Too small to fail

Perhaps this blog ought to be called ‘Too Small to Succeed: Too Important to Fail’.    The saga of the small District Councils the sustainability of which has been called into question by cuts in Government grants rumbles on. 

I wrote a few weeks ago about West Somerset, the nation’s smallest District  Council which has revealed that its finances are unsustainable in the long term because the pressures for growth on its expenditure cannot be matched by an increase in income.   This is the problem for the whole of local government in microcosm unless grants one day start to increase again, although some lucky authorities with growing Council Tax and Business Rates tax bases may escape the ultimate consequences.   The smallest Districts are hit first because their overheads are highest in proportion to overall spend.

 

Since what may become known as the ‘West Somerset Question’ was posed, the Government has come up with its chosen solution, which it is reported is to suggest West Somerset become a commissioning Council, outsourcing provision of services to others and reducing its overhead costs to a minimum.

This kind of things works- up to a point.  Clearly larger providers, such as neighbouring authorities or the private sector  can spread costs more easily and arguably the private sector has more acumen and more leverage when it comes to reducing costs.    But this can only be a temporary solution if austerity continues because it does not address the fundamental issue of growth in demand outstripping growth in income. 

Which underlines the problem, not just for small Districts but for all local authorities, that the often expounded solutions such as outsourcing and shared services in themselves do not do much more than buy time. There are limits to what even the most enterprising provider can do to keep making services more and more efficient.  Two other downsides to arms length provision- the cost of contract management and a risk of loss of democratic accountability are worth mentioning in passing and perhaps we will return to them in the future. 

Economists make the point that service industries, being people based, find it difficult to become more productive other than by managing access channels and moving to greater self-service.   Thus the doctor no longer visits you; you visit the doctor, and the bank offers better terms on investments if you agree to manage the account online.   Productivity improvements in services come from redesigning processes and asking people to do more for themselves.   This is the way forward, in my view, but in the public sector there is a limit to the pace at which this kind of change can be accomplished, the main blockers being ‘The Two V’s’ –the vulnerable… and votes.  

That doesn’t mean arms length providers are not worth considering, of course, because bringing in commercial expertise and the capacity to innovate can help find the longer term solutions, but simply changing the name of the provider is not going to be enough.

Just because a local authority is small in size doesn’t mean that is not vital to its community, and it would be shame if local authorities were forced to become less local in order to become more efficient.  Chubby Cat’s initial suggestion for the small Districts, which was to provide extra grants subject to the small authorities showing they had taken certain efficiency measures has been scotched by Government.  No more money.  Instead we have a solution which kicks the can down the road again – perhaps far enough for the economy to recover and bail us all out. Let us hope so. 

Innovation: For the Light Bulb There Was No Light Bulb Moment

Everyone in the public sector is looking for innovation, but where should we look?

The ‘adjacent possible’  sounds like a dreadful bit of jargon, but actually means exactly what it says.   It describes the place at the boundary between what we do now and an imaginable but as yet unachievable future. 

To take an illustration, Homo sapiens evolved about two hundred thousand years before the light bulb was invented.  Now, the light bulb would undoubtedly have been a particularly useful tool for our ancestors who spent a lot time in caves.  If the brains of Stone Age men were identical to ours, why didn’t they come up with the light-bulb?

The answer seems fairly obvious.  In order to build a light bulb, humans first had to understand electricity, that it existed and what it was, then how to harness it and then how to generate it at will.   Actually making a light bulb then depends upon knowledge and skill in a wide range of difficult technological processes – the ability to construct small, air tight glass vessels and fill them with gas, skills in making delicate metal filaments and so on. 

For the light bulb, Michael Faraday’s experiments in generating electricity in the 1820s and 1830s provided the spark for a period of innovation. In the space of twenty years in the mid nineteenth century, several different working versions of a light bulb were produced and a few were developed into models that could be mass-produced.  At last, probably a few hundred millennia after a human being first thought ‘Hey, wouldn’t it be cool if……’ ,  we reached the point where we could flick a switch and instantaneously light up a dark space.

This week, when the last typewriter was manufactured in the UK, it emerged that the first patent for a typewriter was filed in 1714, a full hundred and fifty years before someone managed to build one.  A similar story can be told for the computer. 

The lesson is that both the light bulb and the typewriter had to move into the adjacent possible before they became reality.

The adjacent possible is easiest to describe in terms of science and technology- things we can see- but it applies to everything, not least culture, ideas and (importantly for innovation in the public sector) politics.  

The notion of the adjacent possible is one of those simple and seemingly obvious ideas that turns out also to be more useful than it first appears. The more you think about it, the more you realise how useful it is.

For example, when looking for innovation it is vital to understand the adjacent possible.  The chap who envisioned the typewriter in the early years of the eighteenth century did a service to mankind, but was no help to anyone in 1714.  The experimenters and theorists who preceded Faraday set the foundations for what he achieved in the field of electro-magnetism, but the invention of the light bulb still had to wait.  

In a crisis, then, there is no point spending a lot of time looking for innovation in the space beyond the adjacent possible, but perhaps there is real innovation to be found in the space that last year was outside the adjacent possible and this year is within it.   What are the new things that make it possible to do things we couldn’t do before?

Because the adjacent possible – and our understanding of it- changes all the time.  Sometimes it is changed for us by a moment of individual genius as with Faraday’s experiment,  or it may be changed by collective effort over time as with much cultural change.   The consecration of women bishops into the Church of England, for example, while it has been moved closer, is still just outside the adjacent possible but with one further push – a change of governance or a new argument perhaps- it will surely move into that space before long.

Innovators need to understand how much they can influence the adjacent possible in the short term, a particularly interesting question when it comes to persuading politicians, who may have been elected on a clear manifesto to do one thing, that perhaps the innovative solution to their problem depends upon pursuing a different course. 

The lesson is that innovation can only be accomplished using the tools and resources that exist.   Once again, this indicates that true innovation rarely emerges from a light bulb moment of inspiration, but from hard graft- understanding the difference between what is out there and what is interesting but as yet tantalisingly beyond use.