From Impossible to Possible: Two Simple Rules to Assure Exceptional Public Value

FROM IMPOSSIBLE TO POSSIBLE

TWO SIMPLE RULES TO ASSURE EXCEPTIONAL PUBLIC VALUE

Andrew Hollo

First published in 2018 by Grammar Factory Pty Ltd.

© Andrew Hollo, 2018

The moral rights of the author have been asserted.

All rights reserved. Except as permitted under the Australian Copyright Act 1968 (for example, a fair dealing for the purposes of study, research, criticism or review), no part of this book may be reproduced, stored in a retrieval system, communicated or transmitted in any form or by any means without prior written permission.

All inquiries should be made to the author.

A catalogue record for this book is available from the National Library of Australia

Printed in Australia by McPhersons Printing

Cover design by Charlotte Gelin Design

Book production and editorial services by Grammar Factory

ISBN 9780648137238 (e-book)

Disclaimer

The material in this publication is of the nature of general comment only, and does not represent professional advice. It is not intended to provide specific guidance for particular circumstances and it should not be relied on as the basis for any decision to take action or not take action on any matter which it covers. Readers should obtain professional advice where appropriate, before making any such decision. To the maximum extent permitted by law, the author and publisher disclaim all responsibility and liability to any person, arising directly or indirectly from any person taking or not taking action based on the information in this publication.

Contents

Foreword

Introduction: Making the impossible possible

Rise of the impact investor model

Solving the world’s problems with two simple rules

PART 1: KNOW WHAT YOUR EVERYDAY IMPACT SHOULD BE

Chapter 1: What is your purpose?

Defining your raison d’être

The ‘aha’ moment

Chapter 2: What is your role?

Gaining clarity

Chapter 3: What is your scale?

Letting your purpose drive your scale

Determining scale based on capability

To merge or not to merge?

Chapter 4: What are your goals?

Setting minimalist goals

Chapter 5: What are your values?

Using values as a differentiator

Chapter 6: Gaining traction

Discovering where and how to apply your energies

Three ways to simplify your strategy

Assessing uptake of the new strategy

PART 2: CREATE EVERYDAY IMPACT, EVERY DAY

Chapter 7: Care about results

What assurances do you want?

Three more must-have ingredients

Chapter 8: Focus on priorities

Hitting the sweet spot of investment

Fighting opportunity gluttony

Chapter 9: Futureproof by innovating

Democratising innovation

Innovating on demand

Chapter 10: Leverage your customers

Gaining power through leverage

Transferring power to your customers or beneficiaries

Chapter 11: Maximise your impact through partnerships

Common customers, common cause

Agreeing on principles

Determining the depths of your partnerships

Chapter 12: Shamelessly build your profile

Painting a vivid picture through numbers

Finding your stickiness

Chapter 13: Creating a meritocracy of ideas

Two common misconceptions about scaling ideas

Using 3D thinking to germinate your best ideas

Reframing common biases that limit ideation

Conclusion: The true secret to making the impossible possible

Rule #3

It doesn’t end here

About the author

Acknowledgements

For my son Jasper, whose generation will benefit from all we create today.

Foreword

Aristotle proclaimed, ‘Give me a lever and I can move the world!’ (If he didn’t say that, he should have.) The metaphor for us, a couple of thousand years later, is about leverage.

Once upon a time, public schools, family dinner tables and religious institutions instilled morality, a work ethic, and a safety net for society in industrialised countries. In my country, the United States, government entered the picture in 1935 with Franklin Roosevelt’s ‘New Deal’ and the advent of social security: a government-guaranteed safety net.

Yet social security was based on actuarial tables that showed fourteen people working for every one retired, and an average life expectancy of sixty-eight after retirement at sixty-five. Today, there are about two people working for every retired person, and the latter’s life expectancy is now eighty. Thus, far fewer people supporting far longer lives doesn’t work, in this country or in any other.

Similarly, the minimum wage was enacted in 1938 to help support people working part-time, or temporarily, as they sought more meaningful work. Yet today it is expected to support people with families as full-time work.

Our traditional institutions and beliefs have changed dramatically and we need leverage to effectively deal with them today. It’s not the leverage of Aristotle forcing a huge rock off the path, but rather the leverage of combined minds and synergistic groups nudging us all onto the right road.

In this highly readable and fascinating book, Andrew Hollo moves analytically and methodically through steps that demonstrate how public policy and private interests can be combined to create profound change. If you’re sceptical about that, let me remind you that (in the US) as I write this, traffic fatalities are at an all-time low, unemployment is virtually non-existent, minority unemployment is the lowest it’s been since anyone started counting it five decades ago, and murders in New York City have gone down from over 2,000 in 1990 to 280 in 2017.

I use my experience here in the US, but wherever in the world you’re reading this, you’ll probably find similar trends. That’s because public and private interests have indeed often come together to create positive change. Yet those joint efforts have too often been by accident, not design, and great potential is being wasted while great problems are allowed to grow bolder and older.

As I write this, Germany, the fourth largest economy in terms of GDP and twenty-eight per cent of the EU economy, has launched a ferociously expensive new destroyer which has no sonar and poor anti-aircraft defences; their new Berlin airport is ten years late; and their new Stuttgart train station is several years late and far over budget. I don’t ascribe this to a lack of prowess, but rather to a lack of will that occurs when politicians, private sector companies and the public interests do not coincide, but rather collide.

Andrew Hollo, who has done profound work for these exact parties and disparate interests, is the only person I know in my thirty years of global consulting with complex public and private entities who has consistently created commonality of interest and strong will. Other consultants would walk away, afraid of the perceived morass. But Andrew has managed to go From Impossible to Possible.

To many, this book may seem like science fiction. But to those of us who have been in the trenches, we recognise the brilliance behind a completely coherent and bold approach to solving the major problems of our times. That’s a major undertaking, and this is a major book.

Alan Weiss, PhD

Author, Million Dollar Consulting, Million Dollar Maverick and over sixty other books

INTRODUCTION:

Making the impossible possible

You do the work you do because you want to make the impossible possible. Or, at the very least, you want to make a difference to people’s lives.

You want more than an office, more than a series of meetings to attend, and more than just a salary. You want to make your time, your insights and your expertise count. You got into your line of work because you believe in public service, in social justice, and in strengthening people and communities.

Yet despite these beliefs, perhaps you feel you’ve become just another overworked business manager. Making budget. Heck, finding the budget! Getting the right people on board. Getting rid of the wrong people. Worrying about the impact of policy changes, pricing changes, new service models, new entrants nudging you out of the way – the list goes on.

You’re stretched to capacity, rushing from meeting to meeting, without time to replenish, to build, to reflect, to grow. Your organisation is operating in survival mode, focused solely on delivery, without margin – or headspace – to reinvest in developing your people, your services, your innovations. Or, you are told that change is the new normal, which means you are constantly on high alert, looking for threats and opportunities simultaneously, layering change program over transformation initiative, over improvement frameworks, over risk strategies.

To top it all off, people are increasingly cynical about public sector agencies, especially governments, many of which are perceived as inefficient and ineffectual, hidebound and stultified, overly complex and self-serving. This is because they have become ends unto themselves. They have unclear goals, and sometimes no goals at all. They get stuck doing the same thing they’ve always done. As a result, they fail to make an impact. They simply can’t cut through the noise and become visible.

And yet, much of what makes our modern Western societies so liveable today we owe largely to public value organisations making the impossible possible. In my lifetime of just over half a century, all sorts of ‘impossible to possibles’ have occurred in my home town of Melbourne:

• Road deaths were at their peak in the late 1960s and since then have decreased by a factor of twelve.

• Women can safely give birth to children, or indeed, choose not to have children (deaths from abortion are almost non-existent today).

• The Yarra River, once polluted by tanneries and industry, now runs clear and is home to fish and platypuses, and as it flows right through the city centre, is home to kookaburras and other native birdlife.

• Inner city laneways are not just safe after dark, they’re bustling mini-cities in their own right.

Given these successes, brought about through combinations of regulation, community activism and service delivery, where does the cynicism about the public sector come from? Is it because, over decades, we all have raised our expectations generally? Is it an increasing division in society between the haves (who enjoy all the World’s Most Liveable City benefits¹) and the have-nots (who don’t)? Is it ideological to criticise the public sector to which all taxpayers compulsorily contribute? Whatever the reasons, there are limits to the impact that public value organisations can achieve when we continue to use outdated models from the twentieth (and even the nineteenth) centuries.

To continue making progress, and to quieten the critics, we now need a different way of doing things.

Rise of the impact investor model

Up to the turn of the twentieth century, public value was delivered through a charity model. This model was hugely effective in almost entirely solving three seemingly impossible problems, in Western countries at least: Death, hunger and exposure. Hospices were set up to look after those about to die who didn’t have a family to care for them at home. Workhouses existed for those who couldn’t feed themselves. And a wide array of hostels, from the comfortable to the dismal, existed for those who couldn’t put a roof over their heads, including children. What all of these services had in common was that they provided only the most essential safety nets for the most needy. Those who did this work acted as missionaries, or even crusaders, under obligation to a higher power, even when they acted voluntarily and altruistically. The descendants of these organisations are still present and some are powerful still, with large armies of staff, substantial balance sheets, and favourable tax status in many Western countries.

Around the middle of the twentieth century, this charity model was rapidly overtaken by professional bureaucracies under the guise of the welfare state. Governments, non-governmental organisations (NGOs) and non-profits rapidly expanded their scope, and set about tackling some very diverse problems that were considered impossible to solve in the nineteenth century. In Western countries, between World War Two and the end of the century, these successes included: Almost completely eradicating communicable diseases, eliminating extreme poverty, assuring minimum quality standards for housing, and creating universal literacy².

During this period, these professional bureaucratic models took over vast swathes of various systems, including public healthcare, most forms of welfare and aged care. In Australia alone, public spending in each of these areas now exceeds $10 billion a year³. What used to be the entitlement of the rich (a well-heated house, education for each child, protection from fire and theft, and care provided at home for the aged) is now considered a necessity for the vast majority of Westerners. Over the last 100 years, we’ve seen what was a privilege evolve into a right. This expanded professional model did not displace the charity model, but operates alongside it, or even has subsumed it, as many charities are no longer run by their originators (such as religious orders) but by professional managers, officers, therapists, clinicians, educators and support workers. This has been necessary as society’s expectations of the delivery of public value have expanded from just the needy to everyone.

So, where to from here? Charities still exist, but their historical base (missionaries doing good works) carries limited resonance in a world of Facebook and Netflix. The professional model has become bloated, a victim of its own success, where finding untrodden ground is difficult, and most organisations operating under this model (regardless of the sector) are concerned with operational and cost efficiencies rather than true impact. To replace these, I believe an impact investment model of public value is emerging and will largely subsume both. The impact investor model is now accelerating to a tipping point where both the charity and professional models will become irrelevant, unsupportable and financially unsustainable if they do not transition to investor models.

An impact investor model of public value functions is driven by a market system, not the donor system of charities, nor the taxation system of the professional model. The most successful are led by entrepreneurs, rather than by social workers or missionaries. They don’t operate from a premise of obligation (a higher power compelling them), nor necessity (a basic human right dictating that it’s essential). Rather, their core paradigm is competition: they believe that the privilege of meeting need goes to the most capable organisations. Importantly, the mindset and structures are demand-driven: they offer what’s genuinely needed. This is in contrast to the supply-driven approach of the charity and professional models, in which recipients are subtly encouraged to be grateful for consuming what’s offered within a rationed system.

The entrepreneurs leading the best impact investment organisations are nearly always systems thinkers. They acknowledge that ‘simpler’ problems (like communicable diseases, housing quality and basic education) are mostly solved in Western countries, except for people considered disadvantaged or vulnerable. Their perspective is most similar to that of the founder of a start-up – they search out addressable needs in the market that can be filled by an innovative product or service. In the case of public value business leaders, they find gaps created by economic and social systems that are unable to be filled by entities with solely commercial motives. For instance, problem gambling is a phenomenon with physiological, social and economic components. It only affects one per cent of gamblers, but those it affects suffer catastrophic losses. And, there is no real commercial incentive for the gambling industry to do much about it. Consequently, we need impact investment thinkers who can find ways to fund combinations of industry regulation, gambling education, industry research and support services.

Who are these investors? They are sometimes forward-thinking government departments and agencies, but are increasingly likely to take other forms, such as venture funds (for example, Social