5 digital lessons for the public sector from the private sector

The public sector has a lot to learn from the private sector...

There are many areas where commercial pressures have instilled practices in private sector companies that the public sector can take advantage of. This article highlights five that can have a profound impact

The public sector has always faced distinctive challenges, and never more so than today. Increasing budget pressures, staffing challenges, legacy processes and operating models from a bygone era are facing off against escalating demand for world class digital access to everything, an equal need to support the needs of every member of society, and a critical role in society as an employer. And that’s just scratching the surface.

As the challenges increase, public sector organisations are becoming more and more like private sector organisations, driven to maximise operational efficiencies while offering long-standing services in new ways. In place of legacy revenue, they carry legacy mandate and expectation.

We’ve worked across both public and private sectors for many years and while we’ve seen the convergence of behaviours accelerating in the last few years, there are still many areas where the public sector, especially government, can benefit from private sector practices.

1 . Build strategy on purpose and vision

The best modern companies can trace all of their activities back to achieving their vision and ensuring they are true to their purpose. Effective strategy is impossible without these essential core components (read more about that here).

It’s easy to underestimate the importance of purpose and vision in the public sector: it has long been argued that most public sector organisations have their purpose defined for them, and to a degree that’s true. It’s also true that when you ask many of the people who work in each organisation they describe its purpose differently. That ambiguity is unhealthy and it only exaggerates as it reaches down into day-to-day activities.

In truth, how purpose is articulated can have a profound effect on the behaviour of its leadership team and of every employee. Likewise vision: your vision sets a tangible direction for the next few years, and if it’s clear and well understood the organisation can get behind it and see how their work translates into a bigger picture.

Clarity is a key driver of success, and that clarity should run through every aspect of the organisation’s strategy. We’ve developed a framework that extends from purpose all the way to key short-term tasks and the measures that confirm that they have been achieved — ensuring that everything the organisation does is both derived from purpose and vision and adds up to achieving them.

Modern companies use this approach to decide where to invest their time, money and energy, and equally to decide what not to do. This provides a foundation for service innovation allied to operational efficiency.

Sound familiar?

2 . Maximise investment in the futurestate

Many commercial organisations operate services that they don’t fully understand any more. Often riddled with technical and process debt and equal amounts of uncertainty, they run by the grace of the teams that know how to manage the endless work-arounds required to make them work.

We always recommend that organisations trying to migrate from a legacy service to a futurestate focus on providing alternatives not replacements. In the public sector, while there is often legislation that determines what service needs to be provided, there is rarely anything that defines how. As such, focusing on what people will use in the future instead of what they use today is equally relevant.

There is something of an obsession around understanding current state in the public sector that many in the commercial sector have left behind. Mapping what you have is expensive, time consuming and, we’d argue, it can be dangerous if done in the wrong way. Conversely, not understanding the current state can lead to naivety about the complexities of service provision.

The answer lies in fidelity and sequence. Unsurprisingly, most people tackle the current state first — to provide a platform for future service design, and they frequently invest in mapping current state to a high degree of fidelity.

Instead, start with the futurestate. Develop a view of what an ideal future service might be like, then, if it’s necessary, review current state to understand critical areas of function or process that need to be carried forward. In many cases, constraints like statutory regulations, geographic constraints, physical factors and service user characteristics set clear enough objectives for the futurestate experience that a fresh perspective can be applied to the problem without the millstone of how things used to work.

Digging into too much detail of the current state at the outset will identify a raft of complexity that may never need to exist in a new (and different) futurestate service, but will be afforded instant importance once identified.

Where circumstances demand some current state work (to benchmark costs for example) the key is to get the fidelity right: map only what is needed to build the appropriate level of understanding and nothing more. Keep the format as visual as possible and it will radically improve how easy it is to get input from a broad spectrum of staff and users.

Incorporating any essential existing service components into a new generation service is best addressed during roadmapping and delivery processes when digging into detail can be directly justified (and contained) — especially where there is infrastructure, hardware or large system change involved.

Good modern companies have learned their lesson here. Focus too much on today and you’ll burn money and time, drive up complexity and make the chance of achieving really substantive future change harder.

3 . Invest in building team capabilities

If one thing has held established organisations back from adapting to the digital age successfully more than any other, it’s gaps in team capability — at both operational and leadership level. Kodak, Nokia, RIM et al didn’t fall off a cliff because they couldn’t see things changing around them; it’s because their teams didn’t have the capabilities to take advantage of them.

In the commercial sector, ‘hybrids’ (sometimes called ‘purple squirrels’) — people capable of working across different types of job role — are a growing breed as digital services manage more customer interactions and demand more fluidity in the workforce. It makes absolute sense to mirror that in the public sector.

However, there’s a flipside. Some roles demand deep expertise — often expertise that has not been a normal part of historic operations. ‘Digital’ skills are the obvious one here: bringing new digital services to life successfully requires expertise and experience, as does managing ongoing product development, to name but two. These are skills that need to be brought in to the organisation alongside building broader appreciation of, and skills in, these areas of specialism. The temptation to try and ‘train’ out of a specialist resource constraint can be high, and it can also be disastrous.

The same applies at a leadership level. Many public sector leaders have less experience of rapid adaptation than their commercial peers — because they’ve never faced commercial competition. Few organisations have invested in senior team capability building to the level that leading private sector organisations have, and that can lead to a lack of confidence in digital-first thinking and decision making. Leaders need support too: don’t expect incisive, well-informed thinking at the top without an investment in building the skills to do it.

Digital up-skilling in the public sector is as critical as in commercial organisations, and, as there, that means a mixture of specialist support, experienced coaches and mentors, good hires and a commitment to build and retain skilled people. While the ‘digital won’t catch on’ Kodak moment may never happen, there are real pressures that could lead to disruption and many more that could lead to the need for sudden, painful change.

Building capability to compare with the best of the private sector has never been more important.

4. Take control of metrics

You can’t measure the new with the old. The best digital-age companies have learned to define a small set of critical metrics that they obsess about every day — and they are rarely the type of measures that a traditional company would use. In the commercial sector we look for foundational metrics and operational metrics.

Foundational metrics are measures of a handful of key processes or performance statistics that indicate the overall health of the organisation. Think cholesterol levels as a foundational metric of cardiac health: it’s not a specific end measurement, but it’s a critical indicator. These should be used as core management tools, helping to inform and prioritise day-to-day operational decisions and activities.

Operational metrics are more useful for external communication of performance.

Some systems here are well-established, and can be useful if used properly. NPS is a recognised metric — albeit with plenty of industry misgivings. Measuring NPS for a council as a whole, for example, might give a reasonable indication of overall service satisfaction levels, whereas applying it to one service area only could provide a heavily skewed view of performance — whether negative or positive.

The key with operational metrics is to own them. Communicate, wherever possible, the metrics that you feel are the best indicators of your performance given both the nature of the organisation and its state. Most public sector organisations are in some form of digital transformation process so their metrics might represent progress towards a transformation goal as much as absolute current performance.

Good commercial organisations own their performance agenda: public sector organisations need to do the same to inform their stakeholders and service users — and educate their critics.

5. Embed a proper innovation process

Innovation is a process; a deliberate, systematic process that helps progressive companies to bring new products and services to life in a predictable way. This mindset is essential to driving continuous improvement in the public sector: better value for money comes increasingly from doing things in new ways, not just driving down the cost of operating the old ones.

A clear, well-articulated process that is well understood by the entire organisation is essential if you want to engage the minds of those people close to problems and opportunities in defining the future.

Where digital innovation experience is low, a robust innovation process can help to build confidence in developing new services and initiatives by providing tools and techniques that anyone can follow. For public sector organisations it also helps to introduce approaches from the private sector and build team capabilities. Exposure to a modern innovation process can be a real energiser for teams: we’ve seen many a team go from reluctant to enthusiastic participants in innovation in weeks with the right process in place.

The model we’ve found most effective is to install a core process that we’ve built on broad experience as this gets everyone up and running quickly. We then adapt that process (sometimes a little, sometimes a lot) to suit the individual needs and characteristics of the organisation, its team and its aims. No two organisations are the same, and each should develop an innovation process that suits it: you should never try to be someone else.

This is particularly pertinent in the public sector where innovation is an increasingly critical activity but the need to explore broader commercial horizons may not be. Keeping innovation relevant, sustainable and enjoyable is key to the future, and an appropriate process is a critical route to achieving that.

I’ve picked just five of many, and some organisations are further along in their adoption of them than others of course. It’s not unreasonable to expect the public sector to lag the private sector in pace and capability at times, but the gap is closing — partly through a renewed ambition and partly through necessity.

Whatever the reason, by adopting some of the practices employed by those under most commercial pressure, we should see a progressive improvement in the way that public money is spent and the level of services we receive in return.

Written by Rae Morgan