Public organisations really can find cost-saving changes by looking afresh at what they do
For politicians faced with a £90bn hole in the public finances, all the options look difficult. Do they implement cuts and stop doing a lot of things that the public have come to expect or, at the other extreme, do they increase taxes by almost £3,000 per annum for every household? There must be a third way.
Predictably, there is now a lot of talk about innovation, new ways of working and better use of technology. Many of us have been promoting this approach for years but even we have to admit that the scale of the challenge looks daunting.
It is true that good ideas emerge every day at all levels in organisations and that if you could somehow capture them, public service bodies could potentially make hundreds of improvements, both big and small. Kent County Council, for example, recently experimented with a two-day ‘ideation’ (ideas generation) event, using technology to gather ideas from its top 200 senior managers. More than 140 managers contributed, generating 78 ideas with 298 review comments.
In addition to bright ideas, we need mechanisms to identify and fast-track the ones that can make a big impact. Encouraging citizens to put forward their gripes in the form of song, as pioneered by Birmingham, might be innovative but it is not going to fill much of the £90bn gap. Building on Sir Michael Bichard’s Total Place approach, part of the Treasury’s Operational Efficiency Programme, and looking for radical economies of scale across whole communities just might.
Unfortunately, the public sector’s record of managing large-scale innovative projects is poor. Also, according to Geoff Mulgan of the Young Foundation, the British public sector is using only about 5% of the methods that are available to it to drive innovation and reshape services. It is not surprising therefore that the public and many in the public services are sceptical about the commitment to innovation and the scale of the benefits that it can produce.
Innovation can just happen, but successful organisations understand that it is important to create a climate and culture that encourages it. Most new ideas do not come purely as a flash of inspiration to a lone member of staff, they result from people coming together to create, combine and share their thoughts. Successful organisations are the ones that create the environment to unlock and harness the talent, energy, and imagination that already exists within their staff, customers, managers and leaders. These organisations also recognise that different skill sets are usually required to take forward each stage of the innovation cycle.
Research by the Audit Commission identified six factors that are critical to creating this type of environment: organisational ambition; openness to new ideas; an organisational structure that encourages collective responsibility and information sharing (such as cross-cutting projects); empowering staff and partners; allowing space for creative thinking; and using information intelligently to identify trends and anomalies, which helps spark ideas and make options clearer.
Successful organisations aim to generate a portfolio of innovation projects that can then be evaluated, piloted, prototyped or tested to assess their viability, potential payback in terms of benefits and the likely level of risks. There should also be an expectation at the outset that not all projects will proceed and that some might be beyond the overall capacity of the organisation.
Innovation is not a painless alternative to cuts. More than 50 years ago, the economist Joseph Schumpeter coined the phrase ‘creative destruction’ to explain the processes whereby innovations destroy existing technologies and methods of production. Innovation will mean job losses, new structures and new ways of working that will challenge long-held beliefs and should cause us to fundamentally rethink the way that public services are planned and provided. It will be an exciting time for those who are prepared to take on the challenge.
John Thornton is an independent adviser and writer on business transformation, financial management and innovation, and executive director of e-ssential Resources.
http://e-ssentialresources.co.uk/
