Wednesday 11 September 2013

Spraying extra costs around public services

Where did it come from, this obsession with targets, with breaking down every aspect of a task into little bits that can be measured and processed?

Some people date it back to the moment in 1903 when the time and motion study pioneer Frederick Winslow Taylor rose to his feet in Saratoga Springs to explain his idea that every factory could be measured to work in what he called ‘the one best way”.  (More about Taylor in my book Broke).

Maybe it was actually James Oscar McKinsey, the first management consultant. Whose consultancy still lives and dies by the highly misleading maxim “everything can be measured and what can be measured can managed”.

Maybe it was the technocrat’s technocrat, Robert Macnamara, who imposed ‘kill quotas’ on soldiers in the Vietnam War, only to find that the deaths rose but victory stayed elusive.

Whatever it was, the management business has spawned a vast industry which churns out targets, specifications, standards and obscure acronyms, while an even bigger industry puts them into effect. The idea dominates consulting just as it now dominates government – the Blair government introduced 10,000 new numerical targets in their first term of office, on everything from vandalism to the state of sailor’s teeth in the navy.

The great mistake this approach makes is that it breaks processes down into parts and measures them, just like an assembly line.

The trouble with processing people according to numerical categories is that it feels alienating. You start feeling outraged and end just feeling hopeless. The feeling of processing us all as assembly lines would has been set out brilliantly by the extremely clear-thinking blog System Thinking for Girls. It is a letter to big organisations explaining what it feels like:

"In big organisations, armies of people are employed to disguise original humans as categories, types and tariffs. This is done via documents and screens often by people who have never met or spoken to the original human." 

This is the philosophy of the 'back office'.  But note this: the letter isn’t really about dehumanising people. It is about the ineffectiveness that creeps in when you do so.

I hesitate to call these ‘inefficiencies’ because the search for 'efficiencies' has paradoxically created these extra costs which now weigh down public services as a result. Because real people aren’t like that – they are complex and usually non-standard and they need to be dealt with by a system that can deal with this variety.

The assembly line system, embedded in IT systems, can’t do this. The costs mount as all us non-standard people start bouncing around inside the system, creating costs, unprocessable. They mount because none of the available interventions on the organisations' dashboards really suit us.  More about this in my book The Human Element.

And here, in a nutshell, is the reason why costs have been rising in public services, and will rise even faster as the big organisations start winning contracts and cut costs in this way – the Virgin Healthcare, Atos, G4S systems of this world.

This is not a privatisation problem. There is no reason why private organisations should not deliver services, as long as they are integrated – as GP surgeries have done since 1948. The problem is scale and wrong-headed systems.

Here is the reason why this kind of out-sourcing, to the out-sourcing giants, is going to be so expensive. Because they don’t just increase their own costs, often paid for on the basis of throughput by unsuspecting commissioners, they spray extra costs around the rest of the system.

They do so by narrowing the definition of what their systems are supposed to achieve, reducing them to numerical outputs which can be measured, and letting someone else pick up the bill for everything else - and for the failure of these Mc-interventions to work.

Then they can get paid for doing it twice, and three times, and so on and so on.

That is the problem a new approach to public services will have to tackle. It isn’t public versus private. It is big versus small.  It is effective systems versus so-called efficient ones.


marksany said...

Right on, brother

boggits said...

Time & motion studies also tend to reward simple repetitive tasks and penalise creativity see for some examples