Philip Whiteley's Blog

December 22, 2009

Why are politicians so blinded by the superficial?

Filed under: Uncategorized — felipewh @ 10:03 am

The Conservatives have promised a huge step forward with efficiency of UK public sector management through an outsourcing deal between Essex County Council and IBM. If you look at the news report in The Times, it’s pretty favourable; yet nearly all the comments from readers express caution or opposition. This is from experienced managers and outsourcers, not trade unionists:

Outsourcing is mostly based on a definition of efficiency that relies on measurement by accountancy. The problem with that is that you can reduce visible costs, but other costs balloon out of control – for example, you reduce ‘duplication’, but because there’s no due diligence on skills and service, errors increase. The cost of correcting errors quickly overtakes the cost of duplication. This has happened again and again and again in major change programmes – the private sector is almost as bad as the public. Mergers are generally a disaster.

What’s fascinating is that, according to the straw poll in The Times, managers and other personnel in the public sector know that ‘outsourcing’ is not a magic bullet. One of the commentators wrote:

‘My company outsourced a lot of its back-office to a company not unlike IBM some years ago. After three years it began to be so expensive we had to go through a very costly and time-consuming negotiation and restructure to get out of the deal. These schemes seem good at the start but they tie you in for the long-term and it never gets cheaper.’

Why do politicians not tap into this wealth of concern and knowledge? It is extremely frustrating that the political parties are not interested at all in management theory, and concern themselves with superficial matters such as outsourcing, organisational tinkering, rules and regulations. There’s an evidence base on how to run things much, much more efficiently – like Nokia or Toyota. Why is there so little interest? This is a big idea, not a small one. Outsourcing per se doesn’t improve anything at all.


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