Measuring public value – not for the faint-hearted
Public value organisations are the domain of the courageous. Generally speaking, they deliver services the private sector doesn’t want to or are not encouraged to deliver. Services may lack commercial value, carry high risk or offer poor revenue streams. However, our society as a whole has deemed these services worthwhile, and hence public entities and the commonly termed ‘not for profit’ sector exists. But what is this scale of ‘worthwhile’? It doesn’t naturally lend itself to measurement in dollar terms. Yet, in most cases, we have a conceptual sense that ‘value’ has been generated for the overall betterment of the community, our living standards, or safer places.
I’ve recently been reflecting on the relationship between risk management and how it corresponds to public value. Public entities and not for profit organisations have considered all the risks of their craft, developed ways (processes, technology, systems) to mitigate those risks, often with considerable investment, and continue to mitigate those risks every day in the delivery of their services. How do you measure the value of a risk well managed, or a disaster avoided?
Let’s take Melbourne Fringe as an example – a year round organisation that presents the Melbourne Fringe Festival. As a Board member of Melbourne Fringe, I appreciate the risks – and the great benefits – that this organisation manages. This year the festival will run for almost three weeks, will present close to 6,000 artists in approximately 400 shows across Melbourne. Melbourne Fringe helps new artists to start careers, active artists to develop theirs, and does so through the presentation of new and innovative material. Being an open-access event, anyone can register, and it is un-curated by nature. Very inclusive. Big tick.
Now think about the risks associated with running such a festival: new people, doing new things, new techniques, in new places, sometimes late at night, often in public places during what can be a very wet Melbourne Spring! There are so many varied risks, and logically, the public value generated must be greater than the risk managed.
What is the value created? Melbourne Fringe and artistic festivals around Australia build connections between artists and audiences. This contributes to our society’s liveability: individual well-being and fulfilment, as well as social inclusion at the community level. Melbourne Fringe specifically builds artists’ capacity to develop, present and promote their work. This develops artist productivity long after the festival has finished.
For governments and local authorities, late night programming during a festival contributes to safer streets through entertainment. Safer streets enhance both individual and community confidence. The liveability and artistic vibrancy of a town during the time of a festival is enhanced, and a notable halo effect sustains after the festival is over. All good public value outcomes.
However, this value is difficult to measure, and we are so often left with economic impact – ‘hotel nights’ booked and estimates of visitor spend. We measure ‘tickets sold’ which is important to artist and organisation financial sustainability, and might even be argued as a proxy for ‘connectedness’, but it doesn’t truly capture the public value created or the many risks well managed.
I have used an arts organisation as an example here, but the public value risk-return investment equally applies to a cross-section of sectors such as healthcare organisations who care for people entering into their service with known health risks, or emergency service organisations who provide services in higher risk scenarios on a daily basis to provide public safety or build the public confidence to carry on with daily lives.
A common frame of reference for describing public value outcomes across different sectors would assist in communicating value.
Should we award organisations a ‘public value’ quotient based on the nature of their service and the many risks they manage? Or perhaps we need a community-betterment barometer? Perhaps it’s a combination of the two or something else altogether? We need to keep this discussion going – what do you think? Where are the good practice examples?
More discussion on the public value concepts of confidence, liveability and productivity can be found in the article ‘Introducing the public value compass’.