Saturday, July 16, 2011

What's holding back spin outs?

Having spent a whirlwind year alongside spin-outs I would point to three key challenges to doing it.

Finding the right people

Every successful business needs a brilliant team. Most spin-outs have one or two brilliant people and a handful of OK ones. Many are reluctant to improve the quality of senior management as the organisation grows. This will be a particular challenge I believe in the health Right to Request. These are massive businesses in a complex market and organisations don’t often quite appreciate how far their top team and board is from where they need to be.

Managing growth

Growth and quality often run in opposite directions. Few organisations can walk and chew gum at the same time. The trouble is that growth seldom comes in manageable quantities and many spin out orgs are faced either with few prospects or projects which stretch the organisation to breaking point. Understanding in SE organisations about how to manage growth is often fairly low. The project management and change-management capabilities are seldom there. So growth poses a real danger to quality I feel in spin outs.


Many spin out organisations I come across are less clear about what exactly they are trying to achieve than their commercial equivalents. Or if they are, it isn’t particularly specific. This is rooted I think in the multipurpose nature of these organisations and the desire to find some kind of balance. But there’s often a reluctance to commit to particular levels of growth or profit. Even social goals remain pretty general. These should be articulated, committed to and worked towards with the same focus as private organisations go after profit. For out of certainty comes focus and energy. Spin-outs can lack this I feel.

Spin-outs have been a slow-burn for some time now, certainly in health and social care. Compare our sector to the academies sector if you want to see a real pace of change. Indeed In Suffolk half of our secondaries will be converted to academies by September. A stunning pace of change.

Part of the reason for this is that successive governments have stood full-square behind their creation and have not permitted local authorities to get in the way. Another reason is that Heads tend to be confident, capable people who can lead. For me a lot will come down to the content and message of the Public Services White Paper.

Will the Government encourage councils to offer guaranteed contracts to spin-outs for at least 3 years? Will they offer a simple route through the pensions question? Will there be a small fund for grants to new spin-outs to get them going? This is the support needed for the sector.

What other support might they need? In my experience, spin-out need both hard, technical support in terms of legals and financials and a lot of soft support in terms of coaching and leadership development. Unfortunately in my view, far more resources go into the hard end than the soft end and I think this has to change now that there are clear templates for spin-outs. The principal requirement of the new spinout is to be ready for independent life and to have the capabilities to operate and grow from a standalone position. That is mainly about people.

The right people with the right capabilities. That is where I think the focus should be more than it is now.


Anonymous said...

Really helpful comments. We have been peripherally involved with a couple of the social work practice pilots and while impressed by the enthusiasm of the staff involved have been concerned about the level of 'preparedness' and of the lack of coaching from people with experience in setting up and managing successful enterprises.

Rob 'Arris said...

I think you are right Craig. I also believe that the comfy public sector (as it was) is such a difficult place to leap from. The fire in the belly that is required to start up, run and grow a business isnt there in most ex senior public sector people - some i have spoken to want guaranteed incomes and a good pension "well thats what i was earning before" type of attitude. I guess time will tell, some will do it well i have no doubt and i have met one or two with totally the right attitude. I agree with your previous post that the government have provided more of an opportunity for Capita and Serco type businesses than they have SE.