THE BIG INTERVIEW: MARTIN STEWART-WEEKS Look, listen, and learn. Michael Pratt AM, Secretary of NSW Treasury, believes he has cracked the code for what to tell an eager minister after walking into that new challenging job: don’t panic, we’ll get there, but you have to establish a really good foundation on which to build.
After a 30-year career in banking across Asia and Australia, Mike Pratt’s journey from something of a sceptical outsider to influential insider in the public sector has coincided with the rise and rise of the customer service revolution, made manifest in the establishment and growth of Service NSW.
Called in by then-newly elected NSW Premier Barry O’Farrell and his senior policy advisor, Peta Seaton, Pratt was offered the chance to recast much of the transactional work of the state government in the ethic of customer service and satisfaction. And it was a revolution, still very much playing out, complete with a portfolio of change that included policy, new service centres, an overhaul of the rambling architecture of digital delivery, new uniforms, better training, and buckets of data and meticulous measurement.
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This was a leadership venture whose ambition was nothing less than recasting the business of government in the service of customers and citizens from policy-top to delivery-bottom. And a good chunk of new physical, digital and cultural infrastructure in between.
In the end, Pratt’s most powerful weapon in the arguments and debates that fuelled the policy and operational changes ushered in by the Service NSW venture were the customers and citizens themselves. Confronted by a sceptical minister or a resisting colleague, in the end they had to confront the evidence that the people of NSW were starting to like the new ways of doing business with their government. And they wanted more.
What attributes stand out for Pratt as the hallmark of effective leadership? First and foremost, a willingness to look, listen, and learn. That started as a young banker invited in his early days at the NAB under CEO Don Argus, who offered Pratt the chance to contribute to cross-business change strategies. Learning how to learn about yourself, about your strengths and weaknesses, is another thing good leaders do. Pratt recalls an incident when, as a postgraduate student of organisational behaviour, he arrived at class one morning. It was his second psych class, and the lecturer asked him and his fellow students to kneel down on the floor and draw their lives. He also suggested they make the noise of an animal while they worked. “When you’re out of your comfort zone,” Pratt wryly recalls, “you learn a lot more.”
Learning, and its cousin, curiosity, are also hallmarks of good leadership. Is there a better way of doing things? Why do we do it this way? Why don’t we do it another way? In the early stages of the Service NSW journey, Pratt invited then Virgin Australia CEO John Borghetti run an induction program. It was, according to Pratt, a game-changer, and not only for the public service staff involved. Trust can be rebuilt. Arrogance can be avoided and humility can become reflexive. Being honest and straight with people can become the hallmarks of good political and policy leadership.
And perhaps projects like Service NSW, seven years strong and still evolving, can play their part in what Pratt describes as a “flywheel” in the larger political system, still working long after its founders and initial leaders have moved on, to drive a persistent search for service and performance.
Not such a bad legacy, perhaps, as the journey from the outside in continues.
When you got that call from Barry O’Farrell, then NSW Premier, he said, ‘come and be my Customer Service Commissioner’, and you thought, ‘time to go into the public service’ — why did you do that?
It really was a coming together of a number of things. I had been working overseas, I was running Standard Chartered Bank in Northeast Asia, Retail and Small Business, responsible for the region, and a really fascinating and interesting job at that time in Shanghai.
But even prior to that, I had studied at Harvard, and I looked at the common US model about tri-sector careers. And in the US, as you know, it’s a very common model where academics move into government, private sector, etc. And that exchange is almost accepted as commonplace. In Australia, not so. Having had a very extensive banking career with a number of banks and had a great time, for me, it was a point of reflection and saying, if we’re coming back from Asia, do I want to go onto boards now or do I still have some thoughts around doing other things.
I remember one of my long-term mentors said to me, “you know, there’s still quite a long runway and don’t give your executive career away too quickly,” So that also stuck in my mind.
And so, when I came back, as serendipity would have it, I met with Barry, who had not long been elected. He had three big agendas around infrastructure reform, which Nick Greiner came in to lead; public service reform, which Peter Shergold came into lead; and then service reform. And he asked me to come in and lead that.
“Everyone said it’s new territory, hard to do, complex, I didn’t know government. So I had a lot to learn about government.”
And at that point for me, it was a reflection on this tri-sector thinking that maybe this is a really good opportunity. So I had a coffee with Barry and said “Barry, are you serious? Because I have no interest if you’re really not serious about progressing this reform.” And he was and he stayed that way true to his word. He was very committed. And, you know, that was a tough journey, certainly the first 12 or 18 months. But I was attracted to the challenge and the fact that this hadn’t been done before. Everyone said it’s new territory, hard to do, complex. I didn’t know government. So I had a lot to learn about government.
What kind of thoughts were noodling around in the back of your mind as you came into this role?
Well, somewhat naively at the time, I expected that because I’d been invited by the premier and endorsed by the premier very strongly — although not suggesting it would be smooth — but that I’d have a lot more support coming in. What I found was quite the opposite. Huge amount of pushback. And a lot of mainly middle level bureaucrats who resisted this initiative very strongly.
Where do you think that resistance came from? How did you sense that, and did you make sense of it?
There were a number of things that I didn’t appreciate initially. But I discovered at a later point that the creation of this new service entity and a very different approach to serve (this is Service NSW) was really at the heart of what the old RMS [Roads and Maritime Services] wanted to do. And so what had occurred was the Premier had come to me, I came in, I’d been given the brief to lead it, independent of RMS. So that immediately was an issue.
Secondly, my largest customer, being RMS, and given all the transactions that I wanted to progress, was also my largest funder. And there’s a fundamental flaw — I didn’t appreciate this either when I came in — but I was getting funding principally from them. And yet, I was taking the very work away they saw themselves as doing.
For the record, RMS were big, big players in NSW when you came in, right?
Finally, in that respect, they’d say, “here’s a banker coming in telling government what to do, what would he know, a banker?” And, you know, I think there was a piece around that that made it more difficult as well.
Just out of interest, as you well know, in the NSW scene, Barry wasn’t the only one, so Mike Baird decided that bankers were not a bad place to go looking for talent. And that’s a great thing. It’s an interesting phenomenon in NSW.
Why do you think public servants felt a bit anxious about bankers suddenly coming into public sector roles?
It’s a good question in that when I started, I actually had a look at this myself, for obvious reasons. There was only a handful of corporate executives at that point — I’m going back to mid-2011 — that had come into government. And so it was also ground-breaking in that context to have people like me come in. But what attracted me, and then we built on this over time, is that there was a very strong commitment to being a reform government. I said to Barry at the time — I remember the conversation in his office — “You know, Barry, you’ve recently been elected, if you’re all about maintaining what is there, then I’m not interested. If you’re serious about reform, I’m interested.”
And what’s happened over time is that reform desire has continued. What that has meant is it’s attracted more and more good people. And of course, it just builds on itself as more come in. I brought in Glenn King, for example, in that initial design and build stage of Service NSW, he’s now a secretary. I brought 10 people in with me. And I brought in the people who knew how to do service design and delivery. That created some angst as well. But having said that, I was very careful about putting people in the team at that time that were long-term officials as well.
How did you respond to all the things you were hearing from ministers, advisors and others?
Well, having studied myself a lot over the years in self-assessment and reflection, I think it’s always really good for one to know strengths and weaknesses. And one of my strengths over a long period of my career has been ongoing learning, and coming into government played to that. I was on a completely new learning curve. I knew what there was to know about banking, but I knew nothing about the inner workings of government.
And it still goes on today. I was quite privileged in that I had close support from Peta Seaton. Peta was Barry’s strategy head, quite outstanding in her capability and knowledge of government. She had been a former member of the house. She was my confidante. I used to bounce a lot of things off her: what about this or that? Will this work or not?
Peta Seaton was kind of almost like a Sherpa in a way, to give you a bit of initial guidance?
It was really important. My first six months, and this is a lesson, I guess, when you’re coming into a completely new sector, is listen and learn. I can’t emphasise how important that is. And in my first six months I really made very few decisions. It was all about listening. I remember saying to some cabinet ministers at the time who were saying, “So what are you doing?” I would say, “Don’t panic, we’ll get there, but I have to establish a really good foundation on which to build.” I would say my biggest achievement in the first six months in government was convincing cabinet to talk about you and I as a customer, not a citizen. And some would say, “You know, what’s so big about that?” Well, I would argue that’s a huge shift. That’s about mindset. And now today, when cabinet gets submissions, almost every submission has a customer angle to it now, because government gets that and it has become BAU.
“The lesson, I guess, when you’re coming into a completely new sector, is listen and learn. I can’t emphasize how important that is.”
What underpinned the changes you were making?
In that first six months I did a huge amount of customer research. I can’t emphasise how important this was because not surprisingly, you know, politicians listen to voters. So, I knew that if I’d connected and understood what you and I wanted as citizens (customers), that would be all powerful. I did a huge amount of research on what you and I wanted in terms of your interactions with government, so that when we designed the model, I was really confident it was going to hit the mark. And that’s exactly what happened.
The feedback from citizens was overwhelming. Citizens walking into their local member’s office saying, “We have to have more of these [Service Centres], like the first one opened in Kiama.” And so that impact multiplied around NSW, where my funding then took care of itself, because MPs were coming to the premier, saying, “I want a Service NSW outlet.” And then, of course, we went digital and contact centre, and so on. So it was actually a good strategy to lock in funding, getting citizens on board.
How do you influence the people you’re trying to influence, especially politicians?
First principles, absolutely. And that’s what happened, I had all these metrics on customer feedback stored in my head. And I had, as you can imagine, some pretty interesting debates with ministers. Often we did not agree. At the end of it, I would take the customer metrics and say, “Right, you have your view, I have my view. Here’s what the citizen says,” and that overwhelmingly won the day. So, very powerful.
Who were the leaders that had most influence on you, and why?
One of my personal characteristics of leadership, which I’m very strong on, is authenticity. And I believe very strongly that if you’ve got incongruence between word and deed, you’ve got no hope of being a good leader, because you just lose the people if you say one thing and do something else. So I learned those sorts of things by observing and seeing how those leaders led. I was very fortunate to have some really good mentors. And, you know, I’d encourage all my team that work with me, to find a good mentor and leverage that person.
One person I would mention is Don Argus, who ran NAB (National Australia Bank).
“If you’ve got incongruence between word and deed, you’ve got no hope of being a good leader.”
Don was an outstanding leader, technically really strong but also a real focus on people development. At the time, if you had NAB on your resume it was a walk-up start to any bank. It was incredibly powerful. And he was responsible for a lot of that.
Don put a group of about a dozen or so together, and he would personally manage careers. He would, as the CEO, say to the HR folks, “You know, I’ve got an appointment I want to send whoever to,” and he would then take a personal interest. Now, the rules of that were very clear. They were always testing appointments — they weren’t an easy free kick as it were. If you succeeded, you got the opportunity for a new challenge. If you failed, you’re out. So that was very clear. Which I frankly had no issue with at all.
I guess getting out of your comfort zone was the other thing that I would say about leadership.
I had an amusing experience when I went back to university and did a postgraduate in organisational behaviour. Resuming study was the result of one of my mentors pushing me. I was leading commercial banking. I knew balance-sheet metrics every which way you could cut it, and all the tricks. But, frankly, I knew very little about people. And he said to me, “If you’re going to lead people, if you want to be a CEO,” which I did, “you are not going to get there by simply knowing balance sheets, you’ve got to get out and learn about people.”
“The first thing I want you to do is go back and get some qualifications in leadership.” So, I did a two-year grad diploma in organisational behaviour. The first year was all psych, learning about yourself — the theory being that unless you know about yourself, you could not lead others. I mention that because I’ll never forget my second psych class: as we walked into the room, the psych lecturer was handing out pieces of butchers’ paper with a crayon, and said, “I want you all to kneel down on the floor. And while you’re on the floor, I want you to draw your life and make the noise of an animal that represents you as you do it.” I was completely out of my comfort zone. But the reason I mentioned this is when you’re out of your comfort zone, you learn a lot more. And over the two years of the program I learnt a huge amount about myself and about people. And then I took that into roles as I went through senior banking appointments.
The other thing I’d mention about leadership is that really good leaders, in my experience, are constantly curious. You know, they’re always asking, “Why does it work that way?”; you know, “Is there a better way to do it?” Or, “Why not?”, etc.
I did a lot of that when we got into design for Service NSW. For example, all the traditional approaches that government took to a whole range of policies, including recruitment and induction. I said, “Why don’t we approach this quite differently?” I went and met with John Borghetti, who at the time was CEO of Virgin Australia, and I said, “John, what about Virgin come in and apply their induction program for Service NSW?”
Now, that was a game changer. Because not only did they bring huge capability in this area, but it sent a great message to the officials and to the public, that this was different. And that was about being curious, about thinking of different ways to do things.
To what extent do you see ideas like ‘curiosity’, ‘comfort zones’ and ‘authenticity’ as part of the current leadership culture of the public service?
It’s probably easy for me to say, through rose-coloured glasses, that it has changed and improved. There’s always a tendency to do that. But I would genuinely say that it has changed. And I do remember when I first started, and I went to my first secretaries board as the [Customer Service] Commissioner. The reception from the group was largely disinterest.
It was quite evident to me that they weren’t working as a team. And I would have thought this was a board of secretaries responsible for all of government service and delivery working together. And it was clearly evident they did not.
Now, I contrast that to today, where I would say, there is a really united team of people who genuinely want to work together. Full credit to all of them, and to Tim Reardon as well.
A layer or two down, are we still struggling? How will that evolve over the next three-to-five years?
It’s a big journey, and I look at the journey of customer design and thinking in government, seven years now. But when I started as commissioner, I had a mobile phone and I didn’t even have a desk. The first month or so I wondered what I’d walked into.
But here we are, seven years later — we now have a full cluster and a minister for customer service. And we’ve legislated horizontally — the only government I’m aware of in the world that’s done that for customer service. I’d say we’ve made huge change. But there’s more to do. And I still see elements of resistance and pushback around the changes we need to drive. So it’s changed a lot, but I certainly wouldn’t say to you that we have arrived.
What could go wrong from here?
First of all, I would say: economic risk. The economy is currently very finely balanced, with a bias to the downside. There are some positive things still about the economy — low unemployment is outstanding in NSW. Job creation, the big infrastructure program are all very positive. On the downside, we are seeing significant contraction in retail spending, and therefore low consumption levels, which is very concerning.
So I think the risk on that is that if things get tighter, the government will have to reassess its spending. And that could put some of the big programs at risk.
Secondly, I’d say: political risk. The government has a reform appetite. I get a strong sense from this government that they want to keep driving reform, but that is always a risk.
And, thirdly, which I’ve seen in my banking career, if you track back over the last three or four decades, one of the major banks has run into trouble. And if you track root cause, it’s usually: corporate arrogance. It’s usually that senior executives think, “We’ve made it, we’re the best.” And, constantly in my Treasury role, even though we’re progressing pretty well, I’m constantly saying, “Don’t get arrogant, stay humble. There’s a lot more to do yet.” And that’s another risk, I think, for the public sector more broadly, the mentality of “We’ve arrived.”
Another characteristic of leadership is that one is never satisfied. And you know, I am always probing Damon Rees [CEO of Service NSW] and Glenn King [Secretary of the Department of Customer Service] about the next iteration of Service NSW.
A good example of that was having delivered a lot of transactions. The model should evolve beyond just simple transactions. We have developed this counselling service on cost of living — that has been huge in terms of its acceptance. And the good thing about it is we are genuinely helping citizens with their cost of living. Great job by the Service team.
I can give you numerous examples. Citizens are walking into service centres, sitting down to discuss cost of living and get advice, and then walking out with rebates up to $1,000 and more they never knew they would qualify to receive. And that is fantastic.
What’s interesting about this journey — I remember going right back to 2012. I said, “Barry, if we get this right — and we will — don’t underestimate the power of citizens feeling good about this government. Because you know, you’re going to be a government so easy to deal with, you’re going to provide great service.” Now, I didn’t at that point have in mind things like cost-of-living support. In our recent customer survey — you’re aware every quarter we do surveys, and every quarter for five years, we’ve also looked at sector positioning. So we’ve looked at utilities, we’ve looked at airlines, banks, government, federal government, local government.
When we started this measurement five years ago, we were second bottom. Glenn King has just received the latest survey: we’re now No 1. The NSW government is ranking above airlines, ranking above all utilities, banks, and the federal government, which is bottom.
“We’re now No 1. The New South Wales government is ranking above airlines, ranking above all utilities, banks, and the federal government, which is bottom.”
What was the link with customer service you were trying to draw for Barry O’Farrell?
The link I was making is that if you are genuine and it’s not just rhetoric — if you genuinely put the customer inside the conversation with government and you start to make decisions around customer outcomes, then you will start to build trust. It won’t be overnight, because there is a whole series of actions you need to do.
So we developed a strategy called “Customer Inside”. The simple proposition was to get the customer inside every conversation. And that played out by way of the design thinking when we built a testing Service Centre, for example, down at The Rocks, to start testing. The service itself was modern, we had many customers through to test the offering. And we did other things, like: when you went online, we used capabilities like eye-tracking technology to see where customers’ eyes focussed on the screen.
The model was completely built around customer feedback. And that’s the point about trust — the more you do that, the more people say “the government is listening, and they are actually getting us involved in how we design things.” And so cabinet got that.
Politics is the nuanced business of getting things done for the national or state’s interest when people don’t actually want you to do them. How do you deal with that kind of tension?
I’ve always said that: people don’t always have to agree with you, but if you provide the “why” in addition to the “what”, people will understand how you’ve come to that decision; they won’t necessarily want to agree with it but they will respect you for explaining the “why”. If you go in with a decision and simply say, “This is the way we’re going, climb that hill”, or whatever it is, without the context or the “why,” inevitably you set yourself up for failure. I’ve always tried to take the approach with difficult issues where I’ve explained the reasoning behind why we’re doing it, and then talked about the “what”. Everyone’s never going to come with you. But I have found that’s a tactic that works. And I do find in the public politicians who explain the context, the why, I think have a lot more credibility.
A good example right now is the machinery of government change as a result of the last election, which are significant. You know, part of that outcome, unfortunately, is job losses. None of us want that and clearly people are directly impacted. It’s difficult.
But on the other hand, if you can explain why we need to do it, which we do, and there’s very good reasons for that around challenged income for the state in this economic environment. And frankly, also the fact that we became too costly and doing too much business with “each other”.
What advice would you give someone in their late 20s or early 30s who comes to you for advice about working in the public service?
I would say, definitely at some point in your career, work in government without hesitation. Ten years ago I’d probably would not have said that. Probably I would have said, “Don’t go anywhere near government, as it won’t offer career development,” etc. But this comes back to one of my initial comments to you around tri-sector careers.
The other thing that I’d add is that if you think about the three legs of [public service] being corporate, government, and academia — you know, I had four years as deputy chancellor of Western Sydney University. I am well informed about things that are going on in each of those sectors. Now, I don’t always have the answers and I don’t pretend to have all the answers, but I certainly know the questions.
I think that makes you a much better decision-maker, but also I would argue it makes you a much better person, because you’re more balanced in your assessment. You tend to see things in balance rather than having set views on them, whatever it might be.
I would also say that the government has what the private sector doesn’t have. Even running banks, it has scale, which you don’t experience to the same degree in the private sector. And the complexity of decisions that you make that affect the daily lives of people are both challenging but exciting.
And the other thing that it has — the private sector doesn’t, I mean — in my prior roles and banking of course I interacted with politicians regularly. But I never worked in government. Exactly. So, different game altogether.
The advice is: see it as a great place to come and learn and to build on those skills, but still keep an eye on this idea of blending across different sectors.
It’s the blending that seems to be significant, particularly if you’ve got leadership aspirations?
Absolutely. You know, if we look at Treasury, we have people who would line up against many of their equivalents in the private sector. The quality of thinking and capability is quite outstanding. So government is certainly — I’m only talking about NSW government, not more broadly — but this is quite an exciting place to work.
Are you optimistic about where we might be heading in the next year?
Look, I’m by nature probably reasonably balanced around being an optimist or a pessimist, with a slight bias to being more of an optimist. This question goes exactly to the point you made around legacy. You know, I’ve always said that the key metric on leadership is the legacy you leave. And you know, in banking, I’ve always said as CEO that you inherit this huge annuity stream and the objective is to leave that annuity stream in better shape, at least as good, if not better, when you leave.
That thinking equally applies to government. In my tenure in this role, am I going to leave Treasury in a better place and government more broadly? And is it sustainable?
A role model for me — we talked about role models in my business career — who I’ve never met and never will now obviously, but someone that I’ve looked up to and read a lot about is Nelson Mandela.
There is an individual who, after 27 years locked up in jail for a crime he didn’t commit, comes out of jail not looking for any revenge on those that put him in there but rather goes on to be the leader of this country. What an outstanding story. His story is all about sustainability.
Can we finish with this topical question: how can we rebuild trust in government?
Firstly, I’d say at one level, there is a lot to be pessimistic about. If you look globally, you look at the US, China; you look at Russia; you look at India — there are many serious issues globally going on with the potential to negatively impact our world and have a huge global impact on trade, etc. Economically, it’s not a healthy picture.
But having said that, I would say, to make a difference for the better, the core of what we need in leadership now is authenticity and to build credibility down to the citizen level.
I think we need local, state, federal, and global leaders who call it how it is. And not everyone’s going to like that, they want to stick to their agreed position and follow through on it.
I see a lack of that desire globally, I don’t see genuine desire to be authentic and treat people with respect.
People pick that up, right? Kind of feeds that sense of unease, I think, which is what I sense around the world. Whether you agree with the politics or not, but you know, I think in the last federal election you saw the prime minister do a lot of that, and that resonated, whether you agree with his politics or not. I think there’s a lesson in that for a lot of people.
It’s been a lovely conversation. Thank you.
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