Master´s thesis “Total Portfolio for Public Services” (1) introduces the way to prepare existing public services for the digital era. Citizens and their life events can trigger new demand for digital public services, but introducing or improving digital services will require tectonic changes in the current service base.

How does the current service base look like in public organizations?

Most public organizations struggle with a myriad of independent services. Services and customer insights are scattered in disparate offices or entities; and so are the corresponding digital assets. This disparity makes the change towards a smooth digital experience hard and financially challenging to execute. As a result, customers often have to find and select their public services from bits and pieces of a fragmented, incoherent mass of services.

Yet, citizens of today expect the same smooth experience from all services they consume – either digital of physical, public or private, automated or manual. What primarily matters for them is that the service gets its job done as expected, and when expected. It also matters that the customers can find the service easily. The cool “wow!” effect happens when the citizen gets the service available even before he or she realizes the need for it. And it is only after such a happy discovery that he or she starts inquiring how much the service can cost, and how the cost is charged i.e. through taxes, through insurance, or out of the pocket. If the cost is right, the citizen chooses the best option and enjoys the experience.

Definitely, it is much nicer to pay a few dozens of euro for a childbirth, instead of 10 000 Euro or more, depending on potential complications. This angle is one of the strongpoints for consuming public services. They tend to be affordable and predictable without unexpected extra bills. Public service quality also tends to be high, as there is a lot of public attention, monitoring, and quality checks. In addition, public services are found in public offices, which makes them easy to spot. Private services must struggle much more for being noticed. In addition, many public services have traditionally been incumbent without much of a competition. All these factors make the current service base look very attractive and promising. But is it for long?

Not only “what” but also “when” and “how easy”

Digitalization changes this natural attractiveness of public services. A much wider, “heavier” public service base faces unprecedented direct rivalry and a threat of substitution from the private side in the ways that were not possible in pre-digital era (2, 3). Hence, today it is not enough to concentrate on the traditional strongpoints of public services (affordability, quality, wide coverage). These services must meet the customer needs better.

Let´s start with “when”. In essence, public services consumption happens in certain life situations. When a child is born, certain childcare services are triggered. As the child grows, new service needs come to the picture, and they form a web of service needs. Imagine if those life situations could be identified and analyzed so well that the citizens could be offered the right services proactively. This is why Stiglitz-Fitoussi-Sen commission modeled the typical citizen´s core needs for the European Union in 2009 (4). Since then, for example, Finland and Estonia have established their Artificial Intelligence programs pursuing this capability to identify citizens’ life-events for focusing public services better (5, 6, 7). In other words, the providers of public services look ahead and have a clear vision how to be more proactive.

So, after building such visions, why there is still a problem with “how easy” the public services can be? Unfortunately, this problem exists, and it is both managerial and technical. It originates from the fact that few public services are islands of their own, and they are not really restricted to certain service areas or tools either. Yet, the operational models of local governments have divisional silos which separate public services into the urban environment, cultural, education, social and health services. This dilemma makes an obstacle for triggering a change in public services into easy and proactive digital services, as envisaged above.

What to do?

My Master´s thesis (1) addresses these issues and proposes an approach to handling them through constructing a business operational concept named the ´Business Wheel´. The ´wheel´ first describes the related business dynamics and then suggests a Portfolio Management setup and the necessary organization around those portfolios. The key pivotal portfolio for a municipality is a Service Portfolio because local governments run hundreds of services. If they are run disparately, without clear service structures, it becomes almost impossible to match those hundreds of existing services with the citizen’s life situations in the way envisaged above.

This is why the thesis recommends that local governments should consider the Service Portfolio and the customer life events first. Addressing both areas will directly lead to a need for fundamental transformation towards digital services, but there is also agility required in adapting strategic targeting. The success will depend on the ability to continuously assess the environment and effectively steer the execution.

However, to capture the value, just steering and targeting is not enough. New and improved public services will be needed, which requires a substantial amount of innovation. All these parts of the ´Business Wheel´ and Service Portfolio practices should contribute to constructing a managerial ecosystem and prepare public services for a turnaround based on life-events triggered services.

About the author

Ilkka Kautto works as a directing chief specialist, ICT development in the City of Helsinki. He has over twenty years of experience in innovating and developing new digital solutions and related organizational capabilities in international technology cluster and public organizations.

References

1. Kautto, I. (2020). Total Portfolio for Public Services: How to Prepare Existing Public Services for a Turnaround to a Life-events Triggered Proactive Ecosystem. [Master´s Thesis]. Helsinki, Metropolia university of Applied Sciences.
2. Christensen, C. et al. (2016). Competing Against Luck: The Story of Innovation and Customer Choice. 1st edition. New York, NY: HarperBusiness.
3. Ulwick, A. (2017). Jobs-to-be-done for Government. April 19 2017. [online] [Accessed 2 March 2020].
4. Stiglitz, J. E. and Sen, A. and Fitoussi, J-P. (2009). Report by the commission on the measurement of economic performance and social progress. [PDF] [Accessed: 10 June 2020].
5. Sikkut, S. and Velsberg, O. and Vaher, C. (2020). #Kratt AI: The next stage of digital public services in #eEstonia. Republic of Estonia, GCIO Office. [PDF] [Accessed 25 February 2020].
6. Maunula, A. (2019). Julkisen sektorin digimenestyjät 2020, Suomi. [online] BearingPoint. [Accessed 19.1.2020].
7. Ministry of Finance (2020). The AuroraAI national artificial intelligence program begins – with the aim of using artificial intelligence to bring people and services together in a better way. [online] [Accessed: 10 February 2020].

Many small and mediums-sized IT companies are packed with young and innovative millennials. These IT nerds, in addition to developing state-of-the-art solutions, want to have a wider influence in their companies. My study of IT companies discovered that millennials do not want to be managed by someone telling them what to do or to be measured how the instructions are followed. Instead, it is important to them to actively participate in the running of the daily operations. Therefore, it is important for a modern IT company to find out how to successfully run a company, in the demanding competitive environment, with modern management methods.

The millennials know that a modern SME (small and medium-sized enterprise) IT company cannot rely on the management methods developed almost a hundred years ago. In their view, it is time to challenge the traditional approach and methods of strategy, which are often developed for large enterprises, not to SMEs.

The millennial era gives power to employees and widens accountability not only to employees but also to leaders of the company. The stiff, conventional top-down management is turned upside-down into the bottom-up management, where decisions are made fast and by the real-life experts, and where cooperation is of utmost value. As the way people work is changing, the modern leadership turns managers into stewards whose main responsibility is to assist their employees to shine. This also leads to considerable changes in the companies’ culture.

The key assets of an SME IT company are the competent and empowered employees. Those who innovate on a daily bases. As the resources of skilled, creative and passionate employees are scarce, leaders are faced with a challenge to win their brains and souls. In this situation, companies have to turn themselves into attractive modern employers and differentiate them from masses by up-to-date ways of leading their business. In nerds’ eyes, it can be done – first and foremost – by empowering those who are the real experts, and by turning error-free operations into error-allowed operations. With the help of new era millennials, highly engaged and committed companies are able to move fast, be agile in operations, and ready to turn the ship whenever needed.

Even though there are thousands of strategy books available, still, studies reveal that nine out of ten employees do not understand their company’s strategy. Having worked for many years in IT industry, in leadership and management positions, I have always missed a handy and practical strategy implementation tool. My Master’s studies at Metropolia gave me this opportunity to explore and eventually develop such a tool and put it into a ‘Strategy implementation handbook’.

In my study, I was helped and inspired by innovative and enthusiastic C- and O-level employees (i.e. from C-‘executive’ and O-‘operational’ levels) who shared their insights and helped to develop this handbook, specifically fit for use by IT SMEs. The Handbook consists of six concrete and easy-to-follow chapters how to implement a strategy in an IT company. I especially relied on some brilliant ideas of modern leadership from Red Hat Inc., one of the leading IT developing companies, and from the Open Organization community. I am grateful for their input.

This Master’s Thesis is available in theseus.fi. Topic: A Generic Strategy Implementation Handbook for Small to Medium Sized IT companies.

Researcher Kirsi Hoikkala (LinkedIn), Master of Engineering in Industrial Management

Master’s project discovery: Conventional Management Methods are Challenged

Master’s thesis often brings unexpected insights to both the thesis worker and their community of co-workers, and to the interested public. This year, Master of Engineering Kirsi Hoikkala, who has completed her Master’s degree in Industrial Management, came up with a discovery challenging the renowned management gurus. In her Master’s project, Kirsi explored how strategy is implemented in small and medium-sized innovative IT companies. And her study revealed some unexpected results.

Master’s process instructor Zinaida Grabovskaia, PhL

My Master’s thesis was done for my home company, Pylon Rakennus Oy, a private repair construction company operating in Helsinki area. Construction industry is one of the last frontiers for sales and new customer acquisition development. Construction business, including repair construction, has traditionally based on competitive bidding. Therefore, pro-active sales has not played a significant role.

Recently, increased competition and price erosion has driven repair construction companies to search for business potential in developing pro-active sales and by acquiring new customers, for example, among private property owners.

Starting from this perspective, the study focused on exploring how sales actions prior the bidding stage and a new customer acquisition process can help to get beyond the painful competitive bidding. The study suggested that through improved visibility and relationship management, as well as through a better service offering, the company could get better access to new customers and a better gateway to joint property development projects.

The study suggested considering sales as a strategic function, which originates from sales strategy. In order to convert strategy into sales performance, the study recommends allocating the sales resources based on customer prioritization. In addition, customer segmentation and offerings should be also considered as strategic decisions.

In regard to the sales process, the study recommended the company to broaden its relationship network outside its buying network. The study found that relationships should be independent of any projects to increase visibility on the market. A customer reference marketing was found to be as the main tool to build company’s image. Additionally, a good service offering is needed to ensure high quality and cost effective services. These actions will increase the touchpoints, thus enabling better access to customers, and providing better possibilities for alliance and negotiation contracts.

In addition, the proposal presented a model for a three-step risk assessment to support the company’s project risk management during sales strategy, customer acquisition and bidding stage.

This proposal was successfully accepted by the home company and now it works as a backbone for the case company’s sales development. The improved sales process will allow the company to become more customer-oriented and forward-looking. Better anticipation will improve the risk management, resource efficiency and, in the long run, will have a positive impact on both sales performance and profitability.

 

Researcher Päivi Stordell, Master of Engineering in Industrial Management

 

This Master’s thesis has gained a high praise from both the school and the home company, and is available in the AMK common database (https://www.theseus.fi/handle/10024/145863). Topic: ‘Developing the Sales Process in a Repair Construction Company’