Internal or external? What to consider when deciding on firm learning

Staff inside the unit start scrambling while contractors chase invoices pleading for payment. Essentially, confusion takes over the team. County customers queue at ward offices and demand action.

However, the two sides point fingers at each other while infrastructure continues to fail. A month later, the director calls a crisis meeting to uncover why all the well-intentioned hard work failed to provide better service for county citizens.

Counties across Kenya face similar choices about who should deliver public services and how learning should occur during service delivery. Leaders often treat governance choices as singular one-off events. But effort alone does not solve problems.

Real life rarely rewards hope without specific task re-design. Performance only improves when people learn during action taken and when public or private structures invite intentional learning rather than block or ignore it.

Careful choices about roles, incentives, and information flow can convert effort into actual improvement that county citizens can see and feel.

New research by Louis Mulotte and Simon Porcher investigates the concept of learning by doing as it relates to inside public service delivery. It looks at a rare comparison between similar public entities.

The scholars track hundreds of French municipalities that decided to either keep work inside city or county-equivalent departments or instead contracted out to private providers for water services during a 10- year window.

The study focused on operating performance through billed water over total water supplied, which is a way to ascertain how well different teams reduce water leak losses.

The research then examined how experience over additional years can shape outcomes under each internal or external structure choice while factoring in and controlling for complexity and political uncertainty.
Even though the research was not conducted in East Africa, patterns emerge that could provide useful clarity here.

First, more actual time on the job generally improves operating performance in both internal and external structures. However, each extra year only yields smaller incremental gains since teams start with the easy pipe and structure fixes first and then have to deal with the harder problems later on.

Second, external service provider contracting often delivers steeper learning curves early because heavy financial incentives push providers to search out and find efficiency quickly and then lock in routines that reduce losses.

That advantage, though, weakens depending on technological complexity rising or when political uncertainty clouds a firm’s future planning and leads them to proceed cautiously with investments that may or may not have longer term yields.

Third, in more simple municipal environments with quite clear causes and effects of decisions, the highest incentives do indeed fuel rapid service delivery improvement.

But in more complex networks with many interdependent parts or in volatile political climates, internal teams often learn better because of their unique proximity, tacit knowledge, and stable priorities that support a more comprehensive trial, error, and refinement approach to problem solving and working.

Not only water boards and water companies, but also county leaders for other types of service delivery can notice some direct lessons that impact their respective portfolios.

Treat internal or external structure choices as a learning engine rather than a static decision. If straightforward tasks with clean interfaces, short feedback loops, and transparent results are involved, then leaders should consider external contracting and design contracts that can reward measurable loss reduction, quick data sharing, and the capability transfer to parastatal or county staff at a point in the future.

But for tangled complicated situations and networks with many interdependencies, legacy baggage, and fragile interfaces, then the research recommends that leaders should favour inhouse internal provision of service delivery that anchors multi-skilled crews, codifies and captures local know-how, and protects continuous experimentation without fear of contract changes accompanying political changes.

Leaders must align the internal or external structure with the learning challenge, not with any type of ideology or habitual practice.

Leaders who match governance to the nature of the work can avoid Mwanaisha’s above predicament. Structure that incorporates intentional learning beats structures that only allocate team effort. Working hard is not always working smart.

Have a management or leadership issue, question, or challenge? Reach out to Dr. Scott through @ScottProfessor on Twitter or on email [email protected] .