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Commercial breakdown . . . ?

04 Feb 2011

A burning platform…


Making a significant change to the structure of an organisation or to its direction is never easy, it requires a lot of thought, planning and excellent communication. A sound change management approach and considerable effort to secure buy-in from those involved as participants or stakeholders is essential to a smooth transition. However, even with all these things there is no guarantee of success. So what if you are a civil servant in a no longer wanted or supported component of the government machine? How do people used to operating under the protective umbrella of government service cope with the change? How do you generate strong enough leadership, courage and vision to ensure a successful change to a new order?

The UK Government’s much trailed and reported ‘bonfire of the Quangos’ is now underway, despite reports that it was a “missed opportunity” (Public Administration Select Committee (PASC) – Fifth Report: ‘Smaller Government: Shrinking the Quango State’).

Regardless of the rights or wrongs of the decisions made, thoughts should now be turning to managing the transition to the new arrangements. Many Quangos – or NDPBs (Non-Departmental Public Bodies) are being abolished altogether, some are merging, others are being encouraged to become charities, self-funding entities or ‘mutuals’.

All face a huge change management challenge. Even where entities are being abolished, in almost all cases at least some of the functions are being moved elsewhere – often to the ‘parent’ Department. Clearly that will involve change – as functions and more importantly people move from one organisation to another.

But what about those that are continuing either as a trading fund or charity? Or indeed those services that might be ‘mutualised’? Surely that’s a much simpler process, isn’t it? I’m not so sure. Here are just some of the challenges such organisations are likely to face:
• How do you place a value on a good or service that has up until now been provided ‘free’?
• How do you persuade your ‘customers’ that they should now pay for what once was a publicly provided good or service?
• Are you allowed to create a surplus (I hesitate to use the word ‘profit’ as that is seen as a dirty word in some circles) that can be reinvested into the business? And if so – how much surplus is reasonable?
• For any services that face competition from other providers (and Francis Maude, the Cabinet Office minister, has indicated that means most if not all mutuals), how do you change mind-sets so that people place a value on their’s and others’ time? For example, to ensure that the cost of sale in any competition (likely to be primarily the cost of the bid team) does not exceed any prospective profit.

Perhaps the overall question is – what is your strategy and vision for a new organisation that might retain the best of the public sector ethos whilst running a business on commercial lines?

None of these issues is trivial; they demand concerted effort to set direction and then manage and implement the change. Sadly, the ability of civil servants to think and act strategically has been severely eroded over the last couple of decades (see the two reports from the PASC: “Who does UK National Strategy” – 18th October 2010 and the follow-up, published 28th January 2011 – see HERE for both reports). Unfortunately, the latter suggests there is an obstructive complacency at the heart of government when it comes to strategy and strategic thinking.

My fear is that, without sufficient thought and effort on the challenges of changing status of these organisations, we will see the further erosion of public goods in the UK as newly established mutuals, trading funds and charities fail.

Making changes on this scale is no simple task. Many private sector bodies have tried and failed to achieve similar transitions particularly in the case of de-mergers from a protective corporate parent. If the private sector finds this hard, where leaders are used to different demands and expectations you can be certain that civil servants will find this extremely challenging, particularly since their personal comfort zones and security blankets have been ripped away from them.

Transition to new structures and environments is possible, but it isn’t easy and requires a great deal of thought to make sure that every t is identified and crossed and every i identified and dotted. There is no margin for error. Taking the time to think, be creative, and build mission, vision and strategy for the new organisation is an essential first step. If you would like help thinking through the myriad issues involved in making changes of this nature, why not contact us at

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