Government and the Private Sector

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					  Government and the Private Sector. Is there really a difference in the way these
                       entities run their organisations?

Conducting a workshop for a South African University‟s senior executives and academic
staff on what it takes to become a 'world-class' institution, I asked a probing question:

“Who do you work for?” I asked.

After an amused look, the answers ranged between “I work for myself … ; I work for XYZ
Department … ; I work for the University”.

I then asked: “who is your customer?”

The reply was unanimous: “Students of course” (“stupid question” must have lingered in
some of their minds). Silence prevailed as they waited for my response. “Wrong” , I said.
“Think again. But this time, ask yourself the question: what is the „moment of truth‟ for
the university?”

After some whispering amongst each other the answer emerged: “when the student is
successful out there in the work place?” This was followed by unanimous approval by
shaking of „academic heads‟.

And then a concerned academic made the „counter‟ comment I had been waiting for:
“You work for a consumer company making cold drinks” he said. “That is very different
to a university.”

Having carefully set someone in the group up to make this comment, I was ready to start
talking about the difference between an „institution of state‟ and the private sector.

“In our cold drink business”, I said, “we make a product which we sell to our customer,
the retail outlet which, in-turn, sells the product to a thirsty consumer. Our moment of
truth? A satisfied consumer who has had his thirst quenched.”

“So what is different for the university? The student is like the cold drink … the
“product” if you like. The thirsty consumer in the private sector, is the user of the „know
how‟ that the student brings from the university. So the moment of truth for the university
then is when the users of the „know how‟, imparted to students, use this „know how‟ to
drive the economic and service engine of the country. Yes, research, development of new
knowledge and adding to science is the role of university, but at the end of the day it is
about how all that „know how‟ is used to drive a country‟s „total engine‟ that ultimately
delivers the funds to enable the university to exist”

Logic usually prevails in academic minds so the point was made.
So what is the difference then between the private and the public sector ? Admittedly
huge differences between what they do and how they generate income from their
customers – but other than that, nothing really. Whilst the cold drink company collects
income directly from its customers, the university collects income in diverse indirect
ways from its customers – and so do the rest of the public service „industry‟.

So then, what is the point? Successful ('world-class') high performance organisations in
the private sector are obsessed with delivering on their „brand promise‟ to their
customers. And to do that, they drive customer centric processes which flow seamlessly
from the customer, through the organisation, into the domain of their suppliers – and all
other stakeholders such as the community, government, financing institutions and so on.
In essence, their businesses are seen as „action communities‟ where the organisation‟s
brand promise is understood, owned and lived by all in the „action community‟.

'World-class' organisations know who their customers are, what they need and then make
it their business to deliver ahead of their customers‟ expectations.

Having agreed that the total economic engine is the ultimate customer of the university,
then the critical need for the university „to talk to and to seamlessly partner with its
customers‟ sank home. Admittedly, some departments of the university by necessity
partner more effectively with their „customers‟ than others. However, the principle was
well accepted.

Any function in the economic engine of a country, whether a business is classified as
being in „the private or public sector‟, exists to serve its customers. And these customers
pay indirectly (and in some cases directly) for the service they expect.

So then, if both private and public services are focused on serving their customers, why
should there be any difference in the way they run their respective businesses?

Organisations in the private sector exist and measure their efficiency and effectiveness
(success) by the profits they make. But then, the argument goes … that the public sector
does not generate income from “sale” of its services. “Wrong !” Local Government
collects income for their services directly from their customers – both in taxes and in
direct charges for services. Central and Provincial Government generate their income via
taxes. The price tag of services is costed and the most efficient and effective way to
deliver on the service is sought – whether this be an internal or external supplier of the
service. Either way, the value of the service is charged to the ultimate customers – the
people who pay for this service.

Expressing his view on improving performance in the public sector, Kerney (2005)
( makes the point
that the most successful government agencies “focus on customer service” and
“organisational change capabilities and leadership” to deliver on customer service ahead
of expectation. Such organisations he stresses, “devote resources to innovation in
managing their customer relationships and redesign their business processes as part of
this effort”.

If both the public and private sector have paying customers who are entitled to what the
brand promises, why should the way these organisations work to deliver customer service
excellence be any different?

Andre J Parker

Senior Contracting Consultant to PwC

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