225 – Why do we struggle to achieve capital expenditure targets?

By Lancing Farrell                                                                                                      1250 words

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I was reaching into the archives to re-run a popular post on how councils fail to complete their targeted amount of capital works each year when a colleague pointed me in the direction of a recent podcast on Freakonomics Radio. The podcast, Here’s Why All Your Projects Are Always Late — and What to Do About It,  provides insights into the nature of the problem facing councils and provides some practical solutions.

You might want to start by reading that post from the archives.

In the podcast several key reasons for projects not being completed on time and within budget are discussed. Those most relevant to local government include the planning fallacy, optimism bias, overconfidence, and strategic misrepresentation.

Let’s start with the planning fallacy.

There are a lot of reasons why that project you planned can take way longer than you anticipated, and cost way more. Outright fraud, for instance — the lying, cheating, and stealing familiar to just about anyone who’s ever had, say, a home renovation … There’s also downright incompetence; that’s hard to plan for. But today we’re talking about the planning fallacy, which was formally described a few decades ago by the psychologists Danny Kahneman and Amos Tversky.

This quote sets the scene nicely. Lots of things can contribute to a project not being completed on time but our inability to accurately estimate the time required to complete a project sets it up for failure. Continue reading

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224 – Risk taking in local government

By Colin Weatherby                                                                                               900 words

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Lancing Farrell raised several important issues in providing advice to a colleague regarding risk management. How does a council balance the pressure not to take risks and fail, with the competing pressure (often from the same sources) to take risks and meet demands to create new value?  

Risk is an interesting concept and there are various definitions. I like to think of it simply as the uncertainties related to achieving your goals. It is about the hazards along the pathway as you make your way towards your destination.

Businesses that don’t take risks will fail. They become uncompetitive or customer satisfaction drops. Either way, they lose business to competitors taking risks to create value that customers want and will pay for. We can all think of the companies that have taken big risks in redefining a service or product to create a new market.

You are probably wondering what this might have to do with local government. Aren’t we just doing what we have always done?

Many councils are. Whether they should be, or whether they will be able to continue to do so, should be questioned. We now live in the ‘age of the customer’ – residents want personalisation, mobility, self-service, rapid response, and efficiency (efficiency for them, not the council). The variability introduced by customers must be quickly and effectively absorbed by the organisation. Complexity, by its very nature, creates risks.

In conjunction with mandated limits on prices (the rate cap) and growing numbers of customers (as Lancing points out, Melbourne is growing rapidly), the rising expectations of residents means that councils must do things differently. Different usually involves risk taking.

I recently attended a training session on developing an organisational risk appetite. It showed me how councils could identify hazards and manage risks differently, yet still satisfy the pressure to stop things going wrong while meeting the demand to create new value. It needs a re-think and a more sophisticated approach to risk and compliance. Continue reading

221 -The Vanguard method in Australia.

By Tim Whistler                                                                                                         1000 words

Progressive leaders

The summit offered an opportunity for those who are unfamiliar with the Vanguard method to hear about work that has been done in Australia by IOOF (a superannuation fund manager) and the County Courts Registry using the Vanguard method. Vanguard team members presented public service case studies from the UK.

It was an interesting event and it highlighted the potential for leaders to think differently and better understand how work is being performed in their organisation, what is happening in delivering value to customers, and how improvements can be made.

There were several issues relevant to local government in Victoria. Continue reading

220 – A decision-making backlog – do you have one?

By Colin Weatherby                                                                                                700 words

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I was recently talking to a colleague about local government decision making. There have been many posts on the topic (see some here, here, here and here). Our discussion turned to whether the common complaints made about the performance of councils reflect a decision-making backlog – i.e. not all the decisions that need to be made, have been made (certainly not on time).

A comment I heard from Professor Mark Moore had started me thinking about the number of decisions we need to make.  He says that today a government makes 10,000 decisions each year. It would be great to know how he came up with the number. His comment was made in the context of the mandate a government takes from an election – they can only campaign on a small number of key issues, which cannot provide a mandate for all the decisions they must then make.

It started me thinking about how many decisions a council makes each year. Working out how many decisions a Council makes in the chamber is relatively easy. I am not sure how you would work out how many decisions are made by officers under delegation from the Council or how many operational decisions are made delivering services.

I started doing some sums. Continue reading

219 – Do we value competent management in local government?

By Lancing Farrell                                                                                                        1200 words

Image result for Why do we undervalue competent management hARVARD BUSINESS REVIEW

Raffaella Sadun, Nicholas Bloom and John Van Reenen have written an interesting article (Why Do We Undervalue Competent Management?) that explores a deep and persistent problem in organisations across the world.  This problem also manifests itself in local government.

The article is based on research over the past 16 years in 34 countries involving 12,000 organisations and 20,000 interviews (see more at http://worldmanagementsurvey.org). A strong evidence base is used in providing some clear insights into a problem that is disturbingly common.

The fundamental premise is that competent management practices make a difference to the productivity, profitability, growth and longevity of organisations.

This seems like such an obvious thing to say or write. Of course, the quality of management is critical to the performance of an organisation. After all, aren’t we are all managers and doing something that makes a positive contribution? This is where the story starts to get interesting. Continue reading

218 – Requisite leadership, stratified systems theory and local government management.

By Colin Weatherby                                                                                              680 words

Jacques levels of work authority

Lancing Farrell posted an interesting piece using Elliott Jaques’ requisite organisation theory to explain the best use of Executive time. It prompted some related thinking on my part. Jaques has provided a significant body of knowledge that can be very useful for managers in bureaucracies and hierarchical organisations.

The idea that people naturally organise themselves into hierarchical, or stratified, managerial systems in organisations reflects the reality of local government.  This is reinforced by legislation that focuses accountability on top management.  They are held responsible for the work outputs of people in the organisation and this responsibility cascades downwards through the management hierarchy. Continue reading

216 – Some further thoughts on systems thinking.

Posted by Lancing Farrell                                                                              1600 words

Rodin's The Thinker

There have been a number of posts on systems thinking examining both its theoretical underpinnings and practical application. I recently had reason to consider how systems thinking, or lack thereof, affects organisations from day to day, and the ways that systems thinking can shape or influence organisational culture.

This was prompted by an article by Brian Martens on ‘the impact of leadership in applying systems thinking to organisations’. It is a thoughtful explanation of his research and thinking.

“Systems thinking is a natural way to look at the world and all the relationships and interconnections that are involved in its functioning.”

I think it is the only way to think about leadership or management in councils because connections matter so much in delivering services that meet the expectations of recipients and because resources are scarce and must be shared whenever possible. Continue reading