When is a bribe not a bribe?

I was intrigued by a recent report in the Guardian "Whitehall supplier offers year's worth of free contracts while times are tough" (see: http://bit.ly/eY18CH).

On the face of it this seems laudable; ostensibly, as part of  their 'corporate social responsibility' agenda, KPMG are offering very low cost or no cost consultancy to government. The rationale, as stated by their head of public sector, Alan Downey is: "Government is turning to firms such as us to help them carry out its major reforms but without a willingness to pay. We can't afford to do it indefinitely, but we can in the short-term."

All well and good you might think. But I was interested in what was said in the next breath: "We're hoping to position ourselves well when the government decides it is willing to pay."

So, as in other walks of life - there's no such thing as a free lunch. No big surprise there - but it did get me thinking and raise a number of interesting questions: how many firms can afford to do this? What does that mean for small and medium sized enterprises - firms that this government has said it wants to see get a greater proportion of public sector work? And perhaps most pertinent of all, two related questions: should the government be accepting 'free' consultancy? And is there an expectation created that such free work will be rewarded by future (paid-for) contracts?

Perhaps I'm being too cynical and unkind when I answer the question: when is a bribe not a bribe? With - when its dressed up as 'corporate social responsibility'. But such an approach - albeit forced upon people by the austerity regime - does seem to me to be potentially anti-competitive.

What's your view?

Wicked procurement problems . . . ?

“Scandal of £6Bn squandered by the MOD" (The Times, lead story 14^th December 2010). Even allowing for the Times ability to exaggerate and take the most conservative view of any numbers (after all they are stable-mates with the Sun these days), the numbers look pretty eye-watering. In fact, more noughts on a number than most of us – including me – can get our heads round.

So – what on earth went wrong?

I don’t accept simplistic explanations that ‘procurement processes need to be tightened up’. Or that individuals or teams are to blame; most public servants I come across work extremely hard to try and do a quality job.

The scale of the loss suggests to me that something more systemic is going on. And I found myself returning to a theme I have explored elsewhere – so-called ‘wicked’ problems.

These are problems that are complex, with multiple causes; problems that are emergent. That is, they are created by the conditions that give rise to them and constantly change as those conditions change.

It seems to me that defence in the 21^st Century is all about wicked problems. Asymmetric threats from highly organised and sophisticated non-state players (like Al Qaida) sitting alongside more ‘traditional’ threats from states such as Iran or Russia.

So how do we tackle such threats? Well, like all wicked problems I suspect they are not amenable to a singular technical solution – some magic bullet like Trident or a new aircraft carrier (with or without planes to fly from them!).

So the threats the UK and elsewhere face appear to me to be wicked problems. However, I also suspect that recent solutions have themselves turned out to be wicked problems. This appears in part be self-inflicted; that is the nature of the solutions that are proposed are conventional and tend to be around bigger better, faster, more lethal TECHNICAL capabilities. Yet can those deal with wicked problems? Take the recent air craft carrier debacle covered in the Times. The threat was perceived to be state-sponsored conventional forces . . . so the solution was supposed to be lethal air strike capability deployable anywhere in the world – which requires planes that fly from concrete or floating platforms. Ironic then that the greatest threat at present appears to be non-state-sponsored unconventional so-called asymmetric forces. And doubly ironic that our lethal air strike capability may not include any aircraft . . .

Be that as it may – the proposed solution itself becomes a wicked problem; how do you procure capability that will take many years to become operational, by which time the world will have changed? And how do you make such procurement successful, in an organisation hampered by slow, cumbersome procurement that is almost certain to mean delivery occurs beyond the time horizon for which you have meaningful scenarios.

I’m no defence specialist, so my probably naive view is that part of the answer must be as for my related post; multiple approaches that are themselves meant to be emergent and able to adapt. Not a single, magic bullet capability.

But if the BIG capability is required, the procurement itself needs be handled differently – as a wicked problem. Working in collaboration with multiple partners in a way that allows the capability to evolve and adapt to a changing world. And I also suspect that a highly traditional command-and-control structure such as that in the MOD is probably incapable of dealing with such approaches. Don’t misunderstand me, I fully understand why command and control is needed in frontline troops when lives depend on the speed with which decisions are made and orders carried out. But put that into a (civilian) procurement context . . . how can the creativity required to deal with complex, multi-cause wicked problems be engendered from individuals who are in the thrall of leaders who have successfully led their forces into life-threatening situations? My contention is that it probably can’t.

So, MOD procurement appears itself to be a wicked problem. Ideally, lets not fall into the trap of seeking a single technical handed down ‘solution’ as a cure-all. But if we do . . . can we at least treat the establishment of that solution as a wicked problem?

Lastly, spare a thought for Bernard Grey the man charged with sorting all of this out. A non-MOD man - in fact a non civil servant; what advice would you have for him?
- how should he approach the challenge of dealing with such a large and byzantine organisation?
- does the system itself make the problem(s) worse? And how can the system be changed?
- are these 'wicked' problems - and if so how can large organisations respond to the uncertainty involved?

Creativity and Imagination - the keys to recovery?

Despite regular claims of a few ‘green shoots’ of recovery, we have a long way to go to get over the worst recession since 1929-31 with one of the largest peace-time budget deficits this country has ever known. The scale of challenge is staggering. Whilst economists and politicians argue about how far and how fast, there is clear consensus on the need to reduce that deficit by cutting public expenditure. Failure to act may well see the UK in a similar position to Greece and Ireland and events there may well be repeated in other European countries, but were there warning signs that might have saved us from our current mess?

How did we get here – was it a failure of imagination?

The financial crisis and resulting recession have many complex causes; surprisingly perhaps, one of those causes appears to have been a failure of imagination – as this exchange in the House of Commons on 18^th November 2010 demonstrates:

Mr Jenkin: “. . . did you ever hear of an organisation called ARAG?”

Mr Cameron: “No.”

Mr Jenkin: “Well, it was an organisation based at Shrivenham Defence Academy. ARAG forecast that there would be a banking collapse and that it would be the largest risk to the security of the nation. Unfortunately, the then Prime Minister, Gordon Brown, excluded it from his national security strategy-he very deliberately did so-and it [ARAG] was abolished to save £1 million. Do you agree that there is a lack of such strategic thinking capacity in government?“

Mr Cameron: “I think that the answer to that is probably yes . . . I accept the general premise that there is not enough strategic thinking in government as a whole.”

(Source: Hansard^[1])

Astonishingly, Gordon Brown had a scenario that suggested that a banking collapse was possible. Leaving aside whether this was a prediction, a forecast or merely a possibility, the fact that such a strategic threat was ignored – worse, buried – defies belief. How little we learn from history; George W Bush also ignored a security scenario for being implausible that was painfully close to the reality of the 9/11 attacks^[2]. 

The way out of the recession: the roles of creativity and imagination

In both of the last two recoveries, it has been the knowledge economy that has been the power house of growth[3]. It is the quality of our creativity that will help to pull us back from the abyss.  Nowhere will this be more crucial than in Government; firstly, to set direction – to steer rather than row – setting out a new vision for the UK and defining the outcomes that must be achieved. Secondly, to ensure that the necessary cuts to the public sector expenditure don’t amount to a wholesale dismantling of vital services. We must not throw the baby out with the bath water.

All the more worrying then that a recent Government report stated: “If we now have a renewed need for National Strategy, we have all but lost the capacity to think strategically. We have simply fallen out of the habit, and have lost the culture of strategy making.”^[4]

To add insult to injury…a senior manager in a major central government department was recently overheard saying that that thinking was now a ‘luxury’, the civil service should just ‘do’ and not think.  Sir Humphrey Appleby would turn in his grave.

The road to recovery: ideas in to action

Clear thinking and the creativity that comes with it is not a luxury, it will be the driving force behind the UK’s recovery. That does not mean ponderous processes or navel gazing. It means rigorous analysis and the use of tried and trusted creative thinking techniques (such as change driver analysis, scenario planning and logical modelling). All of these can be done at pace and make a substantive difference in terms of results achieved.  It also means slaying some sacred cows, taking bold decisions without the normal luxury of time to build consensus amongst the senior civil service.  This will not be easy for an organisation used to working in extremely long timeframes, but this is where private sector experience can make a valuable contribution and a real difference. The government’s aim must be to unlock the creative potential and talent that is latent in the civil service, with outside help if necessary – but critically they must not treat them as an unthinking and subservient machine.

If you would like help in unlocking the potential in your organisation, please contact us here.

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References:

[1] Uncorrected transcript of oral evidence: http://www.publications.parliament.uk/pa/cm201011/cmselect/cmliaisn/uc608-i/60801.html  (neither witnesses nor members have had the opportunity to correct the record).

[2] Several sources, including a US intelligence report titled the “Sociology and Psychology of Terrorism: Who Becomes a Terrorist and Why”

[3] Will Hutton “Them and Us”, Little, Brown

[4] Who does UK National Strategy: first report of Session 2010-11, reference HC 435

Fiscal aggression or sound economics?

I was lucky enough to attend a seminar today at which Will Hutton (from the work Foundation) spoke. Drawing extensively on his recent book ("Them and Us" published by Little, Brown), I was struck by many of the points he made, but two in particular struck home:

The first was Hutton's emphatic view that the current round of public sector cuts, tuition fee increases and the rest are happening too fast: "Fiscal policy as aggressive as this in the wake of an economic crisis as profound as we've had is precisely what you should not do". Now I appreciate that there is nothing close to a consensus amongst economists, let alone 'lay' folks such as me about how far / how fast - but it was refreshing to hear a clear case made for doing things more slowly, primarily to allow compensating capability to adjust to accommodate the changes. On Hutton's estimates, the public sector job losses forecast plus the impact they will have on dependent private sector jobs (supply chain etc.) will require the creation of over 2 million jobs in the private sector over the next 5 years to compensate. That is well above what was achieved in the last upturn (some 1.2m private sector jobs created), particularly as 3 out of 4 of those jobs was in Financial services. Coupled with the points below, that seems like a very tall order.

The second point was the compelling picture he portrayed of the geographical inequalities of opportunity across the UK. Put simply - only a very few regions and cities (for example the South East, London and it's satellites) have the necessary capability (primarily in the knowledge economy) to be able to add economic value by creating the kinds of jobs needed. Elsewhere, there simply aren't the capabilities available.

The result is likely to be further geographic polarisation. As Hutton puts it - if 'brute bad luck' means you have been born in one of the low capability areas, your life chances are severely curtailed. I tend to agree.

Perhaps a gloomy prognosis . . . but I for one feel moved to buy the book to see what further remedies Hutton suggests. The path of the current cuts has been set, but I shall return to this theme in a later post, exploring possible options to address some of the issues raised.

Armchair auditors or ill-equipped cost cutters?

I've been intrigued by recent pronouncements by politicians about converting us into a nation of armchair auditors (see these thoughts from David Cameron and Eric Pickles).

Apart from a mild anxiety about us all becoming curtain-twitching nosey neighbours, I have a more fundamental concern. If we are to be auditors, we need the tools to do the job . . .

As a nation, as communities and as individuals, what should matter to us are the results that public services deliver, as well as what they cost. We can then make judgements about whether we believe those results to be 'value for money' (and each election, we exercise our democratic right to vote for the sets of results that most closely matches our views of the world).

Unfortunately, for a number of reasons that I will return to in a separate post, such results are not always well articulated and even less often measured in any meaningful way. In addition, results for building communities (for example 'the big society'), tackling obesity, reducing the fear of crime, improving social care or national security etc. all take time. So results measures, even when present, will lag behind cost and resource measures (examples of inputs used to achieve results).

My fear is, as armchair auditors, all we will have access to is the easy to report, readily available information about inputs, with little or no output measures - let alone the measurement of results. So we might be tempted into making judgements about how (for example) money is spent, without knowing why it was spent or whether it successfully achieved the desired results. As a result, particularly in times of austerity, everything will seem an expensive luxury; so we will want to spend less. And spending less is likely to achieve less - though we will only find that out much later. In the meantime we may have dismantled the very services that could deliver the results for which we voted.

This is not meant to be a dig at the 'Big Society'; whilst I would like to understand what that means in terms of results a little better, if it means strong, thriving communities, I'm very much in favour. I just fear creating an army of armchair auditors without the tools or information available to allow those people - us - to function properly.

Of course what that requires is clarity of thought over desired results and how to get there (direction-setting - or that hackneyed term 'strategy'). For more on how to achieve that clarity, why not visit here.

When is outsourcing NOT the answer?

When it’s a knee-jerk reaction to a current crisis, driven by dogma rather than analysis or when it takes insufficient account of reality.

Data from the outsourcing research specialist Everest Research Institute, suggests that nearly a quarter of outsourcing projects fail because clients have unclear expectations at the start of outsourcing contracts.

In my experience, the initial phases of any consideration of outsourcing as an option are the critical ones. There needs to be clarity over issues such as:

• The results the organisation is trying to achieve
• The drivers that have led to outsourcing being considered
• The scope of the services under consideration
• The status and maturity of the market for those services
• The alternative approaches that might yield better results (such as in-house transformation or shares services).

All of these need to be answered in order to arrive at a Sourcing Strategy (the option) underpinned by a business case (the justification for the change) and stakeholder engagement (the mandate for the chosen approach). Taking a little time at the early stages can avoid substantial costs later; in the words of the old maxim - measure twice, cut once.

We can help you make the right decision about how best to achieve your objectives (for example to save money and improve services). That may mean outsourcing – but the decision should be made objectively, based on the evidence.

For more information please click here or email.

Why not just stick to the knitting?

I remember having a conversation with my boss during my time as Strategy Director at HMRC, which effectively amounted to him saying "I want to concentrate on day to day operations for now, perhaps we'll return to strategic issues around Easter" . . . in other words - let's stick to the knitting. In this case, as the conversation was in October, for at least six months, no longer term issues would be considered by the Board (the 'perhaps' and 'around Easter' gave me pause for thought too).

So - fine you might say. Sometimes you do have to concentrate on the knitting. Agreed; but if the Board aren't looking at the longer term or at the serious threats (or opportunities) that might affect the organisation - who else will? As BP discovered to it's cost over Deepwater Horizon, failing to understand the level of risk being carried could spell disaster (see some further thought on this issue here.)

As my conversation with my erstwhile boss suggests - often the problem is a lack of appetite at senior levels in organisations to think beyond day-to-day management issues. Whilst my experience was in the public sector, I have little doubt that the same is true in the private sector (and Ben Gilad's analysis in his book 'Early Warning' certainly suggests that is the case). I don't think there are any silver bullets here. I think the Board should make time for considering mission-critical potential threats and opportunities - whether from existing operations or from changes in the operational landscape. Six months is a long time to effectively ignore what might be happening outside an organisation.

I believe the answer is to have a clear separation between the Board and the day-to-day management. The former should be forward-looking, interested in the future operating environment and the higher risk aspects of operational delivery and open to robust, external challenge. The latter should be empowered to make decisions about the day-to-day operational business. That management team should provide a snapshot of delivery and - crucially but often lacking - lead indicators to the Board. The Board can then be a position to 'steer, rather than row' - helping the organisation to find it's way through the challenges, whilst exploiting the opportunities.

Lastly, to be effective, the Board must have access to analysis and evidence about the operational landscape and how it might be changing - robust, evidence based challenge. This comes in part from the strategy team or equivalent, but is also a key role for the non-Executive Directors. In mature organisations, the NEDs work closely with the strategy team, using the evidence and analysis provided to inform and support their challenge role.

Does this sound familiar?  Does your management board spend too much time focused on the present?  If you find yourself in this position and need support to deal with the issue then why not contact me at jim.scopes@ideasown.co.uk and fix the situation before it bites you.  Alternatively - stick to the knitting by all means, but don’t be surprised if your competitors use the opportunity to leapfrog you whilst you're staring at the ground.