Centre for Public Policy
and Management
Public service failures
What happens when things go
wrong?
Kieran Walshe
Professor of Health Policy and Management
kieran.walshe@mbs.ac.uk
Combining the strengths of UMIST and
The Victoria University of Manchester

Centre for Public Policy
and Management
Overview
• Defining the problem: public service failure
• Performance cycles and the process of decline
• Defining and declaring failure
• Ideas and approaches to “turnaround”
• Models for studying public service failures
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Public service failures – some examples
• Child Support Agency
• Home Office Immigration and Nationality Department
• Rural Payments Agency
• NHS “Connecting for Health” programme
• North Bristol NHS Trust
• Hull City Council
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Public service failures – some examples
• Untreated cervical cancer – Auckland, NZ
• Contaminated blood products – Canada
• Poor paediatric cardiac surgery – Winnipeg, Canada
• Deliberate harming of patients – Indiana, USA
• Poor paediatric cardiac surgery – Bristol, UK
• Cytology screening errors – Kent, UK
• Cytology screening errors – Gisbourne, NZ
• Deliberate harming of patients – Manchester, UK
• Poor gynacological surgery – Kent, UK
• Poor obstetric and gynaecology service – Perth, Australia
• Poor general surgery – Virginia, USA
• Unnecessary cardiac surgery – California, USA
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Failure and turnaround
Performance Failure Turnaround Return to
decline crisis process growth
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Centre for Public Policy
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Performance cycle
Normal variation or failure?
High
Performance
Low
Time
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Performance cycle
High
Reported
Performance
Actual
Low
Time
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Recognising performance decline
• Performance is naturally cyclical
• Need for a range of “hard” and “soft” indicators of
performance
• Overall level may be less important than rate of change
and trajectory
• Performance decline is relative, not absolute
• Differentiating “normal variation” and “incipient failure”
• True performance may be masked in reported
performance
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Hard indicators of performance
• Is the organisation achieving key performance targets and
maintaining financial balance?
• What is the level of complaints? How many of these are serious,
enduring complaints, and how well are they resolved?
• What is the level and severity of patient safety incidents?
• What do the findings from audit projects at a clinical and
organisational level show?
• What are the results from external reviews such as Healthcare
Commission, Staff surveys, Patient surveys, National audit
programmes, external audit, etc?
• Are there reviews into specific incidents underway e.g. special
investigations?
• What is the level of staff turnover? Are there problems in relation
to recruitment and retention of staff?
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Soft indicators of performance
• How well does the organisation make use of available data?
• How does the organisation respond to signs of decline - what is
the level of internal challenge and debate?
• Is the organisation ‘in touch’ with what is happening, both
internally and externally?
• How likely is the organisation to be distracted by other major
initiatives, changes or problems?
• How is potential for innovation, creativity and learning used?
• How good are clinical-managerial relationships in the
organisation?
• How is staff morale?
• What is the quality of external relationships?
• What are relationships and reputation with the local media like?
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Health community views of five SHAs
A B C D E All
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C
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The Victoria University of Manchester
C
R
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Centre for Public Policy
and Management
Health community views: SHA D
• “It does not deal effectively with difficult strategic issues”
• “As you can tell I am unimpressed. … the SHA has been of little help.
We suffer from a failure of joint commissioning by our PCTs and the SHA
has shirked its responsibility to make them collaborate. As a result
clinical services are suffering. The SHA will teach Pontius Pilate a thing
or two about not getting too involved. General style is remote and high
handed”
• “SHA veers from a very hands off approach to a very interventionist
approach with nothing in between and no agreed strategy. Sometime the
SHA deals with individual organisations and sometimes with health
economy - there is no logic to this”
• “The SHA is reluctant to work with other than (a) a complete \"hands off\"
or (b) directive intervention too late mode. It needs to develop more
effective participating modes to really work with local Trusts/systems”
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Crisis and declaration of failure
• External assessment/review – by key stakeholders
– Report from Audit Commission or Healthcare
Commission, publication of performance data,
• An egregious event – disasters and major failures
– High profile patient safety incident, major complaint
investigation, whistleblower, scandal
• Change of perspective
– New chief executive or senior management team, new
governance, new partners/views in public service
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The causes of decline and failure
• Markers, symptoms or warning signs
– Poor relationships, financial deficits, targets missed,
• Secondary causes
– Lack of controls, weak strategy, poor leadership
– Increased competition, innovations, policy changes
• Primary causes
– Organisational culture and attitudes
– Introspection, arrogance, myopia, trauma
– Failure to learn, adapt, change appropriately
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The causes of decline and failure
• Multifactorial, multidimensional symptoms/causes
which are interrelated and interact
• The self-regulating response to decline
– Recognition, willingness to change, open about
problems/data, internal capacity to tackle problems
• The failing response to decline
– Fallacy of success, fortress mentality, retrospective view,
hide the data, no internal capacity to act
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Performance cycle
Self regulating response to decline
High
Performance
Failing response to decline
Low
Time
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Case study: acute healthcare provider
• The trust was involved in a major hospital rebuild resulting
in management’s ‘eyes off the ball’ in terms of key
performance targets. It was unable to achieve core
operational targets and underachieved on financial targets.
The management was perceived as out of touch with
changes in the context of the NHS, heavily centralised, with
a ‘bunker mentality’, and decisions were perceived to be
made ‘behind closed doors’. There was a perceived lack of
leadership and strategic direction. There was little pride in
the organisation and a poor image in local media.
Fulop et al (2004)
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Case study: ambulance service provider
• A number of factors relating to the performance decline were
identified. These included a top-down management culture,
characterised by central control, unclear decision-making
processes and an adversity to risk. This was coupled with a lack
of senior management capacity and a significant number of
managers in ‘acting up’ positions and/or ‘wearing several hats’.
Managers were seen to have their eyes of the ball in terms of the
modernisation agenda and were generally resistant to change.
Day to day business was conducted ‘on the hoof’ and frequently
appeared to take on a firefighting approach. Staff felt generally
disempowered and poor relationships existed, both between the
management and staff side and within the wider health economy.
Harvey et al, 2004
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Approaches to turnaround
• Range of actors
– Government departments
– Regulators, inspectors and oversight agencies
– Other, neighbouring public organisations
– New boards/management teams
– Management consultancies
• Range of methods
– Replacement, retrenchment and renewal
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Replacement
• Serves both a functional and a symbolic/political
purpose with stakeholders
• Deals with responsibility for failure and allows the
organisation to draw a line and move on
• Brings in necessary new skills and expertise – but risk
of losing key experience, knowledge and
understanding – flight of talent
• Who gets replaced – the organisation’s leadership?
• May be necessary, but not a sufficient response – and
what happens if the new team fails too?
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Retrenchment
• Addressing most important performance issues and
bringing them under control as soon as possible
• Mechanistic, process-focused, operational changes to
structures and systems
• Financial control, achievement of key activity targets,
tightened monitoring and management
• Short term, stemming losses and halting decline –
focus on symptoms and secondary causes of failure
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Renewal
• Establishing new vision and purpose for the
organisation – redefining its mission
• Developing clear future long term strategy for return to
growth and future success
• Changing organisational culture, attitudes and
behaviour
• Long-term, fundamental, focused on primary causes of
failure
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Case study: metropolitan council
• A new chief executive was appointed who removed and replaced
the top team of senior officials over the first year. He also pursued
cultural change ‘relentlessly’ by emphasising that the organisation
existed to serve the public, making bureaucratic processes and
silos unacceptable and insisting on opening up the organisation to
its communities. The senior team attended all new staff inductions,
held open meetings, lunched with staff, cut back paperwork, had
only three staff in his office, introduced project teams to bring
about changes and provided opportunities to junior staff. He also
paid deliberate attention to the symbolic dimensions of his own
behaviour as being consistent with his goals.
Paton and Mordaunt (2004)
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Does turnaround work?
• Not all turnarounds work - reasons for failed
turnarounds and permanently failing organisations
• Timescale for turnaround and likelihood of successful
turnaround variable but can be long
• Added value and impact of external intervention: what
would have happened without it?
• Embedding renewal – avoiding a return to failure when
intervention/support is removed
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Models for studying public service failures
• Dynamic capability – how firms create/build
competencies to address changing environment
• Absorptive capacity – ability to ‘acquire, assimilate,
transform and exploit knowledge to produce a dynamic
organizational capability
• Organisations as learning or knowledge-processing
entities - what shapes that capacity to learn?
• Performance decline, failure and turnaround seen as a
dysfunction in learning or knowledge-processing?
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STRUCTURES AND
INTERNAL/ PROCESSES
MENTAL MODELS
EXTERNAL
Drive the efficiency and
Drive the creativity of
KNOWLEDGE
effectiveness of assimilation
recognition, assimilation and
Drive the and application of knowledge
application of knowledge
depth and
breadth of
understanding
ABSORPTIVE CAPACITY
ENVIRONMENTAL OUTPUTS AND
RECOGNISE & ASSIMILATE APPLY NEW
CONDITIONS PERFORMANCE
UNDERSTAND NEW KNOWLEDGE
Drive incentives for NEW KNOWLEDGE Improvements in
Translate into
developing KNOWLEDGE services,
Synthesis and organisational
absorptive capacity governance and
Awareness and interpretation of change
management
new knowledge
openness to new
knowledge
LEARNING
RELATIONSHIPS
Drive the ease of
understanding STRATEGIES
Drive the focus of recognition, understanding,
assimilation and application of knowledge
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MENTAL MODELS STRUCTURES AND PROCESSES
INTERNAL/ EXTERNAL
Organisation that transported people Controlled, top-down structure
and Management
KNOWLEDGE
Funded to achieve financial balance Absence of many board level posts, freeze
Fought against external review and meet key targets on recruitment
Findings not a surprise – Unhappy organisation, antagonistic Clinical governance mechanisms absent
rejected by senior managers, New CE, senior managers, Chair
relationships
confirmed what others knew Patient focused organisation with Improved structures and business
clinical remit processes
New Head of Information post
Good working relationships, listening More devolved management, improved
Sharing information and
management, increased trust communication
learning through external
networks
ABSORPTIVE CAPACITY
ASSIMILATE APPLY OUTPUTS AND
ENVIRONMENTAL RECOGNISE &
PERFORMANCE
Wanted more/ No initial
CONDITIONS UNDERSTAND different evidence response 0 star rated, failed CHI
Small organisation, financially Challenged Didn’t think it review
challenged health economy Introduced
external evidence mattered CE sacked, Chair not re-
change projects
External performance review Rejected external appointed
Use of external Responsive to
Disengaged help Second 0 star rating
team issues
External intervention team Recognition that Achieved 3 external
Thinking Taking on
Improved relationships with key change needed accreditation standards
laterally, radical change
stakeholders Eager for Increased clinical focus,
analysing data
knowledge but with overspend
Very different feel to
organisation
Disseminating learning
LEARNING STRATEGIES
RELATIONSHIPS Priority given to financial and response time targets
Poor internal/ external Not engaged with clinical agenda or clinical governance
relationships
Stopped mandatory training; no push for development
Bad press Increased focus on clinical priorities, looking at the
Benefits of working with organisation’s role in the wider health economy
external intervention team Focus on investment – both capital and staff
Working with health development/ training
economy
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Conclusions
• Public service failures are important – functionally and
symbolically, as part of a wider political narrative
• We can do more to understand, predict and engage
with (?prevent) performance decline and failure
• There is growing expertise and experience with
approaches to turnaround which seem to “work”
• It may be helpful to see failure and turnaround in terms
of organisational capacities to learn, or to use
information
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