Features: March 28th, 2014

Marks & Spencer and the NHS are totally different organisations doing quite different things. At first glance there appears to be no crossover and no scope for any cross fertilisation of ideas. Peter Garnett thinks otherwise. In this article he teases out the similarities and identifies common concepts, including most importantly, leadership.

The recent announcement that the NHS is to benefit from the private sector experience of Stuart Rose has been seen by some critics as a mixed blessing. It seems that the notion of any experience other than that inbred in the NHS is considered as an irrelevance by some. For example, Christina McAnea, UNISON Head of Health, said: “The truth is that the NHS is fundamentally different from the retail sector where customers can shop, when and where they like” and “…Instead of focusing on the cult of the individual, Jeremy Hunt would be better turning his attention to engaging with staff, patients and their families on how to improve NHS services.”

Similarly Marina Hyde in The Guardian asked “When did it take root, this bizarre idea that the fantastically complex apparatus of the state is analogous to a shop?” and that “…Just once, perhaps as a humorous experiment, it would be nice to think we were appointing someone who was actually considered an expert in the field.”From the position of the political vested interest to the mischievous commentator there are surely several points being missed.

Jeremy Hunt the Health Secretary believes that “The difference between good and bad care can often lie in leadership” and that Stuart Rose as “one of the country’s most inspirational leaders,” could play a significant role in stopping hospitals failing in the future. Leadership is clearly of great importance when NHS headcount numbers exceed one million and are trending upwards, but there is a more insidious factor at play. The institutional behaviour which has evolved in the management and back offices of some NHS trusts, is characterised by ‘laissez faire’ attitudes, ‘blame culture’ and hierarchical ways of working. It contrasts with and undermines the caring and ‘customer service’ ethos required by clinical excellence. Stuart Rose has recognised the need for “creating a culture where people are empowered to do things differently” and here at least he shows that he and his Marks & Spencer (M&S) roots are closer to the mark than his popularist detractors.

If Sir Stuart is to make a difference and if he is to attract and deploy expert leadership from the private sector, which NHS management processes, critically important in his previous roles, should he uncover? Three less obvious suggestions are given below.

Supply Chain Management

In his current role at Ocado and throughout his retail career Sir Stuart will have become well versed in the criticality of managing all supply chains and networks holistically and effectively. From suppliers through to the final customer he will know that there needs to be a well-oiled machine which always meets customer expectations and drives out waste in time, resources and investment.

In the NHS the final customer is usually, but not exclusively, the patient. The pathways that have been developed are designed to give patients the very best care in complex diagnostic, treatment and recovery environments.
Yet there are similarities between the operation of large-scale retail businesses and acute hospitals. In both there are inbound logistics, demand management, operational planning, service provision, dependent resources, capacity and facilities constraints, total quality requirements and outbound logistics.

Sir Stuart may wish to reflect upon the planning and management techniques with which he is so familiar and consider how the approaches, team behaviours, integrated systems, end-to-end management and performance measurement have propelled leading private sector firms. He may well conclude that there are transferrable best practices, which can improve NHS operational performance, contribute towards the closure of expected funding gaps and provide the best possible care for patients.

Supplier Relationships

Some major retailers have earned a reputation for bullying suppliers into win/lose commercial arrangements, using the threat of delisting as a means to perpetuate squeeze and generally using their colossal market presence and buying power to always get what they want.

As one of Europe’s largest buyers, the NHS behaves differently. Working within the scrutiny and legal frameworks of the public sector, much of the NHS procurement activity is driven by the need to observe standing financial instructions and or the European procurement rules. The outcome favours administration, arm’s length trading and a distinct lack of entrepreneurialism.

This situation has been recognised by the Department of Health and NHS with the latest call to arms ‘Better Procurement, Better Value, Better Care: A Procurement Development Programme for the NHS’ published in August last year. This worthy report sets out the objectives for world-class expenditure management across the NHS. It exhorts Trusts to maximise value for money through economies of scale, information transparency and collaboration – and reduce procurement costs by the required £1.5 billion per annum by 2015/16.

Sir Stuart may recognise the retail procurement model and understand the different constraints of public sector expenditure. He will be able to distinguish between best procurement and sharp practice. Most certainly he should galvanise the NHS leadership he engages into seeking the best procurement teams and demanding from them stretched total cost reduction targets, mutually beneficial supplier relationships, detailed performance tracking, and personal responsibility. Above all, he may be able to convince stakeholders that complying with the procurement rules is not a valid excuse for poor procurement performance.

Behavioural Competencies

In some Trusts there is little evidence that backroom functions such as Procurement, IT and Finance are managed by people who have been selected for total suitability i.e. qualifications, experience and their behavioural capabilities. Such integral competencies including collaboration, relationship management, influencing, facilitation, commercialism, ‘can-do’ and communication are often absent or subsumed by the prevailing NHS culture. In M&S and other leading private sector companies, there is by contrast a very visible emphasis upon consistently excellent customer service. This idea is not limited to dealings with the final customer (in NHS terms, the patient) but equally applies across the organisation to all internal relationships as well as with key external partners such as suppliers. Improved leadership may well tackle the implementation of the prevalent and aspirational behavioural value statements, which are common features of NHS Trust web sites. Yet the new leadership may need to go far beyond the window dressing if it is to positively affect the blatant distrust, apathy, email squabbling, disagreeability and compartmentalised attitudes which drag down organisational effectiveness. Are these behaviours symptomatic of overly secure employment and low turnover, inability to attract high calibre people because of poor private sector remuneration comparisons and an endemic acceptance of the status quo?

Either way Sir Stuart will need to catalyse systemic behavioural changes, if the NHS is to reach the standards of leading organisations.

Peter Garnett is Head of Procurement at Crimson & Co