Councils need to adjust – It’s time to work on our relationships

Councils need to adjust traditional relationships and responsibilities to establish successful new ventures through commercialisation.

The freedoms and flexibilities associated with newly-formed commercial organisations can create tensions when the commissioning authority is reluctant to release controls.

New commercial ventures require dedicated resource from the outset. Limited access to resources, data and information will impact the pace of change, scope of the new model and asset transfers.

A council’s stakeholder strategy may not be the same as the new venture’s, with each party seeking potentially to secure different outcomes. It is therefore critical to ensure responsibilities are aligned correctly and appropriately with new roles. All stakeholders should collaborate to agree a transition plan with distinct and separate milestones, outputs and outcomes.

Before launch, future back-office support arrangements, and transfer of asset ownership, should be agreed. The authority may determine the need for a continued relationship because of complexities with overhead disaggregation. While this relationship may provide initial security for the new organisation, it could also limit the venture’s plans for new partners.

All stakeholders should collaborate to agree a transition plan with distinct and separate milestones, outputs and outcomes

Councils may seek to exercise influence through the governance structure if a new entity is established. There should be no statutory restrictions preventing participation in the governance structure. This would impact the legal form, scope of service transformation, business growth, leadership and plans for future investment.

Once launched, control of the venture may manifest itself in a variety of ways relating to the commercial nature of the relationship. This might include withholding payment for outcome failures or termination for serious default. The commercial venture will require a contract that is not overly bureaucratic or unfocused, allowing it to develop and improve its services, and ensure financial sustainability. If ownership of intellectual property is retained by the council, it could stifle future use and diversification into other areas.

For each commercial venture, the new relationship will be forged in a unique way. There is no single ‘right way’ to manage this set of changes and so it is important to consider both the challenges and the solutions together.