“They are just out to make money”, I hear the lady on the radio say. She continues to berate the company for not delivering what she expected.
I’m sure you’ve heard this several times, and it’s a misconception on several sides.
Because how does a company operating in a well-functioning market make money? Yes, by delivering value to those who are willing to pay what the company wants for its services.
If it’s too expensive, you go somewhere else where you think the balance between the value you get and the money you pay is better. The same happens if you think the value is too low, because it is always the balance between the price and the value that you decide when you trade.
In a non-functioning market, this function is disrupted. For example, when there is a monopoly in an area. This allows the company to raise the price so that they receive more money than the corresponding value they deliver.
So if we assume that the lady on the radio is referring to a company operating in a functioning market, then the phrase “they’re just out to make money” fails to see the bigger picture. Because there are no legal shortcuts to making money, without also delivering value to customers.
In the public sector
But what about the public sector, how does it work there, because there is often no market like in the business world? There is often a monopoly on getting the value you are looking for.
You can’t have it:
- your district heating elsewhere than from the municipal district heating network,
- your passport elsewhere than from the police,
- your study grant elsewhere than from CSN,
and so on.
To link it back to the lady on the radio and turn it around to something in the public sector, you could say that “they are just looking to keep their budget”.
However, I would argue that this is not quite right either. No one can successfully operate in a monopolistic arena in the long term if they do not deliver value. Neither does the police or any other authority. Because if these public services are not delivering value, others will come along who want to do so, or we as a population will get bored and demand change.
I mention the police as an example, because it is mind-bendingly challenging in our culture for someone else to act as a police officer. But it is not unheard of in the world that where the police cannot protect citizens, others arise who are willing to do so. Sometimes they are called vigilantes and sometimes it is criminals who step in and take over “law and order”.
Of course, it is their “order” so that they can continue to operate, but it is a kind of order that citizens may find better than lawlessness.
The same is true in other areas of the public sector, where we must ensure that we deliver the value that customers, whatever they may be called (patient, property owner, student, user, …), demand.
Do private health services only want to make money?
Think of our online doctors who appeared many years ago. Where did they come from? It was because our existing healthcare system was not delivering the service expected of us patients seeking care. The request was for quick and simple advice from a health professional. Not where I have to wait days, weeks or months for an answer.
I usually say that it was not forbidden for a county council to think about using the new technology and then have a bunch of doctors and nurses responding to incoming needs of various kinds. Like what we now see from Min Doktor or Kry.
It was just that their culture made it impossible for them to think these thoughts. If you thought of them, it was impossible to implement the idea.
We see it in area after area, where public sector delivery is transferred to someone else. Health care, as in the above example, social care, and also the police, where we see security companies taking over the protection of people and property in more and more areas.
So to summarize this week’s thoughts:
- Businesses cannot make money in a well-functioning market without delivering value to customers, for which they are willing to pay.
- It is not possible for a public sector organization to survive in the long term without delivering the value that customers demand.
In addition, if you work in the public sector, you have a special responsibility to ensure that you deliver the value that the customer demands while being efficient in doing so. This is so that the welfare that we have built up can continue to exist.
The need will not go away, it is just a question of who will deliver it?
So how do you ensure that you as a company actually make money, or that in the public sector you can both manage the budget and have satisfied citizens who think it is worth paying taxes for the activity?
Yes, by identifying what customers really need. Based on the need, you need to create an efficient value-added flow. That you really meet the needs they are asking for.
With an “effective value creation flow” I mean that you need to go through WHAT the value is you are going to create, and HOW you are going to create it. In the how, you will find the things that you can get better at.
Do you expect a case to be dealt with in 14 days, where you, or the legislator, goes out and says that you will do it in a maximum of 30 days. This means that if you then do it in 180 days, you have a problem in HOW you create the value. This is where the need for work lies.
It is not always that ‘there is a lack of resources’. More so, in my experience, the resources that already exist are not used effectively. It is no use pouring in more resources to work in a resource-wasting flow. This will only make the budget burst.
Good luck this week in critically examining the value-creating flows you have. Therein lies the seed for improving your business.