Leading by Standing Back:seven habits of more effective commissioners

Matthew PikeMarch 28th 2012

Letting Go: Holding On

"..the skill we lack …is…understanding how to let go, to get somebody else to deliver where we specify the results we are after, then work with those suppliers.. to make sure the incentive structure is right and we are all working together to deliver better public services in the end."

Gus O’Donnell – outgoing Head of Her Majesty’s Civil Service

What new capabilities are required?

i) Impact intelligenceii) Value for money appraisaliii) Supply chain ‘choreography’iv) Evidence-based practicev) Habits of innovationvi) Social entrepreneurshipvii) Navigating social finance markets

“Commissioning is the strategic activity of identifying need, allocating resources and procuring a provider to best meet that need, within

available means.”

“Commissioning is all about the most effective and efficient way of using all the available resources to improve the outcomes for

…………………..”

i) Skillfull Impact Measurement

• Longstanding rhetoric of outcomes and results• Most LA’s now have clear high level outcome

statements and a sea of data• Provider capacity is weak and the field of impact

reporting has been immature and fragmented – until now

• Moves to results-based funding and the fiscal crisis have increased the pace and the stakes

• The new Inspiring Impact alliance will help build capacity and awareness

ResultsMark • A new service to help build impact reporting and analytic capacity for Local

Authorities and providers• Shared measures, evidence gathering tools, data sources, reporting standards,

use of open data – available free to providers• Discounted access to the Views reporting system• Three tiers of reporting: Bronze, Silver, Gold – most providers will take two

years to get to Gold. An increasing number will gain a formal impact rating.• Supports benchmarking, informed commissioning, as well as the efficient

sharing of best practice• Local Authorities can add outcome measures to new contracts, access

intelligence about the local and wider supplier market and stream-line reporting in the future – with annual reports submitted on-line*

* Quality assured, verified, made consistent with open data standards, rated for information quality, evidence and outcomes achieved and subjected to both routine and bespoke value for money analysis

Views

• Impact reporting made easy• A simple, flexible reporting system that is ideal for small-

medium providers in particular • The Views dashboard gives supply chain managers and

commissioners real-time reporting on outputs and outcomes• Builds in all the metrics, standards and tools developed for

ResultsMark• Views is a social enterprise, created by research mutual

Substance • £50 a month upwards per organisation• www.views.coop

Results-based commissioning• Models of results-based commissioning are fast becoming the norm• Examples include Work Programme, Ex-offenders, Families with complex needs • Most schemes have pulled back from pure results funding to include an

element of payment on account due to the cost of capital / risk involved. Results based contracting is greatly disadvantaging small and even medium-sized not for profits

• Alternative models to pure results based contracting include cutting the worst performers each year or offering a performance bonus component on successful completion.

• Requires ability to track impact of services in real time, verify outcomes, learn from success achieved, pay the right price for outcomes delivered, understand risk and monetise added value

ii) Business appraisal based on impact intelligence

• Which are the cheapest and most expensive providers of similar services?

• Which organisations are targeting what outcomes?• Which services target which target groups? • Which services deliver the greatest outcomes?• Which organisations are able to report on their social impact?• How does current in-house provision compare to the wider market?• What are the hall marks of more effective providers?• Which services offer the greatest Social Return on Investment?• Which providers are most likely to deliver high impact and returns in

the future?• Overall which providers offer the great social impact for every £

spent?

Cutting, Keeping, Growing

• Cut what does harm, is poorly targeted, delivers poor results or represents poor value for money

• Keep what delivers results at or beyond the norm and spread awareness and use of better practice

• Grow what delivers at the edge of the ‘efficient frontier’

• 50% of Manchester’s cost base results from the failures of previous interventions, so there is scope for major long term cost saving

iii) ‘Choreographing’ new supply chains

• Most challenging social problems are characterised by complex and embedded risk factors

• Single service solutions are unlikely to work• Services need to address multiple factors in a

coherent and comprehensive way

Not for profit supply chains Local providers have great insight into what works best for different target groups. They are also more likely to find ways of working together to offer a coherent service than Local Authorities.

• West London is one example of c 60 NFP consortia nationwide• LA awards contract to NFP supply chain managers – either existing

organisations or special purpose vehicles– Third sector + consortia / supply chains– Joint development of integrated care / support pathway

• Manager & board agree on resource allocation• Peer learning and benchmarking across supply chain• Real time accountability for delivery of outcomes• Needs good capacity, especially in order to be fully accountable for

outcomes achieved

Community management of hubs and services

• Some specialist and highly localised services / amenities can be best passed over to local control and management• Development Trusts and Settlements, • New model libraries • Advice centres, • Parks etc

• Opportunity to remodel estates & support asset transfer to community based organisations

• Co-location of services supports a financially sustainable model• Shift service focus away from crisis management into DIY and

preventionNeed for investment, capacity / shared services, innovation in business models

iv) Evidence-based practice : doing more of what works better

• Commissioning is more than ever knowledge work• Services such as ResultsMark and Views help to build up a

more nuanced picture of what works better (for whom and where)

• A growing library of 200+ evidence-based interventions that have been evaluated to the highest standards

• Dartington Social Research Unit work on impact modelling – predicting likely savings to different agencies, year by year

• In all cases the key is fidelity to known critical success factors

v) Building a culture of innovation

• Local Authorities should allocate some capital in every funding portfolio to innovation (hedged by investment in evidence-based programmes)

• Real time impact reporting enables Local Authorities to invest in early prototypes of new social solutions, kill off those that don’t deliver (many won’t) and scale the few that do

• Innovation is fuelled by putting money behind outcomes• Most successful innovation comes through opening out the

value chain, supporting creative dialogue and engaging front-line service users

vi) Acting as Social Entrepreneurs

• Local Authorities need to incubate third party innovation, but occasionally they also need to pioneer change themselves - especially given their special ability to achieve impact on scale

• Examples include: - Spin-out companies and JVs- Access to financial services- Bulk-buy of energy and other utilities alongside

low-income families

vii) Accessing social finance markets

• Preventing future harm is the best way of achieving medium – long term cost savings.

• Social Impact Bonds and related approaches offer potential to drive long term cost savings

• Special Purpose Vehicles can take some forms of investment off the local balance sheet

• There are similar opportunities to encourage investment in estate redevelopment and rationalisation

• But there are big capacity issues: needs an ability to model, monetise and track outcomes relevant to different funders, track and manage fidelity to known critical success factors, deliver on sufficient scale to achieve cashable savings, with a sufficiently comprehensive care and support pathway to avoid the target group falling behind again in the future. Finance remains over-priced, targeting equity-like returns (reflecting both poor structure and an inadequate understanding of risk).

• Medium term we can at least hope for a liberation of Local Authority financing options

Matthew Pike

matthew.pike529@gmail.com

I am currently recruiting Local Authority partners for ResultsMark capacity building