Bend or break – the winds of change facing business and public sector leaders

Who would have thought that within two short years we would be witnessing such profound social, political and economic change. One wonders what the next ten years holds for us?

History is littered with examples of the rise and fall of civilisations. The recent backlash to globalisation has heralded the re-emergence of protectionist trade and isolationist immigration policies in major global economies. Time will tell whether we have reached an inflection point, or just a momentary bump in the road.

But it does appear likely we are experiencing more than a bump. The US and UK, two countries which have since the 1940s consistently championed international trade and globalisation as the bedrock of their respective foreign policy strategies, both appear to be ready to abandon long-established alliances which have underpinned global peace and their ability to project power and influence around the world.

To effectively lead change, you need to convince your constituents that there is a burning need for that change and that immediate action is needed. Messages from leaders that paint a vision of chaos and threats, or systematically seek to generate distrust for key social institutions (or allies) are one method for generating that burning need and sidelining criticism.

This style of political leadership has been consistently shown through history to be effective in generating sudden shifts in community attitudes and expectations. This leads to significant impacts for both business and public sector leaders.

Each year the various levels of government within Australia spend around $192 billion delivering services across a broad range of areas, including defence and security, healthcare, and integrated public transport systems. The costs of providing services are significant and not likely to diminish anytime soon, no matter which flavourr of politics is ascendant. In a report published by the McKell Institute in 2016, local governments were found to have experienced an unprecedented 7.3% compound growth rate over 20 years for their expenditures.

You can argue that demographics will determine the future role of government within the Australian economy, given the dramatic increases projected by the Australian Bureau of Statistcs for the segments of the population over the age of 65.

Sydney downtown, blurred intersection people and traffic in a sunny day at dusk

These demographic shifts will generate rapid increases in demand for access to public services such as health and aged care services, while simultaneously shrinking government personal income tax receipts available to pay for those services. Reductions in skilled immigration rates will simply amplify the budget impacts and social dislocations caused by a rapidly ageing population.

To some extent, digital technologies will help governments continue along their old path, simply replacing public servants with computer-based customer service. Cost and consumer convenience should dictate new government service delivery models, with digital platforms now already capable of supporting ever increasing levels of sophistication, as demonstrated successfully by integrated customer service “shopfronts” such as the NSW Government One Stop Shop.

But in the medium term automation of customer service shopfronts for government is effectively just shifting the bottlenecks, like a motorway that terminates huge volumes of traffic into an intersection of small suburban roads. New limits will quickly be reached, as many government services require complex individualised personal interactions and employee expertise. Easier digital access to requests for government service also often lead to greatly increased take-up rates for those services.

Budget realities will increasingly lead to a wider range of core public services being delivered via private businesses under contract, or hybrid arrangements involving public-private partnerships. In either case, cost recovery for core government services is increasingly likely to occur at the coalface of service delivery, rather than from consolidated tax revenue. “User pays” models will be likely to become far more common as the pot of tax revenue available for service subsidies shrinks at each level of government.

In this broader environment of political uncertainty and unpalatable truths, both business and public sector leaders should not be afraid to act. Safely navigating uncertainty will require leaders to develop business plans that are flexible and frequently updated. Demonstrating a laser-like focus on coal-face customer service quality and core service deliverables will be critical. Leaders who prioritise timely and honest engagement with constituents and team members will be in the strongest position to inspire trust, which will surely be needed in these uncertain times.