Tony Abbott may have got peoples' attention with a bit of early trimming in the public sector, but will his regime deliver much needed improvement of public services or will it be more of the same? The rhetoric so far points to the latter.
It's a funny thing about politicians; they don't 'do' evidence. Australia has a record on shared services that only matches the debacles in the UK. These IT-dominated industrial designs fail to serve customers and so create what I call 'failure demand' – demand caused by a failure to do something or do something right for the customer – more calls into call centres, more complaints, more work to do so more cost; and if these operations are out-sourced to private-sector providers, more revenue to the service provider. You couldn't make it up.
The obsession for shared services is based on the false assumption that services are all about transaction costs (factories give you lower-cost transactions), but the true cost of service is the total number of transactions it takes for citizens to get any service. The same flawed logic drives the ambition to digitise public services. The UK leads the way in wasting public money on that. The government's 'Universal Credit' 'flagship' initiative is a veritable train crash, wasting hundreds of millions, yet the minister soldiers on. If he ever gets over his first hurdle, building the IT system – 90% of large-scale IT systems fail – he won't get over the second: you can't use computers to deliver services where citizen demands are human, individual, and complex, computers can't deal with that kind of variety because they employ rules. It is flagship, but of doom.
Industrial designs are entirely and wrongly focussed on transaction costs: call centres with controls on the people's time speaking to customers; back-offices, places where services are disconnected from customers so resources can be optimised (people sweated); specialised and standardised work; a focus on employee activity (the number of things workers do). These features prevent services from absorbing the variety of customer demand and so drive up failure demand; miserably poor services at high cost. While the big consultancies crow about lower transaction costs, any politician who runs a surgery will know that the services are not working.
Mr Abbott shouldn't listen to the big consultancies that promote this industrial nirvana. He should pay attention to what works. Instead of trimming he should be invigorating. If we take the greatest budget item in UK public services, care and support services, the evidence shows that good services are local, not industrial, delivered by people, not computers, who give people what they need.
The big consultancies would pull the alarm on that idea: that we should give citizens what they need. No doubt Mr Abbott would concur, after all, that could only drive costs up right? Neither has been on what I call the 'unlearn' step: when you study care and support services in the UK you find citizens are assessed and referred around, because services are functionally designed and controlled and management fears that helping people will consume their budgets, so they prevent citizens from qualifying for help with thresholds. If the citizen is lucky, and something is commissioned, they get what is specified in the commissioning arrangements and that usually doesn't meet their needs. Not so lucky. Failure demand counts for as much as 90% of all demands into these services. In short, services don't work and costs are spiralling.
When you know first-hand just how bad it is, as two groups of leaders do in the UK, you develop the enthusiasm for designing a service that works. Today, if peoples' lives fall off the rails they are met by someone who helps them define what a good life would look like to them, helps them in taking responsibility for their part in achieving that and pulls together any expertise required to achieve the aim. The result is people get back on track at much lower costs than the previous regime (which failed to help). The cost-reductions are dramatic for the local authority and are matched by similar falls in demand in all other care and support activities (police, education, health, voluntary sector etc).
The numbers are eye-watering, but we should see them as representing the true cost of poor service, the consequence of top-down 'deliverology', targets, IT-dominated industrial services.
And that's Mr Abbott's opportunity. If he trimmed the cancer of wrong-headed thinking, he would give the plant a chance, he could immediately review all planned industrial service initiatives. He could, at the very least, insist on contracts to ensure the private-sector providers cop the failure, not just their exorbitant fee. He could make thorough knowledge about demand – the greatest lever – the mandatory first step in improving all transactional public services. If everyone could see how much it isn't working there would be common cause in innovation.
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