How to cut costs without cutting standards

Right now there are projects all over that are based on cutting costs in business through application of Lean Techniques and outsourcing of services. Only the other day I listened as a spokesman set out the reasoning behind Essex Council’s outsourced approach to cost-cutting in an attempt to balance their budget.

To be fair this is not an easy task to carry through. Providing services and meeting other demands placed on organisations with fixed budgets is a difficult balancing act. But there is something rather ridiculous about the notion that process improvement can continue forever in such a way. And that means that whatever is being contemplated right now is NOT (in my view anyway) a satisfactory answer to the fundamental problem.

In an organisation that has a more holistic view of what it is about, they may well identify non-core activities that are better delivered via alternate means. So be it. However that should be set against a coherent understanding of why they are there in the first place.

Just because an organisation is within the Public Sector does not mean the management should abrogate responsibility for questioning WHAT and WHY. Statutory requirements – such as provision of Social Care or the collection of refuse are easy to identify. Answering the questions in a way that also engages ALL the stakeholders is not a common occurrence.

It appears all too often that things get fragmented. A section of Social Care can be shaved. The refuse collection cycle can be extended to mean fewer shifts. But the overall consequence is not a coherent delivery of services to the community.

How about standing back and asking more fundamental questions instead of just trying to make a 1% saving over last year’s budget here or reviewing a provision there? The game plan should be for the Executive Tier of Local Government to show that community needs and requirements CAN be met – but that in order to do so, political choices are made about HOW that is done. The inefficiency of the current way of doing things is that there is NO debate about WHY the organisation is engaged in what it does. Somehow we conveniently overlook the fact that saving costs in one corner is potentially going to cost someone else a huge amount in resources or time.

Call me a grumpy old man if you like but I find the way that customer-facing automation is often presented pays scant attention to the time of the user. Web sites that allegedly make it easier to transact business but which take forever to work properly because they are overloaded with marketing messages and other garbage. I hate going onto my mobile phone provider’s site – it takes forever to get to the simple things like checking a bill because they are too busy insisting that I must be interested in games and videos and other nonsense.

So overall I think there is a message at the root of all of this. Providers everywhere should strip things right back to basics. Completely. No frills. None whatsoever. Then ask the question “Is this WHY we are in business?” If the answer is an unequivocal YES then that’s great. But I bet it isn’t. Instead there will be room for some real dialogue with the community they are serving about what is the basic no-frills that should be there.

Get that right and it becomes much easier to say that everything else is Nice to Have and could arguably be priced accordingly as additional services. People are quite happy to sign up for basic accounts all over the place but pay a premium for those additional layers. That might mean that my local city stops its nonsense over funding and actually gets the roads repaired properly. After all the costs of additional vehicle repairs due to potholes are something the economy could do without (no offence to the motor trade who depend on that for a living). As an individual I can pay (according to my ability) for things like Social Care. However I cannot normally pay and choose which roads I drive on. It is this level of questioning that I think is missing from organisations. They are simply incomplete in their approach because they remain blinded by the paradigm of how things have evolved.

Beyond that, the holistic thinking should challenge the benefits of Choices. There is sound argument that improving infrastructure has a beneficial effect on business. Better economic environment leads to more local wealth, taxes and well-being. That then also means that the areas of social provision are seen in a different light.

Taking this a stage further we can investigate items such as policing. Law enforcement and public safety are important matters. But how are they actually built up from a foundation? The current debate about consensual policing (following events around the G20 Summit) is exactly what we should be having in this context. Because it also informs what sort of resources are then required to deliver it. Wrapping everything up in layers of Counter-Terrorism is stupid. Overall people in the UK have accepted a degree of risk in going about their business as a price worth paying for some of the other freedoms we enjoy.

Now try and fit that into a Lean Six Sigma approach – it simply doesn’t compute.

Overall isn’t it time we stepped back and reviewed WHY we are doing things not just HOW we can do them more cheaply?

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