Commercial skills in the public sector


Can the sector become more commercial whilst retaining a public service ethos? By Martin Pilkington 

The old Chinese curse says, ‘may you live in interesting times’. Faced with ever more complex challenges of growing budget cuts, societal pressures, accelerated change and conflicting priorities, the public sector certainly must feel there is a hex upon them.

The Government wants to see more public-public and public-private partnerships and also reduced expenditure - whilst improving service levels. Increasingly there is pressure to adopt more commercial thinking into the provision of public services to help with developing partnerships and to achieve these goals.

Success in mixing public and private enterprise together has been varied. A number of high profile joint venture structures have been the subject of press comment and scrutiny. Large scale outsourcing approaches have recently faltered in a number of authorities. Outsourcing has its merits but in some cases exploring insourcing versus outsourcing could deliver a better and more flexible result.

There is no panacea or ‘one size fits all’. Each organisation faces a mix of social, geographic and demographic challenges that affect their ‘patch’.

So, who are you going to call when you need assistance with complex commercial deal structures and service provision delivery models to cut costs and raise standards?

Consultants tend to be a popular but expensive recourse and they get involved in outsourcing and transformational activities. But ultimately whether an organisation chooses none, some, or all of a commissioning approach, in the end the ‘buck stops here’ sign will always be on the desk of the Chief Executive, the elected members and their senior executive management.

The skills of existing executives and elected members need to be increased to understand the commercial mindset of their private sector partners.  The talent is there already, the experience of running the services is there also. What is needed is insight into commercial thinking and the commercial approach used by the private sector in such activities as spin offs, outsourcing and partnerships. Being made aware of the commercial mindset helps the team to focus on the key issues at each stage of the negotiations.

Further processes and skills help: a thorough options appraisal, productive competitive dialogue, developing effective benchmarking and creating a proactive and efficient retained organisation that is an intelligent client for the duration of the contract are key to successful outcomes.

The development of a more commercial mindset can be achieved without compromising public service values. Organisations need to transition to a more commercial but progressive mindset whilst retaining the public sector ethos. A hard balance but it can – and must - be done.

About Martin Pilkington

Martin is a consultant specialising in option appraisals to local authorities.

He delivers the Negotiating Outsourcing and Joint Ventures with the Private Sector masterclass  and commericial skills training delivered in-house.