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The new public service delivery business must be different

Tuesday April 26th, 2011

By John Tizard, Director, Centre for Public Service Partnerships

If I were setting up a new public service delivery business I would …… want to make a reasonable and sustainable commercial return (popularly known as ‘profit’), serve my customers in an exemplar manner, to share benefits and profits, and be their strategic partner in reality and not just name.

Achieving these three aims means that I would need to …

  • understand and empathise with the values and principles of my public sector clients, and behave in accordance with these
  • avoid arrogance and recognise that the public sector will nurture a pluralism of supply and that the private sector is not always the right solution; and recognise the strength and successes in the public sector
  • understand and ensure that my business delivers the outputs and outcomes that my clients seek, rather than oversell what is not feasible or affordable in the first place [in other words, don’t lie or exaggerate what you can do!]
  • contribute to my clients’ wider social, economic and environmental objectives, understand how this can be achieved and at what cost, and admit the limitations as to what my business can reasonably contribute/do in this regard
  • be willing to be flexible and negotiate contracts that allow for flexibility while protecting the interests of both my clients and my business or commercial activities
  • agree, calibrate and allocate risks with my clients, and genuinely share risks and rewards with them, including profit share arrangements
  • be an exemplar employer and manager of diverse talent with fully engaged, supported and motivated staff who have a stake in both the business and the wider goals of our clients, and who are involved in all key decisions in the business. I will also want to ensure my people are: well trained; effectively, honestly and rigorously performance managed; and given genuine opportunities for promotion and self-development
  • recognise and work closely with trade unions as the representatives of the staff
  • adopt a fair and transparent remuneration policy which reflects the public sector position and is based on equity for all employees
  • actively practise a corporate social responsibility programme including mentoring and supporting local enterprises – both private and social
  • work with others in the business’s supply chain in a supportive manner – especially social enterprises and third, community and voluntary organisations
  • where appropriate provide different services to different users and/or neighbourhoods for them to determine what they want in order to accommodate the localist agenda, and in a manner that provides me with commercial comfort and the client with value for money
  • have some of the business’s reward at risk from end-user satisfaction, even where there is no direct economic link between provider and user (which will increasingly be the case for many services, implying that the business model must be adaptable to a ‘retail’ market environment)

 

It is possible and indeed likely that the public sector client, especially a local authority, will wish its strategic public service delivery partner to work with it on several levels at the same time. These will likely include: service management (based on outsourcing or insourcing of management skills); consultancy advice and a source of innovative ideas with some risk transfer to the provider; accessing capital for service redesign and transformation as well as wider local development requirements; two-way staff secondments and mentoring; and procurement and supply chain management.

I will expect to be personally held to account for performance, behaviour and ‘living’ the agreement that I sell and agree with my clients.  Therefore, while I will be seeking a warm and strong partnership ethos to underpin the relationship with my clients, I will still expect them to have a strong and rigorous partner/supplier management capability. I will want to help them to realise this and to ensure they achieve the highest standards of probity and secure demonstrable value for money.

In order to establish this new public service business, I will be seeking to recruit colleagues with the right values – as much, if not more, as the right skills.  I will want a fully diverse mix of talent because I know from experience that diverse teams tend to make more informed decisions; that talent comes in all shapes, sizes and guises; and that the best of talent from any one sector is just as good as the best of talent from any other sector.  You will therefore notice that my staff will have a mix of third, social enterprise, business and public sector backgrounds, and neither are they all ‘stale, pale and male’. I will also want non-executives on my board who: have a broad range of experience and complement rather than mirror each other’s background; share the values of the company and the clients we are seeking to work with; and, most critically of all, offer robust and constructive challenge and demand innovative solutions from both myself and my executive team.

Although I have written this piece from the perspective of a new business, the truth is that much the same approach will apply to a new social enterprise, employee-owned co-operative or more traditional third sector organisation seeking to move into public service delivery. Such an organisation will need to live its values but still make a surplus to reinvest in its development – a ‘not for profit’ will not last long if it operates as a ‘for loss’!

Public services are changing fast and so are public expectations. Public sector organisations have to change too and many are doing so. They will continue to provide thir own “in house managed” services and to partner with the business and third sectors.  But above all, this new agenda requires a massive shift in attitude, behaviours, governance and contractual approaches from both business and third sector providers. The days of traditional outsourcing are gone or are certainly going – and even if that weren’t the case or they were to linger in some places, I am not convinced that this is where a progressive, exciting, innovative enterprise would want to do business.

Anyhow, just a few thoughts for you budding entrepreneurs out there, social or otherwise, to help plan your next venture.  Good luck!

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