Local Government Authority Demand Innovation Workshop - Blue Ocean Strategy
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Transcript of Local Government Authority Demand Innovation Workshop - Blue Ocean Strategy
APSE Solutions Demand Innovation Workshops
Post Efficiency Demand Management
The problem
• The age of austerity• Coupled with rising demand
• Graph of doom
• Or …….
The response so far
Cuts•Very low lying fruit•Service reduction•Service failure
Contestability•Value chain •Lean management•More for less
Competition•Value chain•Lean management•Procurement•Contract management
•More for less
Income generation•Mostly confined to existing markets and services
Emerging questions about demand•Troubled families•Reablement
Seeing the public services as a system: bigger picture •Sharing management
•Collaboration across sectors
Porter’s Value Chain
Porter’s Five Forces
Back to basics: why we what we do
• Social policy– Some things are important to everybody– Public health– Social well being– Economic well-being
• Cost/benefit of public services– Public provision can be more efficient than the
market
So is failure an option?
• What happens when the salami runs out?
Beyond supply side efficiency
• Prevention rather than cure• Nudge theory and behaviour change• Income generation
On a bigger scale: tackling causes saves money
Reactive treatment for stroke, heart disease,
diabetes
Prophylactic medication
Increasing physical activity
Healthy school meals
Resource swallowing potential
Lower
Higher Lower
Higher
Behaviour changingpotential
Activities to tackle lifestyle diseases
Leisure facilities
Park pitches
Sports development
Healthy school food
DrugTreatmen
t
Hospital treatmen
t
Prophylactic drugs
Physical educatio
n
Street lighting
Parental educatio
n
Footpath maintenan
ce
Sports development
Playgrounds
Parks maintenan
ce
Dance classes
GP care
Ambulance
service
Food labelling
Cycle lanes
Walk to school
initiative
High impact on underlying problem
Low impact on underlying problem
High costLow cost
Hospital treatmen
t
GP care
Ambulance
service
Prophylactic drugs
DrugTreatmen
t
Leisure facilities
Park pitches
Sports development
Food labelling
Dance classes
Footpath maintenan
ce
Healthy school food
parks maintenan
ce
Physical educatio
n
Playgrounds
Parental educatio
n
Re
so
ur
ce
Tr
an
sf
er
Impact/Cost Matrix
Walk to school
initiative
Cycle lanes
Street lighting
Calderdale Home To School Transport
13
The Evidence – create moments
It helped me gain more experience
and confidence..
Its more grown up...I will keep fit
I never thought he would be able to
travel independently ....it
will open up so many doors for him
As parents we were worried....but the travel team
were professional and reassuring...when we saw him walking home on his
first unaccompanied journey his face was beaming....we
knew we had made the right decision
I like travelling with my friends on
the buses
Developing a systematic approach
• Understanding demand• Changing the nature of demand
– Reducing it?– Growing it?– Redirecting it?
• Looking to the future
Blue Ocean Strategy: Demand Innovation
In a public service context
• Trade off between cost and service quality
• Ever increasing pressure on demand
• Ever increasing burden on staff
• Repeated service failure
• Ultimate organisational failure
• Pursuit of excellence and low cost
• Management of demand
• Empowerment of staff• Innovation in service
delivery• Organisational change
Key principles: W Chan Kim and Renee MauborgneBlue Ocean Strategy Unit: INSEAD
• Value innovation• Thinking beyond competition strategy• Creating new demand• Finding uncontested market space• Avoiding commoditisation of product
Key relevance to public sector
• Blue ocean is consciously concerned with demand side– Creating new demand– Managing demand through re-focussing
• Transcends marginal savings available on supply side– Competition and contestability theory focus on
cost control and efficiency – not enough– Entrenches current approach to delivery
4 Action Framework
New Value Curve
Reduce well below
industry standard
Create
Raise well above
industry standard
Eliminate taken for granted factors
Strategy canvas
• Analyse an industry• Analyse chain of buyers• Analyse and develop new strategy
Value factors
Focus
High
Strategy canvas: McDonalds
Qualities of blue ocean strategy
• Focus• Divergence• Compelling tag-line
6 Path Framework
Head to head competition Blue Ocean Creation
Industry Focus on industry rivals Looks across industry boundaries
Strategic group Focus on competitive position within strategic group
Looks across strategic groups within industry
Buyer group Focusses on better serving the buyer group
Redefines the industry buyer group
Scope of product or service offer
Focusses on maximising the value of product within the bounds of its industry
Looks across to complimentary products and service offerings
Functional – emotional orientation
Focusses on improving price performance within existing orientation
Rethinks the functional – emotional orientation of its industry
Time Focusses on adapting to external trends as they occur
Participates in shaping external trends over time
To reconstruct market boundaries• Look across alternative industries• Look across strategic groups within industries• Look across the chain of buyers• Look across complimentary product and
service offerings• Look across functional or emotional appeal to
buyers• Look across time
The service: What is it?
• Suppliers• Inputs• Processes• Outputs• Customers
Break
Exploring demand for services: exercises
• Who are customers?• Who are the stakeholders• Stakeholder analysis• Kano analysis• CTQ
Stakeholder analysis
Keep satisfied
Manage closely
Keep informed
Monitor(Minimum Effort)
Side player• Consult on
potential interest areas
• Increase engagement/interest
Observer• Keep up to
date• Increase their
interest• Try to turn
into supporter
Key Player• Consult
regularly• Engage in
decision process
• Privilege face to face communication
Supporter• Keep informed
regularly• Consult on
interest areasLow High
High
Kano analysis
Lunch
Analysing demand: Exercises
• Demand chain• Strategy canvas
– Excel spreadsheet or brown paper• 4 action framework
Strategy canvas
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Industry Strategy Canvas
Your Company / Product
Comp 1
Comp 2
Comp 3Key service factors
Sco
rin
g
Four action framework
Raise Reduce
Eliminate Create
Reconstructing market boundaries
Look across alternative industries
Look across strategic groups within industries
Look across the chain of buyers
Look across complimentary product and service offerings
Look across functional or emotional appeal to buyers
Look across time
Sequence of Blue Ocean Strategy
Buyer Utility• Is there exceptional
buyer utility?
Price• Is the price
accessible to mass of buyers?
Cost• Can you make a
profit at target cost?
Adoption• What are the
hurdles to adoption?
• Are you addressing them?
Buyer Utility Mapping
Making change happen
• Factors of disproportionate influence– People, acts, activities
• Fair process– Keeping the workforce on board– Stakeholder analysis (power/influence)
• Focus divergence– Functional to emotional– Demand chain
• Compelling tag line– Marketing
Hurdles to overcome
Cognitive• Attachment to
status quo
Political• Vested interest
Motivational• Demoralisation
Resource• Can’t afford to
change
• Ride electric sewer• Face disgruntled
customers
• Secure a consiglier• Leverage Angels• Silence Devils
• Zoom in on King Pins• Put them in a fishbowl• Atomise
• Hot spots• Cold spots• Horse trading
Focus on what matters
Mass of employees
Extremes Extremes
Focus on extremes – peoples, acts, activities of disproportionate influence
Company
Company
Focus on changing the mass – time and resources hungry
Conventional organisational change theory
Tipping point leadership
Influencing attitudes and behaviour through Fair Process
Strategy formulation
processFair process
Attitudes Trust and commitment
Behaviour Voluntary cooperation
Strategy execution
Exceeds Expectations
Economic theory
Exogenous (usually technology) growth theory
• Supply and demand • Structure – conduct –
peformance (Joe S Bain)• Stucturalist • Environmental determinism• Conventional competition
strategy – capture and redistribute wealth
• Supply side focus – zero sum economics
Endogenous growth theory• Creative entrepreneur
(Joseph Schumpeter)
• New growth theory
• Reconstructionist• Blue Ocean strategy -
create new demand and therefore wealth
• Demand side focus
Understanding Demand
‘Giving the people what they want is fundamentally and disastrously wrong. The people don’t know what they want…(Give) them something better’
Samuel ‘Roxy’ Rothapfel
www.apse.org.uk
Contact detailsAndy Mudd, Principal Consultant, APSE
Email: [email protected]
Association for Public Service Excellence2nd floor Washbrook House, Lancastrian Office Centre,
Talbot Road, Old Trafford, Manchester M32 0FP.telephone: 0161 772 1810
fax: 0161 772 1811web:www.apse.org.uk