Times they are a-changing: for governments

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Many Estonians, who graduated in Soviet time, probably still remember from history classes the Marxist-Leninist definition of revolutionary situation, which is when the ruling classes can’t continue living as they’ve used to and the lower classes don’t want to. As we know, history tends to repeat itself, but usually in somehow different and sometimes in an awkwardway. So no wonder, the situation today is that people in old democracies would like their governments to continue with status quo and so do the governments themselves, but it’s simply not possible anymore.

Governments and public sector organisations world-wide are facing a future where the new normal is dealing with uncertainty while delivering services that are affordable, in the context of deficit-reducing budget cuts. The challenge is to adjust to the new reality of ‘doing more for less’ - or even ‘doing less for less’ – while focusing on the outcomes society needs and wants.

PwC Public Service Research Centre has conducted an international study on future of governments, which concludes that there are several new ‘must-have’ capabilities, characteristics and behaviours the public bodies of tomorrow must have, such as partnering, co-venturing, co-creation and co-design, together with agility, innovation, connectedness and transparency.

Bridging from now to the future means moving towards the world, where citizen is in control and governing takes place with citizens, not as much for citizens as we have used to. The new public sector organisations must be small, flexible, purpose-driven entities, forming networks, as opposed to today’s organisation silos, big, all-in-one giants. Emerging new governments and local governments need to be service facilitators/brokers/commissioners, not simply service providers. What’s especially important for New Europe is the need to change from the forced cooperation between state and citizen (the ‘strong leader’ model) into mutual collaboration based on trust (the ‘servant leader’ model ).

First signs of such movement have already emerged in Estonia. Many civil society organizations, NGOs and active citizen groups ran for the local government council elections held in October 2013 with their own election coalitions. And in many municipalities, they surpassed the 5% electoral threshold and took seats in the local governments.

The new role for state owned enterprises

As an example, state owned enterprises (SOE) have a new strategic role to drive good growth through their impact on a society’s innovation system with respect to wealth creation, job creation and wellbeing. To play this role, SOEs should not be run as a private company given the different business logic and task: their primary task is not just to generate financial return on investment to the government in the short and long term – it is value creation through the right investments creating a long term sustainable and competitive advantage for the nation.

SOEs need to be actively owned, directed and evaluated in a holistic way including human, social, environmental, intellectual and financial perspectives. SOEs must be a bigger strategic player linked to the ambition of creating new jobs, growth and innovation in existing and emerging industries.

Who’s accountable?

PwC has discovered in its global studies that while the public tends to hold central government responsible for core parts of public service performance, it is possible to give power away and transfer accountability to other bodies if delegation is well communicated, clearly enacted and real powers are transferred to highly accountable bodies.

When this is not the case – when lines of accountability are unclear, where the public does not know who is in charge, and where the division of power is murky – then the public reverts to holding the central government responsible for the performance of a public service.

At the same time, it can take time for public perceptions of accountability to change once power has been transferred to a new body. The public, it seems, needs time to get used to understanding who is responsible for exercising devolved powers.

This presents a challenge for politicians as it implies that there will be a period of time in which they will still be held responsible for the outcomes of decisions taken by an entrusted body once they have let go. Public leaders need to hold their nerve if they are to rise to the challenge of giving power away from centralised political cultures – yet this is critical success factor for the “new norm” developed societies are turning to.