The Cheshire Cat State

Yup, I've been thinking again....

It's been thirty five years since Michael Aldrich demonstrated the first online shopping experience and gave birth to eCommerce and channel shift in one fell swoop. Since then the shift to digital channels, first for B2B ordering, then B2C shopping and finally to G2C services has gathered pace. This shift is one of the largest areas of discretionary spend for global public sector clients. It is of interest to citizens, governments and IT providers because it’s pretty obvious that this move to a digital default model for the delivery of public services to citizens will deliver vast benefits to both providers and consumers of those services. From more efficient processing to quicker delivery times, the channel shift to digital will transform the way citizens and public service bodies interact and free up resources to deal with new priorities but that shift doesn’t come without risk.

One novel risk is from a sort of “Cheshire Cat” state, where the presence of the state, the administrative and personal services which most people rely upon the state to provide, disappear from everyday life and exist only online, like the benefits offices turning into contact spaces, GPs replaced by NHS call centres and libraries moving to online presences only. This might sound like some form of ideal but it exposes public sector bodies to an existential risk which they aren’t prepared for, do users of digital services actually need all of the state and which bits do they care for? 

The invisible risk from digital transformation. 

The evolution of the state from royal fiat, backed by force, to provider of essential services is not a simple democratic journey. The state still retains a form of monopoly power for many services and its funding model depends not on consumer appeal but the enforceable taxation channel. Citizens have to pay for services, no matter if they consume them or not. However, as the model of service provision increasingly moves from just monopoly supply of service to supply of elective services like bulk waste disposal or even just supply of funding, like the adult care allowance the question around users needing the state becomes less academic.

 

In some future models of government service supply, which envision a “thinner” state where central and local funding is supplied to citizens for the services they need this question becomes acute. In essence the state completes its journey from “money with menaces” to “also a vital insurance provider to citizens” and that more democratic model crystallises the risk of the Cheshire cat state.

The journey to the future state government is being led by the initiatives which drive the channel shift to digital by default, forcing many public sector services become more commoditised, which whilst allowing greater efficiency also means that the differentiation between public sector services and those provided by other public bodies and private sector enterprises starts to degrade. This is meaningless in most cases; I can’t get another provider of national security or intelligence services. However, for some services it is immediately relevant, like the rubbish disposal question, and for others it will become apparent, like adult care and there could be plans for other areas like education to come into this model through provision of education vouchers. If services are commoditised the first thing to be redefined is the value which rapidly becomes just defined by price. As the value of the service becomes more fungible, the value of the brand degrades. For example in motor insurance the prevalence of the aggregator site means the means of competition have dwindled to price and service coverage as defined by external review. What this means for the public sector is as yet unclear, certainly demands for better value for money will increase but in common with other sectors the primary risk will be brand damage.

In the public sector, brand tends to be a forgotten term. In short very few people care much about brand but in my view brand is vital to public sector services due to the intrinsic link between location and the public services, if the brand value of a local council declines for example, could that decline lead to a reduction in civic pride, or even in civic responsibility? The decline in civic pride is nothing new, it’s been commented upon for decades and much hand wringing has taken place, but the impact of the apparent dwindling of the state to mere services provider could accelerate this further. Pride is a critical motivator for consumers and for staff. Pride in the place, the organisation is one of the key factors behind excellence and pride is proven to be delivered by and form part of brand.

Studies done by the Carnegie trust in 2012/2013 highlight the critical importance of civic pride to both public sector workers and to citizens.  The Carnegie trust found that Civic pride influences the success of crime reduction, environmental improvement, educational success and business investment, areas which drive the primary success of the country at both a specific local level and at a national level.

So what happens when I never see the public sector organisation I fund through central and local taxation? What happens when town halls are relegated to museums and function suites and when council offices are relocated out to business parks on the metropolitan periphery rather than in the centre of towns? What happens if I can only interact with the state via online or in exception by telephone? What happens if the only state office I can interact with is the Post Office?

Will I stop caring about the state if I can’t interact with it in person, in passing? It could mean I start to think about other providers for the services it offers.The very real factor of pride is a factor in how we view public services and the value we perceive we get from them and for the the staff of our public organisations. What does pride mean for our citizens and the success of wider investment in education, policing and infrastructure?

No one is going to stop channel shift in the public sector, the benefits are simply too large to dismiss but if we don't deal with this sort of risk properly then the impacts on civic life may be surprising; from increased demands for local competition to a decline in support for traditional democratic parties; if people can't see the state they are paying for they may start to wonder if they get the best value from it at all. History is littered with examples of what happens when the populace starts to question the value of the state, the results are not usually pretty.