Outcome commissioning; it’s the talk of the public procurement community at the moment isn’t it?
We’re being told to move away from contracts focussed on tightly specified inputs to ones where we’re looking to the outcome and what we’re trying to achieve.
So how can you deliver an outcome commissioning process that’s going to achieve value for your organisation? Here are my five tips to create a process that really rocks:
1. Put users front and centre of the process
For many years public services have operated on a “we know what’s good for you” approach to commissioning. Professional expertise coupled with many years of experience has meant we’ve used our colleagues to inform specification development, undertake technical evaluations and in many cases do the contract management post award. Whilst some colleagues may have engaged with end users or the wider community, the vast majority would not include this as an integral stage in the process.
To really get outcome commissioning moving, we need to involve the people we serve right from the start.
We used this to great effect for our procurement work to provide transport for people in Uist and Barra without cars. Building on a process started in Brazil called participatory budgeting, we put the community front and centre: from specification, through tender evaluation to contract award.
We used a variety of techniques that could feel a bit alien to you if you’ve worked all your life in procurement. You may have been involved in a meeting that made use of post it notes to generate ideas, but have you ever facilitated this approach with people you don’t know where the results could have a real impact on their lives?
In many instances you can draw on the experience of colleagues in other services who regularly do this sort of thing. They are more often than not willing to help and might even come along with you to give support. In Uist and Barra we even used partners from the third sector to help facilitate the contract management phase.
So you’ve got a process to involved users, what’s my next tip for your outcome commissioning process?
2. Begin with the end in mind
Most of us might think about this in the context of Stephen Covey’s 7 Habits but it’s a valid principle to adopt when it comes to commissioning; well it’s about outcomes isn’t it! And although thinking about outcomes can be hard at first, it’s often helpful to frame the issue in terms of needs, as we did in Uist and Barra; or as problems needing to be solved which has been used to great success across the world.
The “open problems” approach, articulately described by Citimart’s Sascha Heselmayer in his procurement focussed TedX talk “Let’s spend city money on empathy”, has been used to effectively commission services based on outcomes. The success of the projects supported by Sascha and his team have encouraged others to try the approach. City of Edinburgh have gone to the market with to seek innovative solutions to health and social care problems, whilst Seattle are seeking to transform the commissioning of services to reduce homelessness with this approach.
So you’re all set to go to the market what’s my tip for a procurement vehicle you can use?
3. Right process, right contract, right result
When we work in public procurement, particularly those of us bound by a particularly prescriptive set of laws or regulation, it’s easy to get stuck in a “can’t do” mindset. We can think that risks around procuring on solutions to problems are too great.
Well the good news is that there are plenty of approaches we can use which can enable our outcome driven approach.
My favourite is University of Tenessee research partner Kate Vitasek’s Vested Contracts approach. Vested focuses on the creation of highly collaborative business relationships to deliver outcomes which benefit both the commissioner and the supplier. It’s not just about the form of contract we use, Kate would call this a relationship contract, but also the balance of risk, particularly relating to pricing, that can be included within it. Her approach has been successful in the private sector and I’ve also seen it used for public services through methods like Alliance Contracting.
There are many routes to market that can deliver such a contractual approach. In the EU procurement zone we have competitive dialogue or could even use the new innovation partnership if a traditional open tender procedure won’t fit the bill.
So if there’s no cause or legal just impediment why you can’t put outcome commissioning in place, what tip can I give you for measuring whether it actually works?
4. Measure what matters
This must be one of the most trotted out performance management phases in history; when I googled it, I got nearly 16 million results! But being able to measure something commissioned on an outcome basis, particularly if the provider is third party rather than in house, is a risk that gives many senior public sector leaders sleepless nights.
The good news is technology and analytics are starting to catch up with our outcome minded aspirations. With the internet of things and data from our IT systems we can create data lakes that can be plunged into using powerful data analytics tools. Using the information we fish out, we can frame our contracts in terms of outcomes, really measure results and reward achievement and in a Vitasek Vested way.
The trouble is, in many instances, we don’t have the skills and capabilities to do this work.
In 2016 a McKinsey study reported that those of us in the EU public sector lacked the talent to analyse data. We’re also prone to keep much of our data in service and functional silos.
But we can get the right people working for or with us, perhaps with the help of our suppliers, and break down those organisational barriers, we can measure what truly matters to the outcome we’re trying to achieve.
So what’s my final tip for an outcome commissioning approach that works?
5. In it together
So we’ve involved our service users, crafted a procurement process and contract that works with rather than against the supplier. We now need a contract and supplier management approach that focuses on a win-win approach. A lot will have been done up front in the way you’ve specified your outcomes and crafted your contract but if you adopt an adversarial approach during implementation you’re not going to have a successful approach.
By including pricing structures focussed on open book, an approach which has been widely adopted in the UK construction industry, you can facilitate ways to work with the supplier to deliver value throughout the lifetime of the contract. No more perverse incentives or punitive action to make the supplier to reduce costs.
If metrics are telling us that things aren’t going according to plan we need to work with our supplier to see whether the reason is us or them and agree an plan to take things forward rather than impose solutions. I’ve seen this used to good effect in social care when supplier quality ratings have fallen below acceptable standards.
By using what Vitasek would call an insight rather than oversight approach we can foster the collaborative feel we need make sure our outcome commissioning really delivers on the ground.
There’s no doubt that outcome commissioning isn’t an easy thing to do. Even if you’ve got senior management support it’s going to be hard. But by using the tips I’ve given you and resolving to make a start you can take a positive step forward to delivering an effective approach.