Value creation in public services

Designing a public service that provides value to users and citizens: without a clear idea of the meaning of “value” and its constituent elements, this is a difficult endeavor. 

Till today researchers exploring this question have focused on production aspects of public services. But lately attention has been turning to service consumption, premised on the notion that these services do not have intrinsic value, but rather a “value promise” which only materializes when citizens use them. In other words, it is only when services are utilized that their value becomes tangible. So, we are transitioning from the traditional belief that public administrators are the ones to determine service quality to a more modern view: citizens alone can create value by integrating the resources provided by public bodies with their own needs and in relation to the social norms of the context in question. This perspective forms the basis of a new three-dimensional model of value creation within the ecosystems of public service.   

This model is described in a recent study. The three dimensions are the loci where value is created, the constituent elements of value creation, and the processes that lead to value creation (or destruction).

Within the context of public service, the loci of value creation may be the individual citizen, the society, or the ecosystem of public services. For every citizen, a service only takes on value when it’s used, as we said before. Take a school, for example. It has no value (beyond its capital value) until it fills up with teachers, students, and learning interactions. Yet this dynamic of value creation is different that what we find with a typical commercial service. In fact, in the public sphere some people may be coerced users (as is sometimes the case with schools). What’s more, if there are very many end users (all with different – or even conflicting – personal definitions of value), value creation can take on an element of negotiation that would be unusual in commercial services.

Public services do not respond solely to the needs of individuals, but also to the needs of society (streetlights are one example). But the value deriving from a public service for the common good and a service for the individual citizen may not always align, which is why public administrators find themselves balancing individual value and collective value.

Lastly, value creation happens in service ecosystems. By ecosystems, we mean complex, interconnected systems of services that include specific components (public bodies, citizens, technology, service provision processes, and so forth), the surrounding context and the social values that give them legitimacy.

The elements of value that constitute public services are five. First comes user satisfaction with respect to how they experience the public service, and how this affects their wellbeing. This experiential aspect can influence the impact of the public service on consumers and forge their future expectations. The second element has to do with the medium-term effects and long-terms impacts of a service. The third element encompasses the influence of the service on the entire life of the user. In fact, even if a public service is designed to satisfy a specific need (say education or community development), often that service (especially if it’s a human service) is so pervasive it goes far beyond the original intent. The school life of children, for example, shapes how their personalities evolve, the opportunities they have and the personal relationships they create. The fourth element is the value created by the public services that generate in citizens and in the community the ability to build capacity to resolve their future needs. And the final element is called “societal value”: public services not only provide value to individual users of those services, but also to society as a whole.

Value creation in a pubic service happens through a set of interactive production and consumption processes. This model distinguishes between explicit production processes (i.e. aware and active, taken on by one or more users) and two implicit consumption processes (independent of the will or action of users, and in some cases even unconscious). Explicit value creation processes are the “co-design” which engages citizens in designing public services on the basis of their prior experiences. “Co-production” instead means that by using a service, citizens can contribute to both enhancing its performance and its future development. This is a collaborative process which calls for the active cooperation of public entities, their managers, and service users.

Implicit value creation processes, instead, are the “co-experience” of the value of service use and the “co-construction” or intrinsic value. The first is the process by which the experience of a public service creates (or destroys) value in the whole life of a user. This is always experiential and subjectively evaluated. The second has to do with the values and experiences that citizens bring with them when they approach a public service, and the way that service responds to their expectations and their social and economic needs.

This study provides food for thought along with practical tools that public managers can use to formulate policies and effective design, and to plan and evaluate the role they play in creating value for citizens. The model presented centers on the capacity of services to create value externally, for citizens and for the society as a whole, rather than fixating on improving efficiency internally. For this reason, our model may be a useful tool for evaluating existing services and a constructive means of support for planning future services.  

The external orientation of value creation does not constitute an alternative to either realizing societal values expressed in public policy, or managing organizational performance of public bodies. Instead, a balance must be struck between these three highly integrated elements.