How commercialisation is evolving and developing in local government

Commercialisation strategy 1.0 was very much about trading and charging, using some surplus capacity or getting additional benefits from assets during the 1980’s. Fast forward to today and version 10.0.3 of that strategy is hugely different in scope and range.

Of course local authorities face huge financial challenges, not least an intention by Government to almost completely remove RSG by 2020, however impractical and unfeasible this may appear for many areas of the country.

Future commercialisation strategies needs to focus on helping close funding gaps and rebalancing budgets. This may include growing business rates, broadening your council tax base, borrowing to make investments in property and assets for a long term return and of course a much more sophisticated approach to trading and charging for services that you are efficient and effective at delivering.

Some have suggested that democracy often grinds slowly and that it is incompatible with operating in a fast moving commercial environment. Whilst decision making processes can always be streamlined I think it’s important to remember that we are dealing with, and potentially putting at risk, public funds and therefore good governance, scrutiny and transparency remain of fundamental importance.

Sharing a panel with a couple of Chief Executives recently I was struck by how one had restructured for the future to act more commercially. It’s the classic approach identified by management gurus such as Tom Peters and applied by leaders like Jack Welch and Richard Branson of breaking operations up into individual business units within the organisation, to give them a much greater focus on their cost base and long term viability. However, it’s also important to ensure that if adopting this approach wider corporate values are retained and that there is no loss of synergy.

For the other the most important emphasis was around culture and that her staff recognised that they are now in a very different financial environment, one where everyone needs to buy into the notion of operating on a much more commercial basis. This also requires an investment of time, resources and the development of skills that without a shadow of doubt exist within local government’s workforce, they just need to be teased out, nurtured and grown.

Of course with all updates and new approaches you can experience some hiccups or problems, even some of the most successful organisations in the world run into problems but what they do is analyse the problem, identify solutions, correct their strategy, refocus and go again.