11 December 2005
David Osborne wrote Reinventing Government over ten years ago, and has suffered the fate of many of his ideas becoming received wisdom, without any particular recognition that he had them (or at least gathered and published them) first. His current big theme is The Price of Government, the core idea of which is that government is in permanent fiscal crisis – and that even more than before, traditional bureaucracies will not be able to survive in this changed world.
|Industrial era bureaucracies v Information age realities|
|Stable bureaucracies||Rapid change|
|Traditional work processes||Information technologies|
|Mediocre services||Public expects quality|
|One size fits all||Public that wants choice|
|Slow-moving monopolies||Global competition|
|Ever-expanding budgets||Severe financial constraints|
IT, he says, can make things a little faster – but that just makes the customers frustrated faster. More holistically, he has five Cs which need to be addressed:
- Core – purpose
- Consequences – rewards and threats
- Customer – empowering and accountable to
- Control – moving power away from the top and the centre
- Culture – changing habits, hearts and minds.
To get to the core, his solution is a radical approach to public sector budget setting, moving away from questions such as what to cut and what to tax, which tend to ignore the vast bulk of spend, and get answers focused on managing pain before the next election. Instead, he suggests a four step process:
- Decide how much revenue to raise – easy to identify what citizens are willing to pay from historical data.
- Identify which outcomes matter most to citizens
- Divide the money between outcomes – on the basis of how much they are worth, not how much they cost.
- Deliver the outcome
- Experts go to buy the outcome, based on key indicators and a cause and effect map
- Challenge is to improve the outcomes at a set price
In effect, this is a slightly specialised zero-based budgeting technique. David was pretty gung-ho about existing institutions having no right of continued existence, and no presumption that they would get all or any of the work. The technique has been applied in a dozen or so US jurisdictions – state, county and municipality. One example he gave was that lifetime health outcomes are only 20% attributable to healthcare (lifestyle is by far the most important determinant), with implication that budgetary provision should be massively switched to preventative measures. It wasn’t clear how this addressed the needs of people whose life had already been unhealthy and who therefore needed medical intervention, not how acute care worked in this model, but the state of Washington was said to be very happy about it all.
I asked him how he thought this would work in practice where budgets were committed as a result of long-term contracts in areas such as IT and buildings. Perhaps not surprisingly, he didn’t really have an answer, beyond suggesting shorter contracts.
Laurence Millar, the New Zealand government CIO said that NZ had been doing this for years, and felt that they had got most of the efficiency benefits from improving outputs – so the question was now how to improve outcomes. Osborne effectively said the approach didn’t change, to which Millar responded that outcomes were often multi-causal and involved a number of different agencies, and that identifying and apportioning the contribution of each was far from straightforward. NZ hadn’t yet cracked that problem and was looking for help – but I don’t think Millar thought he was getting any.