A long-serving politician with a reputation for getting things done and telling it like it is, Leon Panetta has had a distinguished public-service career. A lawyer by training, he joined the US Army in 1964, entered politics two years later, and represented California’s 16th (now 17th) district in the US House of Representatives from 1977 to 1993. He is best known for having served as President Bill Clinton’s chief of staff from 1994 to 1997. Today, he is the director of the Leon & Sylvia Panetta Institute for Public Policy, a not-for-profit, nonpartisan center located on the central coast of California—his birthplace.

Recently, Panetta sat down with McKinsey’s Lenny Mendonca and Allen Webb to share his views on how to make things work in the public sector, how to develop strong leaders, the importance of private-sector involvement, and the challenges confronting the US government.

The Quarterly: What enabled you to get things done during your time in Washington?

Leon Panetta: I have often said that my Army experience was a great deal more important than any government experience. In the military, I saw that you need someone at the top who is capable of running a strong organization: establishing...