For greater social outcomes, we must organise as a system
Take Australia’s agricultural industry, for example. It competes in a global market with the help of a coordinated network of Rural Research and Development Corporations, part funded by government, part by industry. They commission research, support the application of new ideas, and provide training to farmers. While one egg producer competes against another in the supermarket, the Australian Egg Corporation Limited Corporation is raising the benchmark for performance across the board. Everyone wins.
Unfortunately, the approach to competition and collaboration can be quite different in NGO ‘markets’. For example, at TACSI, we’re currently working with NGOs to address addiction across a city. The services compete for contracts in a government quasi-market, which means they don’t share what they know about what works (or what doesn’t) with each other. Each believes they have the best service, but they can’t all be right.
Who does this market benefit? It’s not good for people living with addiction, because they can’t make the informed choice between the options, the way they might between eggs at a supermarket. It’s not good for the taxpayer because it doesn’t allow the most effective ‘value for money’ approaches to emerge. And it’s not good for mission driven providers because it prevents them from learning about what works best, for whom, when and how. Markets like this stifle innovation, and thwart value for money at their best. At their worst, they perpetuate harm and injustice.
A number of value-driven not-for-profit service providers pursue innovation because they believe in better outcomes, but the lack of formal incentives to innovate is remarkable. For the most part, finding a better way of doing things will not guarantee service providers a better bottom line, the take-up of their innovation, or status or recognition. Organisations engaging in innovation risk their bottom line, and risk developing new service models that work better, yet don’t fit tightly prescribed contracting guidelines.