How to become financially lean and fit, climbing the ladders and avoiding the snakes

The road to financial sustainability

Like many agencies you are likely to be coming, or have come, to terms with your recent financial settlement, as well as anticipating much greater scrutiny as the government dials up its focus on identifying and realising cost savings from ALBs. You may be pressed to make key decisions on what you need to do to ensure your organisation can achieve its maximum potential within the constraints this settlement and scrutiny brings.

Historically, when faced with such a set of circumstances you have had to decide between two fairly binary options, ie:

  • Squeezing – finding ways to reduce expenditure through a disciplined budget-setting process, leveraging natural wastage and identifying and realising efficiency opportunities, or
  • Major surgery – embarking on large-scale and potentially transformational change involving new operating models, new structures and new enabling technologies.

The paradox of today is that plenty of agencies require the impact and benefits from the latter, but without the inherent disruption and lengthy delays that come with it. As shown below, we have set out an approach that recognises these dynamics and enables a swift and highly focused way forward, highlighting some of the critical enablers (ladders) and bear pits (snakes) along the way.

 

First, some solid foundations

This approach needs to be built upon solid foundations, without which there is a real risk that success will never be fully achieved. These include:

  1. Strong and decisive leadership throughout – ensuring that senior, middle and operational leaders have the understanding, skills, commitment and approach, to play their part in ensuring success.

Snake: allowing a permafrost to take hold in the organisation, for example where senior leaders have the skills, clarity and confidence required to drive the changes forward, but this is absent at lower levels of leadership so progress and commitment stalls at this permafrost level.

  1. A genuinely agile approach and mentality – establishing a way of managing this work that enables both large and smaller changes to take place side by side, and in a highly agile way that enables the benefits to be realised at pace.
  2. A strong connection with purpose – ensuring all staff are fully invested in what the organisation is seeking to achieve, and can therefore commit to whatever journey the organisation embarks upon, on the basis that it will better equip them to deliver this purpose.
  3. A shared focus on impact – agreed, transparent and measurable success outcomes for the organisation that everyone understands, and where everyone can draw clear line of sight between what they do and these same outcomes
  4. An ethos of resourcefulness, tenacity, imagination and optimisation – establishing a culture and ethos centred around doing the maximum possible with the available resources, habitually seeking and realising innovative ways of achieving more with less.

Ladder: designing and rolling out a quick but insightful self-assessment exercise that demonstrates to what extent your agency has these solid foundations in place, and what needs to be quickly strengthened to maximise the chances of success

 

Then, a tried and tested approach with a strong track record of winning

This approach focuses on five key stages (aren’t they all!), with the optimum balance of rigour and control, strong engagement with the right people, strong evidence-based decisions, and being innovative enough to explore bold and imaginative options. It covers the following territory:

Stage one – framing the challenge

Essential, but rapid and focused. In a matter of hours or days you can nail the following:

  • The case for change – being clear about what the future organisation needs to be able to achieve, and to what degree. Embracing the hard choices of where in the future ‘ok’ is going to have to be good enough to preserve and protect where the organisation needs to be exceptional. Then bringing this to life in a way that galvanises the whole organisation behind this ambition, ensuring it is crafted in a way that is in tune with the connection with purpose ethos outlined above
  • Critical design principles – agreeing the principles that will anchor the future organisation and that will fiercely protect the existing strengths whilst surfacing the inevitable trade-offs between, for example, speed of response and quality of impact
    Ladder: ensuring that through the process of establishing a compelling case for change and key design principles, that the tough decisions around target performance, focus, priorities, and trade-offs are surfaced and agreed early
  •  Risk appetite – agreeing at the outset what level of risk the organisation is willing to take when exploring potentially bold options for the future.

Snake: not establishing a shared perspective of the overall risk threshold for the agency, and therefore not being able to quickly determine how bold the organisation is willing and able to be when pursuing options to reduce costs or increase value for money.

Ladder: designing and rolling out a quick but insightful self-assessment exercise that demonstrates to what extent your agency has these solid foundations in place, and what needs to be quickly strengthened to maximise the chances of success

Stage two – illuminating the current situation

A maturity assessment that shines a light on the organisation and brings clarity and insight that fully informs future options. The territory this assessment needs to cover is typically really clear – the trick is to use the right tools and approach for carrying out the assessment in a way that delivers the insight with maximum pace and minimum disruption. Key question may include:

  • Customers – what do our customers and communities value and need most from us, how is this going to change in the future, and how would they respond to adjustments in the way we engage with them?
  • Technology – are we optimising our existing technology to the full, and to what extent could we further enhance our existing efficiency and effectiveness through additional digital capabilities?
  • Demand – what current and likely future demand for our services do we need to increase, retain, reduce or remove?
  • Staffing – do we have exactly the right staff with exactly the right skills and experience focusing on exactly the right activity, and if there is a gap, what is the size and the nature of the prize in closing this gap?
  • Structure – does our existing structure encourage and enable agility, collaboration, efficiency and innovation? What adjustments can be made to improve this, and what tangible benefits would this achieve?
  • Energy and productivity – at what percentage of maximum productivity are we currently operating at, and what would be the impact of increasing this?

Snake: spending far too long trying to establish the optimum data set to support key decisions around potential efficiencies and cost savings, rather than starting from a position of ‘just enough’ data and working from there.

Ladder: having a suite of maturity assessment tools that bring real insight across a range of interdependent issues and areas through high engagement but low disruption techniques that enable rapid acceleration from the ‘thinking and analysing’ activity to the ‘deciding and doing’ phases

Stage three – creating a bold and exciting picture of the future

This is where bold and imaginative thinking takes place, inspired by the very best. It will include:

  • Focus – fundamentally challenging any sense of having to either transform everything or make small savings everywhere. Using the outcome of the earlier activity to determine what to strengthen, what to leave alone, what to optimise, what to reduce, and what to transform across key activities, services and functions
  • Being inspired – introducing examples from the very best to stretch the thinking and inspire the organisation to go further and faster where it needs to
  • Engaging – ensuring that the design of the future is a genuine team sport, with those who should have a voice given every opportunity for this voice to be heard, respected and applied

Snake: in the urgency of the situation and the need for early impact, not engaging key contributors into the future design thinking, be they representative customers or members of staff with relevant experience and expertise.

  • Designing – standing up a fully equipped and skilled service design team that can adjust or radically transform the necessary processes, ways of working, structures and cultures at pace to deliver the necessary efficiency and effectiveness gains.

Ladder: having the tools, techniques, skills and experience required to create a design ‘engine’ that will produce appropriately relevant, bold and imaginative solutions.

Stage four – stretching & building the best ideas

There are several critical things to cover before embarking on an implementation journey:

  • Testing – stress testing options in a safe environment before they go live. This is essential in encouraging the organisation to explore bold and imaginative options with the confidence that this testing will identify and resolve risks and barriers to them working before they go live

Ladder: having the tools and approaches to stress-test bold and imaginative solutions to see if they are safe, will land well and will deliver the target impact and benefits

  • Gauging impact – providing a picture of where the key changes are going to land most, and hence where any ‘hyper-care’ needs to be focused to enable people to make the transition and embrace any changes successfully

Snake: not recognising the scale and nature of the changes that elements of the organisation will have to embrace, be they oriented around new processes, ways of working, cultures or technologies, and therefore not proactively establishing the support to enable this transition to be achieved effectively

  • Designing a roadmap – working up an appropriately bold but well considered implementation roadmap that delivers the target impact and benefits as quickly and effectively as possible

Stage five – embedding and sustaining your future organisation

In many respects, the most difficult parts would have been completed by now. What we have now is a highly committed organisation, well led and with a clear focus. We have an exciting and compelling picture of the future and the ability to fully support those who are going to be most impacted by the changes in getting there. It is now about implementing the agreed roadmap, with a relentless focus on benefits and the provision of the necessary hyper-care for those most impacted by the change. We also need to ensure that a key legacy of this work is the culture and infrastructure to encourage and enable the whole organisation to continue to identify and realise opportunities to drive efficiencies well into the future.

Ladder: an assessment of the necessary conditions for success required to ensure that the implementation journey will succeed, ranging from strong and decisive leadership, excellent internal communications and engagement, to a strong benefits realisation approach, quick decision making and strong programme controls.

Summary

Organisations are often tested the most when they are forced to confront a set of financial dynamics that at best appear daunting and at worst seeming to run the risk of jeopardising their future success. This is particularly challenging for agencies that are set up with vital roles to protect the public and/or ensure that public services can be delivered in the way they should and must.

The key thing for leaders is to do the right things in the right sequence and at the right pace to ensure they preserve the future integrity of their agency and the vital role it plays. As an organisation that cares deeply for public service, and with a proud history of supporting agencies play their part, we share these thoughts outlined above on the back of spending over twenty years helping our clients achieve financial sustainability whilst enhancing local communities and protecting the vulnerable. We hope they are of help and please do get in touch if you would like to hear more.