Spurring Government Bureaucracy to Action – AE Biofuels

Posted on August 2, 2010

Dealing with government regulations can slow a business plan down, especially when you’re dealing with a multi-level bureaucracy. Eric McAfee, CEO of AE Biofuels, went to the top floor of the pyramid to get action.

Around the world, governments often slow the pace of business. What should take a month frequently takes a year. What should take three months might never emerge to see the light of day.

Eric McAfee, CEO of AE Biofuels (now Aemetis, Inc.), had been waiting for more than a year for his business to get funding from a grant program that had already been passed by the State Legislature and signed into law by Governor Schwarzenegger. The alternative energy bill had provided $120 million per year for ten years in grants to advance renewable energy technology and encourage innovation by aiding green energy companies. Many Californians, delighted that the bill was passed, assumed the funds had been dispersed and were being used to make the world a greener place. But the funds were not being deployed by the agency in charge of the program. As a direct result, investors were also being stalled because they were waiting for funds to be delivered before they could determine the amount of additional funding required to complete projects.

In California, Eric’s team had already been interacting with the government at lower levels, explaining their project plans, educating them about his firm and encouraging action. But for all that effort, it was unclear if they had crept any closer to a tangible result. It was time to change tactics. AE Biofuels launched a campaign designed to get California to deliver the legislated funding. Imagine the bureaucracy as a ten-story pyramid. Here’s a breakdown of the strategy:

Step 1:  Lay the Ground Floor. At this stage, all the standard forms, letters, explanations and documentation must be submitted and reviewed with the intake-level bureaucrats. Most everyone does this as a starting point, and AE Biofuels did as well. But this step is much more than just sending in forms. It includes face to face visits with lower level bureaucrats, confirming not only that the bureaucrats had received the documents, but that they understood them as well. This step is complete when you know they understand and they tell you the matter has been passed upstairs.

Step 2:  Persuade Middle Level Bureaucrats. You must next build awareness of your situation on floors 2-6 of the ten-story pyramid. Even though the ground floor people have told you they passed your documents on, the truth is those documents are sitting in a long queue of other matters the bureaucrats on floors 2-6 are dealing with. They may not notice your issue for months—unless of course, you reach out to them. This requires some working knowledge of the organizational structure of the bureaucracy.

AE Biofuels hired two firms that help with government relationships and then invested management time into the effort to make these middle levels aware of the need to take action. These meetings help the agency become comfortable that your request is in the public interest, and is prudent. The first thing that will happen is that they will ask the intake-level bureaucrats if everything is in order, and if they are satisfied. If they say no, your progress is halted. That’s why step one is so critical. However, once the persuasion of levels 2-6 is accomplished, more than likely, nothing will happen. For a bureaucrat, making a decision is all risk, and no reward.

AE Biofuels spent over four months on steps one and two. Over that time, the lower and mid-level bureaucracy was educated and persuaded that giving a grant to AE Biofuels was a good idea. But one more push was needed.

Step 3:  Bring in the High Level Emissary. For Eric, this step began long before the other steps. For years, he’s been politically active, supporting causes and candidates that he believed in. It was more than just financial support—he worked shoulder to shoulder with influential political figures on charitable boards and political campaigns.

Eric happened to support the same charitable organization as a particular former top U.S. government official. After a dinner event, the sponsor of the event had arranged for the former official and his security attaché to fly home on Eric’s plane. During the flight, the two men talked about government policy and AE Biofuels’ projects. The former official agreed to assist Eric by bringing attention to the value of immediately implementing the policies and grant funding. A week later, the former official wrote a cover letter, attached Eric’s four-page brief describing the projects and the programs, and provided the document to key state officials.
The top floors of the pyramid took notice and asked the middle levels for support. The middle levels responded that they already knew about AE Biofuels and gave positive feedback. In fact, they suggested “they were already about to move forward.” The bureaucracy was spurred to action and the grant program moved to its final phase of issuance. Both grant programs were announced within two weeks, after more than a year of delays.

This three-step process to spurring the government to action is not unlike persuading any large organization to take a risk. It involves commitment to laying a foundation at several lower levels, then grabbing the attention of top level decision makers to act as a catalyst. AE Biofuels is now employing the same strategy in India to get local tax laws to match tax laws at the federal level.
Finding a way to reach people at the top requires time and planning, and is one of the most important roles for a CEO. Whether the connections you need are political or corporate, invest time and money in building your network so that when the time comes to ask for favors in high places, you know how to find them and who to ask.