How to avoid a disappointing marriage

By Peter Griffin 16/03/2012 12

Wellington is abuzz with news of the super ministry, which was unveiled yesterday and will have major implications for a large number of public servants.

Some leaders in the science system have commented about the implications of the Ministry of Science and Innovation being bundled into the new Ministry of Business, Innovation and Employment. Fellow Scibloogger, Professor Shaun Hendy, who is President of the New Zealand Association of Scientists, said the merger could have major benefits on the economic development front, but may marginalise important environmental and health research that didn’t have an immediate economic outcome.

Imergern a press release he is quoted as saying:

’We know that more scientific research is needed to grow industry, manufacturing and exports. But large components of the science system are concerned with the broader view, such as environmental and health science research, areas that do not often deliver an immediate payoff but which can be immensely valuable over longer time frames. Further change such as this is likely to add more uncertainty to funding structures and to science career paths, especially for younger scientists’.

The Prime Minister’s Chief Science Advisor, Sir Peter Gluckman, also weighed in, saying:

’This reorganisation highlights the role that science and science-based innovation can play in a country’s development, be it through direct impact on greater productivity from enhanced services, advanced manufacturing and the primary industries, or indirectly through greater environmental sustainability and social development.

’It will be important that the new Ministry continues to give focus to the broader ways in which science advances New Zealand and I have no doubt that will indeed be the case.’

He points out also that the grouping of science, skills and economic development under one roof is not uncommon overseas. Indeed, the UK’s Department of Business, Innovation and Skills was formed in 2009 as the result of a merger, one of several the coalition government has undertaken there in a drive to reduce national debt. Australia’s Department of Industry, Innovation, Research, Science and Tertiary Education came into being officially just a few months ago. If anything stands out as unique about the merger here is that it did not include tertiary education.

It is too early to tell if these major science-business mergers in the public sector have worked particularly well, but there’s plenty of evidence to suggest that mergers in general are tricky to get right. This merger study Disappointing Marriage: A Study of the Gains from Merger is often cited, though looks at the the private sector.  In anticipation of a large amount of public sector merger activity, Grant Thorton and the Guardian newspaper in 2010 commissioned a survey of 600 directors and senior managers to gauge attitudes in the public sector towards mergers. In the report’s intro the authors note:

While few precedents exist and little practical guidance on successful implementation is available, there is copious evidence that reorganisation and restructuring often result in failure. This is not a problem unique to the public sector. Indeed, a review of the literature shows that between 50-80% of private sector mergers disappoint, with many destroying shareholder value.

Gramt Thornton’s advice for a successful public sector merger…

Plan — ensure that the appropriate people, skills and plans are in place, available to support implementation. Seek specialist advice (legal, financial) when appropriate to avoid any unintended consequences and costly mistakes.

•Cost — consider the full cost of implementation and ensure that a budget has been agreed and is in place before implementation begins.

• People — focus on the integration of organisational cultures and ways of working, as well keeping staff and other stakeholders informed throughout the process.

• Leadership — take the tough decisions early, making sure that the leadership team is in place to take ownership of the process and that clear incentives are in place for management to deliver change.

• Benefits — be clear about the benefits, risks, and timescales of change.

Some of the survey results from the report give an insight into the perceptions of mergers in the public sector and what leaders in the sector see as the desired and realistic outcomes of mergers.

merger fig 1

merger fig 2merger fig 3A fair amount of cynicism then in the higher ranks of public departments about the potential for positive change from merging Government departments, which may well say more about human nature than the merits of creating super ministries.

12 Responses to “How to avoid a disappointing marriage”

  • This can’t help but bring to mind the (apparently incorrectly) quote attributed to Pertronius:

    We trained hard … but it seemed that every time we were beginning to form up into teams we would be reorganized. I was to learn later in life that we tend to meet any new situation by reorganizing; and a wonderful method it can be for creating the illusion of progress while producing confusion, inefficiency, and demoralization.

    Also see:

  • Nice to see someone remembers the original Star Trek, Jean :-)

    I was concerned to see so little mention of science in the press releases around this plan to go ‘where no government department has gone before’ 😉

  • We come in peace, shoot to kill.
    Always going forward, we can’t find reverse
    Worse than that he’s dead Jim.

  • Back to the serious bit. Does the fact that tertiary education is not included mean that the universities may have influenced the merger? The loss of the word ‘science’ from anywhere in the title is……interesting. Should it also be concerning.

  • I have no idea where the idea that science is not in the title. There is no title as far as I can find.


  • Ross,

    the title Peter mentioned was the new “Ministry of Business, Innovation and Employment” – look no Science.

    The universities will sit under education, with the tertiary education minister, I think.

    Also, my fear is that science will be looked at as only something which is there to serve business, rather than as an important area in its own right, and I think Shaun Hendy’s comments above hint at a similar concern.

    With regards to merging the departments some of the downsides will be:
    1) the cost of rebranding every sign, business card, website etc is not cheap.
    2) larger organisations often are slower moving, with increased layers of bureaucracy, and a lack of clarity of who is responsible for what. It seems rather ironic that innovation, which requires agile and quick thinking might be trapped in a behemoth of bureaucracy.
    Of course, if they are smart the new ministry will be composed of independent sections which communicate with each other efficiently when they have to, but which are allowed to act independently and with agility when dealing with their own areas of expertise.

  • Phew. I was covering my behind with that retraction….I had this mad moment of searching for the title and couldn’t find it for some reason. It’s everywhere now.

    MoBIE dicked.

  • Also, my fear is that science will be looked at as only something which is there to serve business, rather than as an important area in its own right, and I think Shaun Hendy’s comments above hint at a similar concern.
    And I suspect that fear is shared by just about every scientist in the country.

  • Making innovation the centre-piece of science funding policy carries substantial risks. Commercial innovation arising from scientific research is to be much sought after and much applauded when it happens, but there can be a significant opportunity cost when innovation is demanded from all research; that cost is good science. The problem is that a great deal of innovation fails (in the sense of high commercial returns) through no fault of scientists. When scientists are sent chasing after every innovation will-of-the-wisp, and confined by confidentiality agreements, patent applications etc they are diverted away from doing good, open science. One of the paradoxical things about innovation is that if scientists do the best science they can, innovation is more likely in the long term – and there is sound knowledge of NZ to inform policy in return for public expenditure.

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