Why a smile could make a difference to public services

A couple of weeks ago I was teaching 53 police officers about managing public money as part of the national High Potential Development Scheme. At one point I was talking about pricing strategies and I drew a idling curve on the board to illustrate the idea that the production of goods creates a smaller part of the value than the design that proceeds it and the marketing that follows. At the time I couldn't remember the person behind it but it has nagged at me until I found the answer. What I was explain got the class was the Stan Shih smile curve of value.

Stan Shih was the boss of Acer computers and he put forward this idea about value in the early 1990s. He was thinking particularly about IT products and the picture above summarises the theory. It seems to me very likely it applies in IT today. Certainly if I think about myself as a customer of Apple then I know I get value from the design of the hardware and software, the packaging, the customer service, the Apple Store. And I can well believe that the cost of the components and assembly of the MacBook Air that I'm typing with amounts to less than 10% of the price I paid for it.

If this is the case for IT companies, is it true for others? Perhaps not all businesses but there are loads where the cost of manufacturing is a tiny proportion of the retail price and a lot of the value of the product comes from the design, branding, marketing, etc. For instance, clothing (how can All Saints get £40 for a cheap-looking t-shirt with a blurry print or replica football shirts sell for £70?), cola and soft drinks, bottled water, restaurants, cosmetics, champagne, brand name painkillers. I'm sure you can think of others.

What has this got to do with public services? Well, public bodies are provide services to the same people who buy all the things I've mentioned above. These people value more than just the creation of the products they buy so when it comes to public services perhaps public bodies should think about:

• how they design their services
• developing their brand and reputation
• how they distribute (or make available) their services to users
• how they will look after users after the service has been delivered.

Going back to the police service, whilst I am not an expert it seems to me that one common issue relates to supporting victims of crime. I might suggest that currently the focus of police leaders is in producing the service so that officers respond quickly to a call and deal with the immediate issues. Aside from anything else, this is a measurable output. How many calls have we taken, graded by urgency? How long has it taken to respond to each?

I think there has been work by senior police officers about the police brand and reputation is important to officers and police and crime commissioners alike. On the Stan Shih curve, brand comes before production. One choice a consumer has about any product is which brand to choose. The only choice a person has after an incident is whether to contact the police at all. I live in Derbyshire; I don't have the option to call in Lancashire Police because I prefer their brand of policing.

The police are less focused, I think, at keeping the victim informed about progress afterwards. If the public derive more value by feeling that they are being 'taken care of' after they were burgled (say) than from the officer's initial visit then the police ought to focus more resources on the former than the latter. But the outputs from this are less tangible and difficult to measure. I wonder, though, whether a change in emphasis would improve public satisfaction.

Can a strategic partnership reduce the cost of policing?

Back in November I gave a presentation to a conference of police authority treasurers and police force finance directors about strategic partnerships in policing and I posted my slides here. In that presentation I tried hard to make sure that my comments were balanced, giving both the positive messages that advocates of private sector involvement would make and the counter-arguments. As a result of having some time on my hands I've boiled down my presentation into a one pag document which you are welcome to download. Can a SP save money

Will a strategic partnership save money for a police force

Last week I gave a short presentation to the joing national conference of the Police Authority Treasurers Society and the Directors of Finance of police forces. I have helped the police in Lincolnshire and West Midlands with the procurement of strategic partnerships but this talk was not about those projects. Instead I was commissioned to talk about the pros and cons of having a strategic partnership. I hope I achieved that. One treasurer said to me afterwards that is was "as balanced an exposition of the issues of outsourcing" as he'd heard. I guess that means I did what was asked of me.

I've posted the slide presentation on Slideshare.net and they are embedded below. They give a flavour of what I spoke about but I like to think that you get more from a presentation when I'm presenting it than from looking at the slides in isolation. So if you want to know more about this subject please feel free to get in touch with me.

Governance is a contact sport

In my previous post I mentioned the conference I attended last week on strategic partnering in the police service. One of the afternoon's speakers was Malcolm Burch, the chief executive of Lincolnshire Police Authority. His talk was about the specifics of the governance arrangements in connection with the procurement process they have undertaken but one thing he said has, I think, a general application. He referred to governance being a "contact sport". He was talking metaphorically, of course, and I think he meant contact sports like rugby rather than boxing or martial arts. The overall aim of governance, after all, is for the organisation to win not for one side to knock out the other.

Anyway, Malcolm's point was that it's not possible for governance to be carried out in isolation from the projects and activity of an organisation. Governors (ie those charged with governance of an organisation) have to get involved, they have to have conversations with people and if there are differences of opinion they have to find ways to resolve them. It would be easier for governors to say to the executive, "get on with the project and when you've finished we'll scrutinise what you've done" but that approach is not helpful to the executive and runs the risk of the project failing. There's not much comfort for governors to observe a project has failed when they might have been able to prevent it, or at least mitigated the failure.  It is tantamount to the old joke about an auditor being a person who hides in the hills until the battle is over and then bayonets the wounded. No-one needs governors like that.

12 golden rules for outsourcing

Yesterday I attended a national conference entitled Strategic Partnering in Policing. It was an interesting day where 35 of England's 43 police forces were represented and there were  presentations from four different police forces. The bulk of the presentations, though, were by Lincolnshire Police, who have recently begun a 10-year partnership with G4S.

One of the speakers was Lincolnshire's Chief Constable, Neil Rhodes. In his presentation he explained the twelve golden rules that he would have liked someone to share with him a year ago when Lincolnshire began the procurement process that led to the deal with G4S. With his permission I have listed the 12 rules below, with some brief explanations in brackets where needed. (In the interests of openness I should state I was an advisor to Lincolnshire Police during the procurement process.)

1. Have realistic expectations (about what the private sector can deliver for you given your starting position).
2. Get the metrics sorted out early (so you know where you are and how you will measure success in the future)
3. Don't be seduced by promises of "jam tomorrow" (by always asking yourself, "can we uplift this promise into the contract?")
4. Make sure you choose the right route to contract.
5. Plan the work, then work to the plan.
6. Chief officers get involved early and stay late (ie closely involve senior managers throughout the procurement process).
7. Bake the partnership's guiding principles into the contract.
8. Be balanced in your requirements because risk aversion is very expensive.
9. Set the structure for future projects (so that you know in principle how the partnership will adapt to changes in requirements over time).
10. Don't focus your evaluation scheme too heavily on price (because you don't want to sign a deal with a partner who will give you "a mess for less").
11. If something is not binding contractually it gains little credit in the evaluation.
12. Maintain the competitive tension (between bidders) until the very end.

Whilst the above rules have come from Neil's experience of a procurement process in the police service I think they are generally applicable to the procurement of strategic partnerships by any public body.