Public services, commercial corporations and spontaneous social movements: what's the power they all lack? How might future public service reform not flounder through trying to shoehorn dynamism into a universalist and planned approach? How might businesses become genuinely socially responsible and values-driven rather than merely intoning fine sounding rhetoric whilst their business model pulls the other way?
And how might social movements achieve more than an initial mobilisation of emotion and energy?
Could a greater willingness to recognise the in-built tendencies of core institutions help us avoid repeated policy failures?
In the seventh post of this series – part of the RSA’s Living Change campaign – I explore another dimension of ‘coordination theory’. This is a set of ideas built on the identification of three foundations for human motivation, for organisational and social change, and for political worldviews: individualism, solidarity and hierarchy. In addition, there is a fourth – largely passive – attitude and perspective, which I call fatalism. In the last post I explored the case of ‘monocultures’ where one active form of coordination is dominant. Here, I analyse the much more common case of ‘deficit cultures’ where one active form is under expressed.
Deficit cultures are the under-achieving average. Despite the tendency in both the academic and public discourse towards either optimism or pessimism, neither great success nor terrible failure is the norm for organisations, strategies and policies, but instead systematic under-achievement. Most attempts at social and organisational change deliver only part of what was hoped or intended.
Individualism and public services
Public sector organisations are generally very hierarchical. This reflects their size and scale but also the high expectations of accountability, which rest with organisations that spend public money, provide universal services and carry out essential functions involving vulnerable people. UK governments of all stripes have for decades promised to cut back bureaucracy, but even when serious attempts are made to reduce hierarchical requirements in one area, new sets of concerns inevitably emerge, leading to new risks being identified and more regulation imposed in what seems like a perpetual cycle.
To add to this challenge, commentators and the public criticise government-funded services for being inflexible and bureaucratic while being quick to complain if those services fail to deliver expected outcomes or to manage risks effectively.
Solidarity too is a strong force in the public sector. It is what is suggested by the term ‘public service ethos’. Anyone who spends time with public sector employees will hear sincere appeals to the idea of service to the public and ‘making a difference’ to lives and society. This is not to say that public services and those who work in them always live up to these ideals. But the reason we are shocked by examples of corruption or negligence in the public sector is, in part, because it goes against the sense of service that is supposed to be its animating spirit. The solidaristic principle of social justice also infuses public services. The state is expected to provide a uniform baseline of provision to all citizens and to mitigate some of the inequalities generated in wider society.
In contrast, the individualist form with its emphasis on autonomy, innovation and competition is much more problematic. This helps to explain why productivity gains have historically been so hard to achieve in public services. In the terms of coordination theory, public services find it hard to achieve ‘full engagement’. This is when all three active forms are expressed and reasonably aligned. Consequently, and inevitably, a recurrent theme in the discourse and practice of public service reform is the need to find ways of mobilising individualistic motivations and methods.
Indeed, this goes back to the very dawn of modern public services. Using the same framework of ideas on which my own approach is based (the work of anthropologist Mary Douglas), the historian and analyst of public administration, Christopher Hood, has shown how ideas like performance related pay, competition for commissions, and contracts were championed by utilitarian thinkers in the mid-19th century in response to perceptions then that government’s ways of working were outdated and inefficient. Hood shows that the modern emphasis on individualist ideas represents the re-emergence of a critique, which is inevitable given the structural tendencies of public services.
However, late 20th century public service individualism has been a more impactful, coherent and consistent force than its earlier equivalents. This went under the name of New Public Management (NPM). From around the early 1980s, and for the next 25 years, NPM was the dominant framework for public service reform, starting in the US before morphing and spreading across the globe. The period of NPM’s dominance has seen the growth of arm’s length units of government, contracting out to both the private and not-for-profit sector, privatisation, the imposition of markets and quasi markets, new ‘autonomous’ delivery units such as Academy or Charter schools or NHS Foundation Trusts, and metric-driven performance management, often with explicit pay incentives. The NPM label is now out of fashion, yet many of its assumptions and methods continue to be the default reform options for national, regional and local governments.
Although most citizens may never have been aware of its underlying rationale, across the world many billions of pounds were spent implementing aspects of NPM, tens of millions of public sector workers and many more public service users have had to adapt to changes, many of which were disruptive and painful. However, the failure of NPM to deliver promised gains in service performance have been stark. In aggregate there is little or no evidence that reform has made public services more efficient, more popular or more innovative. Indeed, if anything, problems – which include stagnant productivity, variable performance, poor public satisfaction and low staff morale – are more acute than they were at the dawning of NPM back in the early 1980s. The collapse or near collapse in the UK of a chain of private sector outsourcing companies, most notably Carillion, felt like the final nail in the coffin. The UK public, who were once enthusiastic participants in Margaret Thatcher’s privatisation programme, are now highly sceptical about private provision of public services.
In the face of this phenomenon there are, predictably, two responses depending on whether they come from individualistic or solidaristic perspectives. For the dwindling band of its defenders, NPM has not gone far or fast enough. The state, and citizens themselves, have not been sufficiently willing to dial down central planning and public accountability to gain the discipline and dynamism of the market. From the latter solidaristic view, the assumptions and methods of NPM were never compatible with core values of democratic accountability, service equity and employee engagement. NPM’s failure to deliver promised gains in performance and efficiency, and its association with profit gouging, the worsening of the conditions of publicly funded employees, and blurring of lines of accountability, are not extreme examples of badly implemented policy but an entirely predictable consequence of its aims and methods.
Despite their different starting points and conclusions, these perspectives contain some shared truths. The failure of new public management was partly contingent. It suffered from poor policy, naïve commissioning and irresponsible behaviour by private companies and management consultants. But it also suffered from a structural problem common to many attempts to address the deficits that arise when one form of coordination is systematically under-utilised.
There are many aspects of public provision that are hard to reconcile with methods such as competition, profit maximisation and the separation of service commissioner and service provider. These tensions are reflected in public opinion. While citizens want innovation and responsiveness in public services, they also tend to object to the idea of a ‘postcode lottery’ whereby people in different places are offered different standards of service. Whatever responsibility for delivery is passed to commercial providers, the public expects politicians to take the rap when things go wrong. Equally, from the calamitous London Underground public private partnership, to various loss-making rail franchises, to the collapse of contracting firms, taxpayers are furious to be told they have no choice but to bail out failing commercial services. People may recognise that commercialisation could bring efficiency and dynamism to the public sector but find it hard to reconcile the idea of ‘service’ with the public purse subsidising large corporate profits or private sector executive salaries. A turning point in the popularity of privatisation in the UK came when the public became aware of the huge pay increases former nationalised industry bosses had awarded themselves.
While the practitioners and opponents of NPM blame each other for its failure to deliver, coordination theory suggests the basis for a more dispassionate assessment. The fundamental problem here lies in trying to ‘dial up’ the assumptions and methods of the public sector’s deficit form, individualism, without managing the likely impact on the wider system to which they are being added. More specifically, in relation to NPM, the potential benefits of a more individualist approach, such as a greater scope for innovation and risk, were unlikely to be reaped while traditional levels of hierarchical control, represented by political oversight, detailed accountability mechanisms, regulation of process as well as outcome, are maintained. Similarly, strict adherence to solidaristic values, such as equity of service or community responsiveness, are not easy to reconcile with the freedoms demanded by a more commercial approach.
Secondly, a systemic lens such as coordination theory – recognising inherent complexity and unpredictability – suggests the need for an adaptive and responsive approach. Change should have been pursued incrementally and experimentally observing at each stage the effect on the whole system. Instead NPM, which was aggressively and lucratively promoted by all the major global management consultancies, all too often involved trying to impose a one-size-fits-all prescription.
The insights of coordination theory might have led to a more realistic programme for bringing individualistic energy into public services. It might, for example, have helped make the case for public service mutuals. These organisations typically compete for contracts and have greater autonomy than in-house providers but, having asset locks and not being answerable to investors, mutuals are more likely to continue to exhibit public service values. They can start small with some extra flexibilities and then grow and acquire more freedoms. Another way to strengthen benign aspects of individualism is to devolve more power. Although the case for devolution has inevitably to deal with concerns about undermining public service universalism, greater freedom for local service providers to develop programmes tailored to local communities enables experimentation and innovation. Labour mayors, for example, tend to have fewer hang ups about working with private partners than national politicians.
NPM is discredited but – as Christopher Hood argues – the nature of public services means that it is only a matter of time before new ways of trying to inject individualism into public servicers surface. Equally, without tapping into the positive sides of individualistic motivation and method, public services will continue to struggle to be responsive and enterprising. When reform comes around again, coordination theory can help us ask the right questions and avoid unrealistic solutions, but there are no simple answers to making public services fully engaged.
The public sector tends to be weak on individualism. By contrast, the modern private corporation exemplifies a deficit of solidarity. Corporations are generally hierarchical, with power highly concentrated at the top. They also tend to be strongly individualistic both in terms of their core task of competing successfully in the market, and internally, through management systems promoting a culture of competition and offering material incentives such as performance rated pay and bonuses. Yet, while the typical employees of a large firm know they must do what they are told by their manager and that rewards may be on offer if they can help generate profits, they may be less likely to feel an emotional commitment to their employer or to see their work as an outlet for their own values.
In the face of strong evidence of a link between employee engagement, productivity and organisational performance, corporations continuously seek to tap into solidaristic motivation. Just about every major corporation will have a statement of its ethical values, and almost every day it seems a new charitable initiative or consultancy is springing up promising to promote such virtues as ‘good business’, ‘shared value’, ‘conscious capitalism’ or ‘profit with purpose’.
Despite all this activity, the extent to which important decisions in companies are guided by anything other than business motives is far from clear. At the same time as growing Corporate Social Responsibility (CSR) activity, increasingly driven by investors focus on Environmental, Social and Governance (ESG) impacts, companies have been guilty of a range of misdemeanours from mis-selling financial services and almost bankrupting the world economy, to encouraging bad eating, drinking and gambling habits and contributing to an ultimately environmentally unsustainable model of consumer capitalism. The gap between the rhetoric and reality is neatly illustrated by the book Good value: Reflections on money, morality and an uncertain world by (Lord) Stephen Green: It was published at roughly the same time as HSBC, the bank Green chaired, was responding to the exposure of its massive money laundering for terrorists and drug dealers, not by desisting, but by attempting a cover-up.
Indeed, in this example and a range of other high-profile corporate scandals, including car-maker VW’s deliberate attempts to mislead regulators over diesel emissions and the fraudulent small business unit run by bank HBOS, there is a common pattern. First, a major misdemeanour is committed. Second, when this is exposed the initial response within the organisation is to cover up, particularly if senior executives are in the firing line. Third, when action is finally taken it is often more about changing perceptions than tackling the problem.
This is not just about breaking the rules. There are several common aspects of business practice – often linked to financialisation – that fly in the face of its claims of responsible behaviour. They include: a willingness to abandon long serving communities of workers or consumers in favour of moving activity around the world in pursuit of the greatest margins; driving down of employment benefits such as training provision and final salary pensions; the prioritising of executive pay and shareholder dividends over long-term investment and fair pay; paying lobbyists and using other techniques not open to other citizens to influence government policy; creating sham company structures in order to register profit in low tax regimes; and the misuse of monopoly power to profit-gouge and rent seek.
Despite the limited evidence of impact either on core business strategy or social outcome, the rhetoric of the CSR industry continues to grow. Are these points related? Is it because the core business of business has become more ruthless and obsessed with profit and executive self-aggrandisement, thereby deepening problems of legitimacy, that it is necessary to throw up the smokescreen of CSR? According to the influential Edelman Trust barometer, the public’s view of business seems to have improved during the pandemic (at least in comparison to government), but over the longer term, business has suffered from the same loss of confidence as most other big institutions.
A less cynical, but nevertheless hard-headed view sees CSR as a form of enlightened self-interest, whereby acting responsibly is seen to contribute to the long-term prospects of the firm. In the terms of coordination theory, corporations are genuinely seeking to tap into the power of solidaristic motivation in a way that is compatible with their need to succeed in the market. CSR consultants argue that firms acting responsibly, and being seen to do so, will gain investment as more funds commit to environmental and social goals, market share by attracting ethical consumers and will win the ‘race for talent’ by recruiting people who want to work in firms that reflect their values.
The implicit aim of CSR is the creation of fully engaged corporations, capable of combining hierarchical expertise and authority, individualistic goals and incentives and a commitment to solidaristic values of social responsibility. But full engagement requires a genuine balance of motivations. Like the failure of NPM in the public sector, the attempt to show employees and the public that firms are strongly motivated by social concern has had limited impact, not so much because of the aims of CSR, which are laudable, or even a lack of genuine commitment to a more values-based approach from some business leaders, but because the attempt has not been accompanied by a recalibration of the hierarchical and individualistic drives that dominate corporate cultures.
It is not impossible for commercial enterprises to tap into solidarity. Some major firms like cosmetics retailer The Body Shop or clothes outlet People Tree, were explicitly established with ethical purpose built into their brand and offer. Others sign up to commitments, which go well beyond CSR box ticking. The B-Corps initiative is an example, requiring companies to balance profit and purposes and be held accountable for doing so. And, of course, below the corporate level there is often a very strong sense of teamwork and mutual support among workgroups. Nevertheless, the contrast between the claim of just about every firm to be ethical and the actual consequences of corporate decision-making continues to be stark, something that surely contributes to low levels of public trust in big business.
In contrast to the Panglossian rhetoric of CSR, coordination theory highlights three major and related challenges. First, the structural logic of commercial activity will always incline it towards the assumptions and methods of the individualistic form. To pretend otherwise is disingenuous. Second, any attempt to live up to the many visions of responsible capitalism would have to involve profound and structural changes to the way in which corporations operate, for example giving genuine power to employees and rejecting the idea of shareholder or investor sovereignty. Third, any attempt to reimagine corporations would also have to address the broader financial, legal and cultural context in which business operates.
The absence of hierarchy?
Coordination theory advocates mobilising and aligning all our core motivations and the methods that summon them. The implication is that it is difficult to develop and sustain successful organisations that lack key elements of hierarchy. Looking at models that appear or claim to be non-hierarchical – like the communes described in the previous blog – tends to reinforce this assumption. Given that an important role of hierarchy is the overall stewardship of a system or solution, including balancing individualistic and solidaristic motivations and methods, it should not be surprising that sustained examples of ‘hierarchy deficit’ are rare.
An example of the frailties of such a model might be the street gang. These groups are defined, solidaristically, by strong group affiliation (based on loyalty, friendship and neighbourhood) and a corresponding antagonism to other rival groups and generally comprise young men pursuing individualistic aims such gaining money, sex and personal status. Lacking leadership capacity, these gangs are prone to act on impulse in ways that are counter-productive even in terms of their limited implicit goals. Such gangs have two likely paths, either they break up or they evolve into more organised forms with clearer leadership structures.
In stark contrast to street gangs, the idea of the ‘social enterprises’ carries highly positive connotations. With its connotations of combining aspects of the dynamism of the individualistic form (‘enterprise’) with solidaristic values and priorities (‘social’), while implicitly avoiding the problems of hierarchical control, the term seems to fit well with modern attitudes.
Social enterprises are generally distinguished from charities by the fact that the former raise more than half their income from trading. This can mean that some are more clearly enterprises than they are social. While they are not exclusively owned by shareholders and will usually have asset locks, this does not stop the business owners and managers being the primary beneficiaries if the enterprise thrives. Conversely, some social enterprises are more clearly social than they are viable enterprises. Despite their trading income and their desire to distinguish themselves from conventional charities, these organisations are ultimately dependent on public or philanthropic funding. That dependency can blunt the capacity of enterprises to be innovative and experimental, particularly if a significant part of what they do is effectively commissioned by public authorities.
However, some long-standing enterprises have found a successful and sustainable way of blending social purpose and commercial viability. UK Housing Associations, many of which are very large and asset-rich organisations, are a well-known example. But in these larger and more established organisations not only do we find hierarchy is alive and well, but that the primary role of leadership is precisely to achieve the best balance between commercial imperatives and social purpose.
A different challenge to the idea that hierarchy is an essential element of successful strategy and organisation has come from the rise of social networks facilitated by technology. These appear to have made flatter, more spontaneous models of organisation much more viable. In earlier days of the internet this led some visionaries to predict organisations of the future with minimal hierarchy; Clay Shirky’s Here Comes Everybody: The Power of Organizing Without Organizations was a high-profile bestseller in 2008.
Ostensibly networks are an ubiquitous hierarchy-weak form of social coordination, comprising individuals collaborating with others in horizontally arranged groups that share certain forms of belonging or identification. In comparison to centralised bureaucracies, networks can enable forms of rapid communication and be more adaptive and resilient to attack.
A small-scale example of the basic social network, facilitated by technology, is the group my wife joined of parents of young children attending the local school. The group formed quickly having been established by one mother who had been part of a similar network set up among parents of a previous reception class.
Here we see some key benefits of the network form, facilitated by online tools. First, it has formed with relatively little effort. Second, so long as it is focused primarily on information exchange and socializing, the group can persist without the need for authority structures; if decisions are made, they emerge through consensus and individuals are free to decide how much and how regularly to engage. The group provides an alternative, less sanitised, source of information about the school than its official communications. Third, there is ‘the network effect’; the more parents who join the group the more useful it is. Within a few days and with little effort the parents met and gained the benefits of sharing information about the school and exploring future reciprocal collaboration such as organising play dates for the children at each other’s houses.
At this relatively simple level of coordination, the network works well. Online tools – and new ones are continuously emerging – do enable faster, easier more ambitious forms of collective action. A key role for hierarchical structures is to distribute organisational work and to encode the relative power of different people. By reducing the amount of organisational work involved in mobilising groups, networks reduce the need for hierarchy.
However, not only are there limits to what flat networks can achieve there are also downsides and dangers. In a historical survey of the battle between hierarchies and networks, Niall Ferguson argues that the power of the latter tends to go through a cycle as they first powerfully challenge oppressive hierarchies but then succumb to flaws such as the tendency towards homophily (people connecting to people most like themselves), sectarianism and extremism. These are exactly the kind of perils that coordination theory would lead us to associate with the dominance of the solidaristic form.
Analysis of online networks generated by citizens shows that while hierarchy may be less essential or powerful, it is neither wholly absent nor wholly redundant. Not only do sustained networks tend toward homophily, but also certain people in the network will tend to be far more influential than others. The Tahir Square protests, which set off the Egyptian revolution in 2011, are often cited as an example of the power of online networks. Yet while they were largely spontaneous, researchers have traced the spark that ignited the protest to two well connected activists whose Facebook page, 'We are all Khaled Said,' quickly became viral.
Yet it is undoubtedly the case that online networks make it incredibly easy for people to share opinions and express support for the opinions of others. Some people disparage this as ‘clicktivism’, yet networks can lead to mass mobilisation both online and on the streets. Benign examples include the clean-up campaign after the London riots of 2011 or the city-wide collections organised for the victims of the Grenfell Tower tragedy. My young daughter was proud to join the schoolchildren’s climate strike, a movement sweeping the world since it was started by a single Swedish teenager, Greta Thunberg.
The problem is that these spontaneous, grassroots techniques of coordination are much better at mobilising than establishing sustainable alternative programmes or structures. The consequence of this shift is what one recent analysis called ‘chaotic pluralism’. There are welcome dimensions to this phenomenon; most obviously that barriers to entry to certain forms of political engagement have fallen. The failings of hierarchies are often real, so it is good that transparency and accountability are more difficult to avoid. However, there are also major problems with a system where reaction, opposition and campaigning are so much easier to generate than longer term, more pragmatic, political authority.
An example of this phenomenon was the Gilets Jaunes movement in France. The movement, which began in 2018 with a provincial protest against fuel duty price rises before morphing into major and often violent protests week after week in major French cities, articulated legitimate concerns about the state and society. The protesters targeted fuel prices, tax levels, speed limits, economic inequality, geographical inequality, immigration, precarious work, the alleged profligacy of the President’s wife, the European Union and more. But in a movement that was proudly leaderless it not only proved impossible to turn these complaints into a coherent programme of demands, but it proved hard even to identify anyone with whom the government might seek to engage. Attempts to write a Gilets Jaunes manifesto ended up with lots of demands but little evidence of consensus.
The movement has had an impact. The fuel tax rise was scrapped along with other measures cutting eligibility for pensions and the minimum wage. Responding to growing evidence of disenchantment with mainstream politics, President Macron put in place a major programme of public engagement. The deeper question is whether the protests have in any way enabled the kind of difficult choices and deep reforms that France and other liberal democracies surely must address. Although the fuel duty rise that first provoked the protest may have been badly designed it was, at least, an attempt to address the issue of carbon emissions. The demands and the choreography of Gilets Jaunes are radical but the lesson that may be learnt by government in France and elsewhere is that making any policy decisions with short-term losers now threatens an unstoppable backlash.
When social movements do lead to shifts in power and consequently have to engage with decision-making and implementation, the need for hierarchy quickly reasserts itself. In Egypt, after Tahir Square, the revolutionary momentum was soon enough seized by the Muslim Brotherhood. Part of the reason for this lay in its organised, offline grassroots nature and its highly selective and hierarchical membership structure.
The challenge posed to informal social movements when they start to have profile and impact and are forced to make decisions is poignantly captured by the anguished tone of a message headed ‘TO GO OUT ON ALL COMMS’ sent to Extinction Rebellion activists in April 2019 a few days after their highly effective environmental protests had brought parts of London to a standstill: “There’s been a lot of confusion around decision-making, hierarchy, transparency and accountability. That can create tension, in feeling like you don’t have voice, in confusion about what is happening and a sense of separation”.
The message goes on to announce ‘a people’s assembly’ on strategy before defending the movement’s ‘Rapid Response Team’ in the following terms: “The amazing souls who took the huge responsibility on their shoulders (albeit a bit undemocratically)… because we can’t hold a people’s assembly EVERY time there is a decision to be made”.
It is sometimes said that the problem with politics is the lack of a ‘shallow end’: with its complex and bureaucratic structures and its opaque and often simply tedious processes, it puts off people with other interests in their lives. Using the same metaphor, the position today is very different. The shallow end is teeming with energy and activity. It is like an overpowered wave machine, constantly creating swells of opinion, which break over the established power structures trying to keep their heads above water in the deep end. Missing now is the middle of the pool, the space that connects the chaotic energy of the shallows and the technique and persistence needed to traverse the deep end.
Coordination theory has a message for those who are in various ways trying to throw off the yoke of hierarchical control: there is always a need for leaders and their agents to be challenged. It is true that the modern world is making old forms of hierarchical control increasingly unable to operate successfully, while also opening up new forms of more adaptive and flatter structures. But fully engaged solutions are only achieved with the specific qualities and capabilities that hierarchy offers.
What general conclusion might be drawn from the examples of deficit cultures in this post?
First, in many types of organisation the question of how to address the relative weakness of a systemically under-articulated form is an endemic issue. There will always be a public service reform discourse about how to mobilise individualistic dynamism. There will always be a debate in business about how to operate more responsibly and motivate employees and customers by an appeal to shared values. Social movements and networks will continue to reach the grudging realisation that only certain things are possible without hierarchy. We would save ourselves time and energy, and set more realistic expectations, if we acknowledged that these issues are deep-set and difficult.
Second, simplistic attempts to ‘dial up’ an under-articulated form are likely to fail. Introducing or strengthening one type of motivation or method has implications for the whole institutional system.
Third, while thoughtful attempts to make government more dynamic, business more ethical and networks more sustainable may reap some benefits, the nature of these institutions is to some extent in-built. A robust liberal democracy is one which acknowledges the dynamism of business and markets but is also unapologetic about the need for regulation to mitigate their negative externalities. Bringing greater dynamism into public services involves acknowledging its solidaristic values and inherent need for hierarchical oversight, and developing realistic and experimental opportunities for innovation and enterprise, which work in this context rather than against it. We need to understand – as we are starting to – that flat networks facilitated by technology have great advantages but also systematic vulnerabilities and limits.
A more fully engaged society will comprise more fully engaged institutions, but it is also one which acknowledges the tendency for types of organisations and activities to have inherent deficits and to address this though a combination of awareness and regulation. This may seem a rather modest or even obvious conclusion yet, arguably, it is a failure or unwillingness to recognise the structural tendencies of core institutions which has lain behind many of our greatest policy failures.
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