In the case of Gina Raimondo and Rhode Island, the answer is: innovation.

Raimondo was treasurer of the tiny state for four years before she became Rhode Island’s first-ever female governor in January. But before getting into politics, she was a venture capitalist. And today, with the perspective of a leader who has worn many hats, she says that her investing background has helped her to turn around and manage her financially troubled state.

As a VC and as a governor, Raimondo says, “You want to look for new technologies, new innovations, new ways to deliver services.” And in both jobs, “you’re always trying to do more with less. Budgets are tight in venture-backed companies. Same with governments.”

Things couldn’t have looked much worse for Rhode Island when Raimondo, who has degrees from Harvard (economics) and Oxford (Rhodes Scholar) and Yale (law school), took charge as state treasurer in 2011. A Democrat in a traditionally Republican state, she confronted a pension system that was underfunded and one of the sickest in the nation.

As Dan Primack wrote in a profile of Raimondo in Fortune‘s recent Most Powerful Women issue, she overhauled the pension system by making a bunch of gutsy moves—such as slashing cost-of-living increases for public employees and raising their retirement age—that incited the wrath of unions. But she revamped the pension system successfully without raising taxes. And now she’s emerging as a model for governing cash-strapped states.

“End the politics of procrastination,” the governor says, offering advice she derived from her stunning success. “That is something I learned in my prior business. The great CEOs are the ones who confronted the reality of their businesses and challenges in a changing market. The CEOs who weren’t as good said ‘next quarter will be the quarter. Let’s just stay on the path.’”

Her best advice to managers of any kind: “Take on the issues, and don’t avoid the tough choices.”