Daily Archives: July 13, 2011

The Open Public Services White Paper, the Budget Deficit and Thirteen Key Reasons for the Government to Deploy Professional Interims for Risk Reduction?

July 13, 2011 By in Accountability, Business Strategy, Business Transformation, Central Government, Coaching, Coalition, Consulting, Cost Cutting, Cost Reduction, David Cameron, Efficiencies, Erik Pickles, Executive Interim Management, Executive interim management career, Interim Management, Interim Manager, IT Strategy, Liberal Conservatism, Local Authorities, Local Government, Mutualisation, Neoliberal, NHS, Outsourcing, People, Politics, Public Sector, Public Services Reform, Reform, Shared Services, Spending Review 2010, Thatcherism, Transformation Risk, Uncategorized Tags: , , , , , , 9 Comments
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This week marked the publication of the Coalition Government’s much awaited White Paper on Open Public Services. In the House of Commons, Oliver Letwin MP, underlined the five principles that underpin the White Paper and the Coalition’s vision for public services:

 
  1. Choice – wherever possible we will increase choice
  2. Decentralisation – power will be decentralised to the lowest appropriate level
  3. Diversity – public services will be open to a range of providers
  4. Fair access –we will ensure that there is fair access and fair funding for all
  5. Accountability –services will be accountable to users and taxpayers.

As a Transformation Specialist, I was rather disappointed when I saw the following headline in the Economist:

 New thinking on public services offers reform but not transformation
 
 The White Paper had been promised since January but differences of opinion within the Coalition Government were probably responsible for the delay. The White Paper makes very good reading and is strong on Localism which is seen as an alternative to Big Government. On the other hand, many economists (especially neoliberals), would argue that enduring cost reduction would come more effectively from a globalist approach that was strong on outsourcing (privatizations in Lady Thatcher’s day). Many observers, like Lord Adebowale of Turning Point, support the direction of the White Paper but caution against the additional risks of Big Society, for example,  not having access to professional expertise, concluding:
 
To stand any chance of long-term success the Big Society has to draw on voluntary bodies that are professional in all but name. Without that the concept will be like a house built on sand
 
 The biggest criticism of the White Paper seems in relation to economics and value for money. Andrew Haldenby of think tank Reform argued:
 
One criticism might be the complete absence of the concept of value for money in the paper. The coalition government could argue that it would have embarked on its reform programme regardless of the fiscal situation but the practical task of reform for public service managers (which in the end is what matters) is all about value for money – whether to amend the services, reduce costs, invest this year to save in years to come, and so on.
 
Another view, from Nick Pearce of think tank IPPR who concluded:
 
The  government is right that public services need reform, but it has no analysis of the mix of public services that the country needs in the decades ahead. Its white paper is too narrowly focused on the role of market forces, neglecting other proven means of raising standards. 
 
Meanwhile, Chris Nicholson of CentreForum summed it up as follows:
 
Employee ownership offers great potential for professionals to transform frontline services. However, in many cases the most appropriate provider will be a large corporation with a good brand, strong balance sheets to enable it to finance new investment, and working capital for PbR. The skills to provide strong quality-control and staff development are also vital.
 
I shall leave the political journalists to argue over the political merits of the White Paper. My personal expertise is Strategic Cost Reduction and Delivery of Transformation in some very challenging, complex and multi-cultural organisations, like for example, UNESCO, and I seriously struggle to understand how the reforms outlined in this White Paper will contribute directly to reduction of the Budget Deficit.  
 
Shrewd political commentators will also argue that the White Paper is a staging post and downstream, outsourcing is the real agenda  (possibly in the next government) but meanwhile Coalition politics dictates a softly softly approach. Some observers argue that this White Paper is closer to a Green Paper – there is an now an extensive consultation period until the end of the year, at least. Different stakeholders are likely to take strong positions and one can only suppose that the government is ready for more U-turns?
 
In my judgement, Big Society and Localism is very high risk, with limited opportunity for demonstrable cost reduction and service improvement (over the traditional Public Sector service delivery model). Given the risks, I would expect early failures and for these to pave the way for Phase 2, namely outsourcing.
 
My concern since the beginning of the year has been delivery of real transformation to support the reform agenda. The House of Commons Committee of Public Accounts report on “Central government’s use of consultants and interims”, in December 2010, recognized that the Public Sector does not have the resources to deliver effective transformation, with government policy often weak on the “strategy formulation” and “implementation phase” of transformation. Given that the Government policy experts are likely to be still drafting early in 2012, when will the Goverment face up to the strategy formulation & delivery challenges? It’s really hard to see how that will support Budget Deficit reduction in this parliament. The Economist cautioned:
 
Wholesale alteration in the delivery of public services might take three terms of government, according to a minister 
 
 As I have been waiting for this White Paper since January, I have had ample time to reflect and write blogs on the strategy and delivery challenges facing the Government. Here is a selection of thirteen of my blogs (ranked by number of hits):
 
  1. UK Local Authorities & Shared Services: Cost-Cutting – Myth or Reality?
  2. What are the Three Types of Interim Management Assignment?
  3. What’s the Difference between an Interim Manager and a Management Consultant?
  4. Public Sector Performance: Catch 22 Type Dilemmas
  5. Public Sector Catch 22: the Role of “IT” in Business Transformation
  6. Utilizing Professional Interims to Help Reduce the Budget Deficit – Removing Catch 22?
  7. Public Sector Catch 22: Structural Reform, How to Avoid an Omnishambles Recovery Programme?
  8. Public Sector Reform: U-Turns, Banana Skins, the March of the Neoliberal & the Demise of the Professional Interim?
  9. Public Sector Catch 22: Business Transformation
  10. Executive Interim Management
  11. Executive Interim Management: Seven Key Trends
  12. Four reasons why a Professional Interim is a Smarter Choice than a Management Consultant?
  13. Reforming the Professional Interim & Independent Consultant Supply Chain Model?

History too provides good reason to be cautious with these proposed policy changes. When in the 1980s, Prime Minister Thatcher reversed the post-war Labour government’s nationalizations, she was dealing with very large, quasi monopolies, with pricing post privatization controlled by regulatory organizations.  The stock market soon applied pressure on privatized businesses for acceptable financial return on investment, with downsizing, lean and offshoring becoming common but it probably took the best part of a generation for customer service to rise to the top of performance challenges in organizations like British Gas and British Telephone etc. Fundamentally, these privatized businesses were very large organizations that could potentially benefit from the economic advantage of scale. On the other hand, specialist micro-businesses that might emerge out of the Public Services Reform will probably seriously struggle for competitive advantage. Neoliberals would argue that these micro businesses would benefit from being non-unionized attracting the best resources available in the wider market.

 For sure, the Coalition Goverment will need help with: (a) policy evaluation and drafting, (b) strategy formulation, and most importantly, (c) delivery of the transformation. Already hard-pressed, down-sized and demoralized,  public servants will struggle in this new language. In all probability, the Government will turn to consultants for strategy formulation and possibly policy analysis. However, I would strongly encourage the Government to turn first to Professional Interims for delivery of transformation for the four reasons cited earlier under (12).  

By deploying Professional Interims early, I would argue that the Government will:

  • Reduce the composite  risk of Public Services Transformation
  • Validate proposed reforms with independent, non-aligned, business hardened challenge on the important practical decisions, like governance, organization, strategy, pricing regulation, products/services & business mix, quality assurance, customer service, financial control, professionalism etc.

To remind the reader, a Professional Interim Executive is a high impact external resource, usually operating at or near board level on a short-term basis, who utilises extensive proven experience to solve complex problems or deliver solutions to business critical issues fast. Professional Interims diagnose, design, deliver, embed the learning, and then disengage.