Commercial Masterclasses

1. Commercial Masterclasses Day One Presented by John Gillespie (ACEVO) and David MacDougal AVANTA Written by ACEVO, AVANTA, Capita, Ingeus, NAVCA, NCVO, Serco and Social Enterprise UK With additional support from Aylesbury Partnerships and James Barrett Consulting

2. Introductions • The trainers • Housekeeping • Introductory exercise

3. Objectives • Confident knowledge on • The emerging context for public service delivery • The role and mission of your organisation within this context • The emerging options for partnership • The role and quality of governance • Skill competencies to • Identify and build appropriate relationships • Assess opportunities in supply chains • Manage efficient bidding processes • Recognise and manage financial risks • Negotiate effectively • Competencies to measure progress

4. Style of training • What do we mean by a masterclass? • Commercial sector case studies – testing translation of process • Discussion-based learning – making the most of delegates • Emphasis on delegate questions • What additional support is there? • Toolkit • Website materials • How do we put this into practice? • Discussion and exercises • Competencies to measure progress

5. Timetable • Day one • Introductions and objectives • Policy and procurement context • Understanding supply chains and the commercial sector • Exercises 1 and 2 • Lunch • Exercise 3 • Building relationships • Exercise 4 • Bid or no bid • Exercise 5 • Summary and reflections

6. Timetable • Day two • Recap • Governance and performance management • Exercise 6 • Modelling financial risk • Exercise 7 • Managing bid effectively • Exercise 8 • Negotiation • Exercise 9 • Summary and reflections • Competencies and evaluation

7. Agreements for working together • Confidentiality: Chatham House rules • The masterclass format means everyone has something to contribute • Respectful challenge • Respect for diversity of needs • Allow the facilitator to move discussion on • Time given to reflect and test learning • Phones turned off 7 – Commercial Masterclass, Day One

8. Context:Policy and Procurement

9. 9 – Commercial Masterclass, Day One

10. Policy Context (I) • Changing funding environment • Big society agenda • Open Public Services • Increasing opportunities for VCSE in public service delivery • Plurality (eg. mutuals, NHS restructure) • Continuation of commissioning • Localism – new commissioners (eg. PCCs, CCGs, HWBs) • New investors

11. Policy Context (II) • New funding structures • Payment by Results • Personalisation and choice • Integration of budgets • Outcomes focus • Social value • Information and accountability UNCLASSIFIED

12. Procurement context Evolving • Now

13. Examples of Different Contracting Structures Work Programme (e.g. Ingeus Justice Sector (e.g. Serco, Doncaster) Personal Independence Payments (e.g. Capita) Prime Prime Prime Advisory Board End to end Sub-contractors Sub-contractors Direct Delivery Area 2 Direct Delivery Catch 22 S1 S2 S3 Specialist sub-contractors S1 S2 S3 S4 S5 S6 • Specialist sub-contractors bring: • Specialist capability • Proven track record • Area based sub-contractors bring: • Geographical presence/knowledge • End to end capability • Primes bring: • Scale (able to carry risk) • Governance • Service integration & delivery skills 13 – Commercial Masterclass, Day One

14. Local commissioning context • Content to be added from host 14 – Commercial Masterclass, Day One

15. Understanding Supply Chains(& the commercial sector)

16. Commissioning system model Commissioner VCSE Prime Commercial Prime VCSE Specialist VCSE Specialist VCSE Specialist VCSE Specialist VCSE Specialist VCSE Specialist 16 – Commercial Masterclass, Day One

17. Exercise one: perceptions and motivations • As a group, in your role discuss and write down: • How do you see yourselves? (Your culture, values, concerns, attitude towards getting involved?) • How do you see the other groups? (Their culture, values, concerns, attitude towards getting involved?) • Be prepared to feed back to the whole group 17 – Commercial Masterclass, Day One

18. Private Sector Expectations Why they are involved What they want from the VCSE Able to bring insight and expertise Evidence competence and achievement Open, realistic and motivated Commercially attuned Able to help us to help you (and vice versa) Aligned governance/decision making People who are easy to work with • Shareholder value • Deliver quality and value • Outcomes • End to end oversight • Risk placement • Commercial best practice ie communications, performance management • Meet CSR objectives • Mission ie find employment for people

19. Selling: the negative connotations Cold calling Hard selling “Selling is the process by which you persuade people to buy things they don’t want or need” Win at all costs Loss leader Selling short

20. ….a more positive view of selling Insight Relationship “Selling is the way that you help customers to buy products or services from your organisation” Consultative Solution Customer-centric 20 – Commercial Masterclass, Day One

21. LUNCH

22. Exercise thwo: making it work • As a group, in your role discuss and write down: • What do you need most from the other groups to make this model work? • What might they need most from you? • Be prepared to feed back to the whole group 22 – Commercial Masterclass, Day One

23. Building Relationships

24. Why do relationships matter? Indicative Timeline -Y3 -Y2 -Y1 Go live Commissioner/Client Recognising needs Formulating strategy Procurement strategy Procuring Evaluating options Private Sector Horizon Scanning Shaping Pre-bid Engagement Bidding Ongoing Qualification Go-live 24 – Commercial Masterclass, Day One

25. Steps to build relationships

26. Principles to building relationships • Plan ahead before making contacts • Saves time • Leads to better outcomes • Enables you to measure success • Be realistic about what you can achieve • Be clear about the reputation you want to project • Involve staff, trustees and engaged stakeholders

27. Relationship Managing • Relationship Manager: challenges of the role • The ‘shop front’, the brand, the access point • Expectations are high, and not achievable • Prioritising the long-term over the short-term • Reactive, hard to size portfolio • New or existing customers? • Demanding or deserving customer? • … you will never get all this right: be realistic

28. TACT: ‘customer’ concepts in practice Drawn from a case study of the VCSE fostering agency, TACT Commercial Masterclass, Day One

29. How to map Stakeholders… John Smith Sales Lead NG TH TH NG Tom Jones Supply Chain Mgr Mandhese Patel Solutions Lead Mary James Commercial Lead Supporter SR TH Undecided Jean Smith Financial Modeller Tommy Steel Risk Analyst Negative ? Don’t know ? NG Our relationship owner

30. Positive perception Exercise four: valuing relationships Sales Lead Solutions Lead Risk Analyst Influence on appointment Supply Chain Manager Commercial Lead Financial Modeller Negative perception

31. To bid or not to bid?

32. Mission-Money Matrix on mission prime target (love it here) majority activity proceed with caution stay out! less money more money off mission

33. What opportunities are available? • Grants • Block Contracts • Preferred Provider Frameworks • Spot purchasing (eg Individual service Funds) • Payment by Results (inc Bonds) • Prime / sub models (often private – VCS) • Consortia (SPV, hub and spoke)

34. To bid or not to bid? • Suitability of contract terms, specification and payment • Supply chain conditions • Market positioning (relationship building) • Future opportunities • Practice in the new market • Competition and partnership options? • Viability next time round? • Provider and/or influencer • On-going suitability for mission and business • Portfolio (cross-subsidy; core funding) • Sustainable funding (non-statutory options) • Investment • Sufficiency and suitability of funding 34 – Commercial Masterclass, Day One

35. Suitability of contract terms, specification and payment • Consider: • Contract terms (*we cover this more, later) • Mission fit • Likelihood of a win (SWOT) • Competitor analysis • What value you bring • Business viability (financial risk) (*we cover this more, later) • Risks that you own and variables you don’t • i.e. contract volumes • Supply chain make up 35 – Commercial Masterclass, Day One

36. Control over Success Factors • Many risks within PbR contracts are inevitably outside your control • Understanding their likelihood and impact is crucial • Understanding incentives helps predict your partners’ focus areas Great delivery ProjectManagement In-House Intervention A In-House Intervention B Key: Governance Internal Information Management External Influence / Control Programme Management Partner Intervention Referral numbers Risk assessment Referral quality Impact on Outcomes

37. Exercise: assessing opportunities • In pairs, discuss • What are the variable factors in a supply chain? • Given limited resources, which factors do you prioritise learning about before you commit to a contract? • Be prepared to feed back to the group Commercial Masterclass, Day One

38. Working with a prim: things to consider • Relationship: values fit? • What role do you want to (& can you) play? • Can you meet the requirements of the Commissioner? • Can you meet the specific requirements of the Prime Contractor? • Review all the terms • Minimum delivery & performance expectations • Financial modelling • Key contractual requirements • Information Security • TUPE • Implementation timescale Don’t be afraid to ask questions!

39. Summary and reflections

40. Today’s modules • Policy and procurement context • Understanding supply chains and the commercial sector • Building relationships • Bid or no bid

41. Tomorrow’s modules • Governance and performance management • Modelling financial risk • Managing bid effectively • Negotiation • Competencies and evaluation

42. Day one reflections • Discuss in pairs • What went well for you? • What was less helpful (and how could we change it)? • What do you need to get the most out of the next day’s programme? • What has this inspired you to explore further after the Masterclass programme? • If you wish, you can feed back key points to the whole group. 42 – Commercial Masterclass, Day One

43. Thank you from: • And to the Office for Civil Society, Cabinet Office for funding this Programme.

44. Commercial Masterclasses Day Two 8thMay 2013, London Presented by John Gillespie, ACEVO and AVANTA Written by ACEVO, AVANTA, Capita, Ingeus, NAVCA, NCVO, Serco and Social Enterprise UK With additional support from Aylesbury Partnerships and James Barrett Consulting

45. Objectives • Confident and knowledgeable on • The emerging context for public service delivery • The role and mission of your organisation within this context • The emerging options for partnership • The role and quality of governance • Skilled and competent to • Identify and build appropriate relationships • Assess opportunities in supply chains • Manage efficient bidding processes • Recognise and manage financial risks • Negotiate effectively • Competencies to measure progress

46. Introductions • Welcome back! • Recap on yesterday • Policy and procurement context • Understanding supply chains and the commercial sector • Building relationships • Bid or no bid • Introductory exercise

47. Timetable • Day two • Recap • Governance and performance management • Exercise six • Modelling financial risk • Exercise seven • Lunch • Managing bid effectively • Exercise eight • Negotiation • Exercise nine • Summary and reflections • Competencies and evaluation

48. Governance and Performance Management

49. What is performance management? • In competitive markets performance is crucial • In publicly-funded markets performance is crucial • In outcomes markets performance is crucial • What drives the need for performance management? • Performance management is: • Monitoring against contract terms • The systems / information required to prove your work • The corrective steps taken • The rewards offered • The comparison with other providers / the wider market

50. Good GovernanceWhat systems and information do you need? • Principles from code of good governance • Understanding the board’s role • Doing what the organisation was set up to do • Working effectively • Effective control • Behaving with integrity • Openness and accountability • http://www.governancecode.org