Developing a strategic user orientation: a key element for the delivery of effective public services

A Correction to this article was published on 09 April 2021

This article has been updated

Abstract

This paper argues that the application of strategic planning and management to public services has been hampered by the failure to link these to strategic orientation. This paper suggests that this is essential to the development of resilient and sustainable public services for the future and that this orientation needs to privilege creating value in the lives of public service users rather than internal organisational efficiency in isolation from such value.

Introduction

The transposition of strategic planning methods and management from the private sector to the public sector has focused, over the past decades on cost control more than on user needs and well-being. Public service organisations (PSOs) have hence become pre-occupied with their internal costs and the implications of these costs for market positioning. This approach has been recently criticized for the inappropriate translation of a commercial management approach to public services (Llewellyn & Tappin, 2003). Drawing upon service management and marketing research and theory, this paper will argue for an alternative approach that focuses instead upon external effectiveness and upon creating value for public service users. Such a strategic customer/user orientation is essential for the evolution of resilient and sustainable public services.

This is not an entirely novel argument. Strokosch & Osborne (2020a) recently pointed to the failure of successive waves of public management reforms to successfully engage public service users and citizens in the design and delivery of public services, whilst Kools & George (2020) have called for PSOs to develop a ‘learning organisation’ approach if they are to fulfil their potential. This present paper maintains that an essential prerequisite for PSOs to become resilient is to adopt a strategic orientation that places the users, not the PSO or public service professionals, at the heart of their strategic thinking.

The paper is a conceptual one, but one with significant implications for public management practice. It will commence by reviewing briefly the development of strategic planning and management for PSOs and by considering the strategic orientation within which these managerial disciplines have been situated. It will then argue for an alternative approach that places the public service user at the heart both of the strategic design and delivery of public services and of resilient and sustainable public services.

It could legitimately be argued that the approach explored in this paper is one primarily located within the developed market societies of the western world, such as across Europe, the US and Australasia. This is undoubtedly true. However, our belief is that the paper has relevance beyond these bounds, and particularly for Asia, for two reasons. First, the pressures of globalisation have meant that these western models are becoming increasingly adapted to non-western contexts. Procurement models and the contractual governance of public services certainly originated in the western world, for example, but have now become prevalent in diverse global contexts such as East Asia (Cheung, 2004) and Africa (Dixon et al., 2018). Consequently, there is now an emerging literature on public service contracting in China, for example, including analyses of contractual processes and models (Chang and Chen, 2016), critiques of its impact upon societal equity (Wang et al., 2018), and evaluation of its effect upon public service innovation (Lin, 2016). There is emergent evidence that strategic planning and management are now also being adapted to a Chinese context—for example in the context of the implementation of co-production as a service delivery mechanism (Huang and Yu, 2019), education management (Hu et al., 2018), local government management (Du et al., 2020), and urban planning (Xu et al., 2017; Guan et al., 2018). This makes the argument of this paper highly relevant for public management in China and Asia.

Second, and more fundamentally, strategic orientation concerns the relationship between citizens, the users of public services, and PSOs and is fundamental both to the effective provision of public services and to the legitimate mandate of PSOs within society. On the one hand, the lack of a user strategic orientation is a break, globally, upon the effectiveness of public services and the approach detailed here offers a potential avenue by which to resolve this key issue. It places the citizen and the public service user at the heart rather than the periphery of the delivery of public services. On the other hand, many societies across the world are suffering a crisis of confidence and legitimacy for their public services. They are criticised for putting the needs of their employees above those of service users and for failing to address directly the needs of these users (Huang, 2009; Van de Walle, 2016). Addressing the strategic orientation of PSOs is one potential route to address this failing and its consequences for the legitimacy of public services.

PSOs: a brief word Before engaging in the substantive discussion of this paper, it is important to clarify the nature of a ‘public service organisation’ (PSO). PSOs are any organisations that deliver public services to citizens. These organisations can be based in:

  • the public or governmental sector at either the national or local level,

  • the business and commercial sector, and/or

  • the third and non-profit sector.

The exact mix of organisations from these different sectors will vary between different national contexts, as will their funding and income models. Inevitably, whatever sector they are based in, PSOs must be sustainable as organisational entities (Osborne et al., 2015). The focus here though is how such PSOs interact with citizens and public service users to create value both for individual citizens and/or service users. This is discussed further below.

The strategic disciplines and public management: a brief review

Strategic approaches have been an important element of the growth of public services management (Poister, 2010). However, as is argued below, the impact of these approaches has been limited by their adherence to a cost and/or market orientation alone (Llewellyn & Tappin, 2003), rather than adopting the customer orientation that characterises successful firms in the commercial service sector (Schlogl, 2017).

Strategic planning The doyen of the strategic planning literature for public services is undoubtedly John Bryson, and he has developed a substantial tool-kit of approaches to strategic planning for PSOs. To conflate his words, strategic planning is about ‘what to do when stakeholders matter’ and ‘for the common good’. It requires ‘a disciplined effort to produce fundamental decisions and actions that shape and guide what an organisation is, what it does and why it does it.’ (Bryson, 1988, p.5).

Strategic planning can, though, become overly pre-occupied with a rational view of public service delivery that belies such issues as power and culture. Despite this, it has become embedded within public services management practice since the 1970s.

Strategic management This has developed as part of public services management since the publication of the seminal text on it in the early 1990s (Nutt and Backoff 1992). It is defined as the rational decision process by which an organization formulates its goals, implements actions to achieve them and monitors results, making adjustments as environmental and organizational conditions require them to.

Strategic management has the potential to go beyond the narrow concerns of strategic planning, to embrace broader organisational goals and to address the issues of power, culture and leadership that have often been absent from the more rational strategic planning literature (Poister & Streib, 1999; Ferlie & Ongaro, 2015). John Bryson et al., (2018) have asserted that strategic management has now become ‘common practice’ for PSOs, though Hoglund et al., (2017) have also argued that its impact has been limited by its reliance on a ‘tool kit’ approach (such as the stand-alone application of a SWOT Analysis or a Balanced Scorecard) rather than on embedding strategic thinking across the PSO. Areas of public management within which the impact of strategic management has been studied include sustainability management, organisational performance, stakeholder engagement, the adoption of information technology by PSOs, and healthcare and the digital city.

The literature emphasises important differences between strategic management for PSOs and for commercial firms. One straightforward example will make this point. In a commercial firm, shareholders alone represent the ownership of that firm, whereas there is no single owner of a PSO. Rather, there are many stakeholders who can often hold conflicting, rather than converging, interests—including service users, their families, citizens in general, taxpayers, other PSOs, and politicians. Thus for PSOs, their strategic management is enacted within an over-arching public service ecosystem (Petrescu, 2019; Strokosch & Osborne, 2020b), where decisions and actions by politicians and other key external stakeholders may interact with or even overtake their internal decision-making (Walker, 2013). They are also subject to public funding models and have little or no autonomy in decision making within these models.

Interim conclusions on strategic planning and management At the most general level, some critics have suggested that strategic management is very difficult for PSOs, because of the complexity of their operating environments, as discussed above. Recent studies (e.g., George et al., 2019) have also suggested a number of problematics with current approaches to strategic planning and management (SP&M). These include the mechanistic application of strategic approaches to PSOs, the contested links between strategic approaches and PSO performance, the under-theorisation of strategic approaches and the dominance of ‘how to’ tool kits, a poor understanding of the links between strategic approaches and organisational leadership, and the undifferentiated application of SD to PSOs.

To these critiques, we would add our own. This is that the SP&M literature fails to interrogate the assumption, derived primarily from the New Public Management (NPM), that the management of public services should be concerned primarily with internal costs and market position alone. We contend that this is a fundamental flaw that has limited the impact of the NPM for PSOs. Consequently, in the next section, we argue for the importance of establishing a strategic orientation as a precursor and context for SP&M for PSOs. Without this, we argue, these disciplines can never truly link the organisational decisions, processes and activities of PSOs to the achievement of external effectiveness and value-creation in delivering public services. These latter achievements are at the core of resilient and sustainable services, whether in the public or private sector. We conclude by arguing that this strategic orientation needs to be informed by an understanding both of public services as ‘services’ and not as a special form of manufactured goods and of the centrality of the public service user to value creation for public services.

Strategic orientation

In the private sector, strategic orientation has long been recognised as important for organisational performance (Deshpande et al., 1993). It refers to an organization’s capacity to create a culture of shared values and behaviour to underpin its strategic approach and can be oriented towards three horizons: costs, markets, users.

Cost-orientation has an internal focus and is aimed at developing a culture of efficiency throughout a firm’s internal value chain. It is of course one of the more enduring principles of the NPM—and indeed the driver of most recent public management reforms has been a cost-orientation in the face of the global recession. As such, it is embedded in many current PSO strategies and operating mechanisms. A cost-oriented PSO places a high level of importance on developing tools and knowledge about the resource inputs used to produce its services and the costs of these resources. It focuses on reducing internal waste and increasing internal efficiency. This is of course a necessary and vital antecedent for the organisational sustainability of PSOs, especially in times of crisis, but it is not sufficient to guarantee either their effective external performance or their sustainability in testing market conditions (Osborne et al., 2015).

Competition-orientation is the creation of a business culture across the firm that is oriented to market performance. It has also been on the rise within PSOs for several decades, again linked to the influence of the NPM. It does appear to have enhanced the sustainability of individual PSOs within public service markets and quasi-markets (McLaughlin et al., 2009). However, the evidence is that this has been at the cost both of the overall effectiveness of public service delivery ecosystems in responding to societal needs and of the ability of PSOs to respond creatively to the most pressing of global social and economic problems in a holistic manner (Pollitt, 2017). The focus for PSOs has thus been upon their market positioning and the marketization of public services, rather than upon external effectiveness and value creation (Powell & Osborne, 2015, 2020).

Customer-orientation is the underlying organizational culture that facilitates the understanding of what constitutes ‘value’ for the customers of a firm and how to embed such value at the heart of sustainable business practice (Narver et al., 1998). It is a customer orientation which gives meaning to the cost and competition orientations of a business (Mediano and Ruiz-Alba, 2019). As we argue below, a customer (or ‘user’) orientation has been absent from the strategic planning and management practice in PSOs and constitute a significant limitation on their applicability to, and impact upon, the sustainability of PSOs.

A recent example from Scotland of what might constitute a user-orientation for public services is provided by the re-design of social security services. The Scottish Government has recently re-designed social security policy and services from a user perspective (Scottish Government, 2016). This has supported the development of a customer/user-orientation and, by consequence, services have been designed with current social security service users to ensure they are accessible and meet the needs of those using them. It also represents an important shift away from the traditional and adversarial social security system which has shaped the approach to social welfare in the UK. This adversarial model has emphasised ‘value for money’ and limiting the numbers of people access social security services. The Scottish model by contrast has a strategic orientation that emphasises the centrality of user experience and the significance of the co-design of the social security system around needs rather than budgets (Strokosch, 2018).

Customer and user strategic orientation in private and public services

Private sector customer-orientation The commercial and for-profit literature has long understood the significance of a customer orientation for business success (e.g., Frambach et al., 2016). Within the service management literature, the importance of such an orientation is even greater. The seminal work of Richard Normann (1991) on the ‘moment of truth’ emphasised how the relationships between the customers and staff of a service business were fundamental to the creation of a ‘virtuous cycle’ of enhanced marker performance for the service business. Relationship marketing developed this approach further by creating a robust strand of theory and practice that situated a customer-orientation as a necessary condition for successful and sustainable service. Thus for service businesses the focus has shifted

‘…from the activity of attracting customers to activities which concern having customers and taking care of them. The core of relationship marketing is relations, a maintenance of relations between the company and the actors in its micro‐environment… and of course customers as the most important actor. The idea is first and foremost to create customer loyalty so that a stable, mutually profitable and long‐term relationship is enhanced.’ (Ravald & Gronroos, 1996, p.19).

As the service management literature has evolved subsequently, the emphasis has shifted from involving service customers in the production of services (co-production) and to their role in the consumption/use of services to create value in their own lives (co-creation) (Vargo et al., 2008; Gronroos, 2011). This emphasis has subsequently been articulated as the basis of success for service firms (Gronroos, 2017). Thus, a customer orientation is the basis for sustainable service businesses in the developed economies. It establishes a customer-oriented culture that is the basis for interpreting cost and market information rather than vice-versa. This then becomes the basis for strategic decision-making. This customer orientation is entirely lacking from contemporary public service management and has, we argue, substantially limited the impact of strategic planning and management on PSO effectiveness, performance and sustainability.

Creating a public service user-orientation There is a strong strand of theory and practice around stakeholder engagement for PSOs in strategic planning (Bryson et al., 2018). This is not the same thing as user-orientation, though. Stakeholder engagement is about a series of operational tactics and approaches to drawing a range of key actors into the strategic planning and enactment cycle. A user-orientation goes beyond stakeholder engagement to embed public service users and the creation of value in their lives at the heart of public service management. This orientation, we argue, is at the core of a service-dominant approach to PSOs, as the basis for sustainable public services.

The rhetoric of user orientation has of course been a mainstay of public service reforms for some years, though research has increasingly questioned its actuality (Boyne and Walker, 2010). Inter alia, this research has argued that in reality a user orientation has both become conflated with ‘consumerism’ as part of NPM-style reforms and that this has undermined substantially its impact and has conflicted with public service motivation to undermine public service performance (Jung, 2010). Others have also argued that the rhetoric is empty and has achieved little in putting service users at the heart of public service delivery. Flemig and Osborne, (2019), for example, have suggested that the lack of substance behind the user orientation rhetoric has undermined the potential achievements of co-production.

Building on this work, Strokosch and Osborne, (2020a) have argued that successive waves of public service reform in the developed economies of the western world have failed to achieve a user orientation in the design and delivery of public services. This has been because these reforms have seen a user orientation as something to be added into existing public services as an ‘optional extra’. This has had the effect of limiting significantly actual user involvement and/or citizen participation as either a means or an end of these reforms. They argue for an alternative approach to public service management that integrates insights from the service management and marketing literature with public management.

In this approach, the user is not at the periphery of the process of public service delivery, where PSOs have to struggle to engage them in this process. Rather they are at the heart of a public service ‘ecosystem’ that includes all the key stakeholders and elements of public service delivery. Consequently, they are central both to the co-design and co-production of public services and to the co-creation of value in their own life through these services. It is not a question of how to engage public service users in public service and delivery. Rather the question is how PSOs can develop their own user orientation to engage effectively with the actuality of public service delivery.

Such an approach has a significant impact for our understanding of public services in general and of SP&M for PSOs in particular. We argue here that this strategic orientation to the centrality of the user for public services is essential to give meaning to the existing cost and market orientations of PSOs as the basis of effective strategic planning and management. Such a strategic user-orientation is hence the missing strategic link between internal efficiency and market position and true external effectiveness and value creation. This argument is developed further in the final section of our paper.

An illustrative example of how a cost/competition strategic orientation might constrain attempts to shift towards a customer-orientation during service re-design is provided by a recent case study of public service re-design in an English Borough Council (Strokosch, 2018). This service re-design initiative was connected to a broader programme of transformation and service modernisation, and of which digital transformation formed a core dimension. In this case, the goals and practice of service design were closely linked to the strategic objectives of the Council and in particular, concerns of internal efficiency. Although a consultancy organisation had introduced the concept of human-centred design to Council staff, the emphasis of senior management was on creating efficiencies and maintaining centralised control of service production and the design process, rather than situating the Borough’s residents and service users at the heart of public service design and delivery. This significantly impacted upon the processes and impacts of the service redesign process. It oriented it away from an external focus on creating value for the Borough’s citizens and public service users and internally towards efficient resource utilisation. The latter point is of course highly important for sustainable public services, but can only be made sense of in relation to how the Borough creates value for its citizens and public service users. Thus, this case highlights the importance of strategic orientation and the way in which it might constrain attempts to transform services (Strokosch, 2018).

Public services, strategic planning and management, and strategic orientation: a Public Service Logic perspective

The last decade has seen increasing attention both to understanding and to managing PSOs as service organisations. This has been in contrast to the more product-dominant approaches that characterised the NPM. This service-oriented approach has subsequently become known as Public Service Logic (PSL) (Osborne, 2021).

Integrating service management and public management theory and research, PSL has argued that the core of effective public service performance derives from understanding them as services, rather than products. This requires four things:

  • An understanding of public services as intangible processes that cannot be stored but where their production and consumption occur simultaneously in real-time;

  • An awareness that these public service delivery processes take place within public service ecosystems;

  • An appreciation of public service users as central to the co-design and co-production of these services; and

  • An appreciation of value creation for public service users as being at the heart of these services.

Within this approach, PSOs provide resources for citizens, in the form of public services. However, it is the user who creates value in their life by how they combine these resources with their own needs, experiences and expectations. This process can also be shared with public service staff to co-create value. The public service user is thus at the core of the public service delivery process and is the engine of value creation, not the PSO. A user orientation is thus essential for the development of effective and sustainable PSOs. It is only in the context of such a user-orientation that PSOs can make sense of their cost and market information to develop effective and sustainable public services (Osborne et al., 2015).

A full exposition of PSL is beyond the remit of this paper and is available elsewhere (Osborne, 2021), but a brief summary of it is provided here. As discussed above, service management and marketing in the commercial sector has come increasingly to focus on the consumption of services alone, arguing that consumption rather than production is the locus of value creation. However, for public services, both the production and use/consumption of such services are important—value can be created as much through user involvement in the co-design and co-production of public services as through their use.

PSL understands public service delivery in the Western developed economies as a process that moves from societal values through to the use of public services (Fig. 1). Societal values are embedded in public services through public policy. These policies are translated into public services by co-design with citizens and public service users. PSOs create resources (i.e. public services) for citizens to use in addressing their needs, and the actual experience of these services is co-produced by the PSO, their staff, and the public service user. This process takes place within the context of a public service ecosystem. Finally, the public service user integrates these services, both consciously (and sometimes unconsciously) with their needs, experiences and expectations to create value for themselves. Importantly it is not assumed that value is always created: badly designed or misused public services can also destroy value for their users.

Fig. 1
figure1

The public service production and consumption process

Three types of value can thus be created:

  • Value-in-production—this comes from the role of users in the co-design and co-production of public services, either through strengthening the focus of these services on needs or by enabling users to develop their own skills and confidence by such involvement. Citizens who are not service users can also gain such value by their role as volunteers;

  • Value-in-use—this comes from the experience of using a public service and can affect the short-term and long-term well-being of service users and also provides a milieu for their engagement with the aims of public services; and

  • Value-in-context—this comes from the extent that public services address the social and economic needs of citizens in the context of their own life experiences and expectations.

These three types of value are themselves made up of a mix of value elements (Osborne et al., 2021):

  • the short-term satisfaction of public service users with their services and the influence of this upon their well-being;

  • public service outcomes, in terms of the effects and impacts of a public service;

  • the influence of public service on the wider whole-life experience of a service user;

  • the extent to which public services create individual and/or societal capacity to change and improve in the future; and

  • the creation of societal value either through the delivery of public goods (e.g. street lighting) or through secondary benefits (such as fostering of active citizenship or an inclusive society).

A key challenge for any public service is hence to determine the dimensions of value that it is trying to create and the elements that make up these dimensions. This mix will be different for each public services (and indeed for each PSO). A crucial task for every PSO is therefore to determine this balance and use this to structure its user orientation. A tool to do this is the Value Matrix displayed in Table 1.

Table 1 The value matrix

This value is created or destroyed within public service ecosystems. The elements of these ecosystems include:

  • The societal values and norms and the public policy context of a public service;

  • The key individual actors and stakeholders to a public service, including citizens; public service users; public service professionals, workers and support staff; and significant others (such as the family/carers of a service user or volunteers); and encompassing their social and economic needs, their personal beliefs/philosophies, their prior experiences (both service-specific and whole-life) and future expectations of these key actors, and their actions and activities within the public service ecosystem;

  • The organisations involved in the ecosystem, often operating within complex and interactive service delivery networks, including PSOs but also organisations supporting their work or supplying resources (such as software firms, outsourced administrative services, or suppliers of essential equipment);

  • The resources that go into the production of a public service by a PSO (including the capital, buildings, training of staff, etc.);

  • The public service infrastructure, including the hard and soft technology that supports the public service delivery, as well as essential ‘back-office’ support services and administration;

  • The spatial locus of a public service and its impact upon service delivery (e.g., whether a public service is delivered in an open-plan or closed environment, or at a location at the top of a hill or in a town square); and

  • The processes both of service enactment and use and of value creation, including their design/co-design, production, co-production and usage.

Conclusions: the implications of PSL and a user orientation for strategic planning and management and for PSOs

To return to the starting point of this paper, a PSL approach to the design and delivery of public services has five implications for the practice of SP&M by PSOs. First, SP&M needs to be informed neither by a narrow focus on internal costs nor by the market performance of individual PSOs (alone). Rather it must be informed by an understanding of the centrality of the public service user to the delivery of effective and sustainable public services. It is only in the context of this central user role that cost and market information can be made sense of. What is significant is how public service users value cost efficiency against the effective outcomes of public services. A strategic orientation of PSOs towards the users of public services does not diminish the importance of cost and competition information. Rather it shifts the decision-making about this away from the PSO alone and towards interpreting nit within the context of public service user needs.

Second, PSOs need to realise that public service delivery occurs not through the actions of single PSOs but rather in complex and interactive public service ecosystems. Both sustainable PSOs and sustainable public services require a strategic focus on the ecosystem rather than on the PSO in isolation (Strokosch & Osborne, 2020a).

Third, PSOs need to concentrate not upon internal resource and performance measures in isolation, but rather the import of these measures for the creation of value in the lives of public service users and society. The dimensions and elements of this value will differ across different public services and different societal contexts, as described above. Again, this is not to say that cost and market information is unimportant but rather that it has to be understood in the context of external value creation.

Fourth, it is only by embracing PSL and a user orientation that PSOs can become truly sustainable. This requires that they adopt such an orientation to steer the strategic direction of public service reform and the role of individual PSOs within these reform trajectories. It also requires them to understand that the sustainability of individual PSOs is only possible within the context of healthy and thriving public service ecosystems. This systemic approach will drive the creation of sustainable public services and sustainable PSOs, rather than an absorption either with internal costs or with individual PSO market position at the expense of the health of the overall public service ecosystem.

Fifth, none of the above is to downplay the importance of cost or market information and orientation for public services. The NPM has created very efficient but permanently failing public services by focusing on cost and market information in isolation. It would be a tragedy if a user orientation were to lead to highly effective but unsustainable public services by failing to consider cost and market information in the context of strategic user orientation. This is the core of Public Service Logic.

This model has, of course, been developed in the context of Western market economies, and the dynamics of Asian economies and public service ecosystems can be quite different. We would argue that this does not negate the importance of strategic orientation for PSOs is such Asian economies. Nor does it undermine the significance of a PSL approach for public service delivery in these economies. What it does require is the interrogation of the assumptions underlying both strategic orientation and PSL in an Asian context and an adaptation of their insights to this Asian context. This is, we would argue, a key task for public management scholars in China, and in Asia more broadly, over the next decade.

Change history

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Acknowledgements

This paper draws upon work carried out as part of the European Commission’s H2020 project ‘Understanding value co-creation in public services for transforming European public administrations (CoVal)’. This project received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 770356. This publication reflects the views only of the author, and the Agency cannot be held responsible for any use, which may be made of the information contained therein.

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Correspondence to Stephen P. Osborne.

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The original online version of this article was revised: In the reference section the DOI of article by Osborne, Nasi, & Powell is now available.

Communicated by Yijia Jing.

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Osborne, S.P., Strokosch, K. Developing a strategic user orientation: a key element for the delivery of effective public services. GPPG (2021). https://doi.org/10.1007/s43508-021-00008-9

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Keywords

  • Strategic orientation
  • Strategic planning
  • Strategic management
  • Public service organisations
  • User orientation
  • Public service delivery
  • Public service logic