Transformation – this is no time for a confidence crisis!

This is the third of three blogs about transformation and medium-term financial planning. We regularly come across four fundamental concerns from our clients:

1. We can’t cut our costs any more
2. We can’t invest in savings where delivery is not guaranteed
3. We can’t take money out of demand-led services
4. We can’t plan long-term or cope with another crisis

Of course, building confidence amongst teams is a practical challenge, however this can be delivered in the short-term. Through interventions we show our clients that things can be different – which I’ll explain in this blog.

In my first blog I pointed out that there is still no shortage of ideas around how to transform local government. I gave examples of IMPOWER’s ‘big hitters’: tried and tested ways to deliver rapid and sustainable cost reduction within key services.

In the second blog I argued that if the goal is driving down costs, then the real challenge is not ideas but the ambition and confidence to move beyond short-term salami-slicing and grapple with the most complex problems. I talked about ambition, the importance of being very clear about what outcomes you want to improve and for whom, making the case for investment, and then having the confidence to really go for it.

Firstly, for cost-cutting, we agree that ‘traditional’ salami-slicing approaches are running out of road and that the most impactful opportunities now come from taking a systemic rather than an organisational focus. Providing the tools to work in this space is big part of what IMPOWER does, as anyone who has worked with us will know.

Secondly, where control is limited, there are naturally risks around deliverability of savings. This is why we work with clients to find the right points of leverage within systems, design focused trials on a test-and-learn basis, and then seek to scale up what demonstrably works. As with any responsible investment portfolio, we want to make the case that risk can also be managed by spreading your bets across a sensible portfolio of transformation initiatives. Some of them may over-perform and others the opposite, but a risk-balanced portfolio is better than sticking with the status quo because doing anything feels too difficult.

Thirdly, taking money out of demand-led services is the wrong place to start. We still see far too many organisations dealing with the consequences of a blunt focus on headcount and disinvestment in areas like prevention and early help. A more promising place to start the conversation is thinking about improving specific outcomes for specific cohorts, and then working back to the savings that might be on offer if we can be radical enough. This is intuitively (and politically) a much more appealing approach than red-penning budget lines to hit a target.

Fourthly, thinking long-term is indeed difficult when everything feels uncertain and fires need to be put out today. In this environment, rather than despairing about the future, it is all the more important to try to take a view on your medium-term trajectory for demand and costs. Setting an ambition for where you think you can get to with the right focus, and building up the performance management discipline to keep trying to push the system in the right direction. The consequences of inaction will often make the case for change more articulately than anything else.

In early 2023, we want to work with even more ambitious directors of finance and their management teams to shift the needle on doing more of the hard stuff – moving away from salami-slicing and taking on complex transformation with real ambition and confidence. If you’d like to explore this with us, please get in touch.