Posted by Colin Weatherby                                                                         1300 words

Mark H. Moore’s ‘strategic triangle’ – the basis for value-led public sector management

I have been thinking about leadership a lot recently. It has been a recurring theme in posts on this site. Reading Jeffrey Pfeffer’s book has challenged my thinking about how leaders work and what motivates them. It has reinforced some of my scepticism about leaders and why they do what they do. I tend to agree with Peter Drucker’s questioning of the distinction between leadership and management. Ultimately, organisations, particularly in the public sector, have to be managed. The idea that somehow managers aren’t leaders or that leaders aren’t managing doesn’t make sense.

Having said that, I can think of organisational leaders I have known who couldn’t manage. At some point they just ticked the leadership box and assumed the position! Pfeffer explains how and why everyone then goes along with it. Once you are a leader it seems you can get to stay there without any real scrutiny and accountability for your performance. That has definitely been my experience in local government.

I keep imagining myself working in an organisation with an effective leader who manages the organisation for high performance (not career advancement). One that provides clear strategy, direction and goals.  One who coordinates effort to  across the organisation to achieve those goals. In particular, I have been thinking about how they could do that in local government.

Some leaders in local government have simply taken up the latest management fad from the private sector or elsewhere in local government. Gary Hamel describes this type of leadership well. He even lists some of the fads I have experienced – management by objectives and evidence based decision. The latest fads in Victoria seem to be projectisation of everything and staff all hot desking. Again, we have looked out the window and seen someone else doing something different, which looks like what we should maybe be doing, so we are blindly copying them.

I have an alternative for local government. It is not an original idea, although how it can be done has taken some thinking. What if a leader decided that the organisation was going to be managed to create public value in an explicit way? By this I mean taking using its authority to make laws and force people to pay taxes and then producing something that those people recognise and regard as really valuable.

I am not saying it is easy. To begin you would need to believe that people expect something valuable when they pay taxes and that they know what it is. Then you would need to find out what it is and be clear about how it will be created through the delivery of services. Then you would need the wherewithal to make it happen and measure your performance.

Previous posts discuss the concept of public value and how to apply the public value scorecard. These posts have assumed some familiarity with the concept of value and how organisations can be managed to create value. It is a common part of management thinking in commercial situations and there are lots of articles on value chains, removing non-value adding steps, and challenging new ideas on the basis of whether or not they add value for the customer.

We often use these terms in local government, especially when we are playing around with lean. Mostly we are talking about something that we know nothing about. Value can be a difficult thing to confidently create  in public services. We don’t have the simple ‘bottom line’ available to the private sector to ultimately determine whether or not value has been created. The Public Value Scorecard is an alternative but it is more complicated. A future post will discuss value in more detail.

I think the starting point is to understand the strategic triangle concept developed by Mark H. Moore. It creates a connection between the authorising environment for use of public authority and resources ( the leadership bit) with the value created and organisational operational capability required to produce it (the management bit).

The diagram below shows the strategic triangle in the context of authority to define value. Moore describes management of the relationships between elements of the strategic triangle as strategic public management. I call it value-led management when leaders use this understanding to run their organisation.

Legitimacy and support is critical for effective delivery of public value. It is the real leadership challenge. Processes are required to find out what people in the community think is valuable and worth relinquishing some liberty (i.e. complying with local laws) and money (i.e. paying rates) in order to have. These processes need to be more frequent than the cycle of elections. Although this is the ultimate accountability mechanism for politicians it happens too infrequently to effectively guide public value definition. Mostly, it really only tells you when you have really got it wrong.

Increasing legitimacy and support is the reason that council’s now have a strategy to engage with the community, it is why ‘peoples panels’ are being used to advise on budgets, and it explains the annual surveys conducted to monitor community satisfaction. The council leadership want to know if they are delivering what the community expects and wants or needs. Unfortunately, these efforts are typically uncoordinated and not designed to provide a comprehensive and compelling understanding of public value.

Getting processes for legitimacy and support right is also the key to a successful relationship between the elected councillors and the organisational managers. Together they have a shared role in delivering public value. Agreeing on processes that are feasible in giving effect to political ambition within available resources is essential. In a worst case there is competition between organisational management and elected officials about who really knows what the community thinks is valuable.

Organisational management must know what the available resources are capable of achieving. This includes the funding, technology, people and systems available to create public value. There is no point committing to creating public value that is beyond the capability or capacity of the organisation. The public value must be feasible. This is a serious management challenge and one that many local government leaders would fail. They simply don’t know what their organisation can or can’t do.

As a result they frequently over commit and fail to deliver. It happens at all levels of government and debate over broken promises is a feature of every election campaign.   Former Victorian Premier John Brumby writes about this frankly and with insight in his recent book ‘The Long Haul – Lessons from Public Life’ in the chapter on ‘Hard Decisions’. His government came to office promising no tolls on a planned major new road project only to find out that the government could not afford to build the road without charging tolls. Significant unplanned expenditure was required for the public transport system. From his account it was the right decision to provide both the road and public transport services people needed but it was a different public value outcome from the one promised at the election.

Closely related to understanding organisational capacity is understanding what it takes to produce different types or levels of public value. Understanding the difference between public and private value is essential. Often value is produced unwittingly and value is as easily destroyed. It requires close knowledge of the performance of organisational processes to know whether or not they are producing the required value. Improving organisational performance depends on accurately measuring what is being produced and knowing that what is being produced is what is required.

Christopher Stone eloquently describes the dilemma of public services that don’t understand the difference between effectiveness and efficiency. He calls producing the right type of value ‘dynamic’ efficiency and contrasts it with the ‘technical’ efficiency so vigorously pursued by many governments. John Seddon also describes public organisations that produce more but create less value. He differentiates between value demand and fulfilling the purpose of people using public services, with ‘failure’ demand that occurs when public services provide them with something that doesn’t fulfil purpose.

Effective local government leaders focus on public value and the processes that surround its creation. They are value-led in their decision making. In the political legitimising environment they support processes that clarify and define what the community regards as valuable. Within the organisation they manage people and systems to ensure that the required value is created.

It’s not easy but it isn’t impossible.

Moore, Mark H. 2013. Recognising Public Value.

Pfeffer, Jeffrey 2015. Leadership BS – Fixing Workplaces and Careers One Truth at a Time.

Seddon, John 2014. The Whitehall Effect