221 -The Vanguard method in Australia.

By Tim Whistler                                                                                                         1000 words

Progressive leaders

The summit offered an opportunity for those who are unfamiliar with the Vanguard method to hear about work that has been done in Australia by IOOF (a superannuation fund manager) and the County Courts Registry using the Vanguard method. Vanguard team members presented public service case studies from the UK.

It was an interesting event and it highlighted the potential for leaders to think differently and better understand how work is being performed in their organisation, what is happening in delivering value to customers, and how improvements can be made.

There were several issues relevant to local government in Victoria.

The importance of understanding the difference between value demand and failure demand was emphasised.

Failure demand is the demand that occurs when something isn’t done or isn’t done properly the first time.

This highlighted the need to focus on customer purpose and value demand if you want to be more efficient or save money, rather than just trying to drive down costs, which will inevitably include failure demand. The risk is doing wrong things wronger.

The W. Edwards Deming statement that the system people work in is responsible for 95% of performance and 5% is within the control of individuals illustrated the importance of designing the system of work. It explained for me some of the frustration experienced by workers at councils where the corporate services division controls organisational systems, which have become disconnected from customers and what creates value for them. Workers want to do their work differently but the system constrains them.

The difference between systems thinking and ‘command and control’ was shown using a comparative table. A take away for me, given that councils are effectively required by legislation to be managed top-down using a ‘command and control’ approach, was that it is the ‘control’ element, rather than ‘command’, that is the main problem. Much of the control in local government is driven by risk management, often in response to confusion and uncertainty created by the multiple sources of accountability.

Knowledge of what matters to customers about their demand needs to flow through to the workers delivering services. This allows the workers to make decisions that are more likely to fulfil purpose and reduce the risk of failure demand. Workers can absorb the variation introduced by customers. Surely there is less risk when workers know why they are doing the work, the context for it, and what the customer expects (i.e. the purpose and value demand).

A key insight for me was the statement from IOOF that they needed to simplify the way they were thinking about their business to improve it.

In local government, we tend to do the opposite. We like to talk about how many services we deliver, how diverse our customers are, and anything else that highlights how special each council is. There is intrinsic complexity in public services and this way of thinking doesn’t help. It also prevents development of shared services, collaborative procurement of common materials and services, and many other opportunities to be more efficient without losing what is valuable to customers.

Unfortunately, this way of thinking adds complexity and cost.

IOOF determined that when complexity increased in their organisation it decreased the consistency of services delivered to customers. Using the Vanguard method, they sought to find better ways of working, become easier for their customers to deal with, and develop scalable flexibility in their operations. Simply adding more people in response to a growing workload would only increase complexity.

A key indicator for IOOF management was when people said they were too busy doing the work to talk about the work. They were focussed on achieving their performance targets. Management became concerned that if they were too busy to talk about the work, they were probably too busy to listen to their customers. The relentless pursuit of targets was driving up failure demand, which created more work, which meant they needed more staff, which increased complexity, which resulted in inconsistent service, …. and on it went.

IOOF now focus on purpose through three simple statements of the purpose of their customers – Understand me. Look after me. Secure my future.

In video interviews, IOOF staff said they are not motivated by targets now. Instead, they are motivated by genuinely helping their customers and making a difference to people’s lives. It struck me that this is exactly what our staff working in local government say about their work.

Are councils fulfilling purposes that are more complex than IOOF?

The public-sector cases used by the Vanguard team in their presentations explained the unforeseen and compounding effects of disconnected (and clearly, unaccountable) decision making in UK public services. I would argue that they have limited relevance to local government in Australia. We are too transparent and accountable. Residents are influential. They can easily come in to a counter, contact a councillor or escalate a concern to senior management. What we do for people is mostly public and easily seen.

Services like public housing, health, and social welfare in Australia probably share many of the problems highlighted in the UK and state governments should be looking carefully at what Vanguard are saying.

Councils do have issues in demonstrating efficiency in a rate-capped environment, ensuring that the services delivered are those that the community values, understanding the difference between public value and private, and meeting the changing service expectations of customers.

When our residents deal with organisations like IOOF it sets a new standard of service and they expect their council to meet it.

I found the discussion of the work done by IOOF to be useful for councils. They improved something that was already valuable to create more value and re-define service delivery in their industry.

We don’t have to fix something that is dangerously and wastefully broken like the UK public services discussed – but there is room for improvement.

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2 thoughts on “221 -The Vanguard method in Australia.

  1. You say this has limited relevance to Australian local govt for reasons you give. Rather than arguing from a position, find out if this is true. What is the levels of failure demand of the most used services? What’s the capability of these services at meeting customer purpose, in data?

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    • ThinkPurpose. You are right. We do need to look for failure demand. I am sure there will be some. I can’t see it being anywhere near the 80% of demand described in the Vanguard examples. The trick for us is going to be learning how to find it.

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