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The Cost of Saving

22/6/2017

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A perennial part of our work is to enable services to continue to function, if not improve their performance, after costs have been reduced and often when budgets are suffering cuts.

We have dozens of examples where a 'silo based' budget has been introduced, leading to an increase in costs for the organisation as a whole.

We know that 'everything is connected' and yet the focus on budget savings seems to keep leaders blind to the big picture, often provoking target driven behaviors that detract from overall performance.



We see this in private and public sector alike. One private sector example that springs to mind is in respect to bonuses and budgets. We know senior managers who had a significant reward in the form of a bonus payment tied to their performance within their contract. To ensure they received this bonus they held back orders from the end of one financial year, when already ahead of target, so they could give themselves a head start on next years targets. They did this irrespective of the delay it created for the customer and the lost revenue not booked and billed for the company ... we've also seen people in similar conditions pull in false sales to hit target and qualify for their bonus, only to issue a credit note the following month once they'd banked their bonus payment. In many ways, the stock-market requires this kind of 'target driven behaviour', because senior exec's are considered incompetent if they are more than 5-6% under OR over their annual forecast. The market loses confidence in a CEO who can't predict turnover a year ahead and share prices suffer as a consequence, even if the organisation has out-performed predictions and increased profit ... it's a very strange world.


The private sector can boast similar quirks and often does. We have many examples which show an array of savings that look good in isolation, but have added in excess of £1/2M to costs when looking at the bigger picture. These feature such things as poor route planning in Passenger Transport, where contractor costs look to be reduced within individual routes but increase the overall annual spend and similar issues that extend beyond Local Authorities and into other services, seeing council decisions to cut costs drive more cost for the local Police force than they are saving.

We'd be interested to hear any stories you have where the focus on the detail increases the big picture costs. We're not on a witch hunt, we don't want anyone to name and shame, or identify where it happened, but we'd love to hear about things in principle so we can help our audience appreciate the complexity of systems and show how cause and effect is sometimes a very big picture indeed!
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Politics or Quality revisited

7/6/2017

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Introduction: Politics or Quality was written in 2006 during the ‘Best Value’ era. As ever, Politics in the UK moves on at an ever-increasing speed, although rarely achieving anything more positive than the philosophies those concepts replaced. Now, via a single minded, long term austerity drive, that ideology fuels failure and inflation while exhausting a one-track pony towards achieving: far less for less.

When Dave wrote ‘Politics or Quality’ with its twin book of ‘Quality or Politics’, major Transformations were quite easy to start and see through. Since then, the term ‘Transformation’ has become massively over-used such that virtually every major organisation Corporate Leadership Team believe they are masters of a universe that they don’t even know exists.

The development of Continuous Improvement over the years enables more powerful and useful transformations, against a background of denuded services where the management have lost sight of what good design should be, and where costs and poor quality of service delivery are frequently escalating out of control, instead of being made more competitive via the constraints of austerity.

Virtually every profession has been ravaged over the last decade from a rapid boom period in the late noughties, to an almost decimation by the late teens of the 21st century. These impacts in Social Care, NHS (most clearly seen in A&E) and infrastructure management, including Potholes and Flooding all point to a system that simply doesn’t work.

​The Socialist Best Value scheme ripped apart their hated Compulsory Competitive Tendering fore-runner, but as a result lost all sight of commercial awareness and practice, followed by the Conservative Austerity measures, that ruthlessly decimate budgets, almost without care of consequences. Neither works! Neither has helped the public sector! Each in turn creates turmoil and survival by rearranging the deck chairs on the Titanic.

When we start an intervention, there’s always trepidation… ‘Can we make a positive difference?’, ‘Can we engage meaningfully with the right people’, ‘Do they really understand what they need?’. We never clone ideas from another place, but we are willing to build on and learn from previous experiences. Thus; we are able to hit the ground running, often to be slowed down by the organisations reluctance to engage, or more usually, because they are swamped by business as usual.

Oddly, the consequences of too many years of austerity is a system that is far easier to add value to, if only the domination of wrong minded, poorly advised subject matter experts, can be overcome. i.e. ICT departments who see hardware and software, but NOT purpose of systems, HR people who create ‘one size fits all’ rules, who have never run a big business, Finance staff who set up accounts structures that are useful to them, but not the services provided and Change Managers who want to define outcomes of a review before starting it, without understanding how a service actually works.

It is said that 70% of change projects fail to deliver! Post programme reviews always create Blame and Excuses: The workforce didn’t engage, management wouldn’t commit, their information was wrong, we weren’t permitted to do that, the targets weren’t realistic…

SSD have been permitted to work with dozens of large organisations on hundreds of projects and programmes, spanning incredibly diverse services and requirements via Lean and Systems Thinking using Visualising Transformation. Every one of those projects and programmes have exceeded expectations: Greater financial outcomes, achieved quicker than thought possible, with as many job gains as losses, with lower investment in new kit, able to get better over time.

Why is there a significant difference between Visualising Transformation (VT) and ‘Best Value’, ‘Austerity’ or ‘Prince 2’?  Well, VT is designed to be adaptive, starting from the reality of the circumstances of THAT service, making the good parts better, reducing the impacts of the bad parts and developing the capability of the organisation to grow in capacity and competence. We routinely achieve More for Less, which is why we have evolved from just VT to VT-Achieving More for Less (VT-AMfL), designing sustainable leadership into a whole system aware culture.

​Note: VT and VT-AMfL are progressive books available from this web-site.

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