Public Value

RELEVANCE

Public Value matters for all of us, individuals and organization alike.

In a world of distributed power, volatility, and disruptive changes centralized sense-making and overarching narratives are in a crisis. More than ever, value is in the eye of the beholder as a web of meaning, purpose and emotion. Paradoxical as it may sound, in a world of hard-nosed material conflict, more than ever we need to come to terms with soft issues.

The same holds true for agency of institutions: more and more, cooperation is required between the public, the public sector and the private sector to help co-create a functioning society with viable organizations and happy people.

We need to accept in a fundamentally new way that the rise of subjectivity is not a temporary phenomenon, but a profound top management challenge. The reason is simple: The more complex organizational activities in a global marketplace become, the less you can fight complexity with complexity. The contrary is true, namely that the less customers, citizens and politicians understand complex social, economic and ecological realities, the more they need to simplify their perceptions and rely on their emotional responses. As natural response, humans feel positive about something if there is a direct personal gain or a positive impact on the community or society, they live in. Public value accounts for the subjective side of value creation by inquiring its psychological foundations and providing alternative measures and rationales of value creation.

Some recent data from Germany and Switzerland (in parentheses) may illustrate this relevance:

  • 87 (84) of 100 respondents indicate they have a fairly clear to very clear concept of public value.
  • 81 (73) of 100 respondents are fairly concerned to very concerned that public value receives too little consideration in Germany.
  • 72 (78) of 100 respondents would rather work for organizations that uphold public value at a high level, even if it means earning less.
  • 92 (95) of 100 respondents believe they can contribute to the public value through their own behavior. (53% voted 6 on the scale of 1-6)
  • 91 (87) of 100 respondents indicate that they prefer products that benefit public value, even if it means having to spend more on them.
  • 82 (86) of 100 respondents believe that private companies have a high responsibility to contribute to the public value. Even more responsible are public administration (98%/96%), non-profit organizations (96%/93%), politics (95%/91%), and also to every individual (95%/95%), according to the respondents.

THEORY

Public value redefines the notion of value creation by taking moral, political, utilitarian and hedonistic aspects into account as equally valid components of value creation. It does not suspend the profit motif, but enquires about its legitimate cause in society and how it interacts with other values.

The concept of public value enables us to answer the question whether an organization adds value to society and, relatedly, what makes an organization valuable to society not just in economic-financial terms. Public Value thinking is about a comeback of giving voice to the public. Basically, public value starts and ends with the individual.

Public Value theorizing builds on the notion of common good and is about the antecedents and effects of “calling a public into existence” (Dewey). In their well-received editorial book Bryson, Crosby, and Bloomberg (2015) categorize the public value discourse into three main streams, according to their main protagonists: Mark Moore, Barry Bozeman and Timo Meynhardt.

The discourse was initiated by Harvard Professor Mark Moore in 1990s, he kicked it off in his seminal book (1995) by stating: “Public Value is managerial success in the public sector with initiating and reshaping public sector enterprises in ways that increase their value to the public in both the short and the long run.” As a response to the new public management reform and its austerity and efficiency measures that ultimately result in less state, Moore contrasted this predominant paradigm with a proactive managerial concept for public servants that ultimate aim is value creation for the public.

Barry Bozeman’s analytical approach to public values focuses strongly on the societal level. Unlike Moore, Bozeman enlarges the perspective on values – he doesn’t distinguish between public and private with regard to the source of contribution. One main theme in Bozeman’s work is the analysis of public value failures: publicly held values that are not served or undermined by public and private institutions.

The European public value tradition originated from St. Gallen University with the work of Timo Meynhardt. He provides a strong theoretical foundation rooting his value concept in a psychological epistemology. Basic needs are the basis of any human valuation, they are the primary reference system to the world. Thus, human beings are constantly evaluating their environment with regard to basic need satisfaction. In order to create value for the public or publics, individuals have to perceive a significant contribution to this larger entity evaluated on grounds of basic needs. Value creation is more of an experiential (subjective) category accompanied by emotional-motivational states than a purely measurable (objective) one. Thus, value resides in the relationship between a perceiving subject and a contributing entity. Public or private organizations, goods and services have to touch upon these needs in order to create public value.

PRACTISE

The concept of public value provides a solution to the difficulty of systematically absorbing and managing expectations in society. It also helps to establish a perspective that views organizations as positive forces in society. Public Value is a way of looking at the world. Practicing the art of public value leadership requires will and skill.

Similar to the emergence of customer satisfaction, public value measures require internal partners who use the results to improve their own daily operations. In practice, we see a number of different rationales companies offer for wanting to increase their public value. Those rationales broadly fall into three categories:

  1. Prevent – what we should stop doing
  2. Identify – what we should keep doing
  3. Explore – what we should start doing

Organizations have two frameworks or tools to measure, analyze and understand public value challenges in depth:

The Strategic Triangle (Moore)

Moore’s strategic triangle (1995, 2013) is an analytic framework that focuses on opportunities for value creation and empowers public servants as society’s agents. The framework consists of three elements – the triangle in which public managers have to navigate – which each point to a particular set of observations, calculations, and judgments managers must make to formulate a strategy for public value creation. Later, Moore came to call an extended version of this triangle public value scorecard.

  1. Public value describes the changes in individual and social conditions that a public manager is charged with making. The public manager has to provide an account—both a story that can create meaning and a set of measures—that can empirically recognize the value she seeks to produce.
  2. Legitimacy and support refer to the authorizing environment controlling the resources, i.e. financial assets and authority that are required to support the organization’s efforts to make the valuable changes in the social condition.
  3. Operational capacity refers to the administrative means and assets that make the strategy operationally feasible, i.e. expertise and capability. Hence, it concerns the managerial question of how the assets could be deployed to produce the desired results and whether the organization is actually capable of delivering to its objectives.

The Public Value Scorecard (Meynhardt)

With the scorecard, Meynhardt provides managers with a simple-to-use tool that allows fo the integration of different perspectives of value creation simultaneously. The scorecard visually integrates different dimensions, following Meynhardt’s psychological approach: (1) moral-ethical, (2) hedonistic-aesthetic, (3) utilitarian-instrumental and (4) political-social. Meynhardt introduced a non-theoretical fifth dimension, (5) economic-financial, to account for managerial needs.

  1. “Is it useful?” – utilitarian-instrumental values
  2. “Is it decent?” – moral-ethical values
  3. “Is it politically acceptable?” – political-social values
  4. “Does it allow for positive experiences?” – hedonistic-aesthetic values
  5. “Is it profitable?” – economic-financial values

The fundamental questions the scorecard is asking, is ‘What makes X valuable to society?’. X might be a wide variety, such as a product a company is about to launch, a footbal club, investements or anything else. The application is open to current or prospective initiatives and it can also be viewed from different perspectives (risk assessment, opportunity assessment). Moreover, the scorecard can enhance dialogue in decision-making processes between more complex and rather single-minded thinkers, by forcing the former to narrow down their thoughts and the latter to broaden their view to five dimensions.

SELECTED BIBLIOGRAPHY

Beck Jørgensen, T. & Bozeman, B. (2007). Public values. An inventory. Administration and Society, 39 (3), 354-381. 

Benington, J., & Moore, M. H. (2011). Public value: Theory and practice. Palgrave Macmillan. 

Bryson, B. C. Crosby & L. Bloomberg (Eds.), Public value and public administration. Washington: Georgetown University Press. 

Lindgreen, A., Koenig-Lewis, N., Kitchener, M., Brewer, J. D., Moore, M. H., & Meynhardt, T. (Eds.). (2019). Public Value: Deepening, Enriching, and Broadening the Theory and Practice. Routledge.

Meynhardt, T. (2009). Public value inside: What is public value creation? International Journal of Public Administration 32 (3-4), 192-219. Download

Meynhardt, T. (2015). Public value: turning a conceptual framework into a scorecard. In Bryson, B. C. Crosby & L. Bloomberg (Eds.), Public value and public administration. Washington: Georgetown University Press, 147-169. Download

Meynhardt, T., Brieger, S. A., Strathoff, P., Anderer, S., Bäro, A., Hermann, C., … & Gomez, P. (2017). Public value performance: what does it mean to create value in the public sector?. In Public sector management in a globalized world (pp. 135-160). Springer Gabler, Wiesbaden. Download

Meynhardt, Timo (2019. Public value: value creation in the eyes of society. In Public value: deepening, enriching, and broadening the theory and practice. Routledge, 2019, S. 5-22. Download

Moore, M. H. (1995). Creating public value: Strategic management in government. Cambridge: Harvard University Press. 

Moore, M.  H. (2013). Recognizing public value. Harvard University Press. 

O’Flynn, J. (2007). From new public management to public value: Paradigmatic change and managerial implications. Australian journal of public administration, 66(3), 353-366.

Stoker, G. (2006). Public value management: a new narrative for networked governance?. The American review of public administration, 36(1), 41-57.