Some reflections on the nature of public services

Diving into Competing in a Service Economy: How to Create a Competitive Advantage Through Service Development and Innovation I found some interesting theories on the nature of services that relates to my previous post on the problematic nature of service innovation within the public sector. The first, and perhaps painfully obvious one, is that the public sector leans heavily towards the services end of the goods and services continuum show below.

The goods and services continuum. Copyright Richard Samuel

If services are heterogeneous, intangible and based on the co-creation of value, that is a perfect description of what the public sector provides. What might differentiate the public sector is that the services usually involve many different touchpoints with different organisations and departments over an extended period of time. The complicate the issue further, most customers (citizens, inhabitants, clients etc) don't really know nor care about who is providing what parts of the specific service. There are at least two interesting consequences of this:

1. It conflicts with the underlying organisational principles of the public sector, as I expanded upon in my previous post. 
2. Even highly improved individual services might fail to provide overall customer value.

I'll expand on the second point shortly, but first I have to digress somewhat into the theory of services and their position within the public sector: A different way to describe public "services" is to describe them as solutions, or linked activities if we're using the terminology from Johson&Gustafson, to customer problems. Welfare, for example, is a complex of many different services, provided by many different organisations in order to help (even if that term is hotly debated) the "cusomer" or client back into a self-sustaining position (the goal is actually to not provide the services involved. An interesting quality I'll get back to in my next post). This means that the experience as a whole, i e the value created, is dependent of each of the services involved. Poor service from one party lowers the overall creation of value and, perhaps more importantly, the experience carries over to the next party. In the worst case this can set in motion a veritable avalanche of value destruction.

Going back to the second point in the list above, I've personally witnessed and read about several different public sector parties that strive for the creation of excellent individual service offerings. While all such attempts should be lauded, they are all doomed to fail unless they recognize that they are parts, links, in a solution to a complex problem or need. I consider this to be essential in order for the public sector to deliver high value. It does, of course, related to the basic questions raised by Johonson&Gustafson such as what culture we should strive for within the public sector, the recognition that we can't always be everything for everyone and that the indiviudal services we provide are links that are highly dependent on other links in a complex solution to complex needs.

Innovative services in the public sector, really?

This might come off as a rant, so I should probably write a short introduction about myself. I've been working in the public sector since 2008 with digital services and all the good and bad parts that entail. It's perhaps only natural that my journey with analysing and developing digital services has led me down the path of design thinking and service logic. I truly do believe that there is an enormous potential for the public sector if it would embrace these two concepts not only in words but in action. With that said, it's time to move on to the rant.

Production logic and public services

Even though technology and information management can be complex issues, they are nothing compared to the founding principle of all major public institutions: the functional structure of the organisation and the related budgets. Both serve as a major mental model through which every decision made within different departements are made. Most, if not all, public institutions (and I include all levels from national to municipal in that definition, as well as units within a specific municipality) focus soley on what services they deliver with little or no regard for the citizens, clients och customers needs and service journey. A journey that probably involves many different institutions on both the national, regional and municipal level as well as cross channel communication.This is of course not due to an active choice, but rather a consequence of how budgeting and economic control works. Using a strong over-simplification, you could view budgeting in the public sector as follows:

1. Taxes, i e money, are collected into a big common purse.
2. The money is divided to different functional units (departements etc) using a yearly budgeting cycle.
3. Each functional unit is responsible for due dilligence and control over its own expenses. If the numbers are red at the end of the year, you have to make cuts or hope for a larger budget next year.

In practice this means that a complex issue such as opening a café is divided between several different departements, such as

• the Environment and Health Protection Unit
• the Unit for Licenses and Alchohol
• the Unit for Urban Planning

And each unit have their own budgets to follow, which makes the case for cross functional services, such as a (in part) digital service that helps you through the whole process of opening a café, a hard sell to say the least. This boils down to quite a simple question: who pays for the maintenace and improvement of the service? The Environment and Health Protection Unit? The Unit for Urban Planning? Some other unit? Due to how the budgets work, some functional unit has to own it. And owning implies responsibility for the service as a whole and everything that entails such as coordination, personel and further development. The consequence is that no one is willing to own the process and service, and we deliver poor value as a result. Even though it's painfully obvious that we, as the public sector, do own the process.

Fortunatley there is movement within the public sector toward a more service dominant logic but even then most ideas are based on the old functional organisation. Unit "A" might "own" the process of opening a café, but the ownership mostly implies a coordinating responsibility with no budget or power to implement change. Production logic is still very much alive.

Innovate, how?

Short answer, I don't know. What I do know is that there is a need for change within the public sector that enables the transformation towards a service oriented organisation. Perhaps studying this course could be the start such a transformation?

Recommended reading

Tjänstelogik för offentlig förvaltning: en bok för förnyelsebyråkrater by Martin Fransson och Johan Quist

Competing in a Service Economy: How to Create a Competitive Advantage Through Service Development and Innovation by Michel D. Johnson and Anders GustafssonFörvaltning och medborgarskap i förändring by Katarina Lindblad-Gidlund, Annelie Ekelin, Sara Eriksén and Agneta Ranerup