Public Sector vs Private

Question

Question for those who have done public and private sector work.

Does public sector have an additional dimension that private might not e.g. that delivering value is more complex when public money / taxes are involved. Where a PE firm just wants ££, a hospital has other considerations and objectives. I guess the question really is, do more public sector firms chase qualitiatve objects that are harder to measure than simply profit in the private sector, or is this a conception I should do away with.

The context is applying to a public sector only firm and I'm suggesting that the public sector has that additional challenge which private does not come across so much, and that this is something that appeals as another element of challenge.

Answer 1

Hi Anonymous,

I never got involved in public sector myself, but from what I saw the short summary is that both areas (private and public sector) have their challenges and neither of them is easier or harder:

Private sector: Nowadays you mostly deal with ex-MBB on the client side resulting in very high expectations and enormous pressure, but at the end the problems themselves are "just" business problems to solve.
Public sector: Noticeably less stressful (think generally about working hours of private vs. public sector), but political environment even more complex and challenging to get anything moving.

Hope this helps - if so, please give it a thumbs-up with the upvote button below!

Robert

Answer 2

Hi there,

So, it really depends here. In general, I've found that public sector works tends to both easier and harder at the same time. While expectations are generally lower, you also have a lot more dead weight, beauracracy, and general difficulty moving things forward. So, while the end deliverable standards are a bit less, it's a lot of work to get there!

"Profit" is an interesting one. While cases focus a lot on profit, you'd be surprised how profit is both a focus and not a focus on all projects, regardless of client type. Of course we know profits are important, but it's viewed much more as cost/benefits. This way of viewing things actually doesn't change across private vs public sector!

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In terms of case approach:

My approach

Public sector cases are tricky because they feasibly be any case type (Product Launch - new service for citizens; M&A - merging two departments; even Profitability - cost cutting mandate). For any public sector case, I recommend:

First identifying the type of case it is.
Second, leverage your knowledge of the public sector as constraints/considerations.

Considerations/Constraints

Regards #2, you know that public perception is particularly important to consider in any public sector move. Additionally, you can count on bureacracy/slowness in implementation. You should identify the goal/mission of the organisation as well and keep this top of mind (if it loses money, but achieves it's goal of helping the poor, no problem). Howvever, just because the government sector doesn't have profit as a target, doesn't mean you should ignore the profit tree altogether - governments are still obliged to take into costs (and sometimes revneues) in decisions (example: setting up a public transport initiative). Don't get tricked into thinking you can't consider the economics of the case!

Other items to consider include, but are not limited to:

Politlcal landscape (i.e. upcoming elections, special interest groups)
Sustainability
Private-public partnerships
International vs governmental vs state vs local partnerships/alignment
Income = taxes/budgetary landscape
Digitialization of government

Framework Resource

In terms of resources, the UPenn Wharton 2011 casebook has a framework for public sector. It's split into:

Strategic rationale (Mission of organisation and stakeholder reactions)
Deal economics (planned investment and returns, if any)
Other (Required capabilities and risks)

Practice Cases

If you want some practice cases:

Tepper 2008's "NGO Effectiveness"
Colombia 2011's "MadeCasse"

Hope this helps, and please don't hesitate to ask any follow-up/clarifying questions!

Answer 3

Hey there,

Public sector has been (at least in past 20 years) and will continue to be a huge buyer of consulting services. They like good practices from the private sector being proposed and implemented across the entire value chain and specially in Technology & Digital transformation. For both public and private sector, every piece of consuting work has to be tangible value driven if it already is not. Public sector is hard pressed to justify spend (and reduce their spend) on expensive consultants, so this is very important metric for them i.e. consulting work must demonstrate value and return on investment just like you would do in the private sector.

The biggest overarching challenges are:

1. a range of socio-economic and political interests which can slow things down

2. uncertain economic climate (even more important with COVID-19)

3. general resistance to change and limited change management in public sector; so adoption (of new process, technology etc etc) can become extremely challenging

4. Complicated procurement processes

Adi

Answer 4

Hello!

Re-targeting you question, given that you are in the application stage: for case prep, the logic you need to follow it´s exactly the same one. There are no big differences in public and private sector cases, and the skillset you need for one and the other is the same in both cases.

Hope it helps!

Cheers,

Clara

Answer 5

Hi there,

There is no relevant difference in the approach between private and public sector cases. What many candidates do wrong with public sector cases is that they don’t clarify well the objective.

Taking your example:

PE firms  Goal is maximize profits in year 5 to resell the company
Hospital  Increase the number of patients that are insured vs uninsured

The second question seems very different, but in the end you want to maximize the volume of something. Most if not all the elements that apply to increase in volume in a standard case will apply to that case.

Best,
Francesco