Creating opportunities from an uncertain future - Re-imagining local government - Exceptional people delivering exceptional results
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Re-imagining local
government
Creating opportunities from
an uncertain future
Exceptional people delivering exceptional resultsAnyone reading this will not need reminding about the cases for change, that stand up to political scrutiny and partner
scepticism, to unlock the biggest opportunities open to local
fiscal and demand pressures facing local government. government.
Rather than rehearsing these issues yet again, in this Newly-designed services will be clearly targeted on those things
paper we focus on developing a positive future for local that make the biggest difference, with provision focussing on
equality and customisation around specific individuals to reduce
government. dependency. Demand drivers will be fully understood and mapped
We argue that the only way local government is going to thrive in onto costs, providing a rich picture of the relationship between
the current and foreseeable conditions is for it to take a good look, customers need, spend, and cause and effect.
outside-in, at what services it provides, to whom and at what
These new capabilities will not only allow the organisation to
customer life stage: the days of universal services are long gone.
transform itself in the short term but also allow self-evolution as
The reality is that no organisation, public or private, could a new, rich evidence base becomes woven in to the operational
continue to stay as it is today whilst reducing its resource base fabric of the organisation. We see a world where the organisation
by circa 50%. What is left cannot, by anyone’s logic, support the has demand management principles designed-in. This will allow:
same model of operation and delivery. There can be no doubt
zz Pro-active, not reactive, management of demand
that things must change, and solely relying on income (business
rate growth or commercial activity) will not be sufficient in the zz Rich customer insight from all customer interactions
medium term.
zz Flexible and responsive service reconfiguration
We believe that:
zz Customer service operations (not just the contact centre) to
zz Structured and well thought through change will be act as an effective front-door truly gate-keeping, channelling,
challenging without a clear strategic vision that is politically triaging and preventing at every interaction
led
zz The most effective specification and design of the right
zz Local government will need to fundamentally change its services, for the most vulnerable, to meet customer demand
shape at the lowest cost without affecting quality.
zz Operating models cannot be rigid and need to self-evolve This means that authorities will no longer be made up of a
because the future is difficult to predict patchwork of disconnected services designed around ‘one size fits
all’, institutional, ‘I know best’ assumptions; but rather a seamless
zz A distributed model of service delivery will become more
pathway approach to meeting customer needs that extend
common
beyond the local authority.
zz The big opportunities lie in whole system design
We believe the opportunities from such an approach are untapped
zz The size of your middle office is an indicator for overall and provide a viable and innovative approach to tackling the
organisation efficiency sector’s challenges.
zz Demand management can lift the lid on the next round of big
savings, particularly in partnership
A little bit of sector context
zz Local government can lead the way in joined-up local
Capita understands that the precise future direction of the
delivery as only it has the local democratic mandate
sector remains uncertain and we have via our Four Futures
zz A minimum four year planning cycle is required to allow the Models, explored some of those potential futures (published in
requisite change to occur. the Guardian - http://www.theguardian.com/local-government-
network/2012/dec/13/local-government-public-services-futures).
To do this, the sector needs to have access to new capabilities
and skills, when it needs them, to design better ways of delivering The policy direction of national government remains unclear
services and to pro-actively manage demand. These new and no one really knows what to expect from health and social
capabilities will allow evidence and insight to create compelling integration, or the unitary authority debate. However, what the
1sector can always expect from central government is the the time.
unexpected. Our view is that uncertainty is not a reason
However, it is also a weakness because the direction and
not to act. In fact, to catch or dodge the curveballs will be
pace of change in the sector has always been constrained
a key behaviour or design feature of any future authority.
by the democratic cycle and political structure. To unlock
This is why we believe that both a strong evidence base
the power of the democratic mandate, decisions will need
and organisational agility will be critical to the successful
greater evidence and science in decision-making if credibility
management of uncertainty.
is to be gained with partners who are often richer in insight
There is a view within local government that the current and evidence, most notably in the health sector. The ability
savings are achieved by simply rolling back to 1990s spending to show evidence-based cause and effect and whole system
patterns: but this cannot be the case as the landscape and impact will become an essential new capability.
customer expectation has shifted so much. Regardless
Local government has the opportunity to lead the way.
of the time travellers theory of rolling back the clock, no
However, to be seen as a credible leader it must get its own
organisation that has experienced such substantial reductions
house in order first.
can maintain its original shape and form and still continue to
deliver the same level and quality of service. Despite the patchwork of locally elected parties, irrespective
of their political stance, there is increasing convergence of
This is compounded by the fact that the sector has until
what needs to be done to resolve the fiscal challenge. There
recently enjoyed nothing but increasing budgets for decades,
remains however, a difference about how it needs to be done,
and few leadership teams have recent experience of managing
and this will be enduring. This will lead to a fragmentation
genuine decline through transformational service remodelling.
of how individual local authorities decide how to deliver
The skills and behaviours required to do this are quite different.
their services – a real mixed bag – resulting in a distributed
(Of course there would not be decline if new revenue streams
mixed economy model - in-house, arms length, not-for-profit,
were being created to offset central funding reductions.)
private etc.
Should the sector be looking to the venture capital market
This means that when we cast our gaze from one authority
for inspiration? They have the skills to create a healthy
to the next the differences will appear to be greater than
business from a distressed business that may be struggling
ever before. Whilst there may be some design principles that
with reduced income or a dramatically changed competitive
can be applied on a national basis, the actual design will be
landscape.
very different to what has been before. The new design will
We see examples littering the headlines where organisations undoubtedly be driven by local innovation, whether within an
continued to deliver the same type of product or service individual authority or across a local geography with partners,
model in the context of changing customer behaviours and as well as the organisational heritage and historical context of
market trends. These include: Blockbuster who failed to ‘place’.
move to a more agile online model and fatally kept their high
The power of partnership working
street stores; and Sony who failed to move away from device
manufacture to application based development. Models of this distributed and fragmented nature mean that
it will become increasingly difficult to ‘put your arms around’
But there are those who have adapted: Habitat who closed
all service delivery and manage it in a traditional hierarchical
down many of their high street stores and partnered with
manner. Officers will therefore have to learn to develop
other high street retailers to sell their products, whilst keeping
skills that allow them to manage the new distributed service
their core successful flagship stores; and Apple interestingly
delivery model regardless of organisational boundary and
did adapt its model after losing out to Microsoft in the 70s
hierarchy. These new skills could be crudely categorised into:
and 80s and now has become the premium brand in the
electronics market. These companies demonstrate that in the zz More engaging: talk to more people, be outwardly
face of seismic market shifts successful change is possible. focussed
Making your democratic mandate work for you zz More assertive: don’t settle for an unfavourable outcome
but avoid zero-sum exchanges
Local government is founded on the principles of local
democracy – which is both a strength and a weakness. It is zz More positive: don’t get depressed by difficulty or
a strength in these austere times as authorities are the only complexity
body that can demonstrate a true democratic mandate – no
zz More Machiavellian: how is power really exercised, how
other locally delivered public service can through public vote
do those people become successful?
make this claim. This should prove a powerful bargaining chip
in a time when service integration is the favoured phrase of The big gains in local government for service improvement
2and savings exist in designing demand management reducing, shifting to the most cost-effective channel (and
principles into new target operating models. Not just in one stimulating ‘positive demand’ – i.e. for services that can
organisation, but across many to embrace whole system be charged for) and understanding the cost drivers.
working and collaborative working with all kinds of partners.
Driving
With more distributed working the number of partners will
increase and the system will undoubtedly change and evolve zz Outstanding customer services management.
like an ecosystem.
And
Local government cannot achieve whole system working in
zz The specification and commissioning of outcomes
isolation but it can certainly lead, start the journey and lay the
that truly respond and react to insight and understood
foundations, indeed become the founding member.
demand.
Over the years there have been many boards and partnership
Leading to
groups - from LSP’s to the more recent LEP’s and Health and
Wellbeing Boards. It is perhaps too early to comment on zz The exploitation of a mixed economy of service provision
how successful the new groups will be, but are they learning that will deliver the next level of supply side savings
the lessons? And should social value as a principle be used (because delivery structures will be substantially
as the common currency and nomenclature to aid such remodelled to respond to insight and demand).
conversations?
All underpinned by
Of course we all realise that this is not straightforward, and
zz Real-time flags and triggers that continually feedback the
its complexity matches the complexity that so many of our
changes in customer behaviour and demand to allow the
citizens experience in their lives when interacting with the
organisation to self-evolve and define its own operating
myriad of public services they rely upon.
model.
Putting it into action zz A new minimum four year planning regime.
Our core proposition in this paper is that new organisational
To realise the potential there are a number of new capabilities,
models will need to be designed by bringing together some
tools and features that need to be accessed. Our view is that
‘old’ principles in a ‘new’ way. These are:
some parts of the sector are relatively immature in the use
zz Customer insight (and business intelligence more widely). of these capabilities – to the extent that they may well be
considered ‘new’ capabilities by some. The diagram below
Linking this to
illustrates these thoughts.
zz Demand management – preventing, eliminating,
zz Understand your demand and
Demand (and political influence) cost drivers
Customer Demand Cost zz Gate-keep and ‘one and done’
drivers zz Change pattern of demand.
insight management
Real-time evidence - flags and triggers
zz Triage
Enablers zz Change customer expectations
Customer Commissioning of every interaction
interaction / zz Specify outcomes that satisfy
services Procurement the new customer expectations
zz Procure the supply.
zz Re-engineer services to match
Supply - operational delivery
demand
Internal delivery External delivery zz Operational excellence and
(Continuous improvement) (Contract managment) real-time information
zz Maintain value.
3The new capabilities and skills their cost and have genuine market currency – create
the kernel of a ‘plc group’ structure that can expand its
zz Customer insight capability: that pro-actively and
portfolio.
continuously creates rich intelligence on citizen need and
behaviour that informs what services need to be provided zz Develop the next generation of leaders: those
and, more importantly, translates this intelligence into who will put the energy into the new capabilities and
effective demand management strategies that positively underlying technology we have described i.e. insight,
alters the flow of demand through the organisation. It demand management, etc in a partnership setting. This
is equally able to apply this internally to tackle its own means they are equipped to work in an ecosystem, have
demand management challenges (which will also affect developed the rich local and regional networks that make
the middle office see below). partnership successful; and have the commercial skills
required to reduce dependency on central government
zz Macro commissioning capability: whether delivered
funding.
internally or externally, it accurately specifies outcomes,
not inputs and processes, using the outcomes from All of these things combined will create a radically different
customer insight and commercially savvy contracts that organisation and culture. Even if full system integration does
link payment to outcome achievement. not occur in our horizon, local government organisations will
be equipped for when it does come; but more importantly
zz Procurement (Micro-commissioning) capability: that
will deliver more focussed, impactful, lower cost services to
buys / enacts local commissioning intents and effectively
citizens and customers.
stimulates the local SME economy and continually
delivers value through all third party spend. What would future operating models look like?
zz Single unified customer services: (by which we mean It is our view that building in these capabilities and skills
no outpost functions in directorates) that is scalable would allow an organisation to self-evolve, staying in tune
to envelope the whole local eco-system and make with customer needs and budget envelopes – not a static,
integration at the front office easier. time limited operating model.
zz Minimalist middle office: Perhaps the holy grail. Those One possible outcome could be an organisation constituted
parts of the organisation that link front, back and service of different operating models set to provide not just different
delivery together and ‘intervene’ to remove complexity services, but different variants of the same service to match
/ variability to allow a transaction to be processed first specific customer groups and their life events.
time. Designing in demand management principles will
Simplistically this could mean two operating models existing
mean that there will be no requirement for as large a
in a single organisation – much like the way insurance brands
middle office. Variability is removed as customers are
target different customers based upon segmentation, yet
managed better at the front door fuelled by customer
which are all underwritten by the same organisation. They
insight. This will result in the removal of variation and
provide slightly different policies and service levels depending
allow the back office to add greater value at lower cost.
on the customer group they are targeted to serve.
zz Single unified back office functions: (by which we mean
For local government, this could mean one model for the most
no outpost functions in directorates) that is scalable
vulnerable – optimised by multi-disciplinary teams, prevention
and makes it easier to take advantage of economies
and the lowest total cost to prevent; and another for everyone
of scale through integration; engendering internal B2B
else; highly transactable, 24/7, digital by design and the lowest
relationships without losing the ‘one council’ approach.
total cost to serve.
zz A whole ‘New Way’: of organising services that tackles
Organisational maturity
and manages demand proactively, organised around
pathway and place – not traditional service stacks. If Given the new ability to self-evolve, we see three stages of
internally delivered the creation of real-time operational organisational maturity based upon its uptake of customer
information will allow continuous improvement teams to insight, demand management and the active removal of the
work magic; and if external, contract management will middle office. Our approach plots the genesis and potential
stop value erosion. direction of travel of local government and what it could
allow your individual organisation to become. We map these
zz Forensically account: for how all spend links to
onto the three potential transformation life stages that
outcomes and meeting customer need with a robust
organisations could generally take (described as follows).
evidence base.
zz Commercialise: non-statutory services that at least cover
4Mark 1 – the traditional local government organisation contact; and is not customer centric – resulting in customers
structured around service delivery operations that operate being assessed, multiple times often inappropriately. It does
largely independently of each other. Strong executive directors not use customer insight to inform service configurations,
trying to operate for the corporate good, but in practice often take advantage of economies of scale, link pathways to
in isolation, delivering their services and protecting their take advantage of up and downstream value and has a large
budgets. Each running its own front, middle and back office middle office focussed on trying to manage variable demand
with limited connection and joined up thinking across the as there is no effective channelling. This results in unchecked
council. costs of delivery and demand-led service pressures being left
unchallenged.
Services actively seek demand to service, not sifting to find
genuine need, or deflecting demand to reduce unavoidable Schematically we represent this scenario below:
Political Leadership
Officer Leadership
Unified customer service platform
Customer Services
Middle Office
Service Delivery
Back Office
Unified back office platform
5Mark 2 – evidence-based authorities will introduce customer where outcomes, not inputs, are measured. This drives a whole
insight and rely on this to help inform their case for change. new mindset within the organisation.
It will be woven into everything they do and allow real Customer and back office services become corporatised and
evidence-based decisions to be made about customer needs a one-and-done mentality removes all failure demand: the
and how services need to be configured to meet them. This number of transactions will halve and there will be a real
feeds a strong commissioning mindset that clearly specifies focus on what really matters. This allows departments to
customer needs and takes these from intent into action. focus on the core business and become expert providers, not
‘conglomerates’ doing everything.
The focus on treating customers like a family member, and
ensuring they get the best possible service, means that The middle office will be significantly reduced as better
multiple different ways of delivering services are designed. Not demand channelling, gate-keeping and triage reduces
entirely agnostic of who delivers them but with a keener focus variability. Services (front, mid, service delivery and back office)
on ensuring services were configured the right way to deliver through customer insight are designed to manage tomorrow’s
and meet customer need. known customer need, meaning there is no waste anywhere in
the current system.
This means multiple delivery vehicles will be used – not just
the standard internal delivery vehicle. Even internal provision However, service duplication is rife and joined-up / whole
will be held to account by (pseudo) contractual arrangements pathways delivery is still open to exploitation.
Political Leadership
Officer Leadership
Insight
Commissioning
Unified customer service platform
Agile
Service 1 Service 2 Service 3 Service 4
Unified back office platform
Agile - configured to rapidly scale up or down
Direct Joint Shared
Outsource ADM
provision venture services
6Mark 3 - the pathway council will turn the traditional resources are focussed on those that really need them –
directorate-based delivery model through ninety degrees. protecting the most vulnerable.
Service groupings no longer exist - if they do they are in the
Commissioning, using demand management, designs out
background not the foreground; and local authorities become
failure demand and services are continually reconfigured to
matrix-based. Individual services and providers still exist but
match changing demand. Business planning is now based
are not structured around ‘silos’, but customer pathways
around accurate predictions of demand and not generic
instead. The greater focus on commissioning means that there
percentage increases for demand pressures.
is a multitude of capable providers in the market as well as
very efficient and effective internal provision. Strategic commissioning sets the agenda and manages a
complex supply and provider chain, or eco-system, ensuring
This becomes a modular system where pathways can be
it delivers its evidence-based plans. Continuous improvement
rapidly rebuilt from constituent building blocks.
and contract management become pivotal capabilities to
Pathways are therefore made up of multiple organisations, ensure commissioning designs and benefits are realised. This
whichever are best, and handovers are smooth as there is one can empirically demonstrate the amplifying value it brings
unifying system that providers plug into to share data and to through a 10:1 positive return on investment in social value.
concoct true, multi-agency, real-time solutions.
Whole system redesign is now a reality and all parties benefit
Customers no longer enter the system unnecessarily, are from each other’s upstream interventions and downstream
pro-actively supported and kept out of the system through value, as the evidence base, generated through customer
active dialogue with partners and decisive preventative insight, creates compelling and undeniable cases for change.
measures. They are not treated equally, but equitably, meaning
Political Leadership
Officer Leadership
Insight
Commissioning
Unified customer service platform
Pathway 1
Agile
Pathway 2
Pathway 3
Unified back office platform
Agile - configured to rapidly scale up or down
Direct Joint Shared
Outsource ADM
provision venture services
7The final critical question(s) zz Are you sufficiently prepared to lead through almost
apocalyptic uncertain times?
This paper raises questions and suggests solutions for the
following: zz Can your organisation self-evolve and adapt to whatever
the future holds?
zz Are you ready for the final push to thrive with
approximately 50% of what you had before? zz Where is your organisation placed within the matrix of
maturity?
zz Do you have access to the new skills and capabilities
needed to plan and execute radical change and We are at the forefront of the drive to help you answer
pro-actively manage demand? the critical questions and to implement new insight led
methodologies for local government.
zz Can you replicate and use some of the techniques and
tools associated with the most successful private sector
companies?Contact us: To discuss any of the ideas contained within this paper or your own ideas / challenges contact Carl Brooks on: T: 020 7901 0068 E: Carl.Brooks@capita.co.uk W: www.capita.co.uk/consulting
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