Te Rā Whakamana: Operational Capacity

09/06/2026

I read Allen Schick’s warnings from the 1990s, Bill Ryan and Derek Gill’s 2011 account and a 2026 study of primary health care together, and find that all three come to rest on operational capacity, the capability we have looked after least well.

This week the series reads three pieces of local implementation scholarship together, written across the better part of three decades and from quite different vantage points. There is Allen Schick’s 1996 review of the reforms and the warnings it carried; there is Bill Ryan and Derek Gill’s later account, written in 2011, of where the reforming energy of the public service had by then gone; and there is the recently published study by Tim Tenbensel and his colleagues, which looks closely at primary health care. Different as they are in method and in moment, they come in the end to rest on the same point, that successful delivery depends on operational capacity and that we have looked after it poorly.

Te Rā Whakamana follows what happens after policy is announced, in the long tail of delivery, where systems either hold or fracture. The question this month lies beneath almost every reform: what capability actually makes delivery work, and why does it keep going missing? Read together, these three accounts answer it in much the same way, and the answer is less comfortable than it first appears, because the capability they point to turns out to be the one we have been worst at nurturing.

A warning we did not act on

In 1996, reviewing the reforms that had made this country a recognised world leader in public management, Schick saw a fault line already opening. In his view the emphasis on accountability was hardening into compliance, attention to outputs was crowding out attention to outcomes, and the capacity to think about strategy and to organise delivery models that could actually deliver was not obviously being maintained (Schick, 1996). His warning came at the height of our confidence in how good our new public management system was, and we filed the report and did not act on it.

Schick returned to the theme a year later, at the State Services Commission’s 1997 conference on the future of public management, and repeated his warnings, but this time politicians were agreeing with him because they were seeing what he had seen. The conference was opened by Jenny Shipley, then Minister of State Services and, within months, the Prime Minister, who embraced Schick’s verdict and pressed his very point (Shipley, 1997).

Having moved, in her words, away from input-to-output purchasing, the government now faced the challenge of focusing on the outcomes that the community and the government seek to deliver. She used the rest of her speech to explain the strategic management system she was implementing, telling the good-and-great that the Strategic and Key Result Areas were going to pull chief executives beyond their single departments toward the outcomes the government was seeking across the whole.

The speakers who followed were more sanguine about Schick’s warning. Graham Scott, who had helped build the model as Secretary to the Treasury, spoke of the second-generation issues the new public management reform was creating, and of a design that was maturing and needed to be embedded rather than rethought (Scott, 1997). Gary Hawke, of the Institute of Policy Studies, set a longer horizon, noting that 1997 lay halfway between the reforms begun in 1984 and the 2010 benchmark, and that it was, in his view, the best time to determine whether the reform was a success (Hawke, 1997).

Schick himself struck a more cautious note. For him the question in 1997 was whether the reforms would still mean anything, let alone the same thing, once the people who built them had gone, and he set a test to be applied by the generation that would inherit the reforms rather than by their designers. “I have a simple test for New Zealand management in 2010,” he said. “Ask the managers why things are done the way they are. If they respond with these rules and procedures I have inherited, then reform is doomed. But if they understand the logic of managerial discretion and accountability, the spirit of reform will endure” (Schick, 1997). His benchmark year was 2010, and now that we are well past it the question is no longer hypothetical.

Schick made a related point the following year, looking outward. Asked whether other countries should copy us, he warned most developing countries off the New Zealand model on the grounds that it presupposed what they did not yet have: robust formal markets, rule-based administration, and the capacity to write and enforce contracts. His inversion was blunt, in that the greater the shortcomings in a country’s established management practices, the less suitable the reforms (Schick, 1998). The point he was making was that the so-called New Zealand model of public management rested on a highly skilled professional and managerial class, capable of designing the system and of supervising its delivery.

Where the energy went

Fifteen years on, Bill Ryan and Derek Gill picked up Schick’s warning and tried to describe what it had become. Their chapter, the closing one in Future State, is an attempt to trace what happened to the reforming energy and confidence that once drove the public service in Aotearoa during the new public management reforms, and to examine where that energy ended up (Ryan & Gill, 2011).

Their account of the model is unsparing. The architecture built in the 1980s had been patched and added to until it resembled an overlayered piece of software, still running but increasingly unfit for the work it was meant to do, and its insistence on vertical accountability and single-organisation performance had recreated what they call an iron cage. The monitoring of targets and outputs crowded out the frontline innovation and the cross-boundary work that delivery in a complex society actually demands, and the managerial and professional classes watched and controlled delivery closely while at the same time starving it of resources and discretion.

The part of their argument that has stayed with me, though, is the part about where the energy went. It had moved rather than died, draining out of the core public service agencies, where it faded, and reappearing in the operational agencies and among those officials closest to citizens across the wider state services. These, they observed, were the people learning to manage for outcomes, to work across organisational boundaries and, when the rules got in the way, to reshape them so the person in front of them could be treated as a whole person rather than a case. Ryan and Gill are clear that this work was both real and fragile, happening under the radar and rarely on paper, depending on the protection of a sympathetic senior, and surviving only until the next restructure.

What the sector’s own accounts show

What Ryan and Gill argued from observation, Tim Tenbensel, Lesley Middleton, Pushkar Silwal and Jacqueline Cumming have now shown from evidence. They applied the policy capacity framework to primary health care across the decade from 2010 to 2020, drawing on fifty-five interviews with people who had spent their careers moving between the centre and the districts, and between government and non-government roles, and they asked a simple pair of questions: where had the system made progress, and why, and where had it stalled, and why (Tenbensel et al., 2026)?

The framework they used distinguishes three capacities: political capacity, the ability to win and hold support; analytical capacity, the ability to ensure a policy is technically sound; and operational capacity, the practical ability to put resources behind action and to generate the ideas and the workarounds that make a policy live. This, named at last, is the capability the other two accounts had been circling, what Schick called the capacity to think and to deliver and what Ryan and Gill watched relocate to the front line. The authors find that operational capacity does the heavy lifting, as it was the capability most often credited with progress and most often blamed for the lack of it.

The detail is where the study is most useful to me. On the sector-driven objectives, such as quality improvement, where progress was real, the energy came from operational and political capability at the district level (the meso level, in their terms). On the harder, system-driven objectives, reducing inequities between Māori and non-Māori and reducing the cost barriers that keep people from care, the picture was bleaker, and the reasons were more tangled than a shortfall of resolve.

Lack of political commitment at the centre was certainly evident in shifting government priorities and, in one account, in the stripping of provisions on Māori health from policy. The authors are clear, however, that much of what looked political resolved, on closer reading, into weak operating and analytic capabilities at the national level, and that even when the political stars lined up, the commitments bore little fruit because operational capacity at the national level had been hollowed out across the 2010s. The intent was often there, while the capability to act on it was not.

Two further findings seem to me worth holding onto. The first concerns the accountability machinery itself, the targets, the contracts and the reporting that consume so much of the system’s energy. The people inside the sector regarded these practices, in the authors’ words, as trivial at best and harmful at worst, with one describing the reporting burden as huge and the focus fixed on what providers did with the money rather than on whether the money bought anything worth having. That is Schick’s warning, thirty years on, confirmed by the people living inside it. The second is the near-invisibility of analytical capacity at the national level. It is hard to see how a system could close gaps it has stopped measuring, yet external reviews concluded that the data needed to support policy was simply not there.

The capability we are worst at keeping

What can we actually conclude from these three accounts? Three studies are not proof, and each has its limits: Schick’s was a review, a speech and a peer-reviewed paper, Ryan and Gill’s an interpretation, and that of Tenbensel and colleagues a reading of fifty-five accounts of a single sector. They were made at different times, by different hands and by different methods, however, and they arrive at the same place, and I think that convergence is worth more than any of them alone.

When a warning sounded at the height of the reforms, a retrospective written a decade and a half later and an empirical study published fifteen years after that all arrive at the same finding, the finding is unlikely to be an artefact of any one way of looking. The finding is that the capability on which delivery depends has been allowed to wear away, and most visibly where the goals are hardest.

That lets us say something firmer about Schick’s warning than is usually said of it. In 1996 it read as a caution, one note of concern in an otherwise positive report, and it was treated as such, but read against what followed it looks more like a forecast. Schick even set the terms on which it should be judged: his test for 2010 was to ask the managers why things are done the way they are, and to listen for whether they understood the logic or merely recited the inheritance. We are well past 2010, and the interviews Tenbensel and colleagues conducted are, in effect, that question asked and answered. What they record, with reporting treated as ritual, capability hollowed out at the centre and the hardest objectives stalled for want of it, is the inherited answer, and on the evidence we have the warning was right.

The capability that decides whether good policy becomes good delivery is, for the most part, the one we name least, protect least and economise on first, and we were told as much at the height of our confidence, thirty years ago. Everyone knows delivery is hard, but the harder point is that we have held the diagnosis in writing for three decades and still failed to act on it.

Next month, as you would expect, Te Rā Whakamana stays with the implementation literature and turns to how the accountability machinery works to support or, as we will see, to undermine delivery.

References

Hawke, G. (1997). Roles, appropriate complexity, and good timing. In Future issues in public management: Conference papers. State Services Commission.

Ryan, B., & Gill, D. (2011). Past, present and the promise: Rekindling the spirit of reform. In B. Ryan & D. Gill (Eds.), Future state: Directions for public management in New Zealand (pp. 306–318). Victoria University Press.

Schick, A. (1996). The spirit of reform: Managing the New Zealand state sector in a time of change. State Services Commission and the Treasury.

Schick, A. (1997). The human element in public sector management. In Future issues in public management: Conference papers. State Services Commission.

Schick, A. (1998). Why most developing countries should not try New Zealand reforms. The World Bank Research Observer, 13(1), 123–131.

Scott, G. (1997). Continuity and change in public management: Second generation issues in roles, responsibilities and relationships. In Future issues in public management: Conference papers. State Services Commission.

Shipley, J. (1997). Address by the Minister of State Services. In Future issues in public management: Conference papers. State Services Commission. Tenbensel, T., Middleton, L., Silwal, P., & Cumming, J. (2026). Using the policy capacity framework to evaluate New Zealand’s primary health care policy implementation. Public Administration and Policy, 29(1), 36–49. https://doi.org/10.1108/PAP-11-2024-0183