Winter 2017

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Pioneering better commissioning

As you may know, many local authorities no longer provide care and support services themselves and, instead, commission these services. Whitehall’s idea is that this will drive costs down through the market mechanism. A couple of weeks ago I listened to pioneers in Wales who have developed a profoundly better approach.

Having jointly studied the system of care the local authority and service provider recognised the folly of commissioning on price and the dysfunctional consequences of standardising services. Together they adopted a better way of working, based clearly on the needs of those who receive care. Instead of being standardised the care is thermostatic, because people’s needs change. Because the care is better costs fall as they no longer carry the costs of ineffectiveness. It teaches us that cooperation is what’s required for effectiveness, not competition.

This work will feature in the up-coming Masterclass ‘Beyond Commissioning’

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The Vanguard Method and IT

A gob-smacking example of the better way to develop IT is occurring down south in a housing organisation. They had previously spent half a million on an IT ‘solution’ which was over a year into implementation when they began employing the Vanguard Method to study and redesign their services. Having understood and improved the operations without touching the IT they came to the clear view that what had been developed was not fit for purpose and so developed their own. It cost £4,000.
IT is the last thing to do, not the first. If you haven’t read my paper on what’s wrong with IT-based change is here.

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No change orders – a first!

In large-scale construction projects it is considered normal to see plenty of change orders. These are created when the work hits a problem and they typically involve labyrinthine processes which change specifications and alter project management plans; they are the bane of the constructor’s life. In systems terms they increase tampering, so things get worse; in practical terms they increase costs.

Applying the Vanguard Method in a construction project has resulted in NO change orders; people in the industry can’t believe it. The contractors who do the work love it. The only losers are the lawyers. It’ll never catch on.

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Beyond Budgeting

Our contribution to the Beyond Budgeting Round Table has been to tackle budget management from a position of knowledge of the true costs of operations. It might sound scary to a command-and-control thinker but the process of getting knowledge reveals how budget management is a primary cause of sub-optimisation (managing costs causes costs) and by establishing better controls you arrive at a place where you can predict costs going forward.

The consequence is there is no requirement for the monthly budget-scrutiny meetings. Why would you review variances in line items if you can predict the total costs going forward? (I guess the answer is you’d do it if you wanted to tamper).

The next European Beyond Budgeting Meeting is in Stockholm.

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Digital Deja-vu

As more and more financial services organisations go digital, we find ourselves walking in to the same problems around the world. New digital services are designed by ‘blue-sky thinkers’ with a bias to use the features of the new technology. They start their development of these services by imagining customers, calling them ‘personas’. With every new digitised service designed and delivered, they strive to meet requirements for forcing customers down that channel. The consequence is more failure demand in their service centres.

It is a re-run of what we saw in the 80s when call centres were established. If you start with a focus on lowering transaction costs and you have no knowledge of demand, you drive up failure demand; costs go up and customer satisfaction goes down. We will be running a Masterclass on digital services in the spring. As well as explaining why this problem occurs – and how serious it is – we’ll show how to design digital services that are effective, and explain how to determine whether a digital channel will be the right or wrong way to go.