The way public procurers interact with the supply market is developing from purely transactional towards more resource focused and collaborative exchanges. Still, what seems to be missing in the public procurement culture is knowledge of how to connect to a wider network of resource providers. We do not have adequate understanding about customer orientation in public sector, nor about customer-centric ecosystem. This is especially true in public health services; systems that are under huge transformation. In this paper, we have followed that development to understand: How can public health care transformation towards customer-oriented ecosystems be orchestrated? We had a unique opportunity to follow the renewal of the healthcare system in Finland, having access to interview those involved in planning the system. In total 17 in-depth interviews enabled us to create understanding of this challenge.
1 Introduction
Increasing number of Western countries are riding the wave of public sector modernization and approaches are ranging from cost-cutting, productivity and privatization strategies to quality assurance, personnel development and devolving central state responsibilities to civil society [1]. This is particularly relevant in the context of healthcare services, which are continuously facing a demand to improve access to primary care, to tackle ever-growing costs, and to change the focus from curing disease to preventing illness [2, 3]. Moreover, healthcare services are constantly being developed by the new solutions and opportunities offered by digitalization with the aim of creating a more efficient, patient-centric, and sustainable healthcare system. Systemic changes needed in the future for public health and social service provision are so remarkable, that the process can also be seen as a real possibility to renew customer-orientation in public health care. Likewise, the change will hopefully boost development of more customer-centric ecosystems. Our aim in this article is to create an in-depth understanding of how transformation of a public health care system towards customer-oriented ecosystem could be orchestrated.
Presumably, these initiatives may face many challenges. Customer-centric i.e. customer-oriented ecosystem formation is to some extent against traditional outsourcing culture characteristic to the public sector, where focus has been on dyadic relationships and contracts with single actors, administered by public sector representatives. Likewise, constructing interfaces between public and private actors needed to act in the ecosystem can also be challenging in the competitive setting. Thus do the changes of culture and perspective from an individual service provision to a service ecosystem, that enable also for a customer more empowered role.
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In addition, public actors responsible for organizing health care services follow the regulative framework of public procurement deriving from the EU and national legislation. Accordingly, transparency, fair treatment and competition are nurtured in the decisions resulting typically in transactional exchange and arm's length relationships between public and private organizations [4]. The role of contracts and formal exchange in public procurement relationships has been emphasized although lately also the need for more collaborative engagements between public actors and supplier companies have been put forward [5]. This has especially been connected to the development of new public procurement procedures, focusing on innovative public procurement and seeing the role of public procurement as generating innovations [6]. Pre-commercial public procurement, for example, refers to procurement that is connected to a R&D phase of the actual object of exchange [e.g. 7], and life-cycle procurement in which long-term partnerships around service business model is created between the public procurer and supplier, instead of large infrastructure procurements. The way public procurers are interacting with the supply market is thus developing from purely transactional towards more resource focused and collaborative exchanges, but the outsourcing remains still highly dyadic and the focus for interaction with the surrounding market resources is highly concentrated on managing single relationships between the public buyer and specific suppliers. Thus, what seems to be missing in the public procurement culture is the way public procurement connects to a wider network of resources providers. Likewise, although research on this matter is emerging, current literature still does not provide adequate understanding about customer orientation in public sector, nor about customer-oriented ecosystem view or its applicability to the new, reorganized public-private collaboration. This is especially true in our empirical context, public health services. These systems are under transformation, and we have followed that development to understand: How can public health care transformation towards customer-oriented ecosystems be orchestrated? First, we need to understand the starting point of developments, and core actors in the system. Thus, we need to answer: Who are nodal actors influencing ecosystem development? Second, many aspects of prevailing culture and structures in public health care need to be transformed to change the system. Thus, we need to answer the question: How can variety of orchestration activities be implemented to influence and transform existing system (towards customer-oriented ecosystem)? Finally, because the core aim is to create a customer-centric ecosystem, we must create an understanding of the inner meaning of this concept in this specific context: How customer-orientation could be realized in the ecosystem?
We had a unique opportunity to follow the renewal of the healthcare system in Finland, having access to interview those involved in planning the system. This reform as our case, we conducted in total 17 in-depth interviews that enabled us to create understanding of this challenge.
2 Theoretical Background
2.1 Customer-Oriented Ecosystem
The idea of customer dominant logic emphasizes that customer’s process should be a starting point of any service development: Service providers’ role is to identify ways to connect to customer’s real life challenges, and offer resources needed for customer value creation [see 8]. One service provider can seldom meet all these needs in the long run, but a variety of actors are needed to combine their resources in order to support customer health and wellbeing. We need customer-oriented ecosystems. Therefore, instead of the focus being on how service systems are arranged and organized from the service providers’ point of view, the interest should be also in what constitutes the customer’s ecosystem providing resources for customer value creation process [e.g., 9]. In this kind of ecosystem, customers may also take a more active role, in some cases even orchestrating the ecosystem for his or her own value creation.
To meet this challenge of customer-orientation, ecosystem dynamics in this new situation and setting should be understood, and we should be able to form customer-oriented ecosystems where private and public actors act as seamlessly as possible to link their resources for customer purposes. This happens by taking different positions and roles in the network, by influencing other actors. In other words, network orchestration is conducted.
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2.2 Ecosystem Orchestration
According to Dhanaraj and Parkhe [10], network orchestration refers to taking deliberate, purposeful actions for initiating and managing collaboration processes. Network orchestration is a dynamic, emergent process, where actor roles and orchestration activities can change in time [11].
Examining these dynamics is critical in understanding service ecosystem and related value creation potential, or inhibitors for it. When formation, or transformation of ecosystem takes place, mobilization of variety of actors needed is not without challenges. Network mobilization presumes some actors taking initiative. As our first sub research question presumes, first we need to understand who are those nodal actors that can act as net weavers when promoting ecosystem formation in health care sector. We assume that in the present situation those actors are often public organizations that hold sufficient legitimacy and regional power/influence to take the orchestration initiative [12, 13]. After defining nodal actors, the basis to form the ecosystem should be understood. Actors needed for integrated service paths should be attracted and mobilized for these networks to form value-creating ecosystem. For example, nodal actors should be able to create an attractive agenda for collaboration and communicate that agenda for potential service providers to mobilize them for the collaboration [14]. Network orchestration mechanisms when forming the ecosystem, also in existing service ecosystem, can relate to many practicalities, like how nodal actors can influence knowledge transfer between organizations in the ecosystem, between customers and service providers, for example. Or how to influence identity of the network in question, so there would be a strong basis for keeping up the long-term motivation to collaborate? Network orchestration can also relate to appropriability issues, especially when collaboration contributes new innovations; Influencing appropriability means defining common norms and principles to share benefits gained are needed on the collaboration. Network orchestration is also about plain coordination and organization. Someone must take care of practicalities and organize platforms of interaction for customers and service providers maintaining the collaboration. Defining roles and responsibilities for different actors is important [10, 15].
Building customer-centric ecosystem may presume customer participation in the ecosystem already in the transformation phase, thus, customers as participatory actors in the ecosystem should be recognized. Indeed, it is crucial to understand how ecosystem structure and resources it can offer meets customer value creation, seeing customer as an active member of the ecosystem, contributing to its resource constellation. Thus, in addition to understand nodal actors and orchestration mechanisms implemented to form and transform the system, we want to create understanding of the inner meaning of customer-centricity of an ecosystem in this specific context [e.g., 16].
2.3 Levels of Change
What is characteristic to public context are many friction forces there can be on a way when forming the ecosystem and transforming the existing dyadic approach to ecosystems. Indeed, transforming the health care system towards a new approach can include many challenges due to specific characteristics of public procurement and culture in public organizations, for example. Thus, in addition to understanding orchestration activities we can use, and the path of customer centricity we want to follow, there are many “levels of change” we must consider when trying to understand how and what we should transform in existing system.
Remarkable transformation always presumes organizations and systems to develop new, actionable mental models. In the public sector creating flexibility needed in new approach can be challenging because of strong traditions, history, certain stagnation of the strategic environment, and earlier mentioned procurement conventions and legislation, to mention few. Under influence of these “friction forces”, these organizations have developed strong dominant logic which is a challenging starting point for disruptive change and ecosystem formation. Furthermore, the difficulty of the dominant logic is that these mindsets are usually tacit, even subconscious, and although they become dysfunctional, organization is not able to question or renew these assumptions [e.g., 17]. Even though changes may make good sense, existing emotional attachments and even fear may stimulate considerable resistance towards development initiatives. When the aim is to form customer-oriented ecosystem, how to tackle this challenge by means of orchestration? The same question relates to renewing organizational culture(s), which refers to the shared values and beliefs that are held by actors [e.g., 18]. How orchestration can facilitate cultural change needed to form ecosystems or later, how common identity for ecosystems can be strengthened to facilitate customer-oriented activities? If culture is coherent, customer-oriented values are commonly understood and they can form a basis for everyday work and choices in the service ecosystem, contributing to higher service quality and customer satisfaction.
Radical change is also needed in organizational design and incentives [19]. By creating a suitable organizational design, and further ecosystem design, organizations can provide forums for knowledge sharing and discussion. By facilitating organizational dialogue and questioning, also change in above mentioned deeper structures of culture and dominant logic is enabled. Related to structural issues, developed incentives can profoundly influence activities in the ecosystem. For example, the presence of structural barriers and competitive attitudes between different activities in the ecosystem (forced by incentives) can raise problems from the transformation standpoint, hampering integration efforts. Our aim is to understand how these factors can be influenced by means of orchestration.
Digital transformation is relevant in almost any environment nowadays, and that is also the case in public health care. However, it is critical to understand that functioning digital system is only the tip of the iceberg. All the above presented influence how we can alter our attitudes and work processes to the new mode needed also in digital transformation. Naturally, development of digital systems is needed. However, developing systems only is not enough to create facilitative conditions for health care transformation and related change needed. In the following tentative framework (Fig. 1), key concepts of our research are combined.
Fig. 1.
Tentative framework for the study
(adapted from e.g., Hurmelinna-Laukkanen et al., 2011)
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3 Methodology
We collected primary data through 17 interviews with regional health care service developers. Those informants were senior managers and experienced officers in regional health care authorities, hospitals, and health care centers. The informants were chosen based on them being part of the group responsible for developing a new regional, more centralized organization of health and social services at the time when new system was under construction in Finland. Interviews were conducted using an open-ended interviewing technique to allow informants to express their perceptions without restrictions. We discussed following themes in the interviews: concept of customer in social and health care, concept of customer-orientation, different interests and actors in health care system, challenges in service development, organizing of service development, collaboration and networks in health care system and service integration in the system. The interviews stayed at a general level, covering management perspective, and not going to anyone’s specific health issues; thus, no ethical permission was needed. The interview data were transcribed and analyzed using the abductive approach, which enables a profound dialogue between the theoretical understanding and insights arising from the empirical data [20].
4 Findings and Conclusions
Our research emphasized the importance of managing the service system so that providing flexible and individually designed services is enabled. Also, taking a holistic perspective and the so-called the “one stop shop” principle, i.e. that the customer gets the services he needs centrally from the same place is crucial for the service ecosystems. The importance of multiprofessional cooperation is also integral; especially a customer who uses a lot of services needs support from experts in different fields, necessitating collaboration of various ecosystem actors. Also, it is essential to understand the uniqueness of the service user's life situation - the service cannot be too standardized, but must be flexible, considering the customers’ different situations and resources. For example, the support or lack thereof provided by an elderly person's close family can be essential in terms of the effectiveness of the service. The service is not only measures, but feelings and empathy play an important role as well. An understanding of all these elements that create value for the customer is necessary when developing services and this has implications for the service ecosystem orchestration.
Our findings also suggest that creating customer value should be the focus of the ecosystem. Customer perceived value is formed as the difference between the benefit experienced by the customer and the sacrifices made. For example, if customer needs to search or wait unreasonably for a service, it decreases the perceived value in the form of time sacrifice and frustration. The service encounter is thus of great importance, but so is what happens after the actual service encounter, e.g. does the service really improve the customer's situation. The service ecosystem thus needs to be able to tackle the customer's value creation on a longitudinal basis.
The present study also brings forth the role of digitalization in the service ecosystem orchestration, from the customer’s perspective. Digitalization has been offered as a solution for creating more efficient and tailored service solutions. However, it is crucial to examine and understand, what kind of opportunities, skills, know-how and resources a health care customer has for participating in such co-creation of value. Digitalization and online, remote services can serve some target groups well, but not all, thus suggesting need for relevant segmentation of customers, as well as integration of systems and services, including smooth knowledge transfer, for example [see 15, 21], also providing a lot of potential for development.
To conclude, in public health care systems, resources are scarce. However, the decision-making related to the organization of services should be possible under the conditions of long-term effectiveness. For organizing and orchestrating the service ecosystem to be more customer-oriented, a genuine customer perspective is central, emerging alongside resource thinking and financial optimization. By organizing according to customer needs, even scarce resources can be used wisely.
Disclosure of Interests
The authors have no competing interests to declare that are relevant to the content of this article.
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