Brexit – ‘crafting strategy’ instead of rigidity or chaos

Concern is mounting both in the UK and in Europe about what seems to be a lack of clarity concerning the UK’s plans for leaving the European Union (EU). This concern is well illustrated by the Italian Economics Minister, who commented recently that: “Somebody needs to tell us something, and it needs to be something that makes sense”. The Confederation of British Industry has also now joined in calls for the government to put forward a clear plan, in order to avoid “further crippling uncertainty”.

The government has insisted that a coherent approach is being devised, but that details cannot be shared in advance of the negotiations. Yet some senior officials have indicated that there isn’t yet a clear plan, and this seems to be backed up by a leaked report, albeit disowned by the government, which indicates that Whitehall is struggling to cope, that there are splits between Ministers and that large numbers of additional civil servants need to be drafted in.

There are of course a number of valid reasons for the government to be wary about sharing a plan:

·   First, the breadth and scope of the issues, and the sheer volume of intricate detail involved, indicates that a period of careful analysis is certainly needed. There are sound arguments for taking good time over this initial analysis stage, although some might argue that five months has already provided a reasonable initial window.

·   Secondly, it could be argued that the government should be careful not to show its hand within the EU in advance of the start of formal negotiations, so as not to weaken its position. This stance is itself weakened though by the extent to which initial pronouncements by the Prime Minister, about the importance of prioritising immigration control, are now shaping the positions that are being taken vis-à-vis Brexit from within the EU.

·   A third, and potentially weighty, reason for the government to be cautious about setting out its stall is that the Prime Minister will know that any indications of the government’s formal position is open to political attack internally, not least from within her own party, which has been described as a ticking time bomb in relation to Brexit. Continuing reports of splits on the strategy for Brexit between key Ministers underline the scope for internal political turmoil.

So, on the face of it there are plausible justifications, linked to careful analysis, negotiating tactics and internal political pressures, for the government to be wary about showing its hand. However, it is possible that the current situation is in danger of delivering the worst of all worlds. On the one hand, there is a deliberate refusal to set out a ‘plan’, which is being presented as a negotiating tactic and yet is leading to claims about uncertainty and confusion. On the other hand, the government has in fact indicated some sticking points – such as the absolute necessity of being able to limit free movement – which are setting off a chain of comments and reactions within the EU and so possibly limiting the government’s room for manoeuvre.

Since the words ‘strategy’ and ‘plan’ are being so frequently used in connection with Brexit, what insights does theory about strategic planning and management in the public domain provide for interpreting this confusing situation?

Informed by work on complexity theory, current thinking in this field highlights the benefits of an ‘emergent’ approach to strategic management. Within this perspective, carefully prescribed, formal plans that commit organisations and governments some way into the future are increasingly being seen as too rigid and inflexible for an environment of uncertainty and change. This type of thinking points to a more ’emergent’ style of planning in which flexibility, responsiveness and improvisation are the order of the day. Recent statements by the Prime Minster seem to take this tack, suggesting for example that the UK needs to “adapt to the moment and evolve its thinking”, in response to anti-globalisation and protectionist rhetoric from the US President-elect Trump. Indeed, some in the government may be hoping that the seismic-scale discontinuity caused by Trump’s election may create openings for negotiation in Europe that weren’t there before.

Recent thinking about strategic planning also suggests, though, that a wholly emergent approach is highly risky: without a sense of overall direction, it is all too easy for clarity to be replaced by confusion and a lack of coordination. As Rose and Cray (2010, p. 456) put it, in their exploration of strategy formulation in the public domain, “the lack of a shared plan can give rise to confusion, wasted resources and internal conflicts” – all of which seem to be clear risks in the current situation. They point to the value of a two-part, ‘hybrid’ process, in which a strategic framework sets out parameters and goals, articulated in sufficient detail to provide a guide for action, whilst retaining flexibility to respond to the changing environment.

Achieving this balance between clarity and flexibility is of course a hugely demanding and quite subtle task, calling for attention to the process of crafting strategy as a skill in its own right. Alongside all the current demands for ‘hard’ skills in Whitehall in areas such as trade negotiations, it is just as important that this ‘meta-skill’ gets the attention that it deserves. As the Institute for Government put it back in September, “when it comes to Brexit, silence is not a strategy”.

Ellen Roberts – follow me on Twitter

Rose, W. and Cray, D. (2010) ‘Public-sector strategy formulation’, Canadian Public Administration, Vol. 53, No. 4, pp.453-466.

Implementing Brexit: Challenges for the Civil Service

In these early weeks after the UK’s ‘Brexit’ decision, most of the attention has understandably been focused on the chaotically unfolding political scene. Beneath these swirling mists, however, discussions are beginning to surface about the role and importance of the civil service in implementing this historic decision. This huge task – of working out how this agenda is going to be implemented and then putting in place the means to achieve it – has been made even more intriguing and urgent by  the fact that the civil service was apparently expressly instructed not to embark on contingency planning to prepare for the outcome of the referendum.

Against this turbulent background it will be vital that the next steps are “clear, honest and considered” as Rob Whiteman, Chief Executive of the Chartered Institute of Public Finance and Accountancy, has noted.

What, then, are the key challenges that the civil service will face?

First, there is the structural issue of working out who will do this work, and in what relationship with the rest of the government machinery. A new central unit, located in the Cabinet Office, is now established to lead the work involved in withdrawal, but questions to consider here will include to what extent this unit will be undertaking some of the heavy lifting itself, or undertaking more of a coordinating role across departments. This will in turn help to shape where resources are targeted.

Secondly, there will be an issue of ensuring that the necessary skills are in place, and particularly with respect to negotiation and contract management skills. There is a long-standing concern, voiced by the NAO (2014) among others, about the extent to which Whitehall is equipped in this respect. As the former Permanent Secretary at the Foreign and Commonwealth Office put it very recently in the context of Brexit: "I doubt there are more than between a dozen and 20 serving British officials who have real experience of trade negotiations."

Alongside these issues of structures and skills, though, ways of working are likely to be just as important. As Melanie Dawes, Permanent Secretary at the Department for Communities and Local Government, pointed out at a recent Institute for Government seminar about the implications of Brexit for Whitehall, we now need a collective approach in which resources and skills are shared across departments. Yet the history of Whitehall demonstrates the strength of the pull in precisely the opposite direction, with the culture of departmental competition for resources firmly embedded in the DNA.  Now is the time to make a collaborative approach a reality, however hard that may be. Lessons about collaborative partnership working seem useful here, including the importance of setting a framework for the management of governance, for performance measurement, for escalation and for communication.

Then there are the leadership skills to drive this work forward. Political leadership will of course be fundamental. For leaders within Whitehall, though, there will also be a host of challenges. One such will be how to manage priorities. Civil service staffing is currently at its lowest level since the Second World War, with a reduction of 15% since 2010, and yet it will now be necessary, somehow, to take forward this huge programme of change while at the same time not losing sight of other domestic priorities.

Another fundamental challenge for the leadership in Whitehall will be working out a way to take these changes forward while the overall sense of direction is still emerging. The mission is clear (Brexit) , but the sense of direction – exactly what form of change we are working towards and what shape it will take on – is still opaque, and there are some big questions to tackle. For example, as powers and resources are handed back by Brussels, how far will they feed into greater devolution, or to increased centralisation? There are opportunities for the former certainly, harnessed to the important work that is needed to rebuild trust within local communities. Taking devolution further forward will however require considerable input from the civil service, at a time when they have their hands extremely full on other fronts. Fashioning a way forward while the big picture slowly unfolds is likely to call for particularly sensitive and finely-judged leadership. In an emergent situation of this kind, a collaborative style of working is likely to be particular relevant.

Two of the most successful teams in the early stages of the European Cup – Iceland and Wales – voiced strikingly similar and simple views about the ‘recipe’ for their success: have a plan and be a team. Both of these messages seem highly relevant to the current post-Referendum situation, and should be taken very much to heart in Whitehall.

Ellen Roberts - follow me on Twitter 

Public sector outsourcing: What have we learnt and what is still unclear?

From the early 1980s onwards public sector outsourcing – the delivery of public services by private sector organisations – has become increasingly common place in the UK and internationally. While the language may have changed along the way, with Compulsory Competitive Tendering giving way to Public Private Partnerships, the underlying intention has remained consistent: to harness the power of competition in order to improve the efficiency, responsiveness and quality of public services. These aims have been reinforced by successive governments.

Since outsourcing is now so well-established, what can be learnt from this long-standing experience?

First, the impact of outsourced arrangements in terms of efficiency, quality and value for money seems to be mixed, but is also quite hard to assess. As the Institute for Government notes, one reason for this difficulty is the lack of transparency about both the terms on which contracts are let and how they perform. While there have been several high-profile failures, such as those involving Serco and G4S, it is hard to gauge how representative these are of outsourcing experience in general. It is certainly interesting to note though, that in some quarters there seems to have been a turning of the tide, with some recent examples of previously outsourced services being brought back in-house. In 2011, for example, the Conservative-led council in Cumbria decided to bring its contracted-out highways and road-works services in-house, citing rising prices and lack of flexibility, with similar decisions since being made in some other local authorities. These shifts indicate that, at the very least, the evidence about impact doesn’t all point one way.

Secondly, there is no shortage of incisive analysis pointing out the lessons that have been learnt within the public sector about the conditions for success. Reports by the National Audit Office (NAO) in 2012 and by the Institute for Government and the Public Accounts Committee in 2013 and 2014 respectively, all looked in depth at the problems and challenges of public sector outsourcing. The recommendations by these reports can be grouped, broadly, into a three-part agenda, dealing with:

• Oversight arrangements. This includes having clear rules in place to govern market-based arrangements, having a clear understanding of each particular market and, crucially, knowing whose job it is to perform these oversight functions – a point made in the Institute for Government’s report on ‘Making Public Service Markets Work’. The need for transparency also fits in here.
• Making markets work effectively. This heading sub-divides further into demand- and supply-side measures, aimed respectively at empowering users and at enabling entry to and exit from the market.
• Contract management and delivery. Here the emphasis is on contractors having the skills to design, manage and monitor contracts. As the Public Accounts Committee commented: “government needs a far more professional and skilled approach to managing contracts”, warning that “there are serious weaknesses in the Government’s ability to negotiate and manage contracts with private companies on our behalf.” Continuing concerns about weaknesses in this area are signalled by the recent announcement of a Cabinet Office review of £500m worth of outsourcing contracts held by Atos, following a major failure in their work on an IT contract for GPs.

There seems to be, then, a clear consensus about current problems in public sector outsourcing and how they need to be addressed.

The third point to note concerning the current state of play, though, concerns the criteria that are being used to assess the outcomes of public sector outsourcing. Almost across the board, the start and end point is that of ‘value for money’. This emphasis is echoed in, for example, the title of the NAO’s report on ‘Delivering public services through markets: principles for achieving value for money’. This is not surprising, given that value for money has been at the heart of the rhetoric that drives these arrangements.

It does lead, though, to some questions and dilemmas. Value for money has to be interpreted, and this involves deciding on the appropriate trade-offs between efficiency, economy and quality. In this complex process of decision-making, it is all too easy for the interpretation to focus solely on costs at the expense of a clear-headed view about how those costs relate to the outcomes achieved. An emphasis on value for money can also lead to a market-centric perspective in which the analysis of both the process and outcomes of outsourcing tends to focus on the workings of a particular sector or market rather than on the wider implications. This emphasis can be seen in the three-part agenda set out above.

These wider implications are important for the users of public services. As the Institute for Government points out, service users may have multiple needs and yet each commissioner will tend to focus on just one narrow part of these needs. There are also wider implications for providers. What happens to the strategic capacity of a local authority when it has outsourced its services to such a degree that it no longer has the capacity to take a strategic view about the future shape and pattern of services? What happens to organisational learning – both about the process of contracting-out and the outcomes achieved – when that strategic capacity degrades? What impact does this then have on public sector managers’ capacity to take the professional and skilled approach that the Public Accounts Committee has called for?

These questions about the impact of outsourcing on strategic capacity and organisational learning urgently need adding to the agenda identified above.

Ellen Roberts – follow me on Twitter

Managing public sector projects: What determines success or failure?

Over the last few years there have been several initiatives in the UK and elsewhere aimed at building the project management capacity of the public sector. In the UK, the Major Projects Authority was established in 2011 to provide independent assurance to government about the progress being made on governmental projects, and to support the development of a skilled cadre of governmental project leaders. This was followed by the establishment of a Major Projects Leadership Academy to develop leadership capability and build technical and commercial know-how. The latest version of the Civil Service Capabilities Plan (the 2014 ‘Annual Refresh’) confirms that ‘delivering successful projects and programmes’ is one of four key priorities for skills development in central government.

The backdrop to these initiatives is a well-established rhetoric concerning the likelihood of failure in public sector projects. The strength of this rhetoric can be accounted for partly by the greater public scrutiny to which governmental projects are subject and thus the high-profile nature of ‘failure’ when it occurs, and partly by a tendency in some circles to view public sector management as somehow inherently lacking.

Despite the possibly heightened tendency to look for and find failure in public sector projects, it is nevertheless valid to ask why projects fail, whether in the public or private sectors, and what could be done to increase the chances of success. This is an especially relevant question in the current climate of austerity, with extreme pressure being brought to bear on public spending and on achieving the maximum ‘value’ from resources.

How, then, to increase the likelihood that projects, whether in the public or private sector, will be successful?

The usual starting point, in answering this question, is to underline the importance of leadership, of technical and managerial skills, and of ensuring that projects are soundly based on established methodologies. This latter point can be seen in the Civil Service Capabilities Plan, which emphasises the importance of ‘drawing on project management disciplines and methodologies to achieve predictable, consistent, robust results’ so that the Government’s priorities can be delivered ‘right first time’. This emphasis on applying established methodology reflects the nature of the professional discipline of project management, which emphasises a rational, technocratic and managerial approach in which an established ‘Body of Knowledge’, representing established good practice and applicable to any project, is to be consistently applied.

This technical approach to project management, founded on a linear process for initiating, planning, executing and closing a project, provides a valuable foundation for building project success, but it only takes us so far in understanding why projects go off the rails.

A wider perspective, and some important clues about project failure, are offered by a recent study (Haji-Kazemi et al 2015) which focuses on understanding what happens when early warning signs about a project’s progress are identified. Such signs, whatever source they rise from, should be important triggers that feed into project scrutiny and, if necessary, into corrective action which in turn should help to increase the chances of project success. In practice, however, early warning signs are frequently neglected or misinterpreted. The reasons for this, as Haji-Kazemi et al discuss, are variously organisational, psychological and political. 

Organisationally, choices have to be made about what kind of project information to monitor. Decisions made at this stage can crucially affect what information gets through. Psychological factors include a well-established tendency in project management towards ‘optimism’ bias (Flyvbjerg 2009), defined as a tendency to be overly positive about the outcomes that are likely to arise from planned actions. This creates an inherent bias towards over-estimating benefits and under-estimating time, cost and risk. A further psychological tendency that can contribute to a neglect of warning signs is a tendency towards ‘normalisation of deviancy’ as problems become familiar and so begin to be accepted as part of the norm, creating ‘a perfect petri dish environment for corporate (or project) misbehaviour’ (Pinto 2013: 377). Political factors, reflected in the role that power plays, affect what type of information is allowed to influence decision-making. Taken together, these organisational, psychological and political factors can have a considerable influence on the extent to which early warning signs are detected and acted on, and thus on project success. Significantly, Haji-Kazemi et al identify that the likelihood of these factors causing distortions increases as project complexity grows. Although their work was focused on the private sector, this is a highly relevant finding for the public sector project manager, as public service projects tend to be characterised by multiple objectives and multiple stakeholders – both of which go hand in hand with a large dose of complexity.

What does this information mean, then, for project management and for governmental projects in particular?

First, there is nothing in these findings that detracts from the importance for project success of managerial capacity, technical know-how and skilled leadership. All these components of sound project management need to be brought to bear on ensuring that the barriers to recognising and acting on early warning signs are minimised. We also need to recognise, though, the importance and significance of the organisational, psychological and political factors that play into project management. While project management disciplines and methodologies provide a foundation for identifying early warning signs, they do not of themselves guarantee that these signs will be acted on. Studies by Haji-Kazemi, Pinto and others indicate that the key components in this respect go much wider than the project manager or leader, and include the nature of the organisation’s culture (especially an openness to discussion and a willingness to learn), the use of external scrutiny to provide for objective assessment that is freed from internal bias, and an approach to governance that encourages and rewards reflection and transparency.

These findings about why early warning signs may be neglected suggest that organisations need to frame the ‘problem’ of project management failure more broadly. While accepting that project management skills and capacity are part of the answer to this problem, organisations also need to understand the deeper roots of project failure, and to develop their corporate capacity for openness, learning, external scrutiny and effective governance. Otherwise, no amount of training for project managers and leaders will increase the chances of project success.

Ellen Roberts

Flyvbjerg, B., Garbuio, M. and Lovallo, D. (2009). Delusion and deception in large infrastructure projects: two models for explaining and preventing executive disaster, California Management Review, Vol 51 (2), pp. 170–193.

Haji-Kazemi, S., Andersen, B. and Klakegg, O. J. (2015). Barriers against effective responses to early warning signs in projects, International Journal of Project Management, Vol 33 (5), pp. 1068-1083.

Pinto, J.K. (2013). Project management, governance and the normalisation of deviancy, International Journal of Project Management, Vol 32 (3), pp. 376-387.