3 Texas CEO’s & Our 2 Speed Infrastructure Renaissance

The mass of mankind under that [democracy] enjoys a precious degree of liberty and happiness. It has its evils too: the principal of which is the turbulence to which it is subject.  Thomas Jefferson

Visiting the country as we open up is a tremendous experience, America and especially our infrastructure leaders are on the move. That’s the strong impression I got last week in meetings in Houston and Galveston with three infrastructure company CEO’s. It was a bracing pre-4th of July message. Government, however, is a big question in their minds – Jefferson’s preoccupation with effective, but small, government burns bright in Texas, as we know, but it is also a big issue in every corner of our country’s nascent infrastructure Renaissance.

Government is everywhere in infrastructure, but where should it be strategically? New sources of funding and new technologies have redefined the infrastructure marketplace, while government is just beginning to rethink its role in guiding, funding and managing the most dynamic infrastructure market that we’ve seen in decades.

The three CEO’s – the leader of a large software company, focused on major projects; the leader of a growing port, focused on disruptive expansion; and the leader of a new energy fund, focused on driving the energy transition – were charged-up, focused. They are locked on to huge opportunities, big bets and big risks. They face a once in a lifetime moment: our economy’s sudden emergence from Covid, which has catalyzed a moment of tremendous economic transition (including supply chain reengineering), all while trying to navigate our extraordinary technology revolution — from blockchain to hydrogen, and AI to machine learning, puzzle pieces all in the digitization and electrification of our economy.  

Its an understatement to say that the federal government looms over everything in infrastructure. From its intentions and its behavior – and its competence, which is generally agreed to be inconsistent, unpredictable and capricious – the government determines the success and speed of everything. Nobody, from Tesla’s Elon Musk to our three CEO’s, are immune to public influence: “I’m not turning down free money,” as one of the CEO’s told me. Big plans and huge benefits, in Texas and around the country, can easily be whipsawed – for better or for worse – by Washington’s bureaucracy, its new king and its sense of priorities.

Big Opportunities. The CEO’s are focused on huge opportunities – big projects and outsized investments. The biggest project, by far, is the Army Corps’ $26 billion project to protect Galveston, and Houston, from rising sea levels. The biggest market, by far, is upgrading the U.S. transmission grid – a whopping $7 trillion investment to harden the grid, create resilience, and bring wind and solar power to buildings, manufacturing plants and the mobility of citizens. 

For the construction software CEO the sky is the limit, as long as the government gets things right, mostly by staying out of the way. Actually his perspective is both insightful and instructive – the federal government, in his eyes, needs to let the states freely experiment and find out for themselves what works best.  Pondering those thoughts the words of another CEO from a discussion earlier in the week kept ringing in my ears: the government, he said, ‘always screws things ups.” Well, not always but in infrastructure it is often enough.

The Two Speed System that Inhibits our Infrastructure Renaissance. Their point is not so much that government is bad, rather that government has enormous power and is both slow and inconsistent in the use of that power. The result is a two speed system, completely out of whack, with the private sector booming ahead, energized – while the public sector is trying to catch up, and lead — while pondering its exact role. Generally this is a problem, in infrastructure this is a mortal threat.

This two speed issue has been a problem for a long time, and it is now something rather more serious. There was an undercurrent of outrage, as technology and economic competition pick up speed, government continues to move as it did when the world was a slower and less dangerous place. How else to explain opportunities not seized, and vulnerabilities that leave us open to high probability peril?

One glaring result of this two speed system (see the graph above) is our weak, inefficient and vulnerable electricity grid. China has built 260 GW of interregional transmission capacity since 2014, while U.S. developers find it impossible to get permits and rights of way to build… anything. We are on track to build only 3 GW – all in one project that is yet to transmit its first electron. This weakens our ability to compete, and creates vulnerabilities that leave us open to blackouts and brownouts (Texas, California) and cyberattack – all problems that one of the CEO’s, uniquely qualified, has been trying for years to address.

Washington decision-making goes bump in the night for these CEOs, every night.   

Government Has a Role – So What Is It? When the state works well, plays a clear role, at speed, then we succeed – it is the essential marshaller of great things, from D-Day to the Apollo moon landing.  That’s a fact. When the state fails to play this role – through confusion, or incompetence, or because it is tied in Gulliver-like knots of inaction, then we fail. 

This essential role of the state punctuates the highlights of our history, from building the Erie Canal, to creating our railroads, to funding the country’s initial electrification, to the construction of our interstate highway system. The federal government, defining public purpose, and acting to drive that purpose, is the essential actor on the stage. It enables, facilitates, prods and funds the private sector in creating the transformative public goods that brick by brick created our world. Above all, it innovates – in order to drive innovation.

What happens when the public sector ceases to play its leading role, whether because of incapacity or confusion? Taking the public sector off the board is debilitating to infrastructure investment, and unless urgently reversed will kill our infrastructure Renaissance.  As you can see in the chart above, 77% of the public thought government decisions could be trusted ‘most of the time’ in 1964, and today after decades of decline only 17% of us – not just my three CEO’s – no longer trust the government. 

What Washington Must Do. Infrastructure – and its benefits: mobility, health, jobs, opportunity, competitiveness – make up the the fabric of our lives. Now, and increasingly, infrastructure is the brains of our economy. Two speeds, with the private sector still speeding up, while the public sector slows to a stop, no longer works.

The state needs to change how it governs infrastructure in three ways:  

First, Recognize Infrastructure as a First Order Priority.  In listening to the Texas CEO’s, and the investments they are making, it struck me – once again – that Washington’s biggest problem with infrastructure is the refusal to recognize the fact that infrastructure is a first order priority. The Senate’s Innovation and Competitiveness Act is a step in the right direction, but once the role of infrastructure in our country is placed at the highest rung, then we’ll get to work creating strategic assets that will empower investment, including: a National Strategic Infrastructure Council in the White House, infrastructure banks at the federal and state levels, and even Tiger Teams of cross silo executives, public and private, to get make specific projects happen.

Second, Clarify Strategy. As in national defense, the federal government needs to have a clear, and long-term strategic infrastructure strategy. Federal employees in Washington are even more negatively effected than my Texas CEO’s by attention-challenged, partisan infrastructure priorities.  The bipartisan infrastructure bill – and bipartisanship in general – needs to be the watchword for infrastructure, as it is for national defense. How else to manage the performance of our federal infrastructure bureaucracies (55,000 people in the Department of Transportation, 104,000 in the Department of Energy). Just as CEO’s need a clear message, the bureaucracy needs a clear direction, so that they can innovate, experiment, and make timely decisions without fear of retribution.   As they tell me all the time: “please just let us make decisions.”

Third, Communicate Performance. Its impossible to build trust without achieving, and trumpeting, achievement – trust is not a strange thing, it is a result of competence, proved expertise. The federal government, as well as state governments, need to do a much better job of measuring the benefits of projects, and then communicating those benefits all across the land. Otherwise no one will know – as one of the respondents to our State of Infrastructure 2021 survey said – what we are getting for our investment, and whether we need to pay ‘twice the $3 trillion price tag’ to get what we were promised.

Note: We need to also do a much better job, a much more strategic job, of getting performance-driving technology into the hands of public sector decision-makers. Only 56% of respondents to our State of Infrastructure survey have any way of monitoring long-term performance. This is why it is urgent for public sector agencies to make significant technology investments. This investments also create extraordinary opportunities to make our investments more productive and transparent: 86% of survey respondents believe that technology plays a more “significant role in driving better, cheaper, faster infrastructure.”  They don’t have it, they know it works, and they need it.

Public and Private Leadership – Innovation is the Watchword. What is the solution for our three Texas CEO’s, as we open up the next chapter in our country’s infrastructure history? How do we focus and speed up, the public sector, so that we better support CEO’s and project makers around the country? The interesting fact is that the state is not the enemy, it is the essential actor – and it is not allowed to play its required role.

The solution is public sector innovation. I love the fact that the term ‘state,’ emerged from the Venetian lagoons — eventually guiding one of the greatest infrastructure projects of all time, transforming soggy marshland into a dominant commercial, military and cultural force for over 500 years. The state balances and ensures extraordinary private effort, harnessing it for the public good – that is why it is essential. President Kennedy said it best, launching us on our road to the moon: ‘it will not be one man going to the moon, it will be an entire nation… because we must all work together to put him there.’ 

This focus on public sector innovation – in policy, technology and above all in institutions – is the piece that will revitalize our democracy. In reflecting on the dynamism and excellence of the three Texas CEO’s a Steve Jobs quote rings in my ears: “innovation distinguishes between a leader and a follower.” Maybe what we need for our infrastructure Renaissance to succeed is not a brake on private innovation, but more – and urgent – public innovation empowering a newly imagined role for states, communities and other public bureaucracies to play in our joint success. However we decided, we need to urgently speed things up!

Most Related Links :
reporterwings Governmental News Finance News

Source link

Back to top button