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Stepping Out NOW            January 2014
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What Mutuals Must Deliver
 
Although there isn't any statistical proof yet, it is becoming clear from a number of sources that mutuals by and large tend to out-perform the public sector service that preceded them. Change happens quicker, staff are happier, delivery gets better and costs go down.  
 
Indeed, these are the benefits on which mutuals tend to be sold to Councils or other public bodies.
 
Putting aside the question of how true this is in all cases, there are some larger questions that the next wave of mutuals will need to answer. Stated plainly, going forward it won't be enough to be a bit, or even a quite a bit, better than what went before.
 
What Councils will want to know is the following:
 
1.  Can a Mutual make guaranteed savings over the short, medium and long-term? Other options such as cutting or outsourcing services bring certain guarantees around savings. Mutuals will have to show they can do this and offer the same level of certainty if they are to be taken seriously by Councils that cannot take the risk of overspend. This is one reason why impact bonds - where savings are guaranteed to the Council - are proving so popular.
 
2.  Will Mutuals actually transform services? The big moves in public services are towards managing demand downwards, integrating public services around the individual and making more of technology in doing so. Any mutual that is hoping to carry on operating the old way, with a few improvements, isn't going to sound relevant in this next phase of public service change. The plan for the mutual, therefore, needs to speak clearly to the wider needs of the host authority. 
 
3.  Will Mutuals be able to cope with what is being asked of them? Privately, a lot of leaders in local authorities have their worries about whether a public service team can pull off change at the required level, particularly if the current in-house offer has been slow to move with the times. Any mutual that is going to get signed off needs to convince CEOs and Leaders that the team is working with people who can bring commercial expertise, change-management skills and, possibly, finance to the table.  
 
So far, it is looking like more and more Councils are seeing mutuals as the preferred way forward, particularly in their care and health related services. But the only way these mutuals will actually succeed is to use their new freedom and the partnerships that arise from this to deliver a transformed service. That is the true opportunity of public service mutuals. Transfer on its own to a mutual is not enough. There must be transformation too.


-- Craig
On the sofa…

This month, we daydream with Sarah Stock at Independence Matters... 
Read more>>

 

Ask the Expert
Iain Hasdell, CEO of  the Employee Ownership Association

Can spin-outs that are joint ventures between the staff and by an external partner really work - and if so what needs to be got right to ensure this is a sensible way forward?
 
There is compelling evidence that employee owned spin outs raise the quality of the public services received by users; improve outcomes; increase returns on investment for funders; and for employees improve their well-being and the conditions within which they work. I am proud that so many of the spin outs are energetic Members of the Employee Ownership Association and that we have helped a large number of them to start up. The brave entrepreneurs who have created these new enterprises deserve all the accolades they get.
 
Some employee owned spin outs adopt a joint venture approach. This model is entirely compatible with the aims and objectives of employee owned spin outs. It offers excellent opportunities for the business to be honest about its skills and knowledge gaps, particularly in terms of commercial acumen, and to address these by dovetailing the expertise of an external partner into the business for whatever period of time makes sense.
 
The keys to success are brutal clarity about the respective roles and accountabilities of the joint venture parties; ensuring risk is properly defined and allocated; and making sure that rewards for success are shared proportionately. One brilliant method for achieving all this is to frame the joint venture in a way that forces the external partner to earn, through the achievement of agreed performance metrics, an ownership share in the business. This moves the relationship away from the tired old paradigm of management fees, to one in which the ambitions and targets of the employees and the joint venture partner are completely aligned. The external partner only achieves financial returns by working hand in glove with the employee owners to build a great business and then benefiting from its growing value. Clearly there are other models too but joint ventures are very much part of the spin out agenda and well worth considering.
 
Iain Hasdell ( iain.hasdell@employeeownership.co.uk  ) is Chief Executive of the Employee Ownership Association
 
An opportunity

Unlimited Potential are looking for a Director of Delivery
 

Good Reads:

Ten Blogs in Ten Days from Craig Dearden-Phillips

Mutuals Support Programme: 2 years on
 
Managing Demand: Building Future Public Services
 
Bankers are from Mars, Civil Society is from Venus – a $5 trillion dollar Love Story?
The 7 secrets of great business leaders
 
Can co-ops compete?
 
Social enterprises must not prioritise social aims over viability
 

Events

The Robert Oakeshott Memorial Lecture
 
Social Enterprise and Housing Conference and Exhibition 2014
 
Introduction to Social Impact Bonds - Manchester
 
Shaping the Digital Agenda: Next Generation Local Government

Support and investment to grow your business
 
Stepping Out is an approved provider for the Investment and Contract Readiness Fund. If you are looking for support to grow your social business contact us 07887 414042 or rob.fountain@stepping-out.biz

Join Our Talent Pool!
 
We get involved in some fascinating assignments and have associate opportunities for people with particular skills and experience that will help move our clients forward.  If you have a talent that you think those setting up and developing new public service delivery models could benefit from then we’d love to hear from you.  Send a CV and covering note to Rob Fountain at rob.fountain@stepping-out.biz and let’s start the conversation.
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