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Renewing strategic insight will help to counteract a decline in citizen trust

and participation

One of government’s key roles is to act on behalf of society as a whole as the steward of its patrimony, resources, and values (see Table 4.1). Towards this end, governments are expected to clearly and publicly articulate their vision and programme, to anticipate and prepare for changes, and to act in order to achieve both short- and long-term objectives. While many of these responsibilities fall on the shoulders of elected officials, the public administration plays a vital role in supporting these efforts and increasingly has its own responsibility in developing a vision for society. This requires strategic insight: the ability to understand and balance government values, societal preferences, current and future costs and benefits, and expert knowledge and analysis and to use this understanding coherently for planning, objective setting, decision making and prioritisation. This chapter will show that strategic insight is the first step in achieving strategic agility, but it is also a value in its own right, as it is a necessary pre-condition for gaining the trust of citizens.

In Finland, as across the Nordic countries, citizen trust in government has traditionally been high. However, public trust has recently suffered a significant blow, falling by 19 percentage points – from the highest in the EU at 73% to seventh position at 54%. This represents the biggest decrease in the EU between January-February and spring 2009.1 Declining trust in government is a serious concern for both politicians and public sector officials. In addition to supporting governmental legitimacy, citizen trust lowers transaction costs and improves the quality and effectiveness of policy through full engagement in, and adherence to, development of a shared societal vision. Trust lowers barriers to implementation by increasing buy-in and understanding of policies.

In a democracy, citizens can be vocal and autonomous actors who take an active part in public life through both formal and informal channels. However, citizen participation is decreasing in all industrialised countries and this trend is occurring much faster in Finland than in other Nordic countries. Over the last 10 years, government interest in citizen

Table 4.1. Administrative elements of government stewardship

Roles Hard levers Soft levers

Anticipating Government Programme and budget; resource and strategic planning

Consultation/engagement/participation; research and analysis, forecasting, horizon scanning

Convening Budget and labour negotiations Consultation/engagement/participation; communications Vision Agenda and strategy setting; prioritisation Consultation/engagement/participation; communications;

standards (e.g., customer service charters)

Shepherding Regulation; budget; setting; tools and frameworks Moral suasion (e.g., “bully pulpit”), setting values framework for public service (e.g., codes of conduct)

Openness and transparency Reporting (e.g., annual reports); freedom of information requirements

Availability and accessibility of information

Monitoring Performance management, evaluation; Ombudsmen Public transparency through media; QCS/feedback; Ombudsmen Course-correcting Performance budgeting; programme review Continuous internal consultation and engagement

participation has increased in response to decreasing voting percentages, criticism directed at politicians and political parties, and the shunning of party political activities. Of particular concern is falling voter turnout in national and municipal elections (see Figure 4.1), placing Finland’s voter activity within the lowest third among the world’s established democracies. Feeding this decline is a lack of interest from younger cohorts, where the voting behaviours of those under 40 years of age are well below the national average. This problem is more significant in Finland than in the other Nordic countries; only a half of the youngest residents entitled to vote do so.2

Concerns regarding declining citizen political participation and trust have led to discussions within the Finnish government on strengthening the role of civil society in Finland. Declining trust in government can signal citizens’ dissatisfaction with the actions of government and its ability to fulfil society’s expectations.

The increasingly complex nature of policy challenges in areas such as climate change, the global economic and financial crisis, and the ageing population requires both the government and the public administration to be able to change policy directions quickly and effectively as circumstances demand – i.e., strategic agility (see Box 3.1 in Chapter 3). They must also be able to distinguish when action is most appropriate at a whole-of-government level – and therefore requires central action or co-ordination – and when agility is best obtained at a devolved level in order to achieve greater responsiveness. Strong strategic insight is a key element to achieving strategic agility. In the public sector context, strategic insight requires the capacity and capability to conduct dynamic (rather than static) and inter-related long- and short-term strategic planning based on whole-of-government vision, understanding and knowledge. To achieve strategic insight, governments must actively seek and draw upon the experience and expertise of multiple stakeholders in developing a strategic vision and then operationalise that vision through the development of strategic planning frameworks.

Figure 4.1. Voting turnout in Finnish parliamentary and municipal elections, 1983-2008

Source: Statistics Finland. % 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 80 75 70 65 60 55 50 Parliamentary Municipal

It is important to identify the type of planning and/or decision making required in order to determine the most appropriate input for achieving strategic insight. Citizen engagement and data analysis can help in the identification of long-term and medium-term priorities, for example, but very long-term events may be unpredictable and “discontinuous” (i.e., not based on historical patterns) and so require other types of scenario planning. In addition, consultation may not always be appropriate for short-term decision making when rapid responses are required or when sensitive topics arise. In such areas, however, it is all the more important that decision makers have general information on hand about citizen preferences (see Table 4.2).

The challenges facing Finland (and calling the Nordic model into question) are complex, requiring solutions that draw on a wide field of experiences and knowledge and that extend beyond one term of government. While Finland has put many processes in place to build its long-term strategic insight, the OECD has found that using strategic insight in the development of many of its current reforms could help to improve the planning, implementation and sustainability of these efforts.

Capacity for strategic insight will be critical to Finland’s ability to manœuvre through the impact of the global economic and financial and economic crisis, and to put strategies in place to secure the future of the Finnish way of life. Finland’s public administration already has the foundations in place, but it will take strong leadership to build the capacity to ensure that it becomes more flexible and can adapt to future needs. The following sections of this chapter will address five key areas of strategic insight where capacity should be increased, by:

● embedding evidence-based decision making in policy development and implementation;

● institutionalising citizen consultation, participation and engagement;

● better utilising medium- and long-term fiscal projections;

● broadening the scope of foresight reporting; and

● using strategic insight to create a strategic vision.

Table 4.2. Analysis horizons: Strategic and decision making needs by planning timeframe

Analytical Needs Characteristics Requirements Examples

Foresight

(long-term: > 10 years)

Anticipation of, and preparation for, both foreseeable and disruptive/“discontinuous” trends; including future costs in today’s decisions

Continuous scanning and consultation; pattern recognition; analysis of “weak signals”; futures studies;

consensual views

Futures reporting (e.g., on climate change); horizon scanning; long-term budget estimates; scenario planning

Strategic planning (medium-term: 3-10 years)

Anticipation of, and preparation for, foreseeable changes; prioritisation; including future costs in today’s decisions; risk management

Analysis of historical and trend data; comparable information and analysis across government; consultation on values and choices

Government Programme; medium-term budget frameworks; workforce planning; spatial and capital investment planning; innovation strategies

Decision making (short-term: 1-2 years)

Responsiveness; rapidity; accountability; ability to determine at what level decisions need to be taken

Quick access to relevant information and analysis; capacity for re-allocation; overview of stakeholder preferences

Executive action; annual

Strategic insight can be improved by better embedding evidence-based

decision making

Evidence-based decision making is a key tool by which governments and public administrations gain strategic insight through examining and measuring the likely benefits, costs and effects of their decisions. After undertaking wide consultation and research, and ensuring that all possible scenarios have been taken into consideration, governments can use this information to increase the transparency of their decision making processes. This also provides a “reality check” on the cost of realising government objectives, and gives governments the tools to prioritise competing objectives.

An increased interest in general efficiency and effectiveness in public administrations across OECD countries has led to a rise in evidence-based decision making. As the complexity of policy challenges facing governments increases, so has their use of evidence-based approaches. The key to evidence-based decision and policy making in public administration is using knowledge produced through multiple sets of data and analysis to inform and influence policy, rather than determine it. These multiple sets of evidence enable a fuller appreciation of complex policy challenges. Cross-portfolio and inter-linked policy issues require the involvement of multiple actors within society; seeking this broad participation has opened network approaches to policy processes such as citizen and stakeholder consultation and engagement. Effective policy design, implementation and evaluation depend on several evidentiary bases.

The public administration’s role in evidence-based decision making is to actively find, consult and engage with actors in key knowledge areas, and analyse and package that knowledge to inform government decision making. In order to engage in evidence-based decision making, the public administration must commit to this process and put in place the structures and resources to undertake such work. This includes: a framework and tools for collecting knowledge; the capacity to undertake research and analysis; good quality data; sufficient time and resources to collect, analyse and test the data; transparency and openness in the collection and use of the knowledge; and evaluation and adjustment (see Figure 4.2).

Figure 4.2. Pillars of evidence-based decision making

PILLARS OF EVIDENCE-BASED DECISION-MAKING IN PUBLIC ADMINISTRATION

Analytical frameworks and structures for collecting and analysing knowledge for decision-making

(e.g., Regulatory Impact Analysis; Benefits Realisation)

Capacity and capability to undertake research and analysis

(e.g., public sector skills; sufficient resources to collect, analyse and test data; and a receptive policy environment)

Access to quality data

(e.g., political; professional and practical; research and analytical and citizenry; high quality and interoperable datasets)

Transparency and openness in the collection and use of knowledge

(e.g., consultation, participation; engagement; information; and communication)

Evaluation and adjustment

Finland has frameworks in place that contribute to an evidence-based decision making culture such as research bodies, some consultation with public stakeholders, the use of impact assessment, and ICT investment business case requirements (see Box 4.1). For example, when new regulations are proposed, the Bill Drafting Instructions require drafters to provide alternatives to the legislation (i.e., non-legislative means to achieve the same goals) and to present the pros and cons for the chosen solution (e.g., by using cost-benefit analysis).3 However, these practices do not necessarily translate into a coherent, organisational-wide culture and ethos where evidence-based decision making is a systemic and ingrained way of working in the public administration. This may be in part because many of the preparatory decision making processes at the state level take place through informal discussions, where there is no standard requirement for the use of business cases, cost-benefit analysis, comparative analysis, and wide consultation on impacts.

Evidence-based decision making also supports the implementation and legitimacy of policies and major government reforms, thereby facilitating the realisation of the Government Programme. For example, clear business cases for major initiatives such as the PARAS (municipal) and ALKU (regional) reforms (see Chapter 5 for ALKU and Chapter 6 for PARAS) have not been communicated to the rest of the public administration, nor has information on projects within the state public administration such as the rollout of Shared Service Centres (see Chapter 8 for e-Government Case Study). As a result, there seems to be a lack of clear targets and/or success indicators for many major public reforms in Finland by which to evaluate and to help communicate the rationale for these reforms. For example, many sub-national officials interviewed by the OECD on the eve of the implementation of the ALKU regional reform were unclear as to the purpose of this programme and the motivation for its implementation.

Increasing the use of, and expectations for, evidence-based policy making will require consultation with external experts and stakeholders to harness innovative thinking and strategic insights. This process will also bring in information that is not necessarily available to the public administration, in particular on programmes’ local impacts. This way of working requires a change in government’s relationship with sub-national stakeholders and citizens to one of consultation and collaboration.

Analytical framework and structures for collecting knowledge

Regulatory Impact Analysis (RIA) is one example of a framework for undertaking evidence-based decision making in government. It is used to examine and measure the likely benefits, costs and effects of new or existing regulations (see Figure 4.3). RIA supports the policy-making process by contributing valuable empirical data to policy decisions, and

Box 4.1. Use of business cases in the Finnish public sector

The term business case refers to a communicated rationale for a reform/project/change, providing the vision and outcomes to be achieved, the methodology for achieving them, a cost-benefit analysis, impact assessment, engagement strategy and evaluation framework. While commonly used and understood in public sector ICT units as a way of showing expected return on investment, this concept has been slow to penetrate into the rest of the Finnish public administration as a means to guide decision making on public sector investments and as a basis for evaluating project success.

through the implementation of a rational decision framework, to examine the implications of potential regulatory policy options. The overall aim of RIA is to assist governments in making their policies more efficient and effective.4 RIA does not replace policy decision making, but it contributes to its design by providing information, as well as consistent justification, for government action.

The use of RIA has expanded rapidly throughout the OECD in the last decade. Finland is one of a growing number of countries to establish an explicit Better Regulation Strategy to support the awareness and use of RIA. A recent OECD review of regulatory capacity in Finland5 noted that since the OECD’s 2003 regulatory policy review of Finland, “regulatory policy has finally become embedded, in principle at least, as an important horizontal policy in its own right”.6 That said, despite concerted efforts to increase the profile of RIA

(e.g., mentioning the Better Regulation Strategy in the Government Strategy Document for

the first time), it is still not embedded in the culture of the Finnish public administration and thus remains weak. The government is aware of this, and it re-assessed the situation in the mid-term policy review of the Government Strategy Document in February 2009 and launched new initiatives for the second part of its term. One of these aims to strengthen the impact assessment of policy measures. The OECD also made a number of recommendations to improve Finland’s RIA practice as part of the 2010 review of better regulation in Finland. Capability and capacity to undertake research and analysis

Evidence-based decision making requires both a public sector that has the capability and capacity to undertake research and analysis, and a receptive policy environment. Capacity refers to sufficient resources (e.g., financial, human and time) to collect, analyse and test data. Officials interviewed noted that there were insufficient resources available to undertake citizen consultation and engagement as part of the policy-making process (see sub-section in this chapter on citizen engagement). This finding is confirmed by the 2010 review of better regulation in Finland, which clearly shows a serious lack of resources

Figure 4.3. The Regulatory Impact Analysis process

Source: OECD (2008), Building an Institutional Framework for Regulatory Impact Analysis (RIA): Guidance for policy makers, OECD, Paris. Definition Identification Assessment Consultation Design

Policy objectives Policy context

Regulatory options

Costs Benefits Other

impacts

Involving stakeholders

Enforcement, compliance and monitoring mechanisms

After RIA is prepared: DECISION-MAKING The Process of Regulatory Impact Analysis

available for the preparation of national regulations in Finland. An average of 7% of overall staff years goes to the preparation of national regulations, and 4% to EU regulations.7 Developing evidence also requires sufficient time, which must be built into policy development through the inclusion of data and indicators to facilitate evaluation of programme outcomes (the need for better indicators for policy and programme evaluation is discussed in the sub-section of Chapter 5 on performance management). Interviews with civil society organisations seem to indicate that public comment periods for new legislation have decreased (see sub-section in this chapter on citizen engagement).

The quality of information provided through spending ministries’ evaluations has been a concern for Ministries of Finance across OECD countries. Figure 4.4 shows how Ministries of Finance view evaluations which have taken place over a three year period. In general, Ministries of Finance have found evaluations to be satisfactory, relevant and accurate for policy reviews and for reviews of ongoing programmes. However, very few respondents found any evaluations to be of high quality. They were the least satisfied with cost-effectiveness and/or value-for-money evaluations. In Finland, the Ministry of Finance noted that the quality of the information provided across policy reviews, reviews of ongoing programmes and cost-effectiveness and/or value-for-money evaluations was insufficient, incomplete and, in many cases, contained inaccurate information. However, the Ministry of Finance also noted that there had been significant improvements in the quality of data used in evaluations in the five years prior to the survey.8

Evidence-based decision making also requires a public administration with the appropriate knowledge to discriminate between evidence which is reliable and useful and that which is not. Capability therefore also refers to a public sector with appropriate research, analytical and problem-solving, consultation and engagement, and collaboration and horizontal working skills. An overall finding of this review is a need for Finland to establish an evaluation culture in the public administration; this can be facilitated by increasing public sector capability in some key areas, such as citizen-consultation and engagement techniques, and legislative drafting. Several stakeholders indicated that there Figure 4.4. What has been the quality of evaluations commissioned/conducted

by spending ministries in the last three years?

Source: OECD (2005), Journal on Budgeting (Vol. 5, No.2). 14 12 10 8 6 4 2 0 Number of responses

Policy reviews Reviews of ongoing programmes Cost-effectiveness and/ or value-for-money evaluations

are limited staff in ministries (other than the Ministry of Justice) with appropriate legal qualifications and experience to draft legislation at a high level. This has impacted the quality of legislation drafted and ultimately affected end users; when legislative efficiency and effectiveness are reduced through multiple handling of legislation, poorly drafted legislation, and requiring adjustments and amendements.

Access and capacity to use quality data

Access to quality data is fundamental to the development of data- and knowledge- bases. Data quality is an essential element of proper analysis, and is recognised as one of the most challenging aspects of evidence-based decision making. It can consume time and resources,