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Q & A

Should Government Run on Rules or Principles?

For governments, fairness usually means a strict adherence to rules and procedures. But while a rules-based approach makes sense for straightforward decisions, it precludes the judgment and iteration required to solve complex problems. Janhabi Nandy ’09, an official at the Treasury Board of Canada, makes the case that a nuanced, principle-based approach can make government more effective.

Ottawa's Parliament Centre Block. Photo: Michael Runkel/Alamy Stock Photo.
Ottawa's Parliament Centre Block. Photo: Michael Runkel/Alamy Stock Photo.

Government bureaucracy can be frustrating. But it is also how we carry out our shared ideals for the nation we want to create. Soaring rhetoric may be more inspiring, but passports, public schools, and streets without potholes are fundamental elements of a flourishing society.

Bureaucratic rules can be absurdly rigid, for good reason—they help guarantee fairness and make it possible to efficiently repeat a task many times in a myriad of contexts. But more and more and more rules don’t have to be the default response when governments try to solve problems.

In a conversation with Yale Insights, Janhabi Nandy ’09, a senior director at the Treasury Board of Canada Secretariat, makes the case that the fast-paced, complex environment we face today require a deep rethinking of government. She points to situations where a principle-based approach to problem solving may get better results than a rules-based approach. “The challenge and the fear is that a principle-based system requires judgment,” Nandy acknowledges. “There are going to be flaws and mistakes, but we can find ways to incorporate principle-based systems to get better results.”
 

Q: What led you to work in government?

I decided to work in the Canadian government to serve in a system that I benefited from. I grew up in Medicine Hat, Alberta. My family is from India. Growing up in the 1980s, we traveled back almost every year. India has made tremendous economic progress since then, but what I observed as a young person wasn’t just poverty on a massive scale but that the systems didn’t work.

I believe systems are the enabling mechanism for success, and a lack of good systems is what keeps people from fair access to opportunity. I also believe the public sector is the keeper of the systems—laws, regulations, taxation, and how we spend the funds. Civil society and the private sector have significant influence, but ultimately the key systems begin and end with government.

I want more people to live better, healthier, happier lives where they can achieve their full potential. I want everyone to have a fair shot in Canada and around the globe. I hoped I could contribute to that through working on system improvement. By working for the Canadian government, I hoped to learn about how systems work well so that, at some point in my career, I would be able to leverage that for improving systems globally.

Q: How does government navigate the space between the ideals a country stands for and the systems and rules that enact the ideals?

Governments, by definition, are very rule-based systems; they should be. In a modern democratic system, it makes sense that we attempt to codify our principles into rules. What’s fair, what’s equitable, what is of value, even what is cost efficient—it’s not always just the lowest cost—these are abstractions. Rules are one way we make ideals applicable in a bureaucracy.

In practice, I’ve found that a rule can often constrain or even warp the principle that it was attempting to embody. I say this with some hesitation because I don’t want anyone to understand that to mean we should be subverting or manipulating rules; that’s the opposite of what I intend.

I worked as a lawyer before going to Yale SOM. In law school you don’t actually learn rules per se, or what's called black letter law; you learn to think about the principles that laws, cases, and judges’ rulings are trying to manifest. Are the principles getting lost and maybe we need to shift course? Or is the manifestation of a principle naturally evolving over time?

As bureaucrats, we are often challenged to be more innovative. We struggle with it. Limited resources and training, a lack of exposure to innovative models—those are all real impediments. But innovation in government is too often just tweaking rule sets. I believe there’s an opportunity for innovation by taking a very different approach to the tension between rules and principles.

“A transparent bidding process is great when the specifications are highly detailed and entirely established at the beginning, as it is when the government needs number two pencils. That doesn’t work for complex IT systems.”

Q: What would that look like?

I spent a number of years working in the Treasury Board Secretariat. We determined whether government spending was in compliance with the rules and also aligned with the concepts of good management.

For example, often government procures goods or services. Many of these procurements are essentially solutions to complex problems. More complicated than 500 pages of detailed specifications can cover. Judgment, failure, and course correction are inevitable parts of solving complex problems. How do we create rules that allow for that?

IT system procurement is an area where the approach is evolving. It has been a bumpy and difficult process. Canada has seen some public failures procuring big IT systems. Similar things have happened in other countries, including the U.S., when governments have tried to use the same procurement rules we use with pencils or janitorial services for complex IT systems.

A transparent bidding process is great when the specifications are highly detailed and entirely established at the beginning, as it is when the government needs number two pencils. Bidders get a fair opportunity because they all propose a price for the same thing. The taxpayers get the lowest cost.

That doesn’t work for complex IT systems. When we try that approach it fails. The same is potentially true of other large, technologically complex projects such as defense systems.

Regulators are trying to develop an approach where we do procurement based on principles of functionality that we’d like delivered by the product or service. Bids present alternative ways to deliver on those principles of functionality. The approach is open to the fact that the initial idea is likely not the exact right one and we will have to iterate.

Q: Is this something that could be applied to many areas?

Many parts of government need to evolve in that same direction of being able to accept the complexity and ambiguity of a principle-based approach to problem solving because the rule-based system has limits in the environment in which we’re now operating.

“We don’t need to make everything the same to create more fairness, more equity, and more opportunities for everyone.” 

My experience is that the people I work with in government are mission driven, conscientious, and hardworking. But we are also very rules oriented. The culture is that rules are how we’re going to be consistent; treat like people the same and like situations the same, and that’s how we visibly demonstrate to taxpayers that we’re being fair and equitable.

I would argue that what matters more to your average taxpayer is that we deliver a good product or service, not that we complied with all the rules on the way to delivering something suboptimal.

Q: Do you think the public is ready for bureaucrats to have discretion in decisions?

The challenge and the fear is that a principle-based system requires judgment. Different people are going to bring different things to each conversation about how the principle should apply in a given situation. There are going to be flaws and mistakes, but we can find ways to incorporate principle-based systems to get better results.

We don’t need to make everything the same to create more fairness, more equity, and more opportunities for everyone. Building good systems that evolve over time as our society changes— it’s not easy. I don’t think anyone has it totally right.

But I do feel good about the direction we're going in. I don’t know if our early procurements under this new approach will be good or not. That’s the whole point, though. We might not have gotten it right, but we had to change and we will continue to improve it.

Department: Q & A