Creating Public value

Transcription

1 Creating Public value By Irwin Turbitt What distinguishes public sector management from private sector management? How can public managers navigate their way across a complex and contested landscape? Do public managers deliver services or obligations to citizens? In this article I want to answer these questions by exploring the creation of public value, an idea first defined by Professor Mark Moore from the Harvard Kennedy School 1 I want to cover two particular aspects of Moore's work, the first being how public value differs from private value. The second being to introduce the strategic triangle developed by Moore to enable public managers to make sense of their complex environments. Most of the academic management work read by, and often written for, public sector managers has a private sector perspective and seeks to suggest or recommend that public service executives follow the practises deemed to be successful and useful in the private sector. Moore appears to start with a similar perspective but very quickly distances himself from it. He starts with the premise that if the role of the private sector is to create private value then the role of the public sector must be to create public value. However, almost immediately the departure begins, when he points out that the measure of private value is an internationally agreed standard unit, ie profit, which can be measured in only one form of currency - money. So success for a private sector manager is simply a matter of who made the most money for the company in a given period. However judging 1 Moore, M H (1995), Creating Public Value strategic management in government,

2 what is publicly valuable and how much public value has been created is a much more complex task. Jim Collins, the author of Good to Great 2 and other books mainly about success in the private sector, has also looked at what he calls the 'social sector' 3, which includes the public sector and the voluntary or 'third' sector. Collins says that, in the private sector, inputs are measured in the same unit as outputs, i.e. we measure the amount of money put into a private sector enterprise and we judge its success according to the amount of money generated on the output side. This model is different from that of the social sector because while, in Collins view, the inputs are the same (money) the outputs are very different. Collins suggests that judgements about success in the social sector should be related to the mission of the organisation. If the mission of the organisation is education, the output should be measured as educational outputs. This seems like a neat solution, except that the question of who decides the appropriate outputs arises immediately, particularly in a democracy. So although starting from different places, Collins and Moore arrive at the same point - who decides what is publicly valuable? The traditional political science answer to this question, in a democratic governance system, is to say that those decisions are made by the people's representatives, i.e. those elected to form a government, and that the role of the public service manager is to implement the government s policy instructions. While Collins is silent on this point, Moore is not. As a public management scholar of some 40 years standing, he does not contest the legitimacy of the democratic governance system, but points out that in a private sector enterprise we expect managers to have ideas about how to create value for their organisations. So should we not expect - even perhaps 2 Collins, J (2001), Good to Great: Why Some Companies Make the Leap... and Others Don't, London: Collins. 3 Collins, J (2005), Good to Great and the Social Sectors: A Monograph to Accompany Good to Great, New York: HarperCollins.

3 demand that public sector managers also have ideas about what might be publicly valuable? Moore recognises that having ideas and having the authorisation to implement them are not the same thing. But his starting point is not only to accept, but to promote the idea that public service managers are just as entitled to create public value propositions as their counterparts in the private sector are to create customer value propositions. A colleague of Moore s Prof Dutch Leonard calls this the answer to question Zero. He observes that when he asks public sector managers about their role they explain what they do rather than the value they produce. He also notes that when he asks them what they need to accomplish again they offer activities rather than results. Thus he suggests the need for an answer to question Zero: what is it you are trying to accomplish? What public value do you think it would be useful to produce? This public value proposition forms the first leg of what Moore calls his 'strategic triangle', a planning and management device by which public sector managers can check the extent to which they are engaged in an activity that is valuable, authorised and 'do-able'. Intellectually this is a very simple idea, but one which becomes more complex very easily and quickly, when applied in the difficult and challenging circumstances in which public service managers operate. The strategic triangle does however provide a ready reckoner for public managers, rather like a compass does for a walker, making sure that they are travelling in the right direction. Note some advantages a compass has over a map; a compass is useful in all types of weather, whereas a map is restricted to periods when the weather is fine and clear and the walker can take a view of the landscape and orientate the map to the landscape. The compass also enables the walker to be satisfied that they are travelling in the right direction and enables judgements to be made along the way according to circumstances. Finally, the map is merely an approximation of the ground it describes, but the ground may have changed since the map was drawn and it

4 may no longer be a useful representation. I want to suggest that similar compass advantages can be suggested for the strategic triangle. The second leg of Moore's strategic triangle he calls the 'authorising environment'. Having decided on a public value proposition which the public service manager feels justifies the use of resources, the next requirement is to have it authorised. So the authorising environment consists of those people who can say yes or no to the public value proposition but also those who can influence those who can say yes or no. Generally speaking, the authorising environment for public sector managers starts within their organisational management hierarchy. They will have a line manager who, in turn, will report to another manager. However in public sector organisations, accountability will quickly reach a management position outside the organisation that is a political appointment. To illustrate this, I will use an example from British policing, starting with a senior operational police manager known as a Basic Command Unit (BCU) commander. A BCU commander will report to the Force Executive which, in turn, is responsible externally to an elected Police and Crime Commissioner. Then in central government there is the Home Secretary, another important element of the BCU commander's authorising authority, but there are others within the commander's authorising environment, including the Community Safety Partnership (CSP), a partnership that operates at the local level, consisting of local authority executives, councillors and fellow public service managers from, for example, the local fire authority, social services and health boards. These CSPs are also subject to direction and control from the Home Secretary, who is also responsible to Parliament and the Prime Minister. And, of course, the whole democratic governance system is in itself, responsible ultimately to the court system. So this very clear strand of accountability is complicated, but there are other elements in the authorising environment - people who can influence those who say 'yes' or 'no' to our ideas - bringing us to other organisations such as

5 the media, staff associations, and special interest and lobby groups and the tax payer. Stakeholders / Authorising Environment! People who can say Yes or No or influence those who can say Yes or No Courts Local Authority Unions Media Parliament CSP Staff Associations Lobby Groups Home Sec Police & Crime Commissioner Chief Officers BCU Commander Supervisors Staff Taxpayers Same people different views Citizens The authority of these individual groups ebbs and flows collectively according to business and political cycles; certain individuals within the authorising environment assume disproportionate authority at certain times within the political cycle. For example, in the run up to an election, taxpayers, in their role as voters, tend to become very prominent within the authorising environment. It is also important to recognise that relationships within this authorising environment are not linear and the environment can be very dynamic. As an example, let's take a BCU commander who has an idea for an emergency command response post, but finds authorisation difficult to obtain owing to a common viewpoint that this type of resource provision should be provided at a force or county level rather than at an individual or district level. Now let's imagine that there is an airport - let's say Glasgow - within this BCU commander's area of responsibility. How much more likely is the commander to get resources for the critical incident command post in the aftermath of a terrorist attack at Glasgow airport, compared to the period in the run-up to the attacks? 4 4 BBC News 30 th June

6 So what is authorisable as a publicly valuable use of resources changes according to the circumstances at the time the authorisation is requested. One way to categorise this differing sets of circumstances is to use the work of Keith Grint 5 who offers three categories of problem situations. The first being 'tame' problems, i.e. ones that executives recognise and for which they have an existing set of responses that they know to be effective. A tame problem might involve paramedics responding to an emergency heart attack call. Although such an incident would be a crisis for those involved directly, it would be a tame problem for the paramedics, as they would have practised and carried out similar tasks on a number of occasions. The second category is that of 'crisis' situation - a terrorist attack at Glasgow airport or a heart attack being good examples. The important thing about a crisis from the perspective of the authorising environment is that it suddenly and dramatically makes the elements of that authorising environment more or less likely to say 'yes' or 'no' to a particular public value proposition. In some circumstances a crisis will enable progress to be made with a public value proposition to which the authorising environment was not very motivated before the crisis. The third problem category is 'wicked'. In these situations it may be difficult for people to agree on a definition of the problem, but even if a definition were to be found, it would be impossible to find agreement on the solution. One reason that the solution is so elusive from a public service manager's perspective, is that it is not possible to go anywhere and find a solution that can be bolted on in a way that would solve a wicked problem. Grint suggests that the most appropriate approach to tame problems is to manage them. It is best to command crisis situations and making progress on 5 Grint, K (2005) Problems, problems, problems: The social construction of leadership, Human Relations, Vol. 58(11),

7 wicked problems requires the exercise of leadership. This is a topic about which I will say more in another article 6. Returning to the authorising environment within Moore s strategic triangle, we have looked up and out from the perspective of the BCU commander. If we look down and outwards, we see the BCU commander has middle managers, supervisors, and service deliverers that look up to him as an important element in their authorising environment. But the ultimate purpose of the Police is to provide a service to the public. So there are people receiving a service and there are taxpayers who occasionally become more important as voters. In reality, these are not always separate people; they may indeed be one individual, so it may be helpful to consider how the views of this individual may change according to whether they are receiving a service, an obligation, or being required to act as an authoriser or as a provider of resources. To do this we need to create a somewhat artificial character set, assigning three one-dimensional roles, with no crossover, to: a taxpayer, a victim and a criminal. A criminal might wish for a poorly funded, not very professional police force not effective in catching criminals. A victim would require a police service that is well funded, professional and very successful, dealing with victims and catching criminals. A taxpayer might want a police force that uses very little money, because the less money public service manager s use, the less tax he or she will have to pay. In this situation, the taxpayer and criminal are in alignment against the victim, clearly not a circumstance that could be authorised as a public value proposition, but it does highlight the difficulties in trying to make sense of what goes on in the authorising environment as a public sector manager. 6 See article by Irwin Turbitt - A Good Crisis

8 There is one other way in which the taxpayer and the criminal are joined and by which they are separated from the victim. The victim is individually in receipt of a service from the state, in this example from the police while the taxpayer and criminal are in receipt of an obligation. Moore highlights this as a fundamental difference between the private and the public sector when he says public managers are not limited, as they are in the private sector, to the provision of goods and services; often public managers are in the business of imposing obligations not providing services." In this example the obligation to refrain from committing crime or the obligation to pay taxes. So while Collins is correct to say that both the private and the public sectors use money to create value, the route through which they acquire that funding is fundamentally different. If a private company obliged individuals to make 'donations' to their enterprise, we would call it extortion or organised crime, whereas in the public sector, we call it taxation. But in addition to obliging citizens to pay taxes the state can also oblige citizens to engage in other acts they would not freely choose to do. Think, for example, about how a country chooses to raise an Army. In the UK we use money to encourage citizens to volunteer to join the Army while in other countries the state uses its authority to oblige citizens to spend some time in the Army. Both these are entirely legitimate but fundamentally differing approaches to ensuring the security of the state and making arrangements to protect its citizens. This delivery of obligations also occurs at the individual street level. Take the example of a motorist being stopped and fined for speeding. He or she is not receiving a service from the constable but an obligation. Moore's favourite definition of policing is an organisation involved in the retail delivery of 'obligations'. A police department will deliver a citizen's obligations right to their front door or inside their house, without being invited. Notice that often the process of delivering an obligation to one citizen or a group of citizens is the means by which a police department creates public value for another individual or group of citizens.

9 But no matter how these resources are assembled, the role of the public sector manager is to use them through a series of processes, procedures or programmes to deliver (product, service or obligation) outputs to create public value. This is done through the third element of Moore s strategic triangle the operating capacity - i.e. the means by which public managers transform inputs into public value creating outputs. The role of the public manager must go beyond having an idea that is publicly valuable, politically and legally possible and administratively and operationally possible. Public value is only delivered to the citizen when the idea has been authorised and delivered and it is through the operating capacity that the public manager organises resources to deliver public value propositions. The operating capacity is therefore essential to the actual creation of public value. The graphic below shows visually the value chain within the operating capacity and will be the focus of this section of this article. Now clearly, depending on the public value proposition that has been authorised, there may be a large amount of work to be done in actually building an operating capacity but I am assuming that there is an operating capacity sufficient for the delivery of the authorised public value proposition and that this graphic represents the value chain within that operating capacity.

10 The Value Chain within the Operating Capacity! Money based i.e. anything that can be purchased buildings equipment peoples time INPUTS Authority based the unique resource only available to state authorities to obligate citizens to do what they would not volunteer to do Programmes Processes Procedures Partners & Co-Producers OUTPUTS The boundary of your own organisation C L I E N T S The boundary of your Operating Capacity P O L I C Y O U T C O M E S Like all value chains at one level it is very simple, it is the conversion of inputs through a series of programmes, processes or procedures into outputs, that when delivered, either to, through or around clients, will result in the achievement of a policy outcome. The policy outcome being a proxy for the authorised public value proposition. I want to start this exploration of the value chain within the operating capacity by focusing on the two distinctly different inputs, money and authority. The latter is uniquely available (legally) to the public manager. I explained above how Jim Collins distinguished between private sector and, what he calls, social sector organisations. In the private sector the role of the private sector manager is to use money based inputs to produce goods or services to deliver money based outcomes. Success comes from producing more money on the output side than was received on the input side, commonly known as profit. In the social sector Collins recognises that profit is not measurable in cash or money terms and suggests that the difference between private sector organisations and social sector organisations is that while both use money to generate value, judgements about success in the social sector should be related to the mission of the organisation. So, for example, if the mission of the organisation is education the outcome should be measured as educational outcomes. The graphic above shows these more generically as policy outcomes but there is another, perhaps much more important, difference on the input side that Collins has not recognised. The private sector manager

11 acquires their money based inputs from investors who see potential in the customer value proposition and the management team that is offering to deliver it and so voluntarily give money to the enterprise in the hope, or expectation, that they will receive a surplus of money in return i.e. a financial return on their investment. In the public sector the source of the public manager s money is the tax payer an investor who has not been invited to invest in the enterprise but has been obligated as a tax payer to provide financial resource to a Government (local, regional or national) that will then make decisions about how to disperse that money in a budget across various elements of the public sector. So the main resource for the public manager is the authority that the state, legitimated through the political and electoral process, uses to obligate citizens to contribute money to the public sector. Thus Moore provides public managers with three key questions to be answered as they navigate their way across the public value landscape: Is your public value proposition purpose publicly valuable? Is your public value proposition politically and legally possible? Is your public value proposition administratively and operational possible? and three key sets of activities: The activity of continually judging the value of your public value proposition; The ongoing activity of managing upward, towards politics, to get or maintain legitimacy and support for your public value proposition; The ongoing activity of managing downward towards improving your operating capacity for achieving your authorised public value proposition.

12 The strategic triangle: Mark Moore! Sources of Support & legitimacy Ability to say YES or NO or to influence those that can say YES or NO Operationally & Administratively feasible Authorising Environment Legitimate & Politically sustainable Public Value Proposition Mission purpose Question Zero i.e. what is it that we are trying to accomplish exactly Three%ques)ons:% is$it$administra+vely$and$ opera+onally$possible?$ is$it$poli+cally$and$legally$ possible?$ is$the$purpose$publicly$valuable?$ Organised & operated The manner in which we organise our resources and use them to produce desired outputs/outcomes Operating Capacity Substantively valuable Three%ac)vi)es:% managing$downward$towards$improving$the$opera+ng$capacity$for$achieving$ the$desired$purpose$ managing$upward,$towards$poli+cs,$to$get$or$maintain$legi+macy$and$support$ for$that$purpose$ 4! judging$the$value$of$your$imagined$purpose$ Aspirant DPH leadership programme! So to return to the three questions tat I began this article with: What distinguishes public sector management from private sector management? How can public managers navigate their way across a complex and contested landscape? Do public managers deliver services or obligations to citizens? The primary resource of the Public Sector manager is the collective authority of the state they are employed by, rather than the private money investors have risked personally in order to get a personal financial return from a business Mark Moore s strategic triangle is a useful compass that public sector managers can use to continually take bearings to locate themselves (staff, partners & co-producers) in the politically contested landscape that is their professional world. In addition to delivering goods and services to citizens often the work of the public manager is the delivery of obligations to citizens in order to deliver value to the public.