Understanding the problem

The slow-burning platform of industrial age socio-economics and government

In this section of the research I am examining the nature of the problem and the underlying causes.

My hypotheses are that:

  1. Productivity levels – the productivity levels of the existing socio-economic system within a jurisdiction are not high enough to ensure sustainability of affordable public services into the future;
  2. Imbalance – the existing socio-economic system is tending toward socio-environmental imbalance in a network effect which needs to be addressed at a macro systems level
  3. Existing methods – existing methods for improving productivity and socio-environmental balance are inadequate; and,
  4. Underlying causes – the multiple underlying causes of inadequate productivity and socio-environmental imbalance are related to our industrial age socio-economic system and public service management apparatus.

The following sections provide a summary of the current status of my research for each of the points above:

1. Productivity Levels

I am contending that the productivity levels of the existing socio-economic system within a jurisdiction are not high enough to ensure sustainability of affordable public services into the future;

How might we go about measuring this?

Measuring the productivity of the socio-economic system operating in a jurisdiction is a difficult challenge. One approach is to break down the scope into different sectors or domains and compare inputs and outputs within each domain. For example, the UK Office of National Statistics has established 9 domains for ‘Public Service Productivity Measurement’:

  • Healthcare
  • Education
  • Adult Social Care
  • Social Security Administration
  • Children’s Social Care
  • Public Order and Safety
  • Police
  • Defence
  • Other

My view on this approach is that we need far greater granularity of domains…in fact a network of domains and sub-domains…in order to gain a better understanding of the state of sustainability across the socio-economic system. Enabling this is one of the key parts of my research, along with the ability to systemically and dynamically measure the productivity for these domains.

Using a more structured and systemic framework to enable the measurement of inputs, outputs, current state and outcome change over time for each domain will enable policymakers and communities to see more clearly the levels of productivity and progress towards targets for each domain.

My research argues that the target for every domain should include movement towards self-sufficiency as much as possible (ie. each domain operating with less and less reliance on direct public funding over time, driven by efficiency gains, effectiveness and self-funding mechanisms)…and that measurement of this progress should be visible and transparent to the community as a whole in order to assist prioritisation of public funding.

So a key focus of understanding the problem is how to establish more granular domains and more accurate and up-to-date measurement of inputs, outputs and outcomes for each domain.

Measuring inputs is generally easier than measuring outputs though both have challenges. Even more difficult is measuring outcomes in relation to inputs – in other words, understanding the changing status of a domain and attributing some proportion of that change to a publicly-funded input or lack of input. For example:

  • What is the level of homelessness in a particular City jurisdiction and is it trending up or down? What are the driving factors behind homelessness in that jurisdiction? Are the supply-side services keeping up with demand? How much of this is attributable to particular, identifiable public programs? Are the publicly-funded programs tacking the causes or just the symptoms? Are they efficient and effective compared with other approaches?

These are thorny questions at the heart of modern public policy debate.

Can we track inputs, outputs and outcomes more systemically within particular domains?

Can we track publicly-funded programs to understand how much each contribute in comparison with each other and with non-publicly funded inputs?

Current situation

It seems, from current public commentary, that the input costs of providing public services are climbing at a rate which is causing major challenges for many governments.  If outputs (and/or outcomes) are not lifting at an aligned rate then it would follow that productivity is reducing.

Alternatively it may be the case that outputs and therefore productivity is rising at an aligned (or greater) level but that sheer demand for quantity and quality of services are causing the mismatch with the ability for jurisdictions to fund public services.

Misalignment could also be part of the problem ie. more outputs are being produced but these are not proving effective at achieving the outcomes required.

Whichever is the case, it seems that:

  • rising input costs are a major dilemma for governments; and,
  • we need an improved way to measure the productivity levels in managing the common good.

With the Kractal Project, I am exploring and experimenting with modern, digital-age, systemic methods combined with human-centred, design-thinking approaches to tackle this challenge.

2. Imbalance

(This section still to be completed)

3. Existing methods

I am contending that existing methods for improving productivity are inadequate and that a new systems-oriented, productivity-focussed approach is needed.

Governments seem to be using two main methods to tackling the problem of rising public service input costs:

Method One. Cut spending and reduce entitlements

Reductions in public service spending coupled with reductions in publicly-funded entitlements in order to reduce the levels of future input costs.

Method Two. Increase taxes and fees

Increasing the contribution paid by citizens and corporations via taxes and fees, creating increased funding for public services.

These approaches are often coupled with some switching to market-driven, user-pays mechanisms for certain aspects of public service delivery. This can have the effect of both reducing direct funding and increasing contributions. However, the efficiency and effectiveness of these mechanisms do not seem to be readily visible and there are some indications that, over time, the mechanisms fail to operate in the public interest.

The sale of publicly-owned assets to the private sector can also have the effect of both reducing direct funding (since future direct public funding of maintenance costs are avoided) and increasing contributions (through a one-off boost to government income from the sale. Additional contributions can also come from corporations through increased fees or taxes in light of private asset ownership…though these are often passed on to citizens by the private sector, therefore becoming a form of indirect taxation.

I am contending that these methods are inadequate to enable sustainability – ie. the publicly acceptable levels of spending cuts or tax increases will not be adequate to create sustainability of funding at our current level of productivity.

A third method – improving productivity of the socio-economic system – requires more focus to create a sustainable future.

Of course many governments are already pursuing improvements to efficiency and effectiveness. There are a multitude of systems improvements and innovations happening on the ground at the micro-level. Whilst many of these produce savings or efficiency gains, it seems that the macro effect is not improving productivity to a level which will enable sustainability.

I am exploring the validity of this hypothesis and the reasons why the multitude of on-ground innovations may not be achieving the productivity gains needed.

At this time my research seems to show that the numerous systems improvements are not displacing the older administrative apparatus to an extent that generates macro improvements to simplicity and efficiency. Instead the sheer number of siloed, fragmented innovations are adding to the overall cost-base and administrative complexity, therefore limiting their value to lifting productivity and enabling sustainability and socio-environmental balance.  It is possible that the added complexity and lack of contextualised visibility may actually be create marginal effects or even degradation at the macro level.

3. Underlying causes

I am contending that the multiple causes of inadequate productivity are related to our industrial age socio-economic systems and public service management apparatus.

My initial research is pointing to a combination of underlying causes which we have grouped under three broad headings:

Increased demand – led by advances in human knowledge and demographic change

Across all fields of human endeavour, we are experiencing a phase of extraordinary advancement in knowledge. For example, advances in our understanding of the human body and mind are leading to new treatments in our public health services, which in turn lead to increased public health service costs. This leads to increased longevity of life which also tends to increase the demand on other public services.

This scenario is playing out, regardless of topic. As the body of knowledge in each knowledge domain grows, it follows that complexity will increase and a need to further break down the domain into specialisations will happen. This in turn leads to a growing problem of fragmentation, where more specialist participants are needed to provide the full gamut of expert coverage. The ability for these participants to collaborate and share knowledge in context becomes more critical.

Increased fragmentation leads to additional topics or knowledge domains that demand some share of public funding. It seems that our existing public funding systems make it easier to start funding something new than to pull funding away from existing domains…and therefore funding tends to be spread over wider thematic territory to the point where budgets are stretched and effectiveness can become compromised.

Another aspect of rapid advances in knowledge is that thematic domains change more rapidly than our ability to respond. For example, advances in our understanding of human learning and education are happening more quickly than our ability to change our educational bureaucracies to take advantage of these advances.

Our body of legislative code in each thematic has also become extremely, perhaps untenably, large and unwieldy. We have been constantly amending and adding to this body of code for the last few hundred years – it is no wonder that our ability to be responsive has become somewhat compromised. Effectively our industrial-age designed bureaucracies are not able to keep up with the digital age pace of technological advancement and change.

This increase in complexity and fragmentation may also be leading to a disconnect between our public policy aspirational agendas and our bureaucratic ability to deliver on these aspirational outcomes. It may be the case that some of our politicians and bureaucracy leaders, with all the best intentions, have overestimated the current capabilities of our industrial-age bureaucracies to implement the policies that the electorate supports.

Poor levels of effectiveness due to lack of contextual visibility

As a consequence of complexity and fragmentation, there are increasing numbers of stakeholders involved in a growing number of knowledge domains which are deemed part of the common good by virtue of having some element of public funds allocated to them.

Public policy within each of these domains should be designed with a clear understanding of the current and trending context for that domain…and its interconnection with other domains. However, the growing complexity and numbers of participants involved makes it harder for public policy designers to see the full context. For example, designing public policy for homelessness requires an understanding of the demand-side situation and causation (which could be changing rapidly) and all of the existing supply-side participants who are providing services to assist, including multiple governments organisations, private sector and NGO’s, community groups, volunteers, etc. At the moment it is not possible to see this and therefore one could say that public policy is designed in a fragmented and best-guess fashion.

Another aspect of this lack of visibility is related to the measurement of public policy effectiveness. Impact measurement needs to be informed by an understanding of the changing status and the significant forces at play on the demand and supply side of each domain. Without this visibility it is difficult, perhaps impossible, to truly attribute improvements to any particular publicly-funded programs. Without an ability to measure and attribute contribution to improved outcomes, we cannot ensure that public funding is optimised.

A further consequence of this lack of visibility is the problem of public policy prioritisation. Since we cannot see the full context of any particular knowledge domain operating in a particular jurisdiction, we cannot gauge its progress towards self-sufficiency. In other words we cannot gauge how much it needs to continue relying on direct public funding.

Improved visibility may also assist in designing and regulating market-oriented models. Creating market mechanisms to deliver public services (eg. the electricity market) has been heralded as a way to improve effectiveness and efficiency. However there seems to be an effect whereby resource utilisation and efficiency are improved but the overall market dynamics tend to shift away from operating in the public interest over time. This requires further research but it may be related to the way the market is regulated and the shareholder-focussed, self-interested nature of the corporations we have designed to participate in the market. Testing decisions made within these corporations to see if they are appropriately balanced between the private interests of the corporation/shareholders and the public interest of the community as a whole is difficult. The challenge for regulators is to see more clearly into the overall effect of the market mechanism on current status and trends towards higher productivity, self-sufficiency and socio-environmental balance where demand-side and supply-side interests are appropriately balanced. Improved visibility is key to assisting this.

Inefficiency – the administration/overhead costs of operating our public policy systems are too high.

Through mechanisms like email, web sites, process automation etc. we have been able to make some significant efficiency gains. However these efficiency improvements have tended to focus on ways to speed up the inherited, industrial-age-designed approach to our public service apparatus and socio-economic system as a whole. We have simply been automating the old model.

With the Kractal Project, I am contending that we need to explore more fundamental ways to organise and adapt our socio-econimic system and public service apparatus.

Inefficiency coupled with the problem of widening thematic stretch for public funding can lead to nonsense outcomes. For example, governments may create hugely expensive bureaucracies at great cost to facilitate payments of child care subsidies for single mothers to allow them to attend regular work hours…but the process to access these funds becomes so onerous and the costs to operate the system so high that the actual funding allocatable to each single mother is not sufficient to subsidise child care to the extent that enables the outcome.

One of the causes for this seems to be the lack of an integrated approach to policy and systems design. There seems to be a lack of awareness by policy designers that the practice of designing policy is actually part of designing overall systems. When policy is designed without systems-thinking and systems design competency, we end up with major inefficiencies, including duplication in public spending, policies that are not implementable and even policies that work against each other.

This seems to be happening at all levels of policy-making. At the most senior levels of existing bureaucracies, policy designers do not have sufficient understanding of how whole-of-systems operate and do not understand how to use systems modelling, simulation and other systems techniques to assess the validity of policy designs. Current practice seems to be that systems professionals are locked out of policy development efforts and handed fait accompli, half-baked, poorly-designed, incomplete systems to implement.

Another impediment to efficiency is the approach taken to information and communications technology (ICT) platform procurement by public sector officials. In the modern systems world, efficiency is a consequence of a major focus on design to understand how various components can be loosely-coupled to facilitate complex systems operation. This approach enables constant, iterative improvement at the individual component level while maintaining continuity and improving overall performance.

Current procurement practice in government organisations works exactly counter to this – forcing public service teams into large, tightly-coupled technology platforms which cannot be iteratively improved at the pace needed to maintain and improve efficiency as requirements change.

One of the major findings of my research to date is that current systems platforms do not enable efficient collaboration and knowledge-sharing between the various participants operating in the same domains. I have found that every domain I have examined is a dynamic collaboration between multiple stakeholders in a supply and demand paradigm…but that the ability of these participants to operate in context with each other is severely limited by the siloed nature of organisational boundaries around information systems and processes. While the ‘open data’ movement is assisting our ability to see joined-up views of information, it is failing to provide the orchestrated views needed to facilitate efficient knowledge-sharing and is missing the key element of facilitating human teaming and tacit knowledge exchange needed for efficient collaboration.

Those are the major causes I have identified to date.

Are there additional, significant forces at play which lead to input cost increases ? I am continuing to research this aspect of the problem.


In concluding this section of my research, I am continuing to research my understanding of the problem, guided by our hypotheses above.

I am interested to examine case studies that illustrate the problems as they manifest in various thematic domains. For each case study I want to see whether the causes align with those set out above and whether my hypotheses hold true.

I am currently working on these case studies myself but would be very interested to hear your views on how case studies either support or argue against my hypothesis.

The other sections of our research are:

Section 2. Future Vision

(I am currently re-writing this section).

Section 3. The Kractal Framework

To read the summaries of my research in these areas, please click the headings above.