Challenges and opportunities

Changes in the delivery of public services.

We see five important and overarching challenges and opportunities emerging as a result of these trends in public service delivery:

  • Building the right capability
  • Ensuring mechanisms for fast learning
  • Harnessing information for better outcomes
  • Achieving system leadership and stewardship
  • Maintaining but evolving some of our oldest institutions.

Capability to deliver

Agencies need to gear up to ensure that they have the systems, processes, tools and, in particular, the people capability at all levels needed to work differently.

Co-production skills

Co-production and collaboration across agencies increases demand for public servants who have the skills to engage with citizens, communities and across government in more constructive ways. In particular, it will require policy professionals who:

  • are adaptable
  • recognise the importance of process to reaching a deliverable
  • see and invest in relationships as assets
  • make room for individuals to develop themselves
  • harness a variety of methods to facilitate dialogue, manage conflict and build consensus
  • make complexity manageable, for example through good synthesis
  • promote reciprocity
  • build social networks.58

Co-production skills will be increasingly needed at all levels of public services, not just among senior leadership and it will be important that agencies continuously seek to better understand their skill needs.

Commissioning skills

Government procuring more services based on results or outcomes (the ‘what’) creates greater ambiguity in the process by which outcomes are achieved (the ‘how’). This requires a wider and more sophisticated set of skills to successfully translate policy intent into commissioning arrangements, including people who can link policy objectives in complex markets with an end-to-end understanding of the users of the services and the supply chain.59

These commissioning skills extend to the assets required to deliver public services, in particular in the context of the more differentiated nature of those services. There is potential to achieve major savings and benefits from encouraging more innovative and pragmatic approaches to the management of public sector assets, including to the $80 billion of public sector capital projects planned over the next 10 years. These could be achieved, in part, through increased private sector involvement in both funding and delivery of major capital works. Also through encouraging more innovative approaches to the design and construction of these assets, including a whole-of-life approach that integrates thinking on their ongoing maintenance and operational management. And through greater leverage of third party assets in the delivery of public services (e.g. state-integrated schools, community housing providers, public private partnerships).

Achieving this will require a major step change in competency and capacity of public service agencies and will require changes to the current approach by the public sector to the planning, specifying, design, procurement, funding/ownership and management of capital asset provisioning.

Private and community sector capability

Effectively delivering services is not just about public service capability but also the capability that citizens and communities to participate effectively. For a variety of historical reasons (e.g. bequests, past government grants, previous work), some community and non-government providers will have accumulated capital (social or physical) that other providers cannot easily replicate, potentially increasingly reliance on those providers and limiting investment in capacity building and process improvements.60

Actions to get others involved in the design and/or delivery of services need to be focused on empowering the community sector with the objective of helping build up and increase the sustainability of that sector. Without this focus on empowerment, there is a risk that commissioning others to contribute to the delivery of public services is seen as burdening a sector that may not be ready and able to deliver. For example, as part of Investing in Services for Outcomes programme, the Ministry of Social Development has established funding and other support to build capability of community service providers.

The relationship between central government and local government should be viewed in a similar way. When central government ‘contracts’ local government for certain outcomes, it needs to mindful of local government’s readiness and capability to deliver. With the changing landscape we can anticipate that councils will come under increasing pressure and will need the flexibility to adapt how they deliver services to citizens. Some of the changes in the recent Local Government Act 2002 Amendment Act 2014 are consistent with this and are focused on encouraging greater collaboration and flexibility in how councils operate.

Learning fast

Reasoned risk

These new ways of working require public servants to step outside their comfort zone to deliver services that are potentially unprecedented or experimental. This raises the risk of failure and means government agencies and Ministers need to anticipate risks in their planning, where they can, and be prepared to respond to failure. There is a premium on ‘failing fast’ – designing innovative models in a way that rapidly delivers results, and monitoring implementation to learn quickly what is working and what is not to prompt the next iteration of innovation.
Developing a culture supportive of innovation and of controlled and reasoned experimentation and risk-taking (within outcomes-based performance frameworks) is fundamental to achieving outcomes. Establishing this culture will need to start with senior leaders and Ministers who are comfortable with the possibility of failure when taking a reasoned risk.

Skill and space to innovate

Taking reasoned risk and picking up lessons quickly requires an entrepreneurship skill set – a characteristic more frequently ascribed to the private and not public sector. In particular, it demands individuals who can see opportunity and make it happen. It also requires mechanisms that help break down barriers to innovation caused by siloed and hierarchical organisations, for example, through building effective networks for innovators. 

Planning to learn

Government agencies need to be paying close attention to examples of where new models of service delivery have been implemented.  They need to be willing to share their own stories of success and failure, and be open to scrutiny. Establishing what has been successful and why and what has been unsuccessful and why is invaluable. In 2013, an evaluation of the Social Sector Trials was able to test how the trials were implemented in practice, what the key achievements of the trials were, what the challenges were and what the lessons for the future were.61

Learning mechanisms again can include connecting and supporting innovators and establishing mechanisms that allow the capturing, tracking and sharing of lessons learnt through innovation. In particular, there is a need to capture and advise on what best practice looks like. The ability to anticipate failure and foster knowledge transfer increases the importance of high quality, timely monitoring and evaluation.

Increasingly, policy analysis will need to be treated as a tentative hypothesis that is tested through the actions of those involved in its development and implementation. This sees policy development and implementation as an iterative process, allowing for design to be modified to retain actions which produce changes towards the desired outcome, and to abandon actions that do not produce demonstrably good results.62

Harnessing information for better outcomes

Understanding performance

At the centre of government’s ability to learn and know when to change course is the ability to understand the ‘big picture’. Recent evaluation mechanisms that are harnessing information to aide learning include the: 

  • Ministry of Social Development’s Investing in Services for Outcomes which, as an investment approach, has a process for using information to identify what is needed to achieve outcomes and to review performance once services are implemented.
  • State Sector Performance Hub that draws expertise from the Treasury and the State Services Commission to provide system oversight and enhance central agencies’ ability to identify improvements needed to make the state sector system work better.
  • Performance Improvement Framework reviews coordinated out of the State Services Commission that provides an evaluation mechanism for agencies to understand how they are performing.

Sharing information and insights

Publishing public data and using it to tell the story of the ‘big picture’ is important for satisfying expectations for transparency and a critical enabler of collaboration and co-production. This is seen through examples of recent external facing publications, for example:

  • The Ministry of Business Innovation and Employment annually publishes a Regional Economic Activity report that brings data together to better highlight the strengths and challenges facing regions.
  • The Ministry for Primary Industries annually publishes a Situation and Outlook for Primary Industries report that the Ministry is increasingly using to tell a story around the ‘big picture’ performance of the primary industries and how its activities fit within this frame.
  • The Ministry of Education annually publishes a report card that brings together the Ministry’s priorities with a snapshot of the education sector’s make up and key changes.

Using large data sets to provide insights and evidence is important for enabling collaboration and co-production. Effectively working with these data sets as well as ensuring others have timely access to the data sets in the right format requires investment in infrastructure and capability to:

  • build the skills to work with large scale data sets
  • develop data infrastructure, software and research
  • facilitate data sharing and linking (e.g. through actions such as data.govt.nz, the Performance Hub, and the NZ Data Futures Forum).63

System leadership and stewardship

The leadership required now differs from what has been expected under the new public management model, with this new generation of leaders needing to lead change across the system. Recent changes to the State Sector Act 1988 to foster ‘system stewardship’ help set the architecture for this new type of leadership. In particular, the Act charges the State Services Commissioner with promoting a culture of stewardship in the state services which is driving a system-wide focus by the State Services Commission to strengthen and align system governance and leadership to collectively deliver shared results and build strong and trusted public institutions.64

System leadership

Unpacking system leadership, the Better Public Services Advisory Group identified the need for both sector leadership and functional leadership. ‘Sector leadership’ envisaged clusters of agencies working closely together to tackle issues with a single chief executive having lead responsibility for delivering the Government’s priority results, working closely with cluster chief executives and Central Agencies. Functional leadership envisaged leadership across functions to drive improvements across the system, with the Government Chief Information Officer role being a good example.65

The State Services Commission’s Leadership Strategy for the State Services starts to anticipate future demand for system leadership. It sets the scene for a system-wide approach to talent management that develops high potential people from early in their career, accelerating the development of top graduates and high potential emerging leaders.66

The need for system leadership extends down to the local level. This would see local leaders actively seeking to understand the ‘big picture’ and thinking widely about what they can achieve by leveraging other parts of government, front line services and/or non-government providers. This may be a substantial shift for many local leaders, with the Productivity Commission finding that local government generally has a weak ‘whole-of-system’ mind set when thinking about regulatory performance, not focusing on how the regulatory regime is performing overall.67

System stewardship

Stewardship reflects a focus on the long-term health and performance of the public services.  In particular, it requires chief executives to look beyond the current government, to ensure their agencies (and the public services that they deliver) are well-placed to address future challenges, including the legislation and regulation that they administer and the assets that they manage.  This requires a broader perspective of the performance of their respective sectors, including government and non-government delivery agencies and the citizens and clients of public services.  It also encourages a broad definition of the assets being managed, and a long-term approach to their performance, adequacy and management.

For example, the Ministry of Education is emphasising its role as steward of the education system.  This has created a stronger focus on the system perspective that the Ministry can bring – both the collection and analysis of data to deliver insights to inform decisions, and the relationships with stakeholders across the system (for example, with businesses, iwi and communities).  It has also strengthened its focus on the management of the physical assets in the education sector (primarily the school network) as a network that is integrated with the virtual infrastructure to support learning through digital technologies and the transport infrastructure to assist students to attend school.  The Ministry is also supporting leaders across the education system (including principals, professionals, and in communities) to develop and implement local solutions to local issues and priorities, investing in this decentralised capability an asset.

Leadership for innovation

Inventive services, contracting for outcomes, co-production and collaboration between agencies all require flexibility within the system to be successful. System leadership is necessary but not sufficient to create the flexibility needed with new ways of working.

The Christchurch Earthquakes highlighted that creating an environment that supports coordinated action is critical. To help promote coordination, the Canterbury Earthquake Recovery Act 2011 gives statutory effect to a recovery strategy to assist the Canterbury Earthquake Recovery Authority in its leadership and coordination roles in an environment involving a number of public, private and community sector actors. The strategy acts an important reference document that guides and coordinates the recovery efforts, communicating a shared vision to ensure a common direction.68

The Christchurch Earthquakes also highlighted that individuals require the mandate and accountability to collaborate effectively. Having people on the ground with explicit permission from senior leadership to ‘do what it takes’ to achieve goals was a critical enabler of innovation. This ‘permission to act’, however, was not uniform across agencies with some staff having stronger decision rights than others. Inconsistent regional boundaries also impacted on the ability to act without referring to head office.69

New challenges to old institutions

New ways of working do not change the principles underlying public service. The shifts in public service delivery, however, are likely to stress some of our oldest institutions, challenging how we think about values at the heart of a high integrity public service, including:

  • Accountability
  • Transparency
  • Privacy
  • Equity
  • Trust.

This challenge is not a matter of ‘out with the old’ but about evolving how we think about and maintain core values. Without being proactive here, there is a risk that current convention and legislation entrenching core values acts as a barrier to change, or that core values are forgotten about in the process and compromised.

Who is accountable?

The increasing focus on flexibility can make it less clear who bears responsibility for decisions and outcomes. This requires new structures for accountability and a clear idea of accountability between politicians and public servants.70

Rethinking accountability structures also applies to the migration of public services onto different technology platforms. While technology has the potential to generate significant efficiency gains, changing public service business models, it can create challenges for citizens when things go wrong or where they are unable to engage effectively through an online medium. Under traditional communication channels (face-to-face and phone), an individual can more easily escalate a concern to a supervisor or manager, and can seek help more easily.  When things do go wrong, individuals need easy and multiple avenues to raise issues and complain, and they need to know how the issue will owned, escalated and resolved.

How do we balance demand for transparency and demand for privacy?

Citizens are demanding greater openness and transparency from government. This openness is also a key input into facilitating co-production processes, giving a wide range of stakeholders’ access to the evidence base. In the UK, a report the House of Commons Public Administration Select Committee on ‘harvesting unused knowledge, empowering citizens and improving public services’ identified that where there is a ‘right to data’ there must also be a ‘right to privacy’.71 Taking the issue of privacy seriously and getting the right balance between openness and individual privacy is an issue that will not go away and needs to be well managed.

Privacy of personal information is a risk factor that, if not managed well, could severely disrupt confidence and trust. With the proliferation of technology and service demands from citizens, government is able to collect growing amounts of information on citizens, and there is increasing value and opportunities to match and share that data to deliver more tailored and effective services.  In New Zealand, amendments made in 2013 to insert section 9A of the Privacy Act 1993 on Information Sharing reflected growing demand to share data across government to enable more effective public services while also ensuring legislative safeguards to protect privacy.

With increasing use of contracting for outcomes, data sharing will increasingly occur not only within government but also with non-government providers. While risks around this data are primarily managed through contractual arrangements and the use of technology, this trend will increasingly put pressure on privacy across the system.

What is fair?

By their nature, targeted and tailored services reflect a shift away from traditional universal public services. Targeted services mean some individuals will receive services that others do not. Tailored services might result in citizens receiving different levels of customer service from government. This might not seem ‘fair’ from a narrow perspective even if ‘fair’ from a wider perspectives. For example, an individual receiving targeted services to break an intergenerational cycle of disadvantage. At a simplistic level, the shift is from fairness based on service outputs to fairness based on outcomes, but the latter can be harder to measure and demonstrate.

The experimental nature of innovative services may also raise fairness issues when approaches are not successful. This might take the form of individuals being disadvantaged by using the service if the approach is not successful, a real risk where services are being piloted. On the other hand, having individuals opt out of services has the risk of disadvantaging those around them. This is not dissimilar to individuals opting out of vaccinations and increasing risk for others, as well as themselves.

Other operating principles

Governments have a range of ‘general operating principles’ inherent in the public service ethos which may be challenged. The public service ethos is an unwritten set of values built into our understanding of what it means to be a ‘public servant’, including promotion or appointment on merit, the avoidance of patronage and political impartiality. These principles are sometimes convention and sometimes embedded in legislation.

For example, we should expect pressures on common practice to avoid or manage conflicts of interests that individuals working in an area may have. Shifts to contracting and co-producing with third parties invites individuals with strong interests to sit around the table where in the past they would have been kept outside and given an opportunity to submit views. This does not mean that conflict of interest is not important but that focus might need to shift, for example, from the individual sitting at the table to the composition of the group sitting around the table.

Increasingly opening up the delivery of public services to non-government providers questions the distinctiveness of the public servant and whether non-public servants can deliver services with similar values. A report into the impact of private sector involvement in public services on public service ethos for the UK House of Commons Public Administration Committee highlighted that while the ‘profit motive’ in the private sector puts public service ethos under strain, it is possible for the private and voluntary sectors to uphold the public service ethos. This report cautioned against taking public service ethos for granted and emphasised the need to be clearer and more explicit in explaining public service values.72

58: Informed by Bovaird & Loeffler, 2012; nef, 2010; Terry, 2010

59: Institute for Government, 2010

60: The Productivity Commission, 2014

61: Ministry of Social Development

62: Eppel, 2011

63: House of Commons Public Administration Committee, 2002

64: State Services Commission

65: New Zealand Government, 2011

66: State Services Commission, 2013

67: New Zealand Productivity Commission, 2013

68: Canterbury Earthquake Recovery Authority, 2012

69: Cabinet State Sector Reform and Expenditure Control Committee, 2011

70: Curry, 2014

71: House of Commons, 2014

72: House of Commons Public Administration Committee, 2002

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