Thursday, August 30, 2012

Procurement and (/or) innovation in public services

The work programme needs local commissioning for innovation

Academic study finds back-to-work scheme's reliance on financial incentives undermines service innovation

Su Maddock
Guardian Professional, Wednesday 29 August 2012 08.00 BST

When the £5bn work programme, the government's flagship back-to-work scheme, was launched, it gained all-party support for a framework that was intended to deliver personal services to jobseekers and significant savings for the government.
However, initial enthusiasm for the programme has waned. The number of long-term claimants has remained static, smaller specialist providers are suffering cash-flow problems and delivering service innovation is proving much more difficult than either companies or policy makers had anticipated.
The Department for Work and Pensions (DWP) devised a procurement model for the work programme that would deliver service innovation through payment-by-results, tapered incentives and the transfer of financial risk from the taxpayer to the companies. A two-tier procurement model of prime and subcontractors was designed to reduce the number of prime contractors and give subcontractors the freedom to deliver service innovation. The model was neat but is it working in practice?
This was the question addressed by Manchester Business School's institute for innovation research, which concluded in a study that the new system delivers financial incentives but appears to be inadequate as a framework for service innovation.
DWP commissioners awarded contracts to 18 companies as prime contractors on the basis of financial assets – service innovation capabilities were secondary. Underbidding and exaggerating claims for initial contract awards was commonplace. Smaller specialist suppliers were unable to afford payment-by-results and suffered cash-flow problems.
The work programme's emphasis on prime contractors and financial incentives was shown to be undermining the creative capacity of all contractors to engage with local specialists and business.
The study finds that the work programme is attempting to deliver multiple policy objectives: rationalising government procurement; delivering personalised services to long-term claimants to reduce the number of claimants; and making savings. These policy aims cause a tension between the efficiencies delivered through a top-down supply chain model and the interagency relationships and specialist organisations that have the capacity and motivation to deliver service innovation.
Evidence shows that centralisation can reduce the cost of transactions, but it can also undermine the very local engagement that underpins service innovation. The innovation models for efficiency are not necessarily a good fit for service innovation, which is underpinned by personal relationships and co-design, rather than coercion.
Merely transferring risk and ownership does not necessarily produce results if those results are dependent on trusting and long-standing relationships that cannot be speeded up by financial incentives.
While the media focus is on the incompetence of companies and the size of their contracts, it is the government's commissioning framework that is responsible for the work programme innovation strategy and procurement process. The public procurement of service is not a technical process but a framework for innovation service delivery, which requires specific systemic support and alignment with government and specific capabilities and providers where there is a balance between social and financial objectives expressed best in long-term strategies not short-term gains.
At present, the DWP prioritises financial assets over service outcomes and incentivises the larger companies at the expense of specialist suppliers. A social market of innovative suppliers may have driven innovation into the public system, but outsourcing to large companies or any company on the basis of financial assets alone is a poor lever for personalised service innovation.
A key message from the study is that the framework and gearing of procurement systems influence the capacity of suppliers to deliver innovative services and that financial incentives alone are not enough to support the connections and relationships that sustain social change.
Locally-based commissioning could be a better procurement vehicle when underpinned by local connections between business, personalised services, training and education and where interagency working and social enterprise consortiums are strongest.
The work programme could be transformed, in spite of austerity, if there were a better strategic alignment between the government's welfare reform strategy and locally-based commissioning, which could stimulate innovative services for all claimants.
Dr Su Maddock is an honorary fellow of the Manchester Business School's institute for innovation research and visiting professor, University of the West of England

Comments

jollylips
29 August 2012 10:09AM

I don't think private companies should be involved with the work programme at all because their priority is solely money and they're just not interested in helping the individual. The service they provide isn't tailored to individual needs as claimed by government, which is so important and it would appear that most who are placed on the work programme are treated appallingly, with many being unfairly sanctioned for no valid reason.
Why not just fund social enterprises and charities, most of which have a genuine interest in helping people, who can also provide specialized support for those with complex needs and who treat claimants with respect. These organisations could concentrate on the long term unemployed, those with health problems who want to return to work, ex offenders, basically anyone who faces various barriers to work.
Invest more money in apprenticeships and good quality training for youngsters and that doesn't mean just sending them all to supermarkets to stack shelves, though I'm sure that may benefit those who wish to do that. As for those who lose their job, they do all they can to find employment anyway. Perhaps instead of forcing them on to the work programme after 6 months or what ever it is, invest more money in to job centres, where there's no financial interest and offer a quality service which will benefit them. It seems to me, putting people with a good work record who desperately want to work, on the work programme, does them more harm than good.
Of course, it would help if there were more jobs available, and what do I know anyway, I'm just some peasant at the bottom of the rung who the government are shitting on from a great height.
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boxerdog1041
29 August 2012 10:17AM

It doesn't need localism.....it needs scrapping.....so it goes
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kaffy
29 August 2012 1:12PM

Response to jollylips, 29 August 2012 10:09AM

What a daft statement: most private companies are totally dependent on their customers for survival. Heavy evaluation and monitoring of most (local, especially) government contracts show whether they've gained that satisfaction or not. And don't reply with a "look at ATOS or A4e" - they're the sleazy minority. There are loads of great private firms doing good work all over the UK. And there are loads of slovenly, second-rate, amateur social enterprises who are screwing up people's lives (including their workers') daily.
This type of 'private enterprise is inherently evil, and social stuff is always good' thinking is sloppy and destructive: there's room for every business model. Your GP surgery is a private enterprise, as are most kids' nurseries. They're all bastards, obviously.
- kaffy

29 August 2012 1:15PM

PS: I do agree the Work Programme is crap though! We should do much, much more for self-employment support particularly, to get folk working for themselves - as social enterprises or as 'private' enterprises: it's the only place good, honest jobs will come from, as long as there's professional support, encouragement and confidence-building.
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jollylips
29 August 2012 2:07PM

Well I did say,"what do I know anyway". All I know is it's not working, despite claims that it is and it's most defiantly is crap!
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ArbeitMachtFrei
29 August 2012 2:47PM

@jollylips
Oh you hit so many nails squarely on the head!
I know it's not working too. Being a victim of the so-called "personalised support" which seems to amount to:
a. Being harangued by advisors who don't know how to advise and are just desperate to meet their targets and KPI's
b. Threatening "sanction doubts" at every available opportunity - and even carrying out such threats on a seemingly random basis (or maybe to meet targets?)
c. Creaming and parking.
I agree wholeheartedlywith your sentiment:

It seems to me, putting people with a good work record who desperately want to work, on the work programme, does them more harm than good.
. Actually I'd go further and say it does most people more harm than good.
The whole thing is a complete shambles and needs to be re-thought from the ground up.
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jollylips
29 August 2012 3:12PM

It's 'definitely' crap even!
ArbeitMachtFrei.
I'm not speaking from experience, as I've not yet had the 'benefit' of their 'help and support'. I'm just going by what I've read and heard by many who are on it and I've yet to hear of anybody who's had a positive experience of being on the work programme, though I'm sure there are a few out there who've benefited from it.
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SJS77
30 August 2012 11:47AM

Does reliance on financial incentives undermine service innovation? Yes. Have a look at this 11 minute animation from Dan Pink.
www.youtube.com/watch?v=u6XAPnuFjJc

# posted by Ian Miles @ 6:15 AM

Tuesday, August 21, 2012

A Study of Manufacturing SME's use of external expertise (Finland)

ANMARI VILJAMAA 2007Accessing External Expertise in Small Manufacturing Firms

"This study aims to describe and understand how small industrial firms access external
expertise, and how service providers are selected. The question is approached by
examining existing literature on organisational purchasing, services marketing and small
business management on one hand, and by an empirical analysis of qualitative data on
the other. ... The empirical data used in the study were collected in personal interviews with
managing directors of industrial firms employing more than four but fewer than 100.
The 51 firms interviewed are located in two regions in Finland. Altogether 39 detailed
descriptions of accessing external expertise were extracted from the interview content.
These cases make up the main data set of the study. Additionally, 45 cases with less
detailed and comprehensive descriptions were extracted and used as a check on the
results of the analysis of the detailed cases....
How do small manufacturing firms access external expertise? The process of accessing
external expert services is varied, not uniform. The patterns of accessing uncovered in
the analysis are informal, routine, reactive, opportunistic, and calculated accessing. The
present study demonstrates that the process of accessing external expertise in small
firms cannot be described in terms of a uniform stage model without reducing the utility
of the description seriously. The organisational purchasing behaviour sequence
commonly used in previous research is reasonably applicable to small firms’ accessing
mainly in situations where the expertise task is definable to a high degree; the buy task
is novel or at least not frequent; and no strong relationship exists between a potential
provider and the client firm.
Further, a need recognition stage is not necessarily the starting point in accessing
external expert services. Although a moment of need recognition as a theoretical
construct can always be assumed to occur, positing a need recognition within the client
firm as the initial step in purchasing sequences is misleading; it draws attention from the
fact that the entry into service use is often a matter of negotiation, with the service
provider as an active partner. The study demonstrates that, at least in expert services, the
purchasing process is not necessarily a strictly internal process, even in its initiation.
The process of accessing a service, whether by purchase or other means, can begin with
a recognised need, i.e. an internal driver, but also with an external driver – a push by a
third party that drives the client to the service, or a pull by the service provider that
draws the client in...."

# posted by Ian Miles @ 4:40 AM

Wednesday, August 15, 2012

Resource on Public Services: European Services Strategy Unit

European Public Services Briefing 3: A Single European Market in Healthcare: The impact of European Union policy on national healthcare provision, Andy Morton.: Examines the recent Cross Border Healthcare Directive, the role of the European Court of Justice and the ‘Europeanisation of Healthcare’. The introduction of EU law into healthcare presents many problems. The most pressing being that EU institutions have sought to apply the ‘economic’ rights enshrined in the EU Treaty’s free movement law to national healthcare systems, like Britain’s NHS, that are essentially ‘social’ in purpose and aims. Expanding the ‘choices’ of users and providers of cross-border European healthcare is a further indulgence of the choice agenda that we’ve seen in Britain. This will only serve to further undermine social healthcare provision in the UK and the rest of Europe.
2011-03-25 12:54:26
European Public Services Briefing 2: The Impact of European Union Competition Policy on Public Transport Policy and Provision in the UK, Andy Morton: In the last thirty years public transport services throughout Europe have been subjected to various sorts of privatisation. Reforms introducing competition and market rules into public transport have challenged the public service ethos that these services operate under. The role of successive UK governments in these reforms is well understood and documented. However the role of EU law, policy and institutions in this area is not. The EU, and in particular the European Commission, have had a considerable impact on public policy choices concerning public transport in EU member states since the early 1990s. Those in the UK who seek to redirect public transport policy away from privatisation and toward truly ‘public’ alternatives are to be advanced need to be aware that EU policy will also need to be challenged. At the very least it is accepted that a full understanding of the EU’s role is necessary and dealing with these questions.
2011-03-02 10:12:07
European Public Services Briefing 1: European Union Competition policy and the Liberalisation of Postal Services, Andy Morton: The European dimension to postal sector liberalisation is often overlooked as successive UK governments have pursued the liberalisation route for its universal postal service: the Royal Mail. Postal sectors in Europe, traditionally dominated by public sector monopolies, have been progressively opened up to increased competition courtesy of European Union (EU) directives, introduced since the mid-1990s as part of EU’s competition agenda and Single Market Programme. This long process of phased liberalisation has come to fruition recently with the last remnants of universal service providers’ protected services being abolished. On January 1st 2011 the Directive introducing ‘full’ liberalisation into European postal sectors was introduced the EU.
2011-03-02 10:02:54
Glossary of Terms in public management: A Glossary of Terms covering many of the current concepts, phrases and jargon used in the design, planning and provision of public services.
2009-10-28 13:36:03
Democratic Governance and the Future of City Regions: The five-part Discussion Paper begins with a new mapping of public sector bodies and organisations based on a privatisation of governance typology. The next chapter discusses New Labour’s modernisation and the neoliberal agenda. Chapter three examines the effect of different elements of the government’s public sector transformation strategy on democratic governance such as the changing the role of the state; personalisation and choice; commissioning and contracting; regional and local economic and regeneration strategies; the growth of services markets; new models of governance and public management and empowerment and participation. The Paper explains the City Region concept, the future of the state and urban governance and democratic accountability and the governance of City Regions. (48 pages)
2008-12-03 09:42:32
Public Private Partnerships: Confidential ‘Research’, A Critique of the Audit Commission’s study of Strategic Service-delivery Partnerships by Dexter Whitfield: A highly critical assessment of the Audit Commission’s recent report, For Better, For Worse, on Strategic Service-delivery Partnerships. It finds ten fundamental flaws ranging from inadequate methodology, no evidence base, employment issues ignored, no audit of private sector investment and no comparison of an alternative in-house approach. The Commission’s claim that the information on which its findings are based is “commercially confidential” makes a mockery of transparency, performance management, democratic accountability and community engagement. The second section of the report uses quotes from the Audit Commission report to highlight the shortcomings in more detail.
2008-01-30 09:49:58
Shared Services Strategic Framework: A strategic approach to developing shared services projects based on a progressive approach, principles for shared services, a public sector shared services strategy, democratic governance and accountability, an evidence-based methodology, quality jobs and comprehensive appraisal criteria and impact assessment. (May 2007)
2007-05-27 15:22:18
Employment Risk Matrix: A revised version of the Risk Matrix assesses the risks of secondment, TUPE and TUPE Plus transfers when assessing employment impacts in outsourcing and privatisation options (March 2010).
2006-11-28 17:20:10
The Case for a Positive Public Duty on Age Equality: This report examines the operation and impact of existing public duties in Scotland, Wales and Northern Ireland and the UK Duty on Race, specifically in light of the desirability or otherwise of a Public Duty for Age Equality either as part of a Single Equalities Act or a separate piece of legislation. It also seeks to develop an understanding of the lessons for drawing up such a Duty in light of the experience of existing Duties.
2006-04-09 17:52:01
Modernising Social Services: Evidence from the Frontline: Report into the implementation of modernisation of social services, with evidence drawn from a major survey of social workers in a large case study authority.
2004-10-14 11:15:04
The Case for the 4th Option for Council Housing: The Case for the 4th Option for Council Housing and A Critique of Arms Length Management Organisations. A report from the Centre for Public Services
2004-05-05 13:50:14
The Investigator's Handbook: The Investigator's Handbook is a comprehensive 140 page guide to investigating companies, organisations, government and individuals. Includes investigation by sectors health and social care, education, housing, regeneration, public transport, utilities and international organisations plus sections on rights to information and searching the web. An invaluable guide for investigating: Company performance; Developers and contractors; Government organisations and quangos; PFI and partnership projects; Investigate performance of public bodies.
2004-03-22 21:24:50
Mortgaging Our Children's Future: The Privatisation, Marketisation and Commercialisation of Secondary Education
2004-03-22 12:54:44

# posted by Ian Miles @ 4:07 AM

INNOVA - Huge resource on innovation and foresight - much on services.

Here I highlight the service-focused documents, many of the overviews also deal with service sectors (little servicisation); other links from "Service Innovation" on the home page.

Reports

Synthesis Report Sectoral Innovation Watch
Synthesis Report
Sectoral Innovation Performance in nine sectors (Task 1)
Sectoral Innovation Performance Aeronautics and Space
Sectoral Innovation Performance Automotive
Sectoral Innovation Performance Biotechnology
Sectoral Innovation Performance Construction
Sectoral Innovatioon Performance Electrical & Optical Equipment
Sectoral Innovation Performance Food & Drinks

Sectoral Innovation Performance Knowledge Intensive Services

Sectoral Innovation Performance Textiles & Clothing

Sectoral Innovation Performance Wholesale & Retail Trade