Geoff Mulgan, Oxford University Press; 2008. Book reviewed by Peter Shergold, Chief Executive, the Centre for Social Impact
Geoff Mulgan, Director of the Young Foundation in London, is well-known to Australians for his active role in promoting social innovation. Already he has spoken twice at CSI events. As befits someone who has previously served as senior policy adviser both to Gordon Brown and Tony Blair, he is also a perceptive thinker on political life. A couple of years ago, in Good and Bad Power, he examined the origins of the State. Drawing on his extraordinarily erudite reading of history and philosophy, he examined the moral qualities that democracies need to renew themselves in ways that serve their citizens.
Now, in a bold new book, he explores how governments can think and act strategically in a political world which often undervalues long-term decision-making. How, he asks, can democracies create the spaces for thought, learning and reflection that allow them to plan for a socially inclusive, environmentally sustainable and more caring future? How can power be harnessed in pursuit of innovative public policy? How can knowledge be translated into political action?
The challenge is that solutions lie not so much in technology but in the education and skills of people (human capital) and the value of institutions. Social enterprises and governments hold this in common: that their success in creating beneficial public outcomes, and being able to assess those achievements, is remarkably hard to measure. For this very reason considerable effort has gone into working out not only what public interventions cost – whether driven by governments, social enterprises or a partnership of the two – but also attempting to measure the value they create. This is, as Mulgan emphasises, far more complex than in the world of business. Statements of profit and loss, and returns to shareholders, give at least a rough and ready measure of commercial success. In contrast “value is rarely easy to grasp and is never an objective fact”.
One particularly interesting aspect of the book for those organisations who seek, through their mission, to deliver and evaluate community benefits is Mulgan’s work on development of a model of public value. Mulgan moves beyond the familiar territory of stated preference (how much people say they would pay for an outcome) and revealed preference (how much people have shown themselves willing to pay for similar outcomes).
He exposes the notorious unreliability of such metrics. Equally persuasively, he reveals how the use of discount rates to judge the worth of contemporary social investments in the years ahead tends to devalue the future. People, it turns out, set more store on the future lives of their children and grandchildren than do the strictly rational consumers who populate economic theory. For a missiondriven, not-for-profit organisation “it is simply inappropriate to devalue future rewards – the cause is everything”.
Do not come to this book, or in particular Chapter 12, expecting a simple answer to the metrics of public value. Indeed, Mulgan recognises that a single measure of net benefit, which has been the holy grail of social accounting, often destroys relevant information in its conglomeration of variables. Different dimensions of value are not commensurable. Value is not one-dimensional.
Rather, attempts to measure social value outcomes are important because of the democratic conversation they engender. This, at heart, is Mulgan’s thesis. The search for metrics, to be successful, should give rise to a process of negotiation between states and their citizens on the value of values. Such discourse will be enhanced by statistics that can inform strategic decisions on choice, opportunity cost and trade-off, including between the present and the future. In my view it is a discourse which can be enhanced by the evidence-based advocacy of not-for-profit organisations.
This is an intelligent, well-argued and sometimes challenging book on strategy as a public good. Its arguments are highly relevant to the development, delivery and defense of community benefit and public good by social enterprises. I recommend it.
The Art of Public Strategy, published by Oxford University Press, will appear later this month. To order please see: www.oup.com.