improvement permits that took 30 to 60 days now often take one hour…. [and] the ‘first pass yield’ is close to 50 percent for smaller projects….The cost savings to the cities in time, staff resources and tax dollars is astounding when one considers that most cities cite a ‘first pass yield’ of less than five percent.” And there are parallel savings for the companies submitting the permit applications.

This is no small matter for high-tech companies, where product lines can have a life as short as six to nine months. “A Tenant Improvement permit that takes 30, 60, or 90 days to process can mean the difference between market success and failure,” according to the Santa Clara County Manufacturing Group (SCCMG). “‘Time to market’ is a crucial concern.”

These processes affect the regional economy as well. “Regulatory permit approval for most California cities can exceed 90 days,” Kraiss notes. “Cities outside California use these delays to entice California companies to relocate. Eliminating the delays protects jobs and tax base”–and the ability to fund the critical infrastructure, from roads to schools, that growing companies need.

Many process re-engineering steps are the same for both businesses and public agencies:

  • Create a detailed flow chart of the existing permitting process.
  • Identify inefficient/excess steps (whether the result of administrative measures
    added over time–always easy to add, difficult to remove–or artifacts of the
    city’s organizational structure)
  • Identify solution opportunities. Sort and prioritize based on time and difficulty
    to implement, and on impact to the city and its “customers.”
  • Rank solutions based on ease of implementation.
  • Implement–and measure the results.

In Sunnyvale, this analysis yielded five specific steps that could be implemented–and that would enable 95% of all permits to be completed with one day, and the balance within one week. Moreover, eliminating 79 process steps from the flow chart didn’t cost jobs, but actually freed up city personnel for other activities, such enabling two fire prevention engineers to expand their roles to include public safety and public works.

Building on the initial success in Milpitas and Sunnyvale, SCCMG compiled a list of “Best Practices” from ten additional South Bay cities. “Copying may have been against the rules in school,” SCCMG’s report notes, “but when it comes to streamlining, both the cities and the corporations sincerely hope that we will borrow Best Practices from each other.”

Some of these Best Practices include:

  • Establish a “self-help” area at the permit department, with a tutorial (perhaps
    computer-based) on required forms and permits–and reduce forms required
    to a bare minimum.
  • Provide an automated records and retrieval system–available for public use
    at the counter–to save space needed for paper files and staff time needed for research.
  • Develop concurrent processing, so certain inspections and sign-offs can proceed
    in parallel–and bypass agencies not involved in changes.
  • Enable fax submission (or even full electronic submission) of permit applications
    –and permit credit card or monthly payment of fees.
  • Use voice mail for permit update requests–and respond within four hours.
  • Build a checklist of most frequent errors, so both cities and companies can
    improve performance.
  • Schedule yearly customer service training for staff.

While none of these Best Practices specifically address environmental concerns, many streamlining strategies would apply. Streamlining, however, can carry risks. “Irrational hurdles in the process should of course be removed,” says Ted Smith, Executive Director of the Silicon Valley Toxics Coalition. “But if government’s role is minimized, the public protection function will have to come from somewhere. The public has counted on government to be its watchdog. People get disillusioned when government hasn’t done that role well; but making government even more of a rubber stamp cuts against those concerns. It’s a tricky issue.”

But if the surgery is done with a laser, not a meat-ax, and with sensitivity to these concerns, streamlining environmental regulation and permitting could go a long way to meeting the seemingly conflicting concerns of business and environment–cutting bureaucratic fat (and worse) out of the regulatory process, while preserving the high environmental quality standards on which both public health and US international competitiveness depend.

[For more information, or for a copy of “Permit Streamlining: A Guide to Silicon Valley’s Best Practices, Policies and Programs”, contact SCCMG, 5201 Great America Parkway, Suite 426, Santa Clara, CA 95054, 408-496-6801, fax 408-496-6804.]

(c) 1995 Gil Friend. All rights reserved.

New Bottom Line is published periodically by Natural Logic, offering decision support software and strategic consulting that help companies and communities prosper by embedding the laws of nature at the heart of enterprise.

Gil Friend, systems ecologist and business strategist, is President and CEO of Natural Logic, Inc.

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