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Entrepreneurship in

the Service Institution

I

Public-service institutions such as government agencies, labor
unions, churches, universities, and schools, hospitals, community and
charitable organizations, professional and trade associations and the
like, need to be entrepreneurial and innovative fully as much as any
business does. Indeed, they may need it more. The rapid changes in
today’s society, technology, and economy are simultaneously an even
greater threat to them and an even greater opportunity.
Yet public-service institutions find it far more difficult to inno-
vate than even the most “bureaucratic” company. The “existing”
seems to be even more of an obstacle. To be sure, every service insti-
tution likes to get bigger. In the absence of a profit test, size is the
one criterion of success for a service institution, and growth a goal
in itself. And then, of course, there is always so much more that
needs to be done. But stopping what has “always been done” and
doing something new are equally anathema to service institutions, or
at least excruciatingly painful to them.
Most innovations in public-service institutions are imposed on
them either by outsiders or by catastrophe. The modern university,
for instance, was created by a total outsider, the Prussian diplomat
Wilhelm von Humboldt. He founded the University of Berlin in
1809 when the traditional university of the seventeenth and eigh-
teenth century had been all but completely destroyed by the French
Revolution and the Napoleonic wars. Sixty years later, the modern
American university came into being when the country’s tradition-
al colleges and universities were dying and could no longer attract
students.
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