Business plans – is failing to plan, planning to fail?

Apparently not according to a report in yesterday’s Financial Times. It reported that a survey by two professors from Babson College in the US, Julian Lange and William Bygrave. The professors surveyed over 100 Babson College graduates who went on to start their own businesses. They found that the performance of these start-ups was unaffected by whether or not they had written a business plan prior to launch.

Perhaps the research is a little more nuanced. For some entrepreneurs, a business plan is not necessary. I had a very rudimentary plan – but it was essentially just me and a laptop.

Before social entrepreneurs rip up their business plans, they should remember that if they want some finance, they will need a business plan. Moreover, if you are taking others (and their livelihoods) with you, a business plan is pretty desirable.

There is lots of useful guidance on business planning out there. I’ve identified some before from Forth Sector. Other sources of help include Microsoft for templates and Future Builders for guidance focussed on the third sector.

Forecasting the future, corporate social responsibility and charities

As we are well past Twelfth Night the decorations are down and the papers are reporting news rather than reviews of 2007 and looks forward. I always enjoy reading the forecasts for the new year. However, we need to be cautious. These are among my favourite quotes:

Airplanes are interesting toys but of no military value
Marshall Ferdinand Foch, Professor of Strategy, Ecole Superieure de Guerre

There is no reason anyone would want a computer in their home
Ken Olsen, president, chairman and founder of Digital Equipment Corp, 1977

Whilst being wary, it is important to note and watch trends.

On the last day of 2007 I noticed in the Financial Times’s suggested that it was time to say goodbye to corporate social responsibility:

Never mind rising sea levels: the waves of cynicism washing over corporate executives as they push their CSR agendas promise to become life threatening in 2008. In the inevitable life-cycle of management fads CSR is now heading for the exit … as to the identity of the next Big Thing in management: sustainability. Unlike CSR, this concept has some meat and commercial potential to it. Innovations that make money while helping to reduce carbon emissions are actually worth pursuing.

I've commented on here that cutting costs and cutting carbon can go together.

If CSR is on the way out (albeit with some re-badging of CSR as sustainability), this may pose challenges for some charities – particularly if the economic environment forces some corporate sponsors to do some trimming of budgets.

Foundation Trust governance: Network Rail and NHS Direct

There has been some debate about the effectiveness of the governance of NHS Foundation Trusts – in particular, the poor levels of participation seen in some Trusts. However, it is interesting to see that there is an emerging campaign to reform the governance of Network Rail along the lines of Foundation Trusts. In the aftermath of the new year “Network Fail” engineering works, some stakeholders of Network Rails are frustrated by the lack of accountability seen in the organisation.

On the issue of Foundation Trust governance, there is a big opportunity for everyone to have a say in a widely used NHS service. NHS Direct receives 120,000 calls every week. Now it is seeking Foundation Trust status and, hence, asking members of the public to join as Trust members. Its Foundation Trust zone is here.

Public services and YouTube

If an antiquated and anachronistic institution such as the monarchy is using YouTube, why aren’t more providers of public services using it? It offers a way of reaching younger people as well as those not keen on wading through paper.

I only know of one social landlord that is making use of YouTube to reach its customers and stakeholders.

Christmas present to Colleges – revised governance documents

The government has presented FE and sixth form colleges with new instrument and articles to go live in 2008.

Some of the amendments to the I&A are housekeeping matters – for example, resulting from the Machinery of Government changes (i.e. the divorce of the pre- and post-19 parts of the old Department for Education and Skills. (Further governance changes may result from this potentially messy divorce.) However, other modifications to the I&A are more significant.

There is the ending of the rigid specification of categories of “external” governors i.e. the requirement for numbers for local authority, community, business and co-opted members. This is a modest but welcome measure of de-regulation. As I have argued here before, colleges should be given more flexibility in determining the size and shape of their governing bodies.

The new I&A also include a strengthening of the “learner voice” with at least two learner governors on each governing body. This will need to be accompanied by action to support learner governors in being able to challenge and contribute in the governance framework. Sometimes this is a problem. (Arguably it would be good to see colleges exploring new ways of enabling learners to hold governing bodies accountable – and this might not require such reliance on learners being on governing bodies.)

Some colleges may struggle with the requirement to post governing body minutes on the internet. However, this is good governance.

If you are a college clerk to governors and can’t find the new I&A, don’t spend all your Christmas and New Year holiday searching for the documents, they are tucked away on the old DFES website so click here.

The rise and fall of Carter & Carter – issues raised by private sector provision of public services

Over my 14 years working with Further Education colleges, one of my particular interests has been the spectacular collapses of some colleges. These collapses have often offered other colleges useful lessons in how not to do things, as I have noted here. (They have also led to a series of knee-jerk reactions from certain quarters with the result that colleges find themselves badly tied up in red tape.) Recently we have seen a phenomenon of a major training provider worth (at one point) £500m implode.

Carter & Carter was a fast growing training provider with plans for further expansion. Some colleges considered partnerships or actually entered joint ventures with the training provider. Then things went wrong. The founder and chief executive died in a helicopter accident. Then the share prices fell, the bankers got twitchy and the auditors got busy. The Guardian has the full story.

The rise (and fall) of Carter & Carter poses issues of private sector involvement in public services. I suspect it has delayed the day when we see the private sector taking over a failing FE college. I personally favour a mixed economy in public services (and, more importantly, so does Gordon Brown according to the Financial Times) as a way of promoting choice, competition and innovation. But how does the funder and the regulator ensure a level playing field?

Interestingly outsourced contractors might be star-rated when providing welfare services according to Public Finance. Stretching the regulatory regime for the public sector over the private sector is certainly one option. However, a lighter but smarter regulation might be a lot helpful in allowing all public service providers to focus more on outcomes than compliance.

Payments to charity trustees – the voluntary sector raises the issue

The Association of Chief Executives of Voluntary Organisations has launched a report Chief Executives on Governance. The report stresses the need for "fit for purpose" governance including implementing board appraisal and more transparent recruitment processes.

Interestingly the report touches on the controversial issue of payment of trustees. The report suggests that payment should be considered by third sector organisations to encourage the right mix of skills and experience on boards. A survey for the report found that 15% of ACEVO members already believe it will be necessary to remunerate trustees beyond expenses.

I am wary payment. I think it has potential to damage the reputation of the third sector unless it is linked to excellent governance including effective appraisal and transparent appointment. I also think it has potential to harm the ethos of smaller “voluntary” organisations. (Its not unlike the issues posed by the sociologist Richard Titmuss on the gift relationship. Will more people give blood if they are paid to give?) Moreover, there remain the unresolved problems of how payments may cause difficulties and exclude from participation those on benefits.

I do recognise that payments to trustees can be a tool to broaden pool of potential trustees. This appears to be the experience of some housing associations after the introduction of board remuneration. I am not aware of any research studies in this area. They would be very welcome.

In balancing the pros and cons, I think it is another case of horses for courses. Appropriate governance arrangements will vary with payments for trustees making sense for larger organisations.

Some facts about police pay and performance

The latest bulletin from the Reform think tank makes some interesting points about policy pay and performance which are worth considering in the heat and noise over the government’s reluctance to aware the review body’s recommended rise. For example it notes that over the last 12 years, police pay has risen at twice the rate of inflation and by more than the average of the public sector and the private sector pay increases.

It also puts falling crime rates in the context of how now 63 per cent of main family cars now have an alarm, compared to 23 per cent in 1992. So often performance indicators are seen in isolation rather than considering the external factors bearing on them.

Social landlords and Plain English

The Plain English Campaign has just announced its latest awards. Looking at past winners I am surprised that social landlords aren’t represented among the winners of Golden Bulls.

While some housing associations have clear and well laid out tenants handbooks, other handbooks are written without tenants in mind. When I have put text from tenant handbooks through reading ease scoring they have have been shown to assume fairly advanced levels of education. How may tenants would understand a tenant handbook that talks about problems with soffits?

I do wonder how many organisations actually use the reading ease scoring that can be found on basic Word packages. The Plain English Campaign has its own Driven Defence software too to make text understandable.

Social landlords have an admirable commitment to translation into other languages (albeit sometimes forgetting the new migrant communities have emerged in the last decade). It would be good if all social landlords (and other public services) had a similar enthusiasm for Plain English.

Social housing and self-regulation - CIH on residents leading the way

I’ve not read all of it yet but it looks like the Chartered Institute of Housing have published an interesting report on resident-led self regulation of social housing. Leading the way: Achieving resident-driven accountability and excellence (pdf available) sets out how scrutiny by residents could be an effective substitute to external regulation of service delivery.

While I believe that resident board members are important in ensuring accountability in social housing, they are not enough. (Indeed there is a risk that the most effective resident voices are co-opted.) Likewise other channels for resident representation are not sufficient.

The report sets out a framework for councils, ALMOs and housing associations where board members and senior managers have a formal duty to respond to the queries and recommendations. The resident-led self regulation group (RLSRG) would have “internal and external powers to get responses and drive change where the board/executive is uncooperative”.

This makes sense to me. How can residents be asked to invest time and effort in getting involved unless they know that they will be taken seriously?

NHS financial turnaround - superficial or sustainable?

In the Public Finance website’s archive there is an interesting article (yes, really) on the state of the NHS’s finances. In “Surplus to requirements” Sally Gainsbury explores how the NHS has managed to turn a deficit of £547m into a surplus of £510m in one year.

The article looks at some of the most spectacular turnarounds in the performance of Primary Care Trusts.

These paragraphs give a good taste of the explanations:

In annual turnover terms, the biggest recovery was in Western Cheshire PCT. There, the provisional NHS accounts show a move from a £16.3m deficit in 2005/06 to a £4m surplus in 2006/07 – a turnaround of £20.3m, representing 6% of its annual turnover.

But monthly finance reports presented to the PCT’s board between April 2006 and May 2007 show that it received more than £33m in non-recurrent funds in the financial year 2006/07, all of which have been absorbed into its final income and expenditure account.

Other case studies are worryingly similar with one-off windfalls and the like.

Too often “efficiencies” and turnarounds throughout the public sector are a little too superficial.

NHS at 60 – faltering progress on reform

The Economist has made content from its crystal ball gazing The World in 2008 available on the internet. It’s worth a look.

There is a fairly depressing prognosis for the NHS as it reaches the age of 60. The article notes that Gordon Brown lacks the enthusiasm for introducing the market forces of competition among health care providers. The article concludes:

It is hard for the public to feel confident about how Labour is handling the NHS when its staff are so dissatisfied. And one of their biggest gripes has been the threat of private health-care groups moving in on their territory. But there will be a long-term price to pay. For it is exactly that threat which has the potential to unleash real change in the NHS, as Mr Blair belatedly realised. His vision of turning the NHS into a publicly funded health-care market may have run into difficulties, but that reflected the resistance of the vested interests of its staff as well as ministerial incompetence. Under Mr Brown and his health secretary, Alan Johnson, genuine progress in transforming the NHS looks set to falter in 2008.

Charities: time for an inspector to call?

Last Wednesday’s Guardian carried a challenging article by Martin Brookes of New Philanthropy Capital. (A full version of the lecture is available too.) The article addressed what he sees as charities’ lack of accountability for the funds they receive:

This lack of scrutiny is not healthy, and is not fair to the taxpayer or donor either. A total of £1.3bn of subsidy on tax-efficient giving was provided to charities in the last financial year. This is money that could go into schools and hospitals. No one sits in judgment over the value for money provided by this. And private donors - that is you and I - give almost £9bn, the impact of which is not adequately recorded or monitored.

He could have added that increasingly third sector organisations are delivering public services rather than supplementing or critiquing them.

Martin Brookes believes that scrutiny would improve performance with better informed donors picking better charities and weak charities lose funding.

Its hard to argue with any of that. However, he recommends a new institution alongside the Charity Commission. This quango would be concerned with assessing and improving the performance of charities. It would be under the wing of the Cabinet Office and report to a House of Commons select committee.

I do like the idea of reports assessing how well charities are managed and governed, how they involve beneficiaries in shaping services, how they address issues of equality and diversity, etc. But I have some concerns.

Given the scale of red tape that small charities are wrapped in, like any other small business, I am wary of anything that adds to the regularity burden in the wider sense. Moreover, across the public sector there is so often a tick-box mentality where things are only done superficially and ritualistically in the expectation that an inspector will call.

Perhaps it would be better if the charities themselves stepped forward and took up the challenge of measuring and improving their own performance. Self-regulation is not always appropriate (as I’ve argued on this blog in connection with housing associations) but it would be a step forward for charities. They could help define the standards for the sector and design the framework for applying assessment.

Standard and Poor’s give social housing regulation a credit rating thumbs-up

Standard and Poor's have concluded in a new report that the planned re-organisation of social housing regulation in England will not lead to any weakening in the level of control over the sector. They do not expect any changes to credit ratings on U.K. housing associations as a result of the new regulatory regime with an independent Office of Tenants and Social Housing from 2009.

This is good news for housing associations and plans for more new social and affordable homes. We can only wonder whether or not the suggestions of self-regulation from the National Housing Federation would have led to a similarly benign result.

Wikis helping professionals to manage the risks of pandemic flu

Its that time of year again – when I start talking about the risk management issues around how the public and not-for-profit sectors are preparing (or not) for the contingency of pandemic influenza.

The technology of wikis has brought a useful website, Flu Wikie, for sharing information on pandemic flu and preparing for the worst.

I hope (and expect) the internet will create more such wiki sites of assistance to professionals in the public and not-for-profit sectors. If anyone has any other examples, please share them.

McKinsey on Government as a business

On the MacKinsey Quarterly website there is a new lecture worth looking at. Ian Davis, the Managing Director on McKinsey, reflects on Government as a business. (Both the transcript and the podcast are available although you'll have to register.) Hopefully the title will not turn people off.

The lecture reviews a range of issues facing the public sector internationally including globalisation and demography. But the most insightful section is on the “productivity imperative” – what is known as the “efficiency agenda” in the UK.

Davis starts by pointing out:

People often use the term "productivity" interchangeably with "savings"—seeing the word as synonymous with cost cutting and layoffs. But that is not productivity. Productivity achieves two goals at once: productivity simultaneously improves performance while decreasing costs. The magic is that productivity integrates both results and costs, conceptually and in terms of measurement.

That isn’t a big revelation. It is common sense. And its in all the UK government’s guidance on efficiency. Yet sadly in the UK the word “efficiency” is being abused in all sorts of ways. (One housing association that I know didn’t spend a large chunk of its training budget – it claimed that as an efficiency in its returns to its regulator.) The UK “efficiency agenda” really does have to get back to the key related issues of raising productivity and doing more for less

Davis advocates stretching ambitions for improving performance but reminds us:

This can't be achieved by pressure alone—you need support as well. And you need training. In government reform efforts we have seen around the world, pressure without support simply leads to demoralization, while support without pressure leads to complacency.

That sounds rather familiar?

In terms of means, he notes:

Virtually all countries could benefit from adopting more of the approaches that have helped drive the productivity gains in the private sector over the past two decades—better transparency, improved performance management, better alignment of incentives, stronger accountability, better incorporation of technology, and, crucially, better attraction, deployment, and development of talent.

I fear that in the UK we’re see more top-down approaches to improving performing – linked (or confused) with a more bracing financial environment for public services. Nevertheless, leaders and managers in the public and not-for-profit sectors can still raise to the challenge for raising productivity from the bottom-up.

Vision, Brown and the market for think tanks

Last month Prospect magazine gave the “left-leaning” Institute of Public Policy Research the accolade of Think Tank of the Year. I see this as significant given IPPR’s closeness to New Labour and power – plus a government in search of the “vision thing”.

It is note-worthy that the IPPR has been thinking and promoting reform ideas quite distinct form the Blairite agenda of choice and competition. Public Finance has carried an article by Carey Oppenheim and Lisa Harker setting out a Brownite “narrative” of collaboration between users and producers.

The two IPPR staffers identify behind “personalisation” and “co-production”, two guiding principles:

The first is that people should have more opportunity to shape their own public services and should be better involved and informed. The notion is that ‘how’ public services are delivered is as important as ‘what’ they deliver. The second principle is that a transformation of outcomes will only come about if users of services are jointly involved with professionals in achieving changes in behaviour. This might sound pretty unradical but it is likely to change fundamentally the experience of using public services as a patient or parent.

That all makes sense.

But I would suggest that public services still require incentives to change, innovate, improve quality and reduce costs – in other words, there is a need for the disciplines of markets. Think tanks like Reform and the Social Market Foundation continue to develop ideas around choice and competition.

Txt helping to cr8 better public services?

In media coverage of the billion texts now being sent every month there has been little mention of the emerging impact on public services.

Schools and colleges are starting to communicate by text on issues such as attendance. Social landlords are reminding tenants of visits by maintenance staff and gas checking staff. Prospective tenants are even bidding for flats and housing in choice based letting. Once tenants increasingly they can use their voice and contribute their views via text in resident involvement activities.

Personalising public services sounds like jargon. But text technology is connecting public services with customers. Its a good news story thats lacking the coverage that it deserves.

Enforcement, education and 16-18 years olds - does it add up?

While the proposed increase in “school-leaving age” (strictly speaking it isn’t that) to 18 does create opportunities for colleges and other providers of 16-18 education and training (partly offsetting the demographic trends of falling numbers), I am a bit of sceptic on this proposal.

The think tank Reform have published any interesting critique. Its worth reading. It quotes the economists of the Organisation for Economic Development and Cooperation on the proposal in its latest Economic Survey of the UK:

While raising education participation is an important goal, it is not clear that compulsion is necessarily the best way to achieve it. In the United States there is substantial evidence that higher student achievement leads students to stay in school longer voluntarily. For those students who have already performed poorly, and who are unmotivated, it is not clear what the returns to further education and training at ages 16 and 17 would be, particularly since the return on many existing vocational qualifications is low and the new diplomas are yet to be tested. It should also be kept in mind that education participation is a relatively poor proxy for skills, and that a focus on qualifications can hide problems of poor usage and over-qualification. Educational quality – measured by cognitive skills – is a much better measure of human capital than years of schooling, and care should be taken to ensure that greater quantity is not sought at the expense of quality.

Moore is less? NHS and Sicko

Although cinema is one of my enthusiasms, I don’t plan to turn this blog into me talking about my favourite films. However, I think I will comment on Michael Moore’s new film Sicko as it touches on public services here.

Sicko movie is Moore’s polemic against the lack of free universal healthcare in the USA. It makes a strong case against what many Europeans would see as indefensible. When Moore leaves American shores, the film is more ropey.

Moore shows the NHS as idyllic. No reference to MRSA, Clostridium Difficile, the neglect of mental health, the way the NHS has sucked in huge additional resources without a proportionate improvement, etc.

When Moore visits France, its not just the social insurance based healthcare that is wonderful – it is everything. I am no expert on French healthcare but I am aware that there is racism, social exclusion, youth unemployment, etc – and that is just the suburbs of Paris.

I did like Moore’s trip to Cuba. Viva Fidel!