95 – Making high performance happen through value-led management.

Posted by Lancing Farrell                                                                              850 words

tug of war

Some time ago I posted on Frank Ostroff and the barriers that he believes prevent change in government . Ostroff makes a lot of sense – formulate a vision, be mindful of your present situation, seek the support of stakeholders, set a clear path, understand the complexity in what you are doing, and hold people accountable. However, I have found that sometimes you need a simple tool to take those ideas into practice. I was once asked by a CEO.

‘How do you get people to fundamentally re-think what they are doing instead of making incremental improvements to optimise what they are currently doing?

Maybe this is the answer.

In local government, a significant barrier to change is the traditional functional structure of the organisation and the reluctance by Group Managers and middle managers to step outside their disciplinary areas. Most find comfort in sticking to what they know and going deep into their professional area. When the senior people have that preference it is a major impediment to any service improvement that involves improving cross-functional processes. The best you can hope for is that they will at least get optimise their part of the process. Their reluctance is reinforced when they are measured against functional outputs and there is no reward is provided for taking risks to focus on improving process outcomes. This is the first thing that needs to change.

The starting point is to get organisational acceptance that services are delivered through end-to-end cross-functional processes that deliver an output or outcome to a defined customer (see here, here and here). It is the ‘horizontal’ view of the organisation that Geary Rummler and Alan Brache describe. Once you get acceptance of this definition, improvement can really start. This leads to the next thing that needs to change.

An end-to-end cross-functional process is a value chain. David Walters and Mark Rainbird break value chains into two – the demand chain and the supply chain. This is useful because local government tends to not to focus on demand. We are more comfortable dealing with supply because we understand it and have control over it. At the point that the demand and supply parts of the value chain meet Walters and Rainbird have positioned the value proposition. In  some organisations it will be at the point of tension between those wanting to really understand demands and those focussing only on the supply of service – the mid point of a tug-of-war.

If an organisation is to be customer-driven with a genuine focus on customer or public value an understanding is required regarding what that value is, how that value is created, and what will be done to deliver that value. When this is written down it is the value proposition. It sits between the demand and supply chains and connects the value to be produced to satisfy demands with the operations producing it.

Once you have a value proposition, you can refine it and use it to provide a focus for process improvements. The diagram below is a version of Walters and Rainbirds value chain that I have modified for public services.

Walters and rainbird modified value chain

The value proposition provides a way to guide decision making about the trade-offs occurring between creation of private value and/or public value by the organisation’s operations. It can be for the whole organisation, sets of services or a specific service depending on how you define your value chain.

The value proposition should be an internal document that guides decision making. I think it is a mistake, especially in the public sector, when they become part of the marketing collateral because they risk being transformed from a flexible and useful statement into a public commitment that has to be met (often without consideration for common sense).

It is important not to get hung up on writing the value proposition. It doesn’t have to be complicated. A simple value proposition says, ‘For (customer) the (service name) offers (explicit description of customer benefit or value from the customer viewpoint) because (description of the organisational capability that creates the value).’ Here is a worked example:

For residential properties, the waste collection service offers choice by collecting wastes separately and offering a range of bin sizes so that residents can select and pay for the combination of services that best meets their needs.

Once you have a value proposition, or series of value propositions, you are on your way. People can start fundamentally re-thinking what they are doing and whether or not it they are producing the value described by the value proposition. Simply getting better at what you already do may not be enough. Improvement is then focussed on the supply chain; who is involved in delivering the service and what is their contribution (the ‘swim lane’ diagrams used by Rummler and Brache are really useful); and what changes to the design of the service are required to ensure that the value proposition is delivered. This also allows thinking about potential service failure points and development of service recovery strategies.

Ostroff is right. There are some unique barriers to change in government. Knowledge of those barriers and a plan to overcome them is essential. In saying that, sometimes you just need a neat and effective technique to effect the changes necessary to improve and be high performing.  Try value-led management.

Ostroff, Frank   2006. Change Management in Government, in Harvard Business Review, May.

Rummler, Geary A., and Brache, Alan P. 1995. Improving Performance – How to Manage the White Space on the Organisation Chart.

Walters, David, and Rainbird, Mark 2007. Strategic Operations Management – a value chain approach.