Leadership of a State Agency: An Analysis Using Game Theory

During his relatively short tenure in office, Illinois Department on Aging (IDOA) Director Victor Wirth performed an apparent managerial miracle. Inheriting an agency ridden with internal conflicts and in bad repute with its contractors and constituencies, Wirth successfully refocused his department's operations on client service and on cooperation with contractors while complying with the governor's directive to cut the department's budget. This apparent demonstration that government can be better and cost less is a case of "reinventing government" that merits analysis. Why do we believe that this is in fact a success story rather than another self-serving claim on behalf of a political executive? The testimony of agency officials and contractors at the end of his tenure was persuasive. They believed that his actions had led to better services to the state's older citizens, budget cuts notwithstanding, and that the compromises reached to cope with resource scarcity had been appropriate. Moreover, two years after his departure, based on evidence from an agency retreat, the department had apparently internalized Wirth’s cooperative values. Pre-Wirth-era conflicts and dissatisfactions had not been revived; client service and cooperation with service providers, now expressed in the obscurantist vocabulary of "quality improvement," were the norms. The purpose of this paper is to analyze Wirth’s success. Our objective is to produce insights into what constitutes "best managerial practice" in the "reinventing government" era. More than that, we explore the value of using game theoretic concepts to construct a heuristic model of IDOA operations that will generate non-trivial and non-obvious conjectures concerning how a public manager can transform an agency producing collective goods such as services for the aging. Our choice of analytic approach is controversial in the field of public management. Thus we begin with some observations on the study of public management practice and on the potential value of using a relatively formal heuristic model rather than relying on thick descriptions and practitioner reflections. Following these comments, we present a structured analysis of Wirth’s direction of IDOA using our model. We conclude with an account of Wirth’s success and with an assessment of the value of our analytic approach.