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Abstract: On February 13, 1984, Minnesota Commissioner of Administration Sandra J. Hale told a group of some 200 state managers that her department would soon launch a program to improve the "effectiveness and productivity" of state government. Hale and many other government leaders believed that past initiatives--usually focused either on cost-cutting or on management schemes developed by private sector executive--had failed to generate significant, lasting change in the performance of state government. She christened the new program "STEP" (Strive Toward Excellence and Productivity, later renamed Strive Toward Excellence in Performance) specifically to distinguish it from a 1971 productivity initiative called "LEAP" (the Loaned Executive Action Program), which was still remembered bitterly by many state workers. STEP would rely on ideas generated within the bureaucracy, Hale told the managers, and would create more cooperative partnerships between the public and private sectors. This decision-forcing case focuses on administrators charged with the task of designing the STEP program and challenges students to consider how to institutionalize innovation in government. Students will be asked to identify the political and institutional obstacles to innovative management and to consider what it would take to authorize--and galvanize--managers to approach their divisions in fresh, creative ways.