Management consultants and the public sector

The Schumpeter column in the Economist has interesting thoughts on the role of management consultants in the public sector. Can they contribute? The evidence is damning:

They have frequently left devastation in their wake and have treated the public sector as dumping grounds for airy-fairy ideas such as “transformation” that have been rejected by the private sector. They have built overly elaborate management structures that make it harder for people to do their jobs. And they have demotivated people who like to feel that they are working for the public good. The government has wasted huge amounts of money on botched IT projects designed by consultants. The worst example, a £12.7 billion project (in the UK) to improve the health service’s systems, has now been partially abandoned; but the Ministry of Defence is still struggling with a project that is currently £180m over budget.

But Schumpeter finds some virtues in the public sector using them:

Civil services are congenitally inward-looking organisations, led by people who are plucked from elite universities and shielded from the rest of the world in government palaces; it helps to expose them to innovations from the private sector. The private sector routinely introduces reductions in costs and improvements in performance that are almost unknown in the public sector....

......the people who are ultimately responsible for the debacles are not the hired hands but their political masters. Gordon Brown and Tony Blair were suckers for flashy but insubstantial ideas about transformation. Lower-level politicians were lazy managers. In 2006 the National Audit Office provided a devastating list of ways in which the government had failed to make the best use of consultants—ranging from failing to appreciate what could be achieved with their own staff to refusing to learn from what the consultants were telling them.

I think it's important to identify where management consultants can be useful. In specialised areas, such as IT and improvements in efficiencies in particular operations, yes, they could be useful. But, giving them a broader mandate- putting in place performance measures or incentives in government, judging the necessity of particular tasks in government- would be ill-advised. That is because the ethos of the public sector is fundamentally different from that of the private sector and it is difficult for those with a private sector orientation, such as management consultants, to appreciate the difference.

On a broader note, I would be wary of relying on outsiders for solutions. There are plenty of ideas within organisations, including government, but you have to provide opportunities for these to surface. Once a set of ideas is available, it may be useful to get an outside assessment of which make more sense.