A sustainable business model for public service organizations?

The current global economic recession presents significant challenges to public service organizations (PSOs) that deliver public services to local communities – irrespective of whether these organizations are situated in the public, private, or third sectors. Governments around the world have responded to this recession by a range of strategies intended to reduce public spending and generate growth. This is not the place to debate such strategies – this task has been undertaken by other writers (e.g., Kickert 2012). The general rubric of such strategies, however, has been ‘doing more with less’ (Patterson et al. 2009). As a consequence of this global context, the public service delivery environment has become a challenging one for PSOs, with a range of survival strategies, such as demarketing (Osborne and Kinder 2011) and Lean (Radnor and Osborne 2013) being considered by these organizations. Consequently, there is a growing need to establish the basis for a sustainable business model for PSOs that will provide a foundation upon which to survive the recession and thence for sustainable growth in the longer term. This brief essay presents our first attempt to address this issue. Our central argument is that the premises that underlie much contemporary public management theory, in its guise as the New Public Management (NPM), are both flawed in theory and have failed in practice. Far from creating the basis for sustainable PSOs, this theory has actually undermined their sustainability by encouraging a shortterm, transactional approach to the delivery of public services. We offer an alternative to this, based within the New Public Governance and the public service-dominant logic (PSDL) for public service delivery (Osborne 2009; Osborne et al. 2013). We argue that it is essential for PSOs to move beyond the failed transactional approach of the NPM and take a relational and public service-dominant approach that emphasizes three elements: building relationships across the public service delivery system, understanding that sustainability derives from the transformation of user knowledge and professional understanding of the public service delivery process, and being predicated upon the inalienable co-production of public services with service users.