Monday, August 22, 2011

Spinning Out Together

When I set up Stepping Out, I expected it exclusively to be about groups of public managers wanting to set up free-standing businesses. What I didn't anticipate was the appetite for partnerships between groups wanting to spin out and existing social businesses and charities. About half the calls we get at the moment are about this.

Why does it have appeal? Three reasons stand out. The first is that public managers are often well aware that they don't have the full set of capabilities to go it alone. And the idea of doing everything from scratch - setting up accounts, payroll, HR etc - is deeply off-putting. A partner who can bring know-how and some slot-in back-office functions has some appeal.

The second factor is that Councils and other public bodies feel a lot less nervous when a third party is involved. Having a 'name' organisation involved assures Councillors in particular that the venture is legitimate and that if a well-known name is willing to risk their reputation on a joint-venture project, they are safe to do so too. Plus, as risk averse organisations, councils like the idea that someone who know what they are doing will be helping to deliver the new service safely and on time.

The third factor, and this is crucial, is about values. Hardly anyone I speak to in public sector wants to go in with an organisation whose ethos is a million miles from their own. While they can envisage doing business and even delivering alongside an organisation set up purely for profit, the idea of being joint partners in an organisation which is clearly identified as money-making is, rightly or wrongly, a turn-off for most public managers - and, interestingly, Councillors too who need a simple 'good-change' story to tell to the voters that isn't 'privatisation through the back-door'.

How many of these conversations with come to anything we don't know, but I am struck by how many Councils, charities and social enterprises seem to want to work together on spin-outs. It's not a direction I anticipated but one which I can see a lot of mileage in.


Rob 'Arris said...

I agree the mentality and inertia of public sector managers is such that they sneer at profit making organisations that deliver services in what they believe to be their territory.

The hard facts of the matter are that since the 80's they have had no choice but to commission and in some cases work alongside successful enterprises that deliver real outcomes, professional services and sustainability - usually at a much reduced cost than they could deliver themselves.

The pratonising, nimby like argument that public sector organisations are somehow ethically better or more wholesome than private organisations is wholly ridiculous and borne mainly out of frustration that they havent got the cajones to go it alone themselves; spending a significant chunk of their working lives moaning about 'management' and 'pensions' and 'pay & conditions' - this is a massive generalisation i know....

Obviously there are some good examples of where profit has got in the way of a good service, but there are loads of other reasons why services fail in and out of the public sector.

Time to smell some coffee i reckon (for me or them i hear you say...).

As for the future of social enterprises and services genuinely stepping out; my experience so far is that as soon as the public sector manager steps out they start to think in business terms, and talk about turnover and bottom lines. Funny that.....

Edward Harkins said...

Craig your piece generates some mixed responses from me. I accept the three reasons you give as being some of those that might explain why exiting public managers prefer experienced partners.

The one about councilors finding it useful to be able to exploit the social enterprise marque as ‘not real privatisation’, is the other side of the coin that means social enterprise is often seen as a sheep-in-wolf’s-clothing by some others (notably many trade union activists).

I have a hunch that some public managers want experienced partners because those managers come from a culture that leaves them risk-averse and wanting only ‘enterprise lite’ i.e. not truly innovative or radical enterprise… just a kind of ‘safe’ and manageable enterprise.

On the shared values I think I’m more skeptical than you; I have experienced many, many, public sector practitioners who seem more comfortable in dealing with the private sector than those pesky, socially committed types from the voluntary or community sector that they persist as lumping social enterprise in with.

But I suppose we need to maintain a bit of a perspective or reality check here – it will be the case that the type of public manager who has been approaching you is only part of a spectrum of managers; in fact the ones approaching you may not have been at all typical.

Craig Dearden-Phillips said...

Rob, Edward, thanks as ever for your comments.

Rob - yes, gross assumptions often made about profit motive. I think my negative thoughts concern the scale and power of those orgs, rather than their profit-motive.

Edward - yes I think you make a good point - and my sample is very small!

Edward Harkins said...

On this thread theme; I don’t know if you have seen the piece in Civil Society about ‘public service mutuals’ (?!) inhibiting voluntary sector organisations.

I get mixed signals from contacts in England about ACEVO (suggestions of a bit self-regarding with some self-promoting folks in there?) – but the ACEVO letter does throw light on the nuances and layering that needs to go on between new modeling of public services and the third sector.

Don't know if the link will work here but it's: