Complex Processes Too Much for Government
The dramatic events surrounding the Dutch National Railway (NS) are partially caused by a lack of vision and leadership amongst politicians who are too much taken up by small incidents, says Steven P.M. de Waal.
Published in NRC Handelsblad, 12 January 2002.
Author: Steven de Waal
It was a drama in more than five acts. It almost seemed as if the curtain would never rise for the final act, until pressures from the Lower Chamber, the media and NS staff became so intense that Minister Netelenbos had no alternative but to act. The result: an administratively compiled Board of Commissioners, an interim manager for six months and a vague political promise of a ‘clean sweep’ and an improved Railway Act.
As a traveller and a citizen? don’t hold your breath. After all, administrative officials don’t make good commissioners, just think of the principle of instruction and consultation. Expecting a six-month contract to be sufficient for the management of a company where, as is the case for the NS, investments are high on the list of priorities, is expecting a butterfly to grow roses.
An election period is never the right time to introduce clear laws, even apart from the fact that the time between design and implementation is usually two to three years or more. Meanwhile, we won’t have any extra trains to travel on, let alone on time.
The traveller’s interests are not served in the short term. But which interests? The NS drama can only be understood from a political perspective. There was dissatisfaction amongst users and their spokespeople, there was staff unrest, which received a great deal of media attention and, most of all, there was a great deal of management ambiguity. For example, about the strategic target perspective (privatisation, flotation, international and national competition), about responsibilities and about powers to adjust.
Minister Netelenbos has acted, but with her back to the future: she demands punctuality to the second in trains travelling from a to b according to a complex timetable measured in decimals behind the point ? the minister in the role of super engineer. But weren’t competition on the track and hiving-off the organisation not also intended to innovate mobility services?
We wanted seamless door-to-door travel, which gave us the train taxi, for example. We wanted to make innovative investments in station areas in inner-cities, to serve not just as a hub for railroad tracks, but as a city’s throbbing centre, as has been realised in Den Bosch, for example, and which is to be followed in Rotterdam. We wanted better traveller information to allow the self-directing (potential) customer, including car owners, to make a deliberate choice as to their mode of transport. We also wanted rid of that silly hierarchical and pretentious engineer approach and more self-direction on the track, comparable to metro systems, where it is the waiting times until the arrival of the next train that are announced, allowing train drivers to adjust the interval time to their predecessor. And as a real metropolis, isn’t the Randstad entitled to its own metro or light rail system?
The manner in which Netelenbos has taken action is illustrative of the way the government acts in cases like this. We’re in for heavy weather. All three dramatic factors (user dissatisfaction, staff unrest, managerial and strategic ambiguities) plus a great deal of media attention, are also applicable to many other public services: from education to health care to safety issues.
The election programmes of all major political parties voice severe criticism on policy achievements and set out innovative approaches. But innovation and processes of change require confidence-inspiring leadership, based on a guiding vision. The NS drama shows that where there is no vision and no leadership, it is concrete incidents and apparently objective figures that decide the agenda and that determine behaviour in the top, particularly the fact that people have to give account halfway through the process of innovation regarding their failure to achieve old-fashioned operational standards.
This reality has already created a fear of essential innovation in many sectors other than public transport, also because many of the underlying issues are comparable. Underspending in the basic capacity, a flawed image in an increasingly competitive labour market, competition and at the same time co-operation with commercial parties, distribution of scarce resources and the use of private purchasing power in public frameworks are factors that apply elsewhere, too. But at the same time there are huge possibilities and opportunities for innovation of services in all of these fields.
While as a leadership case the NS drama has great impact on society, the government seems to once again revert to the sectarian order of the day. After all, the train drama has nothing to do with schools or hospitals, or has it? Without open evaluation and adjustment of the direction employed and leadership shown in such immense operations of innovation, the next cabinet will start without too much social authority. There is a lot at stake: respect for politics, willingness to take political and social risks in major and uncertain changes and, finally, better education, health care and tackling security.
What has this NS drama taught us? Not much that wasn’t obvious already. For example, use a long period of transition, but be clear about the target perspective throughout this period of transition. Hiving off or privatisation are no short-term solutions. Look at the operational and managerial cohesion before splitting up organisations into legally or theoretically interesting units. After all, lawyers or staff officials never head large public services.
Contract management is a better option than hierarchy only if sanctions are imposed, with the ultimate sanction of switching to another party. This makes contract management not an instrument to be used instead of, but complementary to competition. Otherwise it’s merely food for expanding the polder-model and stacks of work for lawyers. Moreover, the Netherlands shouldn’t be too eager to execute European guidelines so very quickly and strictly as if it wanted to come top of its class.
In retrospect all useful and sensible concepts with, like we said, a high degree of obviousness. The key question is therefore why these concepts weren’t applied when they could have or should have been, and what should be done to improve management of such processes. This requires three major changes in the organisation of the government.
First of all, major social innovation operations should not be started until after all ‘skeletons in the cupboard’ have been sorted out and after an adequate policy has been formulated, taking into account the required budget.
Capacity or budget problems should never be charged to privatisation operations or to a management prepared to be innovative. The past must be settled and progress must be based on responsibilities of the moment (often the State). The General Court of Auditors would be the best institute to do this. A successful example of the past is the privatisation of the national museums.
Secondly, the target perspective of the goal set should be established by the government after it has been carefully thought through. Its implementation must be placed in the hands of an independently operating regulator, or rather deregulator. The latter must also be given powers for the gradual abolishment of obsolete regulations as well as for taking over powers from the present ZBOs, departmental units or other public supervisors. It must act as trouble shooter in incidents that will undoubtedly take place and that are bound to attract involvement from the government, leaving it worried and restless.
There are no good examples in the Netherlands of processes that have been monitored from a to z, since the most powerful supervisors we know, STE, NMa and Opta, operate as interventionist in just a single facet of creating order in existing and fully private markets, instead of an institute that integrally directs the changing from public to (more) private. This regulator could be an entirely public organisation. However, it could also be a public-private partnership, which would make sense for the education and healthcare sectors.
While this role should be played by the executive power in our political system, I believe that one of the lessons to be learnt from the NS case is that the controlling, executive and lobbying powers in the Netherlands are too closely linked. Moreover, this construction would mostly benefit the government looking to delegate powers in major operations (but which hasn’t done so yet) and wanting to adopt new management powers (but doesn’t yet have the means to do so and is definitely unable to supply all of the required services at once).
Thirdly, the transition of powers, for example over investment goods and responsibilities, must take place at a clear moment, the ‘hour of truth’ to a clear new management constellation which incorporates all modern principles of corporate governance. So no early transition of certain issues, no ambiguous shared responsibilities, no calling for civil disobedience, and no calling for (social) entrepreneurship while supervisors are still looking to traditionally uphold the law.
This is how we can truly learn from the dramatic NS events while every party, particularly in national politics, fulfils the role that suits it best. It is extremely difficult to create clear ‘border moments’ in the Netherlands that can be crossed in one direction only. The Netherlands swears by coalitions, which means nobody is ever certain of their position of power. And that means that it is in everybody’s interest to keep every possible option open and that the opportunities to adjust are virtually endless. But that is not how leadership can actually be implemented, nor how processes of change are introduced in large and complex organisations. Healthcare, education and security organisation are still functioning too well, and are too important and too complex to be handled in the manner the NS has been.
S.P.M. de Waal is partner with Boer & Croon Strategy and Management Group and executive partner with Public SPACE