Saturday, September 13, 2014

Saturday Morning Musings - the use and abuse of the term business

The decision of the Australian High Court in the temporary protection case (here; a link to the verdict is included in the story) represents another set back to the Australian Government's stop the boats at all costs policy.

You don't have to be for or against the policy to know that the policy has come at a considerable cost, financial and human. To those supporting the policy, these costs are acceptable. Those opposing it obviously take the opposite view. To them, the costs are part of the arguments against.

My argument has been a little different: even if you take the Government's objectives as a given, have they gone about it in the best way? Here I argued from early on that the Government's policy approach was unnecessarily clumsy, creating damage (among other things) to our relations with Indonesia. It's kind of a blunt crash or crash through ethos.

Down in Canberra, the changes that have been imposed on the public service by the Government continue to cause ripples. The Canberra Times remains the best source here. This is the latest example: Tony Abbott's indigenous takeover in 'disarray'.

From a practical perspective,  public servants in all Australian jurisdictions are struggling to deal with a multiple changes that interact with each other: budgets are being cut; services are being outsourced; new management models are being introduced, some not so new re-introduced; with the whole package wrapped up in the latest version of modern management speak whose practical effect it to make the process so opaque that even those inside the system struggle to understand what it all means, let alone explain it to those outside the system. Most public servants are just keeping their heads down, trying to keep things going as best they can.

It will be clear from my writings that I am out of sympathy with the changes.

I dislike the new jargon. Consider the use of the word business. University VCs talk of their institutions as businesses, while senior public servants sometimes talk of their agencies as the business. The business needs this

But what is a business? One definition reads: an organisation or economic system where good and services are exchanged for one another or for money. Wikipedia states:  "business, also known as an enterprise or a firm, is an organization involved in the trade of goods, services, or both to consumers." The concept of transactions, of exchange, is central to both definitions. So if an agency is a business, its core activities must focus on transactions, on exchange.

This leads to a second question. If an agency or institution is a business, what is that business? Put this another way. If a business is about transactions, what transactions are we talking about? Do those transactions actually represent the core of what we do? This gets us into slippery territory. You can see this clearly if you ask a simple question, who is the customer? 

In the case of Australia's universities, for example, they have multiple customers, including especially the Australian Government who acts as funder and regulator. Similar issues arise with specialist medical colleges. Each customer is involved in often overlapping transactions. In this mix, what are the core transactions? How do these relate to the business as defined?

In practice, very few organisations define themselves in terms of transactions or, indeed, business as such. Take BHP Billiton as an example. The company defines itself in this way: "We create long-term shareholder value through the discovery, acquisition, development and marketing of natural resources." This statement has the advantage of being clear. Transactions are there, but the key thing is shareholder value on one side, a set of activities on the other. BHP Billiton knows that it is a business, doesn't need to talk about it.

Now compare this to Sydney University.  Its strategic plan begins:
The University of Sydney is a large and diverse institution with a broad range of disciplines and a strong shared identity that binds us together as a community and shapes our strategy.
At the heart of our strategy is our shared common purpose to create and sustain a university in which, for the benefit of both Australia and the wider world, the brightest researchers and the most promising students, whatever their social or cultural background, can thrive and realise their full potential. 
The introductory statement on the About page reads: 
Our scholars and students share a passionate commitment to the transformative power of education.
Our research makes a real difference to our understanding of today's world and how we work and live in it, and we enrich our community by bringing together people from all social and cultural backgrounds.
These are aspirations expressed in marketing terms that reflect that nature of Sydney University as a major tertiary institution.. But how do they link to the expressed concept of Sydney University as a business or the phrase "the business" used in internal meetings?

If we now turn to the NSW Department of Family and Community Services (FACS),we find that the About Us section begins:
We are committed to achieving the NSW Government targets and ambitions as outlined in the NSW 2021: A plan to make NSW number one. We measure our performance against these targets through indicators which we monitor and review regularly to improve our services.
Further information our performance can be found in the NSW 2021 Performance Reports.
 Our work is broad and challenging. Our objectives for 2014-16 are:
  • Children and young people are protected from abuse and neglect.
  • People with disability are supported to realise their potential.
  • Social housing assistance is used to break disadvantage.
  • People are assisted to participate in social and economic life.
  • People at risk of, and experiencing, domestic and family violence are safer.
  • Aboriginal people, families and communities have better outcomes.
We will achieve our objectives by improving the way we work:
  • We put people first.
  • We create local solutions tailored to meet local needs.
  • We work with government, non-government and community partners to reach more people with better services.
  • We build an agile and cohesive department that leads and delivers social policy reform
Again, aspirational relative to the role of the Department. But how do these goals link to the sometimes expressed concept of FACS as a business or the phrase "the business" used in internal meetings? As with Sydney University, the reality is that they don't. 

If the term business is so ambiguous and uncertain, why do people use it in circumstances where it is arguably not at all relevant or, at least, of uncertain meaning?

There appear to be three reasons. The first is just fashion, that being a business is somehow good. The second is that business appears to be used as a synonym for business like. The third and more complex reason links to implicit mental models about the importance of markets and the role of government.

I will extend this argument in my next post.



Anonymous said...

BHP: We create long-term shareholder value - which is polite-speak for "we aim to make a profit". That is what 'business' is about; nothing more.

The thing these other entities haven't yet properly enunciated is what their version of 'profit' is. For unis, I see that as the production of worthwhile, value-adding educated human beings. For FACS I see that as reducing a significant-otherwise-cost-to-society of not responding to the societal problems they are there to address.

But it seems there is always a 'ledger' - double entry - to be balanced. It is easy with BHP, but not so with universities or FACS.

They need better cost/benefit elucidators. Lord knows, I support their very valuable (thankless) work.


Legal Eagle said...

As someone who works at a uni, I am so sick of being called a business in the profit sense. I prefer KVD's definition of profit - making worthwhile, value-added human beings who will contribute to society while we break even.

Evan said...

I guess it sounds naff, but I'm increasingly coming to see the importance of citizenship rather than society as a group of consumers (originally I suppose 'tax payers').

Looking forward to your next post.