More than luck

Governance that works

3 Comments 25 July 2010

Why public service reform needs systems thinking

by Ray Ison

Future public sector reform needs to differentiate between reform that does the wrong thing in the right way and reform that does the right thing.1 To consider what the right thing is, we need to look at the big picture and ask: does Australia have the forms of governance it needs to be effectively governed? This chapter takes a step back and presents a systemic perspective on:2

  • how some situations that need to be governed are, or could be, framed,
  • the systemic failings that are built into our current governance arrangements,
  • some of the findings and recommendations of the recent Moran Review3, and
  • recommendations for improving public sector reform.

Re-framing governance in a climate-change world

What is governance?

Governance encompasses the totality of mechanisms and instruments available for influencing social change in certain directions. While governance is a much broader idea than management or administration, it is not some abstract label but an action that has to be carried out. Governance is the context in which adaptive planning, designing, regulating and then managing sits. Governance that is ‘adaptive’ incorporates learning and change in response to uncertainty.

Governance and systems thinking

There are many good introductions to systems thinking and how it can be used.4 Unfortunately too few people know what it is and how to use it. Most rarely make it to first base because they are trapped in a dominant linear, causal mode of thinking typified by projects, prescriptions, objectives, deliverables and blueprints. Better governance requires a more skilled use of systems thinking.

Reframing the situations to be governed

At this moment in Australia, the public service (APS) faces a growing number of seemingly intractable policy problems, and the pressing need is to work out how to make governance work in conditions of uncertainty.

In 2007, the APS Commission (APSC) produced a very thoughtful review of ‘wicked problems’. This review described ‘wicked problems’ as problems that:

‘go beyond the capacity of any one organisation to understand and respond to, and [where] there is often disagreement about the causes of the problems and the best way to tackle them…key ingredients in solving or at least managing complex policy problems include successfully working across both internal and external organisational boundaries and engaging citizens and stakeholders in policy making and implementation.’

Rittel and Webber coined the term ‘wicked problems’ in the 1960s, and contrasted them with ‘tame problems’ where the main stakeholders agree on the nature of the problem and what would constitute a solution. With tame problems, they found that traditional problem solving approaches could be reliably used. In their experience, however, ‘tame problems’ were rarely present and traditional approaches often made wicked problems worse.

Walking becomes painful if the shoes no longer fit, or are wearing out. This is a good description of the failure to deliver systemic and adaptive governance in a world in which an increasing proportion of the problems that governments face are ‘wicked’. Making these ideas real in terms of public sector reform is a great challenge. Unfortunately there are very few examples of using systems thinking and practice (ST&P) to guide public sector reform.

Mythbuster: science and evidence can transform uncertainty into certainty

Rittel and Webber argue that it is morally objectionable for a ‘planner to treat a wicked problem as though it were a tame one, or to tame a wicked problem prematurely, or to refuse to recognise the inherent wickedness of social problems’.5

Whenever policymakers seek ‘objective’ evidence or answers from science to deal with a ‘wicked problem’ they are, perhaps unknowingly, attempting to tame the problem. Evidence from science and research, historical data and trends are needed but are insufficient.

We need to accept the uncertainty of many situations and develop practices for governing uncertainty. A simple reframing from the governance of certainty to uncertainty changes fundamentally the underlying predispositions and emotions of those involved and thus also the practices.

Whether situations are framed as ‘wicked problems’ or not is a choice we can make. In the Moran Review, for example, the word ‘wicked’ does not appear. Instead there are framing phrases like: ‘policy challenges in the era of globalisation are so complex, and the solutions so contested…’ or ‘policy issues are increasingly complex and interrelated…’ “Complex” is one of the new framings of choice, but while the language may change, the situations to which the language refers have not gone away. They are, if anything, multiplying and it will take a shift in thinking, the practices that result from that thinking, and in our governance structures to engage with them effectively.6

Challenge #1. Reframe public sector reform in terms of reinventing governance

Public sector reform which does the wrong thing in the right way is no longer good enough. The new Gillard minority Government needs to develop systemic and adaptive governance experiments as part of its expansion of horizontal governance (see what is meant by horizontal governance below). This shift could make a big difference as part of on-going water reform, in moving towards sustainable cities, and in the reframing of climate change responses as moving towards a post-carbon society.

The recent report Adapting Institutions to Climate Change produced in the UK by The Royal Commission on Industrial Pollution provides some useful ways to think about reform.7 The Commission identified four overlapping challenges that need to be faced when adapting to climate change: uncertainty, complexity, path dependency and equity and efficiency. Confronting these challenges, they argued, requires attention to how issues are framed, how learning is incorporated and how development and implementation of policy deals with the four challenges.

The Royal Commission’s insights apply beyond the governance of climate change. Parts of the new Murray Darling Basin Authority (MDBA) have demonstrated how systemic and adaptive approaches could begin to be introduced into the MDBA’s operations.8 However, the structures of the MDBA and the Water Act (2007) make it difficult for the organisation to move in this direction.

Alternative structures of governance

The term New Public Management (NPM) has been applied to an approach to public service reform that focuses on performance management, the devolution of managerial controls to individual agencies, the restructuring of public sector industrial relations arrangements and outsourcing of service delivery to third-party service providers.9 Kathy MacDermott has looked at the history of New Public Management in Australia and found that the approach has been internalised by the APS in ways that leave it much more vulnerable to the pressure towards politicisation. The Moran Review needs to be considered in this light.

Ian McAuley notes that the Moran Review report uses the words ‘strategy’ and ‘strategic’ 136 times in its 81 pages ‘but not once are they defined…What is meant by the term ‘strategic policy’? Is it long term and system wide? Is it just clever?’10

The report states that ‘…strategy requires having a vision over a horizon of a decade or more, not a single planning cycle. For the public service, strategic thinking means thinking how the public service will do its job beyond the next electoral cycle.’ But if strategy is just long term planning, then there is nothing to suggest that the Moran Review will achieve anything other than doing more of the wrong thing in the right way. What is missing is an understanding that good strategy depends on how situations are framed (e.g. the ‘wickedness’ of problems) and how the ‘system’ of governance is structured.11

McAuley also draws attention to the report’s use of the term ‘leadership’:

‘…another word used freely — 63 times — … again without explicit definition. For example, senior public servants are expected to “model leadership behaviours including promoting innovation and challenging unnecessary risk aversion …” This all sounds fine’ he says, ‘but note the tautology: leaders model leadership. The implicit leadership model, illustrated in the report with a neatly drawn pyramid, assumes that authority and leadership are closely intermeshed or perhaps even indistinguishable.’

Leadership is better understood as an emergent property of the interactions of individuals and context rather than as the position description or personality trait of an individual. Our current governance arrangements are for the most part designed to maintain hierarchical, command and control decision making. There are other options better suited to our circumstances.

Mythbuster: there are no alternatives to hierarchy

Gerard Fairtlough claims that there are only three ways of getting things done in organisational life.12 He refers to hierarchy as the most common and recognises the hegemony of hierarchy in our organisational practices. Hierarchical or command and control approaches are very poor at managing variety and surprise and the uncertainty of ‘wicked problems’.

Fairtlough’s second category, heterarchy, refers to multiple rulers with a balance of powers rather than a single ruler through hierarchy (an example of heterarchy is a group of partners in a law firm). In the recent UK election both New Labour and the Conservatives had policies concerned with more heterarchical modes of governance, such as fostering mutuals or cooperatives.13

Fairtlough’s third category is ‘responsible autonomy’ in which an individual or group has autonomy to decide what to do but is accountable for the outcome of the decisions. Australia has a history of innovation in governance arrangements associated with ‘responsible autonomy’ though, unfortunately, they rarely seem to have been understood as such in policy circles. Landcare was in its original form a good example of world-class innovation in governance that exemplified responsible autonomy. Unfortunately as so often seems to be the case, these bottom-up initiatives, such as Landcare, become appropriated by the state into the dominant hierarchical framework. When this happens, the creativity, innovation and emergence associated with ‘responsible autonomy is lost.

To me, responsible autonomy is the form of governance that most closely aligns with the skill set that is desirable in the 21st Century public sector. If the aim is to create the space for new solutions to emerge then there are clear advantages to purposefully creating the conditions for devolved self organisation – a key attribute of systemic and adaptive governance.

Unfortunately the essential measure of public sector performance under New Public Management and the Moran review, is that of efficiency. In systemic terms, this is only one of several measures of performance. One could add efficacy – does it work? Effectiveness – does it achieve its purpose? Equity – how are the benefits distributed? Ethicality – is it ethically defensible? Efficiency gains may come at a cost to other measures of performance. 14

Challenge #2. Serious engagement with new forms of horizontal governance

Horizontal governance encompasses a range of governance mechanisms other than vertical command and control or hierarchical approaches. The literature on the subject often stresses networks, usually of community-based organisations, but this does not have to be the case. The Victorian Centre for Excellence in Child and Family Welfare is a peak body that acts as an intermediary with government on behalf of a network of over 90 voluntary sector organisations. The heterarchical mutuals and cooperatives, and other forms of organisation based on responsible autonomy can all contribute to more horizontal forms of governance as could imaginative change within the APS itself. In the UK moves towards creating greater ‘public value’ through public sector reform can also be understood in these terms.15

Susan Phillips highlights practices that recognise interdependencies, and seeks coordination, negotiation and persuasion instead of control. To this might be added deliberation, enablement and social learning.16 Horizontal governance is significantly different from simplistic consultation, naive stakeholder participation, the provision of information or education, unethical approaches to behaviour change or a simplistic belief in market mechanisms.

In her review of Canadian experiences with innovations in horizontal governance Susan Phillips saw that governments found it very difficult to give up control. For this reason Phillips concluded that ‘it would be myth to assume that horizontal governance is being practiced as conceived’. This highlights the need for institutional and practice innovation and long-term political support. Canada’s experimentation with networked, horizontal governance came to and end when the current government, committed to hierarchical command and control approaches, came to power.17

Serious experimentation with horizontal governance needs to be immune from short-term election cycles, as it requires adequate protection from arbitrary shifts in political and intellectual fashion.

Investing in systems thinking and practice

I have argued for embedding systemic thinking and practice in the APS as a core capability within a broader systemic and adaptive governance regime.18

I am not the only one. In July 2009, Lynelle Briggs argued for the development of more horizontal accountability mechanisms (a form of horizontal governance) and the need for skills and capabilities for APS staff in:19

(i)             problem framing and boundary setting

(ii)           generating fresh thinking on intractable problems

(iii)          working across organisational and disciplinary boundaries

(iv)          making effective decisions in situations with high levels of uncertainty

(v)           tolerating rapid change in the way problems are defined, and

(vi)          engaging stakeholders as joint decision-makers (not just providers or recipients of services).

Other research has highlighted the need for systemic capability for effective leadership and sustainability management. In ‘Exceeding Expectation: the principles of outstanding leadership’ research undertaken by The Work Foundation (UK) shows that outstanding leaders ‘think systemically and act long term… Outstanding leaders achieve through a combination of systemic thinking and acting for the long term benefit of their organisation. They recognise the interconnected nature of the organisation…’

Geoff Mulgan, writing in 2001, identified seven factors that increased the relevance of systems thinking to policy making and to the functions of government. These were:

1. the ubiquity of information flows, especially within government itself

2. pressure on social policy to be more holistic

3. the growing importance of the environment, especially climate change

4. the connectedness of systems and the new vulnerabilities this brings

5. globalisation and the resultant integration of previously discrete systems

6. the need to be able to cope with ambiguity and non-linearity

7. the understanding that planning and rational strategy often lead to unintended consequences.

He concluded that out of all these factors has come a ‘common understanding that we live in a world of complexity, of non-linear phenomena, chaotic processes, a world not easily captured by common sense, a world in which positive feedback can play a hugely important role as well as the more familiar negative feedback that we learn in the first term of economics.’ He also recognised that ‘so far remarkably little use has been made of systems thinking or of the more recent work on complexity’ and that in part this is ‘to do with the huge sunk investment in other disciplines, particularly economics’.

The trends and imperatives recognised by Mulgan have, if anything, become more pronounced since 2001.20 However,  so far little has been done in Australia to respond to them and it is not clear that key decision-makers would know how to do so. There is a tendency within government to limit the definition of need to skill development,21 but research demonstrates that to do this is to miss the point entirely; skills are necessary but not sufficient unless developed within a theory-informed organisational ‘ecology’ that is systemic and adaptive.

Challenge #3. Invest in systems thinking and practice at the same time as managing governance reform systemically

Evidence of systemic governance failures

A major study by Stein Ringen looked at what the UK New Labour party achieved in terms of its own social policy objectives over the ten year period 1997-2007.22 Ringen studied the flagship policies of child poverty, education, social justice and health. He found that they had achieved ‘absolutely nothing’. His study provides strong evidence for the systemic failure of UK governance by highlighting the problems that emerge when governments adopt a command and control approach and fail to mobilise citizens or stakeholders in policy development and implementation. His sobering conclusion is that no UK government, of any political persuasion, can currently get done what it is elected to do.

Ringen’s findings illustrate a situation that can be understood as a ‘structure determined system’. It is not only governments that are constrained by the system in which they operate. Take utility companies that deliver social goods – such as water or energy. Most now have as a main measure of performance the profit derived from sales of water or energy and associated services. The system is not structured to recognise that in today’s world the main social benefit from water and energy comes from how little water or energy is used and the efficiency of its use. We create measures of performance which conserve particular structural relations that give rise to particular forms of organisation. Only by inventing new organisations with different structural relations can we break out of the constraints that the old structures impose on our thinking and behaviour.

Challenge #4. Seriously examine Ringen’s prescriptions for the reform of the British ‘constitution’ in the Australian context

Ringen argues for:

•           a return to genuine cabinet government, breaking the power that has moved to the Executive, which has distorted the historical ‘constitution’ on which the Westminster system is built

•           the re-invention of local governance, something very different to local government as we know it (this can be understood as a new form of horizontal governance)

•           public funding of political parties through a citizen-based voucher system and the abolition of all donations to political parties, thus creating a level playing field sensitive to citizen interests and totally transparent.23

Innovating in systemic and adaptive governance

Our current governance system does not have the variety that is needed to maintain a viable system. Ringen’s analysis looks increasingly relevant to the Australian context. In reinventing local governance (horizontal governance) we need bold institutional arrangements which protect the self-organising and emergent nature of the local and which is coupled more fruitfully with the existing vertical model that underpins our form of representative democracy. There is no blueprint for doing this – we have to invent new ways forward. By framing the challenges in ways that embrace uncertainty and complexity we can relegate command and control strategies and optimisation strategies to where they rightfully belong – subsidiary to systemic and adaptive governance.

What doesn’t work: joined up government, targets and ‘deliverology’

In the UK New Labour’s catch cry of “joined-up government” was built on understandings of the ‘third way’ as articulated by Anthony Giddens. It espoused a desire to increase the extent of joint working between different parts of government and to identify innovative ways of delivering public services which served their Better Government agenda as well as reducing the cost of delivering public services and/or improving the quality and effectiveness of services delivered to the public.

As experience in the UK demonstrates, the notion of ‘joined-up thinking’ and ‘joined- up government’ became, conceptually and practically, an empty cliché. It can be argued, joined-up government failed because of inadequate conceptual and praxis skills and poor institutional settings to enact joined-up government. Targets and ‘deliverology’ in particular undermined New Labour’s espoused intentions.24

The ‘targets culture’ that became endemic in the British New Labour government as well as widespread in other areas of government and corporate life. The development of a targets culture is a good example of privileging systematic approaches over systemic, sometimes at considerable social cost.

As Simon Caulkin, The Observer’s former management editor, rightly observed:

‘The Health Commission’s finding last week that pursuing targets to the detriment of patient care may have caused the deaths of 400 people at Stafford between 2005 and 2008 simply confirms what we already know. Put abstractly, targets distort judgment, disenfranchise professionals and wreck morale. Put concretely, in services where lives are at stake – as in the NHS or child protection – targets kill.’25

Simon goes on to say:

‘Target-driven organisations are institutionally witless because they face the wrong way: towards ministers and target-setters, not customers or citizens. Accusing them of neglecting customers to focus on targets, as a report on Network Rail did just two weeks ago, is like berating cats for eating small birds. That’s what they do. Just as inevitable is the spawning of ballooning bureaucracies to track performance and report it to inspectorates that administer what feels to teachers, doctors and social workers increasingly like a reign of fear.’

John Seddon has been an erudite and consistent critic of New Labour’s commitments to targets and ‘deliverology’, a term coined by Sir Michael Barber, a former Downing St insider.26 Unfortunately ‘deliverology’ seems in danger of breaking out in Australia.  Responding to criticism of failed service delivery, the former Prime Minister Kevin Rudd’s strategy for the future had all the hallmarks of ‘deliverology’ gone mad. He said:

‘We need to lift our game, I need to lift my game, in terms of delivering on these undertakings… The key thing for us is to get on with the business of delivering to the Australian community, in critical areas of need, in health, in education, in real action on climate change as well… This is critical for the future, and we’re taking a pounding because we haven’t been up to the mark so far… I think people are becoming disappointed at the pace of the delivery of the commitment that we have made.’27

One can be sympathetic at the sentiments that appear to lay behind this act of mea culpa, but in its framing and in its prescription, it is a recipe for ongoing systemic failure.

An agenda for future public sector reform

  1. Our concept of the reform process needs to be expanded to include the need to reinvent governance
  2. Those responsible for managing public sector reform need to reframe the issues. The reform agenda as currently framed – as one of better administration, service delivery, narrowly defined efficiency and enhanced command and control by the executive – is a recipe for poor governance
  3. Intractable policy issues require more systemic approaches; governance arrangements are needed that broaden our definitions of problems by opening up the process to a wider range of perspectives
  4. Investment in the skills of systems thinking and practice is an urgent priority that needs to run in parallel with the invention of new institutional arrangements that are conducive to engaging with and managing complex, ‘wicked’ situations
  5. New experiments in horizontal governance are urgently required. A good starting point would be to reinvent catchment management authorities so that they operate nationally to govern water, rivers and human livelihoods as a coupled social-ecological system. Such authorities would work most effectively with an income stream (e.g. a rateable base) that is independent of government short-termism. A similar model needs to apply to Australia’s cities.28


  1. I first heard this distinction made in a presentation by the late Russ Ackoff.
  2. There are two adjectives that come from the word system – systemic means pertaining to a whole, thus holistic; systematic refers to linear or step-by step action.
  3. I will refer to Ahead of the Game: Blueprint for the Reform of Australian Government Administration, Commonwealth of Australia 2010 as the Moran Review after Terry Moran, Head of the Department of Prime Minister & Cabinet who chaired the review.
  4. For example, see the recent set of systems books co-published with Springer for The Open University MSc on Systems Thinking in Practice:
  5. Rittel, H. and M. Webber (1973) Dilemmas in a general theory of planning, Policy Sciences, 4, 155-169.
  6. Ison, R.L. and Wallis, P. (2009) Submission to the Advisory Group on the Reform of Australian Government Administration Available at:
  7. Summary available at:
  8. Ison, R.L., Russell, D.B. & Wallis, P. (2009) Adaptive water governance and systemic thinking for future NRM – action research to build MDBA capability. Monash Sustainability Report 09/4. Monash University: Clayton 68p.
  9. MacDermott, K. (2008) Whatever happened to ‘frank and fearless’? the impact of new public management on the Australian Public Service.  ANU e-Press, Canberra.
  10. McAuley, I. (2010) Grey Suits and Vague Language.
  11. McAuley himself observes how unfortunate it is that the Blueprint authors have ‘overlooked the work of Ron Heifetz of the John F Kennedy School of Government who, over the last 30 years has articulated a practical division between leadership and authority which is particularly relevant to public policy.  What Heifetz terms “adaptive leadership” is concerned with raising difficult issues, which may require people to undergo difficult changes in their assumptions, ways of thinking, lifestyles or careers. Those in authority, such as departmental secretaries, have a raft of difficult administrative tasks at hand. They are often working within a constrained field, particularly when they are accountable to a government sensitive to opinion polling and to media outlets that are always ready to capitalise on the public’s fear of change.
  12. Fairtlough, G. (2007). The Three Ways of Getting Things Done. Hierarchy, Heterarchy & Responsible Autonomy in Organizations. Axminster: Triarchy Press.
  13. See Brindle, D. et al (2010) in The Guardian, 20 April 2010. Available online:
  14. From this perspective commentators like Alan Moran who is the Director, Deregulation, at the Institute of Public Affairs just do not ‘get it’.  See his claims in: ‘Public service needs to improve productivity’ (2010) in The Herald-Sun, April 3rd 2010. Available online:
  15.; see also Mulgan, G. (2009) The Art of Public Strategy: Mobilizing Power and Knowledge for the Common Good. Oxford University Press, Oxford.
  16. Phillips, S. (2004) The limits of horizontal governance.  Voluntary sector-government collaboration in Canada.  Society & Economy 26, 383-405.
  17. There is no mention of public value or horizontal governance in the Moran Review.
  18. Ison, R.L. & Wallis, P. (ibid)
  19. See Briggs in Australian Public Service Commission report Contemporary Government Challenges: Delivering Performance and accountability and the intersections with wicked policy problems. Available online: Briggs argued for removing unnecessary obstacles to innovation, to improve the quality of outcomes in complex and uncertain policy areas, and developing more variegated accountability and performance management arrangements, better suited to new modes of policy implementation.
  20. Mulgan, G. (2001) Systems Thinking and the practice of government. Systemist, vol 23(SE) Nov. 22-28.
  21. In the Moran Review the need to tackle systemic workforce challenges such as skills shortages is identified. Undoubtedly this is important but it is one of the few uses of the term systemic and it is in relation to skills.
  22. See
  23. See also
  24. See:
  25. Caulkin, S. (2009) This isn’t an abstract problem. Targets can kill. The Observer Sunday 22 March 2009. Available online:
  26. Seddon, J. (2008). Systems Thinking in the Public Sector: the failure of the reform regime…and a manifesto for a better way. Axminster: Triarchy Press.
  27. Johnson, C. (2010) We took our eye off the ball: Rudd. Available online: 01 March 2010
  28. He would like to acknowledge the assistance of Dr Phil Wallis and Mr Ben Iaquinto from Monash University in preparing this chapter. Also that of Dr Greg Smith and Fiona Cameron.


Ray Ison

Your Comments

3 Comments so far

  1. Colin Sanderson says:

    There is plenty within this article which can be translated into the relatively simple terms of “The Art and Science of Government,” “…of Management,” “…of Leadership,” etc. Whether you would find it attractive or beneficial to think in these terms, and whether you would be willing to contribute to doing so is another matter. It may seem that to do so is to reduce the content of your piece, with its careful analysis and employment of particular terminology. Yet, paradoxically, I would argue that it allows one better to think in terms of an even bigger picture. It is, of course, all a matter of wholes and parts. I would like to be in touch, but shall not go into details here. Please look at My Profile on LinkedIn and consider. Thank you very much for this posting. I found it most helpful.

  2. In the context of the theme of your book “Ideas that Australia needs now” the chapters on Strengthening Democracy and Governance that Works only touch on aspects of much more important issues. The recent election have brought these out but these chapters don’t actually deal with them. The chapter on election funding and advertising is relevant but the more important problems with the electoral system, which has cemented the two-party tyranny in place, are not even mentioned, the electoral system itself and compulsory voting.
    The other chapter largely deals with the public service, dwells extensively on definitions and meanings but says nothing about governance in a wider sense, e.g. the constitution, federal-state relations, problems with the Westminster system, the Republic. In other parts of the book these public issues of governance are also not considered.
    I find it hard to believe frankly.
    Klaas Woldring


  1. Changing The Conversation | CPD - 19. Aug, 2010

    [...] is on offer. Staring them in the face is the systemic failure of governance that I alluded to in my chapter of More Than Luck, “Governance That Works: why public service reform needs systems [...]

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