Government Commercialisation: the right plaster for the budget gap?

The Local Government Association in its report “Enterprising Councils” rightly highlighted the increased need for commercialisation by local authorities in the UK,  particularly considering the removal of the revenue grant by 2020.

Across our client base over the last 5 years, we have consistently seen public sector services seeing commercialisation as a likely plaster to fill an expanding deficit gap. However, starting up a company simply to generate a fixed amount of money is rarely a good start for a commercial venture whether in the private or public sector. Based on our experience, we set out below the 5 characteristics of commercialised public services that are early, “good signs” of potential future success:

  1. A service leader: the service is already seen as a leading provider by its peers. It has robust evidence of service achievement and has already developed a reputation for service excellence.
  2. Market demand: other domestic or international public sector organisations are already asking the service to provide them with advice and/or products. The market is already there, hitting the service’s door whether because of an innovative product, service or reputation for excellence as mentioned above.
  3. Workforce support: often ignored but too often a reason for failure is the appetite of the existing workforce to support commercialisation. Launching a joint venture should be an opportunity for existing staff for more advancement and interesting work. If seen as an additional task to an already heavy workload and a career risk, the commercial venture has a high degree of failure. Those commercial ideas that work, are built on good change management practices.
  4. An understanding of risks: no commercial venture comes without its risks. Those that understand risks and take an “educated” leap of faith into the world of commercialisation have a higher chance for success compared to those that look for “guaranteed” solutions.
  5. An aspiration: successful commercial ideas, have a strong vision at their core – one that is consistent with the purpose of their holding organisation – serving the public and working for the “Social good”. This is integral to their vision and their culture.

For comments and more information on our commercialisation experience please contact christos.pishias@roioperations.com