IN MY OPINION: Sir David Wright

IN MY OPINION: Sir David Wright - Chartered Management Institute companion Sir David Wright, now vice-chairman of Barclays Capital, calls for a fuller use of agencies in public services.

by Sir David Wright
Last Updated: 31 Aug 2010

Chartered Management Institute companion Sir David Wright, now vice-chairman of Barclays Capital, calls for a fuller use of agencies in public services.

I have been fortunate in my career to experience very different management challenges. I've twice managed a core management unit of the Foreign Office - an embassy overseas - and on both occasions in the Far East: Korea and Japan. I have sat on the management board of the Foreign Office and have had the unique experience of setting up British Trade International as a separate government department but one with the unusual position of being answerable to two Secretaries of State.

I was involved with the Far East at the time when Japanese management practices were being assimilated by UK companies. We should not overstate the novelty of these techniques. For now, with the benefit of hindsight, their introduction can be seen as a revolution that owed more to the failings of management and the bitterness of class division that reigned in British boardrooms and trade unions in the 1950s and '60s.

Here are just a few examples. The just-in-time system is an entirely logical and unexceptionable method of inventory management that improves output and reduces costs. Kaizen represents a search for quality and improvement that any efficient producer should espouse and as a result manufacture products that respond perfectly to the aspirations of consumers.

High levels of R&D expenditure and a constant search for product improvement should be at the top of the marketing and development strategies of all companies. And communication with the workforce on a regular basis, whether in canteens, companies' sports activities, or kaizen discussion groups, should surprise none.

So although I acknowledge the benefits brought to British industry as a result of the management techniques imported with Japanese capital in the 1980s, we should not be dazzled into believing that these techniques contained some unanswerable truth that Western economies couldn't penetrate.

And as we look now at the problems that the Japanese economy faces, we can see that the Japanese had no more discovered the Philosopher's Stone than had Britain in the late 19th century. They now face their own management challenges in finding ways to unleash innovation and change into unresponsive business environments.

In Britain, the challenge of management change has shifted to the public sector. The call now is for improved delivery of public services. In spite of the fashion for applying private-sector management techniques to government, difficult issues remain about the way in which government both performs and delivers its services. These affect any assessment of how private-sector management techniques can be applied to government.

In government, the link between inputs and outcomes remains hard to establish - as recently highlighted by the difficulty of successive government departments in meeting well-publicised delivery targets. This challenge is aggravated by the inability of departments to focus their activity on a small number of immediately realisable targets. The private sector can do this by one simple test: follow the money, achieve the sale or the deal, and find the best way of adding to the bottom line with the minimum use of resources.

However, two holes beneath the waterline in the superstructure of any government department can leech valuable resources. These are the large number of activities that all departments are responsible for - a tyranny of past agendas, issues and programmes that departments have taken on but failed to shake off; and the political initiatives deriving either from manifesto commitments or from the pressure of a domestic constituency.

Both are a function of the democratic process, and it would be wrong for those who seek to cut swathes through the budgets of government departments to ignore these activities or the effect they will have on achieving the sort of focused allocation of resource that typifies private business.

A bold attempt to tackle these difficult management dilemmas was the introduction of so-called Next Step Agencies more than a decade ago. These agencies - many of which still operate in Britain - were intended to distance certain government organisations, largely those directly providing services to the public, from the slings and arrows of political fortune. They should have been allowed to focus more clearly on their delivery obligations without having to deal with the below-the-waterline leeching of resources.

Indeed, it could be argued that with an increasing focus of departments on the delivery of services, the shift of activity to agencies should be on the increase.

Regrettably, that is not the case. Agencies are no longer in fashion.

Perhaps the distancing of delivery from direct political control is more difficult to accept - the political buck has to stop somewhere. But this should not be a reason for not trying harder. Nobody pretends that the present government structure is ideal for delivering effective, quality services.

While I might regret that there are not more of these agencies, the fact is that we have some that are working well and we could, with a bit of a push, have more.

But there are signs of innovation over the health service, the funding of education at different levels and the costing of transport systems.

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