Posted by Colin Weatherby 500 words
Some time ago, I posted on what I would do if I was the CEO. This post is in a similar vein.
The new Australian Prime Minister Malcolm Turnbull called a mini summit last week and invited leaders from the worlds of business, unions, community organisations and think tanks to discuss the state of the economy and the best way forward for economic reforms.
Reporting about the planned summit reflected the openness of the new national leader to discussing ideas other than his own. It was a move that his predecessor failed to make. The Sydney Morning Herald described the summit as suggesting that the new Prime Minister is keen to discuss big ideas and ‘send a message of creative optimism’ to the leaders invited. The Prime Minister is quoted as saying that the summit is a ‘rare opportunity to achieve consensus on the most pressing economic and social issues’ facing the country.
I am not sure whether the summit reached consensus or whether it will really influence government thinking and action. It has certainly signalled a new approach by Malcolm Turnbull.
It occurred to me that local government leaders could take a similar approach. Continue reading
Posted by Lancing Farrell 550 words
In part one I discussed the features and benefits of in-vehicle GPS. Because councils deliver services at locations dispersed across a large geographic area and vehicle ownership is expensive and utilization is often low, in-vehicle GPS has the potential to provide significant benefits. It links the planning undertaken in asset maintenance systems to in-field work planning and delivery to ensure that resources are used efficiently to complete the planned work. The key barrier has been how to get in-vehicle GPS installed in all vehicles.
I think the trick to implementing in-vehicle GPS is the strategy and policy sitting behind it. Here are some tips. Continue reading
Posted by Lancing Farrell 1600 words
This last post in this series (see here, here and here for previous posts) is an attempt to synthesise a new theory of value creation for local government using the ideas discussed in the previous posts.
First, a quick recap on strategy, business models and operations stratgey.
- The strategy is the position that an organisation takes in relation its market, the value it decides to create, and how it decides to create that value and operate at a surplus.
- Every organisation explicitly or implicitly employs a business model that describes the design or architecture of the value creation, delivery, and capture mechanisms it will use.
- The operating strategy then guides decisions about vertical integration, capacity planning, facilities planning, services technologies, and process technologies.
A new theory of value creation for local government will need to integrate these concepts into a cohesive and repeatable approach. Continue reading
Posted by Lancing Farrell
Image from Operations Management, 6th Edition, Slack, Chambers and Johnston.
In this third post in this series, I look at the concept of the operations strategy. Every organisation has one. Your organisation does, but do you know why or what it is? And how does it relate to the business model?
This series of posts is intended to make the case that local government needs a theory of value creation – a clear explanation of what local government does to create public value. That theory will require a reappraisal of the operations strategy and the role that operational capability can play in supporting the business model and strategy execution.
Hayes and Wheelwright describe operations strategy as guiding decisions about vertical integration (i.e. the extent to which the council owns the value chain), capacity planning (i.e. how variation in demands will be met), facilities planning (i.e. the facilities needed to deliver services), services technologies (e.g. information systems) and process technologies (e.g. batch or make-to-order).
The academics Nigel Slack, Stuart Chambers and Robert Johnston in their text Operations Management talk about strategy and the connection to operations Continue reading
Posted by Colin Weatherby 1400 words
This post continues a series started by Squire to the giants about his giants. David Maister will be best known to anyone responsible for running a professional services firm. In the late 1990’s when he visited Australia his seminars were expensive and quickly sold out. ‘The Professional Service Firm’ and ‘True Professionalism’ are still must reads. Maister retired in 2009 and much of his material is still available from his website.
David Maister was born in Great Britain where he completed his Bachelor’s degree in Mathematics, economics and Statistics at the University of Birmingham (England), his Master’s in Operations Research at the London School of Economics. Continue reading
Posted by Lancing Farrell 750 words
Image: ‘The greatest theory ever told’ – Walt Disney’s 1957 value creation map.
This is the second post in the series intended to make the case for a new theory of value creation for local government. The first post discussed business strategy. This post looks at the link between strategy and the business model.
Once the strategy has been determined, it leads directly to the selection of a business model that can deliver that strategy. I have chosen the following description of a business model from organisational theorist and academic David Teece to set the scene.
“Whenever a business enterprise is established, it either explicitly or implicitly employs a particular business model that describes the design or architecture of the value creation, delivery, and capture mechanisms it employs.
The essence of a business model is in defining the manner by which the enterprise delivers value to customers, entices customers to pay for value, and converts those payments to profit.
It thus reflects management’s hypothesis about what customers want, how they want it, and how the enterprise can organize to best meet those needs, get paid for doing so, and make a profit.”
As with strategy decisions, the difficulties for local government are again apparent. Continue reading
Posted by Lancing Farrell 850 words
This is the first post in a series exploring the relationship between business strategy, the business model and operations strategy. It is an attempt to pick up on the ideas in Colin Weatherby’s previous post discussing Henry Mintzberg’s ideas about different models for government organisations. Hopefully the series of posts will make my case for a local government theory of value creation.
I will begin with business strategy. To set the scene, I have chosen the following quotations from management consultant and academic David Maister to highlight the strategy problem for local government.
“A strategy is not just choosing a target market, but is about actually designing an operation that will consistently deliver the superior client benefits you claim to provide.
However, each decision you make to be more effective at delivering the preferences of those you target will (inevitable, inescapably, unavoidably) make you less attractive to clients or market segments that look for different benefits.
You could try to design your operations to meet a wide variety of preferences and needs, serving each client or customer group differently, according to their individual wishes.
Your market appeal will then come down to ‘tell us what you want us to do for you and we’ll do that. We’ll do something different for other people tomorrow!’
The very essence of having a strategy is being selective about choosing the criteria on which a firm wishes to compete, and then being creative and disciplined in designing an operation that is finely tuned to deliver those particular virtues.
An operation designed to provide the highest quality is unlikely to be the one that achieves the lowest cost, and one that can respond to a wide variety of customized requests will be unlikely to provide fast response and turnaround. Any business that tried to deliver all four virtues of quality, cost, variety and speed would be doomed to failure.”
Maister may not have had local government in mind when he wrote this piece, but he provides an insight into the challenges in determining what provides value to people receiving services. He calls it ‘superior client benefits’. In the public service context, academic Mark H. Moore has called it public value. It is the same idea Continue reading
Posted by Colin Weatherby 1300 words
The public release of this critical report has been something of a surprise. Commissioned in March 2015 and released in May, the report prepared by Jude Munro, Dr Bronte Adams and Steve Parker has looked at three key capabilities; leadership, strategy and delivery. Each has been rated on a four point scale for several elements. Out of the ten attributes rated, six were seen as a ’development area’ and one as a ‘serious concern’. The remaining three were seen as ‘well placed’ and none were seen as ‘strong’ (p.14). So what does this mean?
The report states that this is the first time that this review model has been applied to local government in Australia. Its intention is to provide a forward looking, whole of organisation review that assesses an organisation’s ability to meet future objectives and challenges.
“This review provides the opportunity and impetus to take a very good organisation and make it even better.” Ben Rimmer, CEO
Posted by Lancing Farrell 700 words
This is the last post in a series of five. The first post discussed the myth that strategy execution equals alignment, the second post discussed the myth that strategy execution means sticking to the plan, the third post covered the myth that communication equals understanding, and the fourth post covered the myth that a performance culture drives strategy execution.
Sull, Homkes and Sull say that top-down strategy execution has a number of draw-backs, including ‘unravelling’ after the loss of a strong CEO. This is because strategy implementation in large, complex organisations ‘emerges from countless decisions and actions at all levels’. The leaders closest to the situation are best positioned to make the required decisions. Top-down implementation may boost performance in the short-term but it reduces the organisation’s capacity over the long-term. Continue reading
Posted by Lancing Farrell 530 words
This is the fourth post in a series of five. The first post discussed the myth that strategy execution equals alignment, the second post discussed the myth that strategy execution means sticking to the plan, and the third post covered the myth that communication equals understanding.
Sull, Homkes and Sull disagree with executives who believe that a weak performance culture is the reason strategy isn’t translated into results. They say that the ‘official culture’ may not support execution, however, the organisation’s true values will reveal themselves when managers make hard choices from day to day, which usually have a focus on performance.
Two thirds of managers cited past performance as the performance most valued when promotion decisions are made. Underperformers are generally not dealt with well. The majority of organisations studied delay action (33%), deal with underperformance inconsistently (34%) or tolerate it (11%). Overall, the companies surveyed had a strong performance culture, yet they struggled to execute strategy.
The authors believe that the reason is that organisations that value execution must recognise and reward factors other than past performance. Continue reading