Public sector beats private sector?

Rohantha Athukorala

* Top valued brands in Sri Lanka in 2011 in the Public Sector

* SLIM People’s choice of most favourite brand 2011 - People’s Bank

* The Sri Lanka GDP equals to Apple brand

When ever I get some free time I try to spend some time to understand some macro trends that are emerging in the country. Last week during the Easter break I spent some time on the Brand Finance report of 2011. What was interesting to see was that the top three brands in the country valued at Rs. 16.7 billion, Rs. 16.6 bn and Rs. 11.5 bn were Bank of Ceylon, Peoples Bank and National Savings Bank all from the public sector.

If one were to single out People’s Bank, it had won the Peoples favourite brand of the year for 2011, Service Brand of the Year 2010, SLIM Brand of the year 2009, People’s Bank of the year 2008, Best loved bank of the year 2007 and Power of People Award 2006 which in my view signified that the public sector was doing some cutting edge business strategies and outsmarting the private sector which was contrary to the current perception in the market place.

Let me analyse this in more depth.

Public sector -talent

My mind went to the time that I was the Chair of the Sri Lanka Export Development Board I. I remember at that time that I was very surprised at the talent of this state institution given that I was coming from a fifteen year multinational career and the ethos that was floating around was that the public sector efficiency was the lowest that one can encounter .

However, the talent at the EDB was so high that it forced me to do some fact finding given that this was the first public sector job that I had done.

The facts gathered revealed some interesting information. Normally the cream of the university material gets selected for the jobs in the public sector. Namely the first and second class ranked students in a batch. Which is why institutions like the EDB, which is a premier export driving government agency has a set of very competent personnel.

Thereafter when I took over as the Head of the National Council for Economic Development (NCED) the pivotal policy making body of the Government I came across the same talent base in many ministries and my final conclusion was that provided that there is a strong leadership which was transparent in nature backed with high levels of financial integrity at the top echelons the middle management motivation levels were at a very high level and in fact in my view was better than the private sector.

The sad situation was that the public only gets a share of life of the public sector like the local municipality council or the motor traffic law enforcing officers and tend to form opinions of the public sector which to my mind was unfortunate.

Marketing Excellence award -2009

At the 2009 Marketing Excellence Award I remember sitting in the judging panel when the Peoples Bank’s Marketing Head was presenting the performance of the entity. The performance was outstanding in my view. Not specifically the numbers but more the discipline of the marketing model that was at play.

There was also a brand equity measurement track that was discussed that is normally practised by only the top brands even in a multinational organization.

I gave my thumps up for the performance to be tipped for ‘Brand of Year’ award. Even from a business angle from overall asset value to deposit base and number of customers tracked on a monthly basis signified the cutting edge marketing excellence practised by companies was my view.

In fact I did not see this stature of brand marketing that were being practised in the private sector entries that year. Which proves that the Public Sector has the potential to out beat the private sector provided that the leadership is right.

People’s Award 2011 - best bank

Even if we examine the recently concluded 2011 SLIM-AC Nielson most favourite brand competition called the ‘Peoples Awards’, once againwe see how the power of the public sector emerging.

Peoples Bank was selected by the people as the most favourite banking brand 2011. Thisselection was orchestrated by the Global research company AC Nielson which means that there is absolutely authentic on the results.

What’s also important to note is that this selection is not on internal data released by the organizations but on perceptions and attitudes of the people’s based on real life experience, which makes the results more valid and relevant.

Peoples Bank being selected by the people means that from a customer care to touch point experiences that a typical customer gets exposed tojust opening a current account the brand experience has been very positive that has led the brand to be rated as the most favourite bank over powerful private sector driven brands.

A point that needs to be highlighted is that in 2010 the advertising spend of the banking sector alone was a staggering 2.4 billion rupees that gives us an indication of the entrenched competition there is in this industry. In this backdrop for a public sector brand to be at cutting edge performance especially in a highly service driven industry augurs well for this entity in my view.

Which also means that even with such an entrenched competitive scenario and with such a strong marketing muscle of the private sector it could not beat the performance of the Public sector entity that has 683 branches islandwide and ATM facilities, Foreign Exchange transfer facilities and a range products to meet the changing consumer of the new economy.

This indicates the sheer power of the talent in the public sector. All that is required is strong leadership and as mentioned before the performance will naturally happen.

Top valued brands 2011

If one examines the most valuable brands of 2011 as per the brand finance report as mentioned we see that top three brands are public sector owned and managed. Namely BOC, Peoples Bank and NSB. The combined values of the brands as per Brand Finance 2011 exceeds Rs. 44 billion which once again indicates the muscle that these entities have to expand globally or at least regionally.

BOC leads the performance with Rs. 16.7 billion with a higher share of the import-export trade, international remittances that has resulted in a net profit of 10.1 billion rupees last financial year.

The beauty of this brand is that even among the next generation consumers, namely the 4.2 million school going children the top of the mind brand is BOC which tells us of the strong brand marketing work that has been done by this state entity in the last couple of years.

Emerging strong brands

Apart from the above, we can also see that there are more categories away from the banking industry that is demonstrating strong business performances that can teach some strong lessons to the private sector.

1) Lanka Hospitals

Post the take over from Apollo the company has re-fashioned its business model. Moving away from the AB SEC targeting to the C1/C2 target market the organization has developed some cutting edge business practices that has been able to lure some of the loyal consumers from the private sector hospitals.

In my view this is another classic example of a public sector entity driving private businesses to second place.

2) Mobitel

Once again tracking back to the 2009 Brand Excellence award, I was surprized to see how a brand equity model was practised where the brand performance was tracked not just on revenue and profits but on brand equity parameters.

To me, this was the ultimate of best practices in driving brand marketing in the market place that require depth of talent in the marketing division of the organization as well as the sense of appreciation that the top management provides for such practices to be continued.

Next steps

1) The continuity of these best practices in the identified state institutions must take place. This must happen without any political interference and financial irregularities even though in our part of the world where a political economy exists this is tough to practice.

2) The People appointments at the higher level must be on merit and not of political nature.

More importantly there should be security of employment so that cutting edge branding and business strategies can be implemented and tested.

3) A holding company can be set up where these government entities can be placed under with strong private sector personalities at board level.

This will drive in strategic thinking and new business practices that are working in the private sector world.

4) Best practices in the public sector organizations must be identified and shared among the rest of the enterprises in the government so that diffusion of the practice happens.

5) A thrust to move on cutting edge mergers and partnerships must be pursued. The successful public sector organizations must be encouraged to move to the South Asian region or the global market like what Tata did in India.