A confusing title for an equally confusing time. We are told we have to behave more ‘market like’, be innovative and develop new products.
But, can publicly funded services, a publicly funded, openly tendered and procured service exist within a true ‘market economy’ (private sector) market?
As a producer, in a ‘market economy’, I would know the size of the market I operate in. I would know my market share, its sustainability and its growth potential.
I would know my customer demographic, have 5 year forecast predictions and have indications of actions to fulfil those potentials.
Any new product (innovation) that I wished to introduce into ‘the market’ would be developed and based on a thorough understanding of the above issues.
I would be able to cost development and retooling , potential borrowing requirements and repayments, capitalize the expenditure over a given period, borrow against projected sales and growth and then decide if I progress or not.
Having developed the initial product, from my own resources, and borrowed to get the product to market I would know which demographic it was targeted at, potential sales and impact on the whole market and my other products within the target market. I would know what share of the market my new product should achieve, and if that would have an impact on current products, or gain me larger market share overall i.e. I might lose 2% of market share from my current products but the new product would obtain 5% of market share, so my overall gain would be 3%.
While I accept that there is a finite amount of money in any given economy, at any given time, in this scenario I believe I could persuade people to change their buying habits and buy my new product.
All these judgements are based within an open ‘economic market’ – knowing that people want to buy my product, persuading people to buy a new product, made by me.
I am aware of how much money exists within my market and what I have to do to impact on my growth.
Product innovated, developed, produced, marketed, sold…
In the public sector funded service provision we are told we are to exist within a market and develop these skills. We are encouraged to innovate and develop new products to meet the need of tenders and procurement activity which is the way we access the funding. The process is developed, implemented and run by commissioners who receive an allocation of funding to ‘procure’ services and, in turn, develop tenders for applicants.
It is therefore a market restricted by funding, funding that can fluctuate within the public finance environment.
It is data driven, public sector data driving delivery targets, informing commissioning targets and outcomes. Data drives silos (specific funding for specific issues), and funding it attached to silos, and cannot (or very rarely can) be transferred between silos.
It is therefore outcome-orientated and very restricted. We have to deliver the expected outcome (data driven) within public sector (and silo) finance restrictions.
This is not a market.
Into an outcome-orientated market (environment), we are expected to deliver given outcomes, often in an expected manner. We cannot innovate, as that may not fit the commissioning brief. We cannot expand our market or products, through innovation, as there is a finite capacity to the finance in the silo for which we may be tendering, and the tender is for delivery, not development.
I cannot borrow to develop new products as I am not guaranteed a place in the market – I can neither argue nor prove my case.
Long term capitalisation of any investment is also restricted by the length of the contract, usually three years but it can be shorter, and any IT development to improve productivity cannot be included in a tender application.
Transformation argues we need, as a sector, to change our behaviour and practice within our ‘markets’.
While there may be skills and practices we can learn from the open market, we are having to learn them within the confines of our eco system, what I would call, based on the foregoing, a ‘non market’.