Posted by Colin Weatherby                                                                                         1100 words

There have been a number of posts on value. In the context of imminent rate capping in Victoria it is timely to revisit some concepts of value relevant to local government. It is easy to overlook the fact that public service expenditure is about creating public value.  Especially when revenues are being constrained and thinking is turning towards making savings and cutting costs.

In the diagram above I have used the Kano model from Wikipedia and positioned three key council services that many regard as ‘core’ services – the provision of public parks, waste collection from residential properties, and provision of roads. Each has been placed in a different place on the diagram and I will explain why.

Roads are basic infrastructure that people rely on for transport. I have yet to meet someone who has written to the council saying what a wonderful road they have outside their house, or that they bought into the area because of the great roads. As long as there are roads and they work, people are satisfied. If the roads don’t work (i.e. they are inadequate and there is traffic congestion or maintenance is poor and cars frequently hit pot holes) they will quickly complain and put roads at the top of their list of areas for improvement. It meets basic needs and can  become a dissatisfier but is very unliekly to become a delighter.

In comparison, waste collection sits squarely on the expected value curve. People have a clear expectation of what the service will provide – put your bin out the front of your house on the correct night and the next day it will be emptied. Again, I don’t know of anyone who has moved into a particular municipality because of the quality of the waste collection services. Unlike roads, however, because people participate in producing the service (i.e. they place their bin out the front) they have a clear expectation of what will happen next and they will complain if it doesn’t. A good waste service has the potential to make people very satisfied and this is evidenced by the high importance and high performance scores given in community satisfaction surveys.

If services are improved and they start to delight people the delightful innovation becomes a basic need and is expected as shown in the diagram above.  The best example is a cleaning service for public toilets.  If toilets are cleaned so well that people notice the high level of cleanliness, this will become the expected standard.  The best outcome for customer satisfaction with public toilet cleaning is that people don’t notice how clean the toilets are – they should be neither sparkling clean or dirty.  This is an important consideration for local government and service improvements intended to delight should be targeted at services where the improvement is visible and capable of delighting.  Attempting to delight people with roads is expensive and could be unrealised.

Lastly, I have put provision of public parks as a delighter. People do write to their council when parks are looking beautiful. They do move to particular municipalities or areas because of the quantity and quality of open spaces. Whilst parks fulfil many basic functions in supporting physical and mental health, they also add capital value to residential property and bring enjoyment to people. Even when parks are poorly provided they seldom score very badly in community satisfaction surveys. They are intrinsically good and most people appreciate them. Done very well, they are a delighter.

In each example, there is a different value expectation and value proposition sitting behind the delivery of the service. All will have efficiency based business models, although public parks should have elements of a value-based model. Each is a ‘universal’ service available, although there may be some customer segmentation with waste collection and parks. The performance objectives for each will be different:

• Roads – safe, reliable and cost effective.
• Waste collection – timely, low cost and responsive.
• Public parks – quality, cost effective and consistent.

I have mentioned community or customer satisfaction a few times. It is worth remembering that satisfaction = expectations +/- experience (i.e. satisfaction is a product of what you experience in comparison with what you expected). Councils do very little to influence or shape expectations of services. As a result, satisfaction is often low because everyone has a different expectation of what the service will be. Often this includes customisation to meet their specific needs when the service is mass produced and has been standardised for efficiency.

If the Kano model is used to understand value and how it can be produced, the positioning of the various services becomes important in terms of how they are managed. For example, in Victoria councils have diminished their public parks through cost cutting and de-skilling. Thirty years ago public horticulture influenced gardening practice. People would see what their local council was doing with flowering displays or shrub massing and copy it at home. Public parks and gardens were the pride and joy of many councils, especially in regional areas.

Cost cutting after municipal amalgamations in the 1990’s started the decline. It was followed by a decade of drought in the early 2000’s when poor management and expeditious cost cutting further degraded parks. Today parks seldom delight and a hallmark of municipal branding has been lost. One of the few services that was unique and differentiated municipalities has been abandoned at great cost with rapid asset decline.

Waste management, in comparison, has gone from strength to strength through outsourcing. The involvement of large companies in tendering for waste collection services has driven introduction of technology and work practices that have significantly reduced costs and improved quality. The cost to collect a domestic waste bin and dispose of the waste is around $1. Can you think of another service where someone comes to your property and takes away up to 100kg of materials for $1? This is a good news story because the value proposition has been explicit and supported by capable service delivery.

In many ways it is a pity that councils have not thought more about value in their haste to reduce costs. Rather than ‘support their price’ (i.e. demonstrate the value created through expenditure of public money), councils have been quick to cut inputs.

Where this has been supported by intelligent private sector service providers it has resulted in improved value.  When this has not happened, it has simply eroded value and diminished local government as a service provider and manager of community assets.