Strategy and policy in government

Geoff Mulgan

‘There is nothing a government hates more than

to be well-informed; for it makes the process of arriving

at decisions much more complicated and difficult’

John Maynard Keynes

What I’ll cover:

What strategy and policy are for

Some methods

Issues and pitfalls

Most governments produce large numbers of policies and strategies ...

But many are ….

- Unclear about the goals that really matter

- Poor at maintaining focus

- Prone to disparate initiatives and programmes

- Poor at learning, and admitting mistakes

And too few are …

• - Grounded in rigorous analysis• - Sophisticated about organisational capacity• - Compelling communicated and shared with those who

have to deliver them

What does good policy and strategy mean?

Clear goals and objectives – where do you want to go

Ways to get there

Ways to learn and adapt

Common patterns – social change and public policy

1. Understanding unmet needs, anger, blocks, dislocations – through empathy, listening, conversation, ethnography, politics

2. Grasping new possibilities: technologies (eg mobile, AI, the

Grid), organisational forms, knowledge (eg under-5s) … through analysis, networks,

interdisciplinary teams

3. Reinterpreting and reframing how people think (eg idea of disability rights, microcredit,

distance learning, food miles) – through the work of campaigners, social

entrepreneurs, thinkers, designers

4. Turning ideas into vision and strategy – through

synthesis, communication, planning, alliance building

5. Using prototypes, pilots to try ideas out –

showing early wins, proving impacts

6. Growing the good ones… scaling up and replicating

through franchises, federations, laws, spending

programmes

7. Continuing to learn and evolve and to find new needs – through

constant listening, networks, open

hierarchies

Strategic imperatives for government:

• politics;

• public needs and demands;

• future challenges/opportunities

The relationship between strategy, policy, delivery and learning

Strategic imperatives:

• politics;

• public needs and demands;

• future challenges/opportunities

Pressures:Scandals

CrisesMedia

Campaigns

Delivery

Policy Design

Strategic Direction

Outcome goals, PSAs

&c

Strategic imperatives: politics; public needs and demands; future challenges/opportunities - feeding into overall vision

Systems

Culture

Structures

People

Resources

Delivery

Policy Design

Strategic Direction

IT

Knowledge

Skills

Outcome goals, PSAs

&c

Strategic imperatives: politics; public needs and demands; future challenges/opportunities - feeding

into overall vision

Measurement

analysis

testing, piloting,

continuous learning

Public and user feedback

choice

engagement

Systems

Culture

Structures

People

Resources

Delivery

Policy Design

Strategic Direction

IT

Knowledge

Skills

Outcome goals, PSAs

&c

Strategic imperatives: politics; public needs and demands; future challenges/opportunities - feeding into

overall vision

measurement

analysis

testing, piloting,

continuous learning

Public value created

public and user feedback

choice

engagement

Systems

Culture

Structures

People

Resources

Delivery

Policy Design

Strategic Direction

IT

Knowledge

Skills

Outcome goals, PSAs &c

Strategic imperatives: politics; public needs and demands; future challenges/opportunities - feeding into overall vision

•Clarifying the task and its boundaries

•Understanding the context

•Learning what works, international experience

•Mapping the system

•Design of options

•Assessment and criteria

•Affordability

•Viability

•Timescales

Tasks and processes

Appreciation of key analytical approaches, including basic economics, statistics, business modelling etc

Multi-disciplinary teams, and understanding of complex systems and their dynamics, and organisational capacities

Range of experience and processes for creativity

Futures methods, simulations, scenarios

Stakeholder management skills and storytelling and logical storyboarding skills

Robust risk management approaches

Delivery skills - professionalisation of management, project and programme management, HR, finance as complement to formal strategy skills

Skills for policy and strategy

Shared tools: the Strategy Survival Guide, a comprehensive set of techniques available on the web

http://www.number-10.gov.uk/su/su%20survival%20guide/index.html

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Early Childhood Interventions.Early Training Project (reported) US Y 20 Y Y ? ? ? ?Perry pre-school US Y 27 Y Y Y Y ? Y Y Y M ? ?Chicago CPC US Y 14 ? Y Y Y Y YProject Care US Y 5 YSyracuse Univ. Family YCarolina Abecedarian US Y 21 Y Y Y Y Y Y Y Y YIHDP - full sample US Y 8 Y Y M Y YEEC 2000 UK M n/a Y Y ? Y Y Y Y YEEC 2001 UK M n/a Y Y Y ? Y Y Y Y Y YHead Start - Westinghouse Report US Y 7 MHead Start - Currie&Thomas US Y Y YChildcareCost, Quality and Child Outcomes in Childcare Centres

US N 8 Y YEffects of Public Daycare SwedenN 13 YNICHD data - Belsky US dataN NNICHD - cognitive and language development

US N 3 YNICHD - quality US N 6 Y YNICHD - behaviour US N 3NICHD - attachment US N 1.5Vandell & Henderson US N 8 Y YEPPE UK N 7 Y YEPPNI NI N 6Osborn and Millbank UK N 10 M M Y MThe Impact of Study Support UK N 16 Y Y Y

Int - ParentInternal - Child External benefits

Literature reviews

Issue trees and logical analysis (eg childcare)

Is existing childcare provision and policy

failing, will it fail in the

future and, if so, should

and how can the

government intervene to improve it?

Is existing provision best for children?

Is existing provision failing parents?

Does and will demand outstrip supply?

What are existing government policies

doing to help?

Is existing provision accessible for

parents?

Does existing provision allow parents choice?

Is childcare affordable?

What childcare provision is needed to allow parents

to return to work?Is existing childcare provision and policy failing and, without changes, will future

provision fail?

What is the rationale for government intervention in

childcare?

How can the government best improve childcare

provision?How is government

intervention best delivered?

How can the government intervene

to best effect?What intervention should there be on the supply side?

What intervention should there be on the demand side?

What effect will such assistance have (will it

increase supply)?

What are the options for financial assistance?

What support will government need to

provide in terms of finance or infrastructure, e.g.

schools?

What is the potential role of employers, and private/

voluntary sector providers?

What are the government’s aims

and principles?

Will childcare intervention improve

distributional outcomes?

Will childcare intervention help

meet more general govt objectives?

Will childcare intervention help meet

government objectives?

Are there market failures in childcare?

Will childcare intervention help meet employment

aims?

Will childcare intervention help meet educational

aims?

NET PLACES EXPECTEDAt March 31 2001 2002 2003 2004 2005 2006

New build 1,496 3,490Sure Start glue 0 0Nursery glue 3,290 7,678

Total 4,786 11,168Govt supported 13,137 13,137Unsupported 25,439 27,401

11,218 11,2185,060 5,06059,640 67,9831,117 1,117

21,221 21,220 21,22021,221 22,337 22,33721,221 81,977 90,3200-4 ratio places:children 1.30

CHILDREN HELPED 5-14 ratio places:children 1.75At March 31 2001 2002 2003 2004 2005 2006

New build 1,944 4,537Sure Start glue 0 0Nursery glue 4,278 9,981

Total 6,222 14,518Govt supported 17,078 17,078Unsupported 33,071 35,621

14,583 14,5836,578 6,57877,532 88,3791,954 1,954

37,136 37,135 37,13537,136 39,089 39,08937,136 116,622 127,468

Childminder 5-14Out of School Clubs

Total

0-4 year places

Children’s Centres

Childminder 0-4Total

Total

Nursery conversion

Nursery new build

0-4 year places

Children’s Centres

Nursery new build

Nursery conversionChildminder 0-4

Total

5-14 year places

Total additional children helped

5-14 year placesChildminder 5-14

Out of School ClubsTotal

Modelling (eg childcare)

The SU work mapped cycles of decline

Doubled headed arrows blue for clarity

Families with little choice move in. Concentrations of vulnerable residents:

• sick/disabled• low-skilled• people with criminal records• ethnic minorities• asylum seekers• substance abusers• Lone parents

Disincentives from benefits system - low gains to work

Little motivation to (formally) work among residents

Informal economic activity in area

Few accessible jobs matching skills

High worklessness among residents

Negative peer culture. Low bridging social capital. Low aspirations

Low level of basic skills, work skills and education

Poor transport access or high cost

Lack of information about available jobs in area

Lack of affordable / convenient childcare

Historic industrial/ economic legacy

Low rate of enterprise

Low private & public sector investment

Employer discrimination

Teen pregnancyHigh drug

use/dealers

Higher incidence of poverty

More disrepair or neglect

Unpopular neighbourhood. Empty/cheaper properties

Less rent income

Less stable, less committed to area, fewer community links. Lack of bonding social capital

Less social control, more disturbance, anti-social behaviour, vandalism

More crime and fear of crime

Growing exodus of more educated/entrepreneurial residents

Poor housing design (esp

high rise) and condition

Lack of youth activities

Truancy

Low proportion of jobs via Jobcentre Plus/ Poor JC+ performance

Poor mental and physical health

Low use of health services

Large proportion of young people

“Benefit farming” by private landlords

Disincentives from benefits system - slow processing

Lack of outreach /community development services

Reliance on incapacity benefits, perhaps passed through generationsSocial housing

allocation system

Debt problems

Low pay jobs

Strained schools

Strained health services

Mapping systems

Mapping trends and impacts - using foresight methods (eg health)

Time when we predict that a major change may be seen in this

dimension

Greater differentiation of diagnosisFocus on managing risk factors

Demography & Society

Epidemiology

Labour Force

Smaller households, single parents, living alone

Population growth in 45 - 75 age group Population growth in in >75 age group

Chronic disease increasing

Lifelong learning

Increasing informal elderly care demands

Inequalities

Labour force ageing and

participation rates reducing A end to retirement?

Portfolio careers

Home Monitoring

Minimally Invasive Surgery

Major Pharmaceutical Innovation

Medical Advances

Information & Support

Technology

Pharmacogenomics WidespreadGenetic Screening & Therapy

Stem Cell Technology

Complete EPR & use of IT networks

Protocol Driven/Expert Systems

5 yrs(2007)

20 yrs(2022)

15 yrs(2017)

10 yrs(2012)

Patient Expectations Holistic health & wellbeing

Meeting needs of older people

Major Drivers

Consumerism

RoboticsIntelligent Devices

Source DH

Analysing potential impacts and risks (eg energy to 2020)

Hydrogen Fuel Cells

Cellulosic Ethanol

Solar energy

Tar SandsCoal-to-oil

Superconductors

Nuclear Fusion

Cheap LNG

Likely

Low impact

High Impact

Unlikely

EU gains energy

competence

Global economic downturn

Asian economic

boom

EU protectionism

IPE or trading

meltdown

EU falls apart

Russia joins OPEC

Iraq leaves OPEC

Gas OPEC forms

Longford type gas explosion

Tanker catastrophe

Transit pipeline blockage

Sustained terrorist attacks on

infrastructure

Freak waves destroying offshore

infrastructure

Nuclear disaster forcing global shutdown

Savage winters changing demand

Technological change

Market Change

Disruption

Key:

Carbon Sequestration

Breakdown in production from

Middle East

Men: 81.6

Women:85.5

Men: 80.0

Women:83.8

Men: 78.7

Women:83.0

Life Expectancy

at birth

DecreaseNo changeIncrease

Long term ill health among the elderly

Decrease

-10%

Decrease

- 5%

Increase

+ 10%

Acute Ill health among the elderly

Go beyond current public health targets

Meet current public health targets

No Change

Health Promotion (smoking, exercise, diet etc)

Fully EngagedSolid ProgressSlow Uptake

Using scenarios (eg public health and behaviour change)

Mapping dynamics

Using simulations to map dynamics and emotions

– contingency exercises for terrorist attacks and other threats

– simulation of NHS internal market in early 1990s and of current health reforms changes

Selecting the right policy instruments

Information, Education & Advice

• Provision of informationLeague tables; Transport direct

• Public education campaignsTeenage pregnancy; AIDS campaigns

• Reporting & disclosure requirementsFinancial services

• LabellingFood ingredients

• Advisory servicesConnexions; Small Business Service; Business Links

• Representation servicesOmbudsmen; PPI Forums

Self-Regulation

• Voluntary agreementsAdvertising standards; Corporate Social Responsibility initiatives

• Codes of practiceBanking Code

• Co-regulationACAS procedures

Economic Instruments

• TaxesTobacco duty; fuel duty

• ChargesCongestion charges; road pricing

• Subsidies, tax credits & vouchersR&D tax credits; Child tax credit; pre-school education vouchers

• Benefits & grantsIncapacity benefit; Child trust fund; Direct payments; Education maintenance allowances

• Tradeable permits & quotasCarbon emissions trading scheme

• Award & auctioning of franchises and licensesMobile phones; airport landing slots

• Government loans, loan guarantees and insuranceStudent loans; Social Fund; Export credit guarantee

Direct Intervention

• Direct provision of services (including co-production)Police; Armed Forces; Hospitals; Schools

• Commissioning of services (from public, private and/or voluntary sectors)Private prisons; (some) employment zones, Direct Treatment Centres in health; Culture on-line; Futurebuilders; Subsidised bus & train services; Subsidised social care

Regulation & Other Legislation

• Price & market structure regulation Stakeholder pensions; Privatised utilities; Competition laws; Price regulation

• Production & consumption regulationPlanning rules; Public service obligations on privatised utilities; Compulsory motor insurance; Renewable energy obligations; Licensing

• Standards setting regulationAccreditation – NVQs, educational qualifications etc; Trading standards; Health and safety

• Prescription & prohibition legislationCriminal justice; Banning tobacco advertising; Drunk driving

• Rights & representation legislation or regulationHuman Rights; Regional assemblies

Policy design work should always consider the full range of policy

instruments.Examples shown in italics.

Note: categories overlap e.g. most economic instruments require legislation

or regulation

The Prime Minister’s Strategy Unit, May 04

To achieve outcomes (eg crime, health, learning):

•Roles of government as provider, funder

•Roles of markets and quasi-markets

•Roles of NGOs, social movements

•Public behaviour change and co-creation

Allies and systemic change

Systematic approaches to stakeholders

High support High influence

High support High influence

Low support High influence

Low support High influence

Low support Low influence

Low support Low influence

High support Low influence

High support Low influence

Support

Influence

Targets focused on outcomes

Policy Delivery: trajectories

50

55

60

65

70

75

80

85

90

95

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Delivery Indicator

Low Trajectory (policy has a lagged impact)

M id trajectory

High Trajectory (policy has an immediate impact)

Policy Step

A

Long Term Strategic GoalM id term Delivery

Contract Goal

Intermediate progress indicators or m ilestones

Historical performance

Project Plan Stream sProject Plan Stream s

Policy Step

B

Policy Step

C

Policy D elivery: trajectories

Designing trajectories to meet and track targets

……Plus Registered Childcare Providers With 200 Metre Zones Around Them

Lone ParentsNotified Job VacanciesChildcare Providers

More sophisticated use of information: eg mapping lone parents, childcare and jobs

Implementation plans developed as part of the policy process - and published on the web

Systematic evaluation of policy

• Systematic reviews of existing evidence

• Policy pilots

• Demonstration projects

• Economic appraisal and evaluation methods

• International benchmarking

• Regulatory impact assessments

• Impact Evaluations

• Randomised controlled trials – in employment, criminal justice

Continuous learning

Strategic Audit – a new approach in 2003

Assessing government performance

Assessing government performance

Values and aspirations –

interviews with Cabinet

Values and aspirations –

interviews with Cabinet

Benchmarking the UK-

Benchmarking the UK-

Futures - identifying key challenges

Futures - identifying key challenges

Assessing trends, demands &c of population

groups

Assessing trends, demands &c of population

groupsJudgments

on priorities, opportunitie

s and threats

Judgments on priorities, opportunitie

s and threats

Involving ministers and civil servants in a comprehensive stocktake on UK and government performance

Understanding change – for example why some apparently remorseless trends have turned around or levelled off

Crime has begun to fall after a long period of steady rises

The fall in birth rates has levelled off

1

1.5

2

2.5

3

3.5

To

tal p

erio

d f

erti

lity

rate

0

2

4

6

8

10

12

14

16

1960 1970 1980 1990 2000Ann

ual d

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ce r

ate

per

‘000

m

arrie

d po

pula

tion

And the rise in divorce rates has also levelled off

Num

ber

of r

epor

ted

Inci

dent

s (B

CS

)

Future challenges – for example soft skills are becoming more important

Verbal, communication and planning skills will be more important in 2010 than today… the demand for these skills by the service and creative

industries will continue to grow

-0.04

-0.03

-0.02

-0.01

0

0.01

0.02

0.03

0.04

0.05

0.06

0.07

Verbal Manual Numerical Planning ClientCommunications

HorizontalCommunications

1999 2010

Indexed score

Change in importance of skills to 2010

• 1000-year temperature record with 100-year projection

Survival challenges – such as climate change

Tem

per

atu

re c

han

ge

.deg

rees

Cen

tig

rad

e re

lati

ve t

o 1

990

Delivery challenges – for example variability of performance in public services

Highest and lowest rates of death within 30 days of surgery after non-emergency admission in each region

There are large variations in almost all indicators of hospital performance

The range of detection rates varies greatly across police forces

Schools with more deprived children generally do worse, but this is far from universally the case

7065

4743

2127 25

14

40

20

40

60

80

100

%15-year old

pupils scoring 5 good

GCSEs

Least deprived quintile

Most deprived quintile

Source: Institute for Fiscal Studies

Source: DfES

Source: Crime in England and Wales, 2003

Trust challenges: the movement away from powerful institutions

9%

12%

13%

15%

16%

19%

27%

40%

41%

58%

63%

71%

83%

86%

90%

5%

79%

77%

73%

73%

68%

69%

47%

49%

48%

29%

28%

20%

8%

2%

-100% -50% 0% 50% 100%

Politicians

The governmentBusinesses

MagazinesThe Monarchy

Newspapers

The church

The legal systemSupermarkets

The Armed Forces

The policeThe NHS

Your GP

Your friends

Your familyA lot, quite a lot

Not a lot, not at all

How much do you trust the following to act in your best interests?

Source: ASC 2003

New global challenges – such as weak/failing states …

– around 90% of UK heroin comes from Afghanistan; 90% of cocaine from Colombia

– 54 of 57 conflicts since 1990 have been inside states, not between states

– Resulting in 8 million people killed and 22 million displaced in the last decade

– 4 million people trafficked through organised crime networks

– 58% of UK asylum seekers originate in conflict areas or failing states

Benchmarking

Future readiness

Switzerland 1 Japan 1 Sweden 1 US 1 Sweden 1 Finland 1Sweden 2 South Korea 2 Canada 2 Finland 2 France 2 Denmark 2Japan 3 Finland 3 UK 3 UK 3 Germany 3 Sweden 3Finland 4 Australia 4 Belgium 4 Germany 4 UK 4 Norway 4Germany 5 Canada 5 Denmark 5 Switzerland 5 Canada 5 Netherlands 5US 6 Switzerland 6 Portugal 6 Sweden 6 Denmark 6 Belgium 6Netherlands 7 UK 7 Australia 7 Netherlands 7 Switzerland 7 France 7Denmark 8 Belgium 8 Norway 8 Denmark 8 Finland 8 Germany 8Belgium 9 France 9 France 9 Canada 9 Belgium 9 Switzerland 9France 10 Austria 10 Netherlands 10 Austria 10 US 10 Austria 10UK 11 Denmark 11 Germany 11 Japan 11 Austria 11 Spain 11Austria 12 Sweden 12 US 12 Belgium 12 Netherlands 12 Ireland 12Norway 13 Ireland 13 Japan 13 Australia 13 Norway 13 Canada 13Canada 14 Norway 14 Italy 14 France 14 Italy 14 Australia 14Australia 15 US 15 Austria Ireland 15 Japan 15 UK 15Italy 16 Germany 16 Finland Norway 16 Australia 16 Italy 16Ireland 17 Spain 17 Greece South Korea 17 Spain 17 US 17South Korea 18 Italy 18 Ireland Italy 18 Ireland 18 GreeceSpain 19 Portugal 19 South Korea Spain 19 Greece 19 JapanGreece 20 Greece 20 Spain Portugal 20 Portugal 20 PortugalPortugal 21 Netherlands Switzerland Greece 21 South Korea 21 South Korea

CO2 reduction Child povertyPatents PISA Maths Fiscal sustainabilityMicroeconomic Competitveness

CanadaBelgium

Japan

Germany

France

SpainItaly

Portugal

Ireland

Greece

Norway

FinlandSweden

UK

South Korea

Netherlands

Switzerland

Denmark

AustraliaAustria

US

Low ------- Relative performance - present ------ HIgh

Low

---

----

---

Rel

ativ

e fu

ture

rea

dine

ss -

----

- H

igh

Potential? Continued success?The best performers show some common characteristics:

-open systems rewarding innovation and performance

-high levels of capacity – human, social and other forms of capital

?

Who does it? The UK machinery for medium to long-term policy

Strategy development

Resources and targets

Implementation

Short-term shocks and threats

-- departments required to produce 5-10 year plans; SU and parallel units in departments and devolved administrations, along with Foresight; use of policy commissions and task forces

- biannual spending reviews to set targets, allocate resources &c based on evidence

- stronger focus on delivery, implementation, performance management

Civil contingencies secretariat; horizon scanning group; resilience assessments

Who else does it? The best governments on performance also tend to be good at strategy (and smallness appears to

help, leading to greater realism about the environment, smaller numbers …)

Netherlands… used scenarios to build consensus to change direction in late 80s

Singapore…all senior civil service in scenario exercises: helped response to 90s economic crisis

Finland…strategy exercises have pushed them near top of competitiveness league tables

Switzerland…all senior officials trained in a sophisticated set of strategy skills

STRATEGIC AUDIT: Published November 2003

‘what looks insoluble to one generation can be

sorted out more completely than would

have been thought possible … but Governments

overestimate their influence and impact in

the short-term and underestimate it in the long term …’ Times, 25

November 2003

Risks for longer term policy and strategy work

– events, events, events– volatility (political and economic stability are far

more conducive to strategy work)– insufficiently rich methodologies (eg failing to

understand culture and identity)– detachment from leadership priorities– excessive power of tactics – failure to link long-term to short-term, and show

benefits

What counts as success?

Less driven by events, more driven by goals

Better prepared for low probability high impact events

Pandolfo Petrucci, Lord of Siena, to Machiavelli:

‘wishing to make as few mistakes as possible I conduct my government day by day and arrange my affairs hour by hour;

because the times are more powerful than our brains’

Not in the hands of fate