Having blogged about the dangers of ‘riding the tiger’ of the big service contract and getting eaten I realised I was focussing a lot on the negatives of contracting out services and failing to talk about when it works, why and how.
If you are old enough or have an interest in 1980’s cinema you may remember ‘dances with wolves’ where, to cut a long story short, Kevin Costner learns how to live with wild wolves, be accepted by them and generally not get eaten.
Kevin did it by understanding the wolves, the wider ecosystem of the plains and where he and the wolves fitted in rather than trying to project his values and agenda onto them.
He learned that if he acted like a meal they would eat him, if he acted like a threat they would attack him and if he acted like a member of the pack they would cooperate.
It also reminded me of research work I did while at the Ministry of Defence looking into the common features of successful procurement teams which was sort of similar.
These teams had to be able to cope with requests ranging from getting a machine gun mount onto hovercraft in Iraq ‘yesterday’ to contracting scores of ‘jingle’ trucks to transport food and equipment into Afghanistan or a major PFI deal for accommodation in the UK. After a lot of interviewing and analysis the rules of success that emerged were simple, relevant to most projects and have stood the test of time:
- Be insightful and understand a contracts objectives in context. Understanding of the outcomes or capabilities you have to deliver and how they fit in a wider strategic context and objectives, including the longer view, was critical. It allowed teams to make decisions on when a procurement rule should be applied and when it should be flexed. It also gave insight into what success looked like, which aspects of the procurement they had to accept, which they could shape or trade and which they could dictate.Care for the elderly in their homes or in residential settings are good examples of situations where there is a need to understand a service and contract in context. There is a need to come in on budget, but there is clear evidence that forcing price down too far is causing suppliers to withdraw from contracts and/or the market entirely. One significant cause of NHS bed blocking is that sufficient care home beds are not available in many areas of the UK as the market is unviable. If you destroy the market then ultimately you fail to meet your primary procurement objectives.
- Be dynamic and willing to take decisions and calculated risks. When we had confident, empowered and skilled commercial teams that were able to understand requirements and willing to take calculated risks, we saw consistently good outcomes. Counter-intuitively, risk-averse teams were ultimately much higher risk as failing to take smaller controlled risks created the much bigger risk of failure to meet the procurement objective.
An example of this relevant to local authorities and health providers is the Netherlands model for community nursing care which does away with all performance indicators bar patient outcomes. Nursing teams do what their professional judgement says will get the desired patient outcomes. The evidence is that this delivers better outcomes at much lower cost. It is a radically different approach with risks, but failing to innovate may ultimately be the biggest risk.
- Strong leadership and trust matter. In this context ‘strong’ did not mean ‘macho’ leadership, it meant leadership that listened, would make decisions, that the whole team trusted and which gave clear direction. It also meant leadership that could push back if they thought their customer was getting it wrong and which contractors trusted and could ‘do deals’ with. Strong leaders and teams get good, equitable and sustainable outcomes. In ‘wolf’ terms it meant thinking and acting like the agile wolf not the wounded buffalo forming a defensives circle.This is likely to be increasingly important as local authorities and other providers need to work in big complex local and regional partnerships. They will require leaders that really do lead in terms of demonstrating and supporting new values as well as setting the strategic direction. They will need leaders that draw the best from their specialist teams. They will also need leaders that are able to accept failure as part of the process of testing and innovation and not be discouraged by it.
Which brings me to the punchline which is that if you don’t want to be eaten – by tigers or wolves or other metaphorical beasts – then you need to understand there are no quick fixes in contracting or commissioning. It’s about understanding the fundamentals and doing them well, which includes accepting you and your requirements are part of a bigger picture that you need to understand, you can’t retreat into your organisation and just huff and puff and re-tender until something good happens.