Monday, May 23, 2011

What kind of leadership do we need in Suffolk now?

I listened to Andrew Marr's interview with Barack Obama yesterday. For me he embodies what leadership is all about. Clear, strong values. Calmness in adversity. Sensitivity to human feeling. An ability to raise others and paint a big picture - but also a clear eye for detail. Toughness when required but also persuasion as the main weapon.

When I was a CEO, I didn't always rate myself as a leader that much. I could, I think, inspire people, I could build a picture - but I never felt sure enough of myself as a manager of people. I need to be liked that little bit too much. People, I think, found me just the wrong side of flexible - a bit of a pushover. I also flapped quite a lot, sometimes not very privately either. Painfully aware of my weaknesses, I always felt like an actor who had only learned half his lines.

I know this isn't unique. I know all CEOs feel, to some extent, frauds waiting to be unmasked. I know few that ride that delicate balance between having good relatonships with colleagues and having the wrong sort of dynamic - either not being sufficiently 'above the fray' or so far above it that people can't relate to you.

The best advice I ever had was to be myself. This meant, of course, accepting that I was never going to be a Barack Obama, but it also meant that I was going to be authentic. People tend, I found, to respond well to that. By following the contours of your personality, rather than a template for leadership, colleagues found, eventually, a way to work around certain predictable patterns. Interestingly, by being more frank about my weaknesses, support mechanisms developed where they didn't before. By being more human, I didn't I find become less 'CEO-like'

Which bring me on today's matters in hand. In Suffolk, we are currently without a CEO. She is on long-term leave pending the outcome of an investigation into the organisation's culture. Her style was a funny mix of visionary, inspirational and confrontational. I make no bones of the fact that I like Andrea Hill. She is smart, interesting and brave. But she's got a very different 'leadership face'. Which, in my experience, has been to show no weakness, to meet fire with fire and to be fairly brutally honest in her assessments of people and situations. She doesn't sweeten any pills.

The net effect of her style was mixed. On the one hand, she drew some great people into our Council who have been rainmakers. She also gave our Council clear direction, energy and agenda. On the other, she was a divisive figure who seemed, to staff, to be scary and remote, cold and unsympathatic. My guess is that she needed a 'front' just to get through some very difficult times - but that in creating this may have made matters more difficult for herself. That a little more of herself shown would, ironically, have taken some pressure off her.

Obviously, nobody knows what happens next. It's a matter for HR and the leaders of the Council to decide what happens. My fear is that if she doesn't come back, the Suffolk experience may become a cautionary fable for Councils who might seek to do things differently. But perchance she does return, I think she would do well to review a leadership style which, while inspiratonal to some was difficult for many to deal with. And that it was the many, in the end, that saw off some of the ideas with which she was most closely associated.

Tuesday, May 17, 2011

Why Social Enterprise needs to throw open its doors

Clients actually never ask me the social business question. They either assume that Stepping Out is - or don't really care about our structure.

The truth of the matter is that Stepping Out isn't, by UK legal definition a social business. There is no asset lock. The Directors own 80% of the company and can do as they please with 80% of the profits. The other 20% - of both the company and the net profit will go to invest in early stage social entrepreneurs working at community level. That is when there is a profit to distribute - a moot point for many in the social sector.

While I can't contest the social enterprise legal definition, I will say now why I think enterprises like mine should be allowed Guest Passes to the fold. Firstly, our commitment to redistribute profit goes well beyond minimalist CSR. Secondly, our time - the other key asset of any company - is given away generously to in-need clients. Thirdly, we are not profit-maximising and seek a variety of returns from this business.

I have said this before - there are thousands, possibly tens of thousands of firms in the UK just like ours which are, in essence, privately held but which subscribe to a broader view of their existence and indeed have the track-record to demonstrate this. Capitalism as a whole is, with many risible exceptions, slowly walking in this direction. At the moment, these companies have nowhere to go. CSR is largely working at the margins. For companies making substantial social contributions - but without the means or capital structure to go the full hog to social enterprise - there is very little formally there.

I believe that, in time, the Social Enterprise movement will see this gap and ride into it. It is not only a great opportunity for them but a chance to create real and productive alliances between progressive firms currently separated by the somewhat arbitrary lines set out the legal definitions of social enterprise.

Tuesday, May 10, 2011

Why the NHS still needs reform

The debate about the NHS is frustratingly binary. Public vs Private. Managers versus Doctors. Front-line services versus bureaucracy. Planning versus chaos. Gosplan versus the Wild West Discussion on the Lansley Bill, even among the better Parliamentarians and commentators, seems to sink to this level.

Part of the problem is that the challenge of how we improve healthcare in the UK is fiendishly complex. Hardly anyone knows enough about all areas to really have a total grip on it. Furthermore, the issue of the NHS is related, as nowhere else, to larger ideas about national identity and the binding of our society.

Reforming it, therefore is a hellish task. Some basic truths about the health service cannot be escaped from. Firstly, it is, globally speaking, relatively cheap. Secondly, it is unusual in that it is provided through taxation and is free at point of use. Insurance or payment haven't, so far, entered the picture, unless you decide to opt-out altogether. Thirdly, as a system, the resources are allocated, for historic reasons largely, more to acute and hospital based services and less to community, primary and preventative services.

Despite big political disagreements about means, there is some consensus on ends. We need to make the health service better at helping people help themselves to stay healthy, less about treating them in hospital when they are sick. Resources need, over time, to shift from one to the other. We also need health and social care to be less rigidly separated as the two needs tend to come together, particularly with an ageing population.

There, however, it all breaks down and gets very binary. The way forward for the right is to create this change by splitting the purchase from provision of services and by opening up the market to any willing provide. Coupled with this, people should be allowed to both choose their provider and 'top-up' their service, like Fast Boarding, if they choose. This, goes the argument, drives efficiency, innovation and customer-focus. More bang for your buck.

The argument from the left is that all of this disrupts an ecology of co-operation, integration and professional and public involvement which has developed since the formation of the NHS. Competition, they say, puts people who need to work together e.g. GPs and community services or community services and Foundation Trusts, into competition with each other. The patient - who is guided down 'Pathways' between primary, community and hospital care, will suffer as agencies fight over the funding and, inevitably, act in organisational self-interest, rather than that of the patient. Furthermore, there is huge fear over the consequences of co-payment and the idea of a 'two-tier NHS'.

As a self-confessed wooly liberal, I see both sides of the debate. I also work closely with health and use health services quite a bit. I can see both cases. What I do not doubt, however, is that no-change, is as unacceptable as some of the more far-reaching aspects of the Lansley Bill.

I illustrate this with a personal story. One of my children is three and a half and has 20 words, about as many as a typical 18 month old baby. A year ago, he had none. We referred him to Speech Therapy. Apparently there is a waiting list. Then we got him seen. There was another delay. Then a couple of cancelled appointments. We get 1970s style letters telling us when we will be seen, inked in biro. No choice or quality of communication. The therapist herself is excellent but in the year since referring our child, he has been seen twice.

Had I not the commitment I have to the NHS, I would have taken my child private six months ago. A queue for speech therapy at this age is just going to compound the problem - creating more work down the road - and possible education/ SEN needs.
There is clearly a resource issue. But on top I sense a complacence too. This service is the only one funded by the NHS. Nobody else can do this and get NHS money. If I wanted my son's notional share of the budget of this service to take to the market to buy a service from a speech therapist or practice I couldn't have it. And there is no way I could augment this money with some of my own if I needed to, god forbid, because that would give my son some kind of bizarre advantage over some other child who may well also reach his fourth birthday unable to say more than a few words.

Clearly, there is a need for some system-change here. I would be deeply surprised if the budget for speech therapy was such that if was not possible to work harder. While we need more planning to ensure under-funded areas do get funded, we also need more freedom to ensure that the money works harder so that people who need services benefit from some of the things we take for granted in other areas of life e.g. choice and the freedom to use our own share of public sector resources in the way we choose, even if this means adding some of our own.

It is this kind of change that I am trying to encourage in my own work. I don't think the NHS should be a free market. There are real dangers in losing control of the system to a profit motive, as in the US where spending is out of control and outcomes extremely poor. We need system-planning. But this doesn't mean we can't have a lot of providers and it doesn't mean that users of the health service having to put up with a 1940s, nationalised industry approach to provision in which the forces which do drive forward innovation, quality and customer-services are systematically nullified.

Friday, May 6, 2011

My piece in this week's Third Sector on the need for soc ent to take over state services

I go to a lot of sector events these days where nearly everyone, even quite sensible people, are banging away about how the coalition is taking us to hell in a handcart. Amid redundancies, closures, vital projects lost and more redundancies, I can understand this. To a point. But some perspective is needed here. Blaming the coalition is to seriously misread the issue.

Two things need pointing out. First, this was coming. As a sector, we had been pumped up by 15 years of uninterrupted economic growth, which left us deeply vulnerable to changes in the economic weather. And by 2010, any new government knew it would immediately face two flashing red signals as it pulled out of the station - the economy and the runaway costs of the public sector. It is fantasy, in my view, to believe that charities wouldn't be getting an equivalent hammering with a fourth Labour government driving the train.

Second, the world is changing faster than many in the sector understand. Many people - most often my generation and above - forget that we are facing overdue structural changes in the way the UK addresses social need. They still see the 'voluntary sector' as a useful crack-filler for an all-embracing public sector. We're an 'and' solution, not a serious alternative.

That model is broken. The brutal truth is that, unless you're incredibly fortunate, you can't get a service from the state unless your problem comes in a box they recognise. Try being mentally ill and alcoholic. Learning-disabled and deaf. Or a perpetrator and a victim of crime. You'll find very little out there for you - except a bit in our sector, if you happen upon it.

The logic of a complex society is that we need a greater diversity of solutions for a population that has become far more multi-faceted than that of our grandparents' time: all sorts of organisations doing all sorts of things with all sorts of people.
We also need to support stuff that helps the sector's activities match up to need rather than being only, in effect, a supportive gesture. This can't be done 'in addition'. It needs cash that used to fund the state.

That is what we are, somewhat chaotically, moving to now. It's messy, it's difficult and it isn't helped by the economic situation or the lack of a proper plan from government. But underneath all of this there is a once-in-a-generation opportunity for our sector to redefine itself as the first point of call for people in need.

And this should be the default position. Government grew as a provider when nobody was willing or able to take on that role. By the same logic, it needs now to revert to providing only where a civil society organisation cannot or will not do so. It can still plan, oversee and ensure a level field.

But one provider normally brings only one solution. The United Kingdom, in the 2010s, is not a one-solution society. A million flowers need to bloom. The price for this is a far smaller state than most readers of Third Sector are comfortable with.

What now for the Lib Dems?

I wasn't up for election yesterday. If I had been, I may well not be a Councillor today, despite having done OK in the role. Such is the nature of local elections - local issues are not what decides them.

This election has brought into sharp focus the challenge for the Lib Dems. The charge that the party is a 'human-shield' for the Tories has been borne out - they have come out without a scratch, while the Lib Dems face their worst results for 30 years.

When the party went into coalition last year, most party members endorsed it. The party was, in reality, trapped - but armed with a strong agreement, felt able to go into confidently into Government. However, the cuts - and their consequences such as the need to ask students to pay for their own education - have been the ubiquitious theme of the last year and we, not the Tories, have taken all of the political heat for them. The party's opportunism around fees - and its rash promise not to raise them - is now a burning large as a trust issue. Furthermore, Clegg's early view that all Lib Dems should 'own' the Coalition, now looks naive and we are seen to have 'played along' with the Tories rather than playing a strong hand as distinctive voice within the Coalition, as has been the case quite recently on health, which could provide a model for the future.

A second big problem is the North. In large areas of Northern England, the Lib Dems, not the Tories, became the natural opposition after the near-wipeout of the Tories in the 80s and 90s. Now that has been reversed, with the Leader of Hull Council, Carl Minns, actually losing his seat. The typical Northern Lib Dem voter is anti-Tory and has pulled away from the party in reaction to the Coalition. Interestingly, while Lib Dem members OK'd the Coalition, its voters probably would have vetoed it, given the chance, something which is only now being fully appreciated.

So what next? While there are odd calls for Clegg to go by angry councillors, this won't happen. It's too early and it would destabilize the Government and, ultimately spell doom for the party. There needs to be unity. And while there are whispers of an SDP-type split, I also see this as highly unlikely. Such things are years in the making and, for now, Labour provides a reasonable alternative home to disillusioned Lib Dems.

However, neither can things go on as they are. The Lib Dems in Government need to carve out a distinctive voice and be able to present themselves to the British public as a brake on the Thatcherite tendency in the Conservative Party. They need to be credited, politically, with stopping the Tories from privatising public services willy-nilly. They need to find some stronger themes than social mobility to campaign upon. And they need to look like a party that is listening again. This may mean admitting a mistake on fees early - in order to lance that boil. Clegg has the skills to do all of this and he is still the right person to lead the party - until the end of the Coalition.

After that point, or even going into the next election, the party needs a new leader, probably one who can pick up the lost voters and who can credibly join forces with Labour in the ev
ent of a hung parliament. Labour needs to win only 50 more seats to become a credible governing force again - but will still be short of a majority. I can't see them working with Clegg - ever - but it is possible to see them partnering with Tim Farron or someone from the mainstream centre-left. The Orange Book is now all but finished-off, outside Parliament at least.

And for me? I have never made any secret of my centrist views. If anything, I am still, at heart, a Blairite, as many, from all parties, still are. I want a Government which improves public services by diversifying supply, creates a dynamic but compassionate society and is modern and progressive in outlook, rather than backward-looking or statist. I had hopes for Cameron but he has reverted to type. David Miliband would have been supportable as Labour leader. Clegg, for me, has it about right.

But that will count for nothing if he remains politically toxic in the run up to the next General Election.

Wednesday, May 4, 2011

Can partnerships between mutuals and the private sector actually work?

What can be understood from yesterday's news that the Coalition Government will be scaling back plans to outsource large parts of the public sector to private firms? And what does this mean for other sectors?

The important message yesterday was, as usual, behind the headlines. The Government isn't necessarily looking simply for a phalanx of new non-profit providers. There just aren't the numbers, the expertise or the available public capital for the flea to take significant bites out of the elephant.

No, what the Coalition really wants are new ventures which are part-mutual, part-private. A bit like Circle Healthcare which is owned 49% by its staff and with significant minority shareholdings for venture capital backers and the senior management of the company itself.

There are three reasons why this makes sense, from the Government's point of view. Firstly, this brings private capital into play instead of public funding being required. Remember, each 'Right to Request' spin-out from the NHS has cost the Government tens, sometimes hundreds of thousands of pounds. A private partner with a long credit line can bring much-needed capital to a cash-strapped public sector.

Secondly, a private partner would bring expertise. Public sector spin-outs tend to be led by passionate teams of people who, certainly early on, lack the commercial nous to run a business at scale. Plus they have to set up all sorts of things from scratch - such as back-office, HR etc - which is simply very hard work. A good private partner could provide all sorts of help to the newly stepped-out organsiation. Thirdly - and this is the big one - partnerships of this type could be set up quickly and at scale. Average times for spin-outs, from conception through to execution run, from my experience, at 18 months to two years. Much of that is due to the internal approvals process, but much is due to the fact that the poor people leading it have to do this on top of their day jobs. It is a long firewalk, meaning few people have the energy and time to do it. A partner could make this easier.

So, there's the case-for. But will this work? There's a few big questions here. One concerns the nature of partnerships between mutually-owned and for-profit organisations, particularly those from the world of private equity. One, essentially, is driven by a range of goals, often including social ones, the other mainly by short-term bottom-line. Who wins out - or rather how a compromise is arrived at which satisfied both sets of owners is an interesting question. The truth of the matter is that commercial capital will not settle for sub-optimal returns given the risks involved here. So where the goals of mutualism - or social goals - will fit in remains a moot point.

Another big question concerns the meeting of cultures. Although this sounds less significant, I don't think it can be underestimated. Every single person who I have met who leads a stepped-out organisation is motivated by social purpose. They strongly identify with public sector values, albeit ones which see social enterprise as the appropriate vehicle for this. Culturally and politically, they are mostly people of the Left, who are sceptical about the values and motives in the UK private sector. Essentially, you're talking here about mixing oil and water.

A final question in my mind concerns the scale of ventures. Most mutuals or social enterprises tend to be defined by geography or function. A passion for people, place or profession is often a big element in these ventures. They aspire to be local, to be connected, to be human-scale. The dynamic of the private sector is around scale, either by organic growth or takeovers. The natural tendency among providers with private partners will be to seek to maximise value by taking over other organisations by merger or acquisition, strip out costs, find economies and so on. You see this right across the health and social care sector now, leaving us with very large providers, hugely efficient but also somewhat remote and soulless, with ownership often based overseas or in sovereign wealth funds.

While some degree of mutual ownership would mitigate all of these three problems, I wonder how far this would be the case - given who will hold the purse-strings and whether, in the end, even this approach, while well-intentioned, might lead to a fairly poor set of outcomes, when viewed from a social point of view.

Piece from today's Guardian on social enterprise spin-outs

What is it like to lead a service out of the public sector into a social enterprise or employee-owned mutual?

I recently spoke to four freshly-minted leaders of social businesses or mutuals. What they have to say is inspiring, but also reveals the major challenge ahead for the government, as it aims to create new employee-owned ventures.

Three big themes emerge. The first, emphasised by all, is the importance of leadership from the front.

One leader, a former director of local authority adult services who does not wish to be named and who now leads a new social business, warns that spin-outs will struggle unless senior players are prepared to put themselves on the line. Another, Andrew Burnell, chief executive of City Health Care Partnership, Hull, formerly part of Hull primary care trust (PCT), underlines the need for leaders to be resilient during a process of extrication which, for him, was "a drawn-out affair, difficult and at times challenging to one's sanity and patience".

Then there is the opposition, both overt and covert, from trade unions and, on occasion, from top management. This often takes a personal toll. Burnell felt that his passion for spinning-out led to him being labelled, as "blinkered". The former council director, meanwhile, found that his motivations came under attack. He also believes he was treated as a threat to a comfortable council monopoly: "I was disappointed but not too surprised at the deep municipalism that pervades a local public sector," he says.

Clearly, doing this isn't for the faint-hearted, even those who heed Burnell's counsel "not to take 'No' for an answer".

A third, more positive theme, common to all, is the increase in productivity, innovation and energy that being part of a social business engenders. Scott Darraugh, director of Social adVentures, which was part of Salford PCT, says things are now more productive. "There has been a cultural shift within the team. Staff are driven to take ownership, and that has to be better for the people we serve".

Kevin Bond, chief executive of Navigo community interest company, formerly North East Lincolnshire mental health services, says his new organisation has managed to make significant savings over the next three years without diminishing its service to the public – and has engaged staff and users in governance in a way "never possible before".

What can we learn from these leaders? The vital factor appears to be the benefits of freedom both strategically and operationally. Getting away from a much larger public body seems to have a powerful galvanising effect.

But warning signs abound. A trickle of spin-outs has not yet turned into a flood. Few councils, it appears, are looking seriously at this option, choosing instead to cut their inhouse services and tender them out.

What could speed things up?

First, public bodies need a "playbook". At the moment, according to the former director of adult services, councils don't know how to create and nurture spin-out businesses. Then, further assurance needs to be given around how pensions will work, how public bodies can avoid legal challenges if they create a spin-out and how the creation of spin-outs can be financed. And there is a real need for leaders – hundreds of them. There is no doubt that such people exist in the public sector. But the challenge is to convince them that spinning-out their service will do for them what it has for these four leaders.

It remains in the balance whether potential leaders of new mutuals are encouraged and nurtured – or made to walk through fire before stepping out.

• Craig Dearden-Phillips is founder and chief executive of Stepping Out, a business helping parts of the public sector become a social enterprise, and is a Liberal Democrat county councillor in Suffolk.