Reinventing business models: what can the public sector learn from digital disruption of business?

In my last blog I wrote about how government is challenged by technological change and globalisation. I now want to explore what governments might learn from the experience of the private sector.

Globalisation is connected to the rise of consumerism. But its attributes of brands, choices, service, access and responsiveness are no longer the preserve of the private sphere.  Increasingly, these attributes define the expectations of the public when they interact with government or use public services.

Unless public services can adapt to these new expectations, the ability to sustain a consensus for the provision of public services free at the point of use may prove impossible in the long term.

Business, of course, has been at the forefront of shaping this ‘new world’. But those forces equally challenge us.

How, for example, does business reform its governance in a way that inspires the trust and confidence of investors and is accountable to employees and the wider public?  How should businesses respond to the opportunities of the global market and new technology, both of which are producing a revolution in the way the business operates?

Let me give you just one example of how these global pressures are influencing business today.

Thirty years ago, businesses could almost entirely rely upon product cycles that lasted for three to five years and business models that could last a decade.  The great companies of the last century created products and refined their supply chains over decades. And they based their business models on relatively stable markets, high barriers to entry and a plentiful supply of relatively unskilled labour.

However many of the most successful companies today are those that have developed a capacity to reinvent themselves – not just once every ten years – but now every eighteen months or two years.

Businesses operate in a global competitive market.  They are challenged to create new value, improve productivity and respond to tomorrow’s customer needs – today.  That global competitive market ensures that today’s businesses simply cannot afford to wait five to ten years to develop a new product cycle or business model. For those companies and communities that are equal to the challenge, this relentless competitive pressure is creating new sources of wealth has increased standards of living.

Next week, I’ll be talking in more detail about innovation and why businesses might have an advantage over the public sector. In the meantime, if you enjoyed this post, I’d be very grateful if you’d help it spread by emailing it to a friend, or sharing it on Twitter or Facebook.  And if you are interested in public sector innovation you might be interested in another of my recent blogs where I wrote about how businesses learn from mistakes.

The world is still flat: how economic change is straining our ability to remake public services

I want to talk to you about what is arguably the greatest domestic policy challenge facing governments over the next decade.

How to create the conditions for a sustained transformation in our public services in a way consistent with the fundamental values that underpinned their creation.

In this first in a series of blogs, I want to anchor the debate about public service reform in the context of a number of global pressures affecting governments.

Every government is challenged by a similar set of pressures. The most significant of these is when a combination of rapid technological change leads to profound transformation of the economy. This has significantly increased prosperity. But governments are struggling to maintain a consensus of support, particularly as communities experience periods of insecurity and upheaval when technology is introduced.

The change unleashed is provoking tough and searching questions for governments of all political persuasions.

How do we reconcile rising flows of goods, services, capital and labour mobility with the need to create and sustain socially cohesive communities?

At the same time the capacity and capability of health, education, social care, housing and other public services to respond to change is curtailed by continuing austerity. And our ability to build cohesive communities is even more difficult when the very mechanism for reconciling competing tensions within communities – the institution of government and the process of democracy – has never been more questioned.

People’s sense of ‘connectedness’ with government and the political process looks increasingly weak and shattered.

Next week, I’ll post about how business has responded to the challenge of technological change. The most successful businesses are agile – attempting to reinvent their their business model to meet rapidly evolving customer needs.

Meanwhile if you enjoyed this you might also enjoy my summary of our government digital trends survey. We asked civil servants how their work is influenced by new digital ways of working and the benefits for the public

Digital in Government: the next step is true transformation

Have you recently tried to access a government service and wondered why it can’t be as simple and easy as Amazon? Were you frustrated, like me, when required to print, complete and return a physical form rather than fill in a pre-populated online one?

In our recent survey of civil servants we wanted to understand how digital – the powerful combination of disruptive technologies underpinned by new business models – was being adopted across government. How is government seeking to enhance digital customer experience by optimising its digital infrastructure and insight from analytics?

Transformation = Restructure

Our Government Digital Trends Survey of nearly 4,500 civil servants over three years found they have a consistent understanding of what digital means. The most popular definitions chosen were ‘restructuring services’ followed by ‘improving online services’.

With government facing pressures from multiple directions, not least the challenge of implementing a successful exit from the European Union, civil servants view digital transformation as a win-win. Not only can it improve the quality of service that citizens receive, through the development of more convenient delivery models, but these same models can help government to reduce their costs.

But the sheer scale of changes facing the government means that the civil service needs to think harder about the way it works.

Breaking down ‘stove-pipe’ government

Adding to the skills gap I described in my previous blog, there are in-built structural challenges across government. Public services tend to adhere to ‘stove-piped’ models that have largely been left untouched for decades.

Departmental structures encourage civil servants to focus purely on their own priorities. The organisation of government provides little opportunity to consider how citizens’ needs cut across departmental boundaries.

The good news is that civil servants view the collection of data that underpins their operations as a core process. In 2017, civil servants told us that the most significant benefits of ‘big data’ were reducing expenditure (29%) and improving operational efficiency (21%). But opportunities for innovation in new processes (7%) and improving customer engagement (3%) trailed far behind.

Data-enabled government is needed

This example highlights the challenge and opportunity of digital transformation in government. A more innovative approach, such as a single interface for collecting data, is not only a source of efficiency. It allows government to remove the duplication of effort and provides a catalyst for the development of end-to-end processes that place the needs of citizens at the centre.

As government is understandably cautious by nature, digital transformation was initially limited to narrow front-end activities. The focus was on creating digital channels to ‘bolt on’ existing business processes, rather than redesigning processes endto end.

Yet government benefits from being one of the most ‘data-rich’ organisations. The growing number of data sets that are now generated, through the automation of processes, create huge opportunities to drive digital transformation. The Policy Exchange think tank suggested that the UK government could save up to £33 billion through improved data use.

What does data enabled digital government look like?

I think there is an urgent need for the joining and sharing of data across government to help civil and other public servants to plan more effective services targeted at those most in need.

There are several aspects to this data enabled digital government, including:

  1. Predictive analytics: Human resources tend to represent the largest single source of costs for government. Predictive analytics can maximise the efficiency of operations and improve workforce utilisation (helping government do more with – more often than not – less).
  2. Coordinated government analytics: Sharing data across government organisations drives benefits by avoiding the duplication of effort. But going beyond efficiency, the creation of cloud-based big data hubs leads to more personalised and targeted services.

And tailored and preventative approaches are urgently needed to address high cost social issues such as troubled families and health problems such as obesity. Predictive and coordinated analytics lend themselves to addressing these so called ‘wicked issues’ because they are so complex, fast moving and they involve changing the behaviour or gaining the commitment of individual citizens.

If you would like more information about the Government Digital Trends Survey, or would just like to raise a question, please feel free to add a comment below or contact me by email.

Government needs to invest and build digital skills across government – the view of civil servants

Having the right skills and capacities to hand is pivotal to the effective digital transformation of government. For the past three years, we have asked civil servants to tell us how government is adapting to changing digital skills needs as part of our Government Digital Trends Survey.

The most startling finding from this year’s survey is a rise in the number of civil servants who say that a lack of training is a barrier to digital transformation

Lack of available skills continues to be a barrier to transformation

In 2017, 62% of civil servants placed lack of training for staff among the top three barriers to digital transformation of government. Despite a significant increase in training over the last twelve months, 43% of respondents told us that they had not received enough digital training to do their job well (an increase of 6% points since 2015). When asked about whether they personally receive adequate digital skills training to do their job, the number agreeing was just 12% (a decrease from 20% since 2016).

Seeking to fill this digital skills gap, we found that civil servants are taking a proactive approach to skills acquisition:

36% are using self-directed study in their own time to develop their digital skills (an increase of 12% points since 2015)

Civil servants are calling out a lack of specialist digital skills

Several types of skills are needed: technical and professional skills, including ICT specialist skills for workers who drive innovation and support digital infrastructures and the functioning of the digital services. This year we asked civil servants, including those working in digital programmes, to identify the top three digital skills gaps in their organisation.

Development and service design were the most popular answers, chosen by 44% of respondents. The next most common answers were agile delivery management (37%), user research and technical architecture (36% each).

To seize the benefits of digital, government needs these in-demand specialists: workers who can code, develop applications, manage networks and analyse data, among other skills. These skills enable innovation to flourish, often in collaboration with the private and not-for-profit sectors, but also support the infrastructure that government and users rely on.

What are the priority skills policies to meet these challenges?

Addressing the challenges of digital will require an overhaul of government’s skills policies. It must ensure that an increasingly digital world yields better quality jobs and that civil servants have the means to take advantage of the new job opportunities that open up.

In my opinion there are five priorities for skill policies to facilitate take-up of these opportunities:

  1. Part of the task is to ensure that all civil servants have basic ICT skills as well as solid problem-solving skills to use ICT effectively. Many of these skills are also acquired outside education and training institutions – for instance, and as we have found through the survey, in the workplace. Government could support and better recognise skills acquired by civil servants outside formal channels.
  2. It is not just sufficient for civil servants to have skills – government must fully use these skills to reap their benefits in terms of higher productivity. The use of digital skills, including problem solving in a technologically rich environment, varies substantially across the civil service. A key factor driving this variation is the use of high performance work practices such as teamwork, work autonomy, training, flexible work hours, etc.
  3. For ICT specialist skills, basic programming is no longer enough. For instance, advanced engineering and experience with machine-learning are increasingly important. In addition, ICT specialists also need domain-specific knowledge, given the potential applications of ICT in the business of government, such as health, education and welfare.
  4. Government needs to better assess and anticipate changing skills needs in order to adapt programmes and pathways offered and guide civil servants towards choices that lead to better outcomes. By including all stakeholders in skills assessment exercises government can ensure that the information collected is useful and that policies respond to actual needs. This includes working closely with industry to address shortages in areas of strategic importance.
  5. As skills demands change continuously, training for civil service to keep up with new skills requirements is crucial. This requires offering better incentives for civil servants to re-skill and up-skill. And includes, for example, the government fully supporting and embracing the Digital Academy initiative in the Government Digital Service (GDS).

If you would like more information about our Government Digital Trends Survey, or would just like to raise a question or add information, please feel free to add a comment below or contact me by email.

The journey towards government digital transformation: three years of data highlight the scale of change

Digital transformation is the buzz phrase of the moment – the only way to stay relevant in 2017. In January 2013, the government gave itself 400 days to transform 25 major services, making them simpler, clearer and faster to use. Fast forward to February 2017 and the priority is even more ambitious – to change the culture and ways of working of the public sector. With technology as an enabler.

Truly transforming government through the power of digital technologies will inevitably take time.

Over the last three years we have surveyed nearly 4,500 civil servants from across Whitehall and beyond. Increasing numbers of civil servants have told us that digital is having an impact on their work.

So by 2017, 88% of civil servants were directly experiencing the changes produced by technology and new ways of working (an increase of nearly 20 percentage points since 2015).

How do civil servants understand and experience digital transformation?

Transformation is needed to keep up with changing user demands. And technology is delivering more efficient and effective operating models. These changes are well understood by civil servants, who told us that digital meant, beyond anything else, the restructuring of the way that public services are delivered. In previous years channel shift and improving online services were the most prominent descriptions (reflecting the emphasis then placed on digital by default).

This pace of change can be threatening, especially when the civil service is far smaller than in 2010 (there has been a reduction of around 19% in just seven years). However. three quarters of the civil servants we surveyed said digital ways of working were having a positive impact on them and an even more positive impact on the citizens they serve (a response that has remained relatively stable over the last three years).

What conditions must exist to achieve digital transformation?

Technology is an enabler of transformation. Technology is not the outcome. It is a component of change that must be exploited. Transformation of government requires senior civil service buy in. But you also need adequate resourcing and teams with the skills to set and keep the pace.

Lack of resources and skills have consistently been identified by civil servants over the last three years as the most significant barriers to transformation.

The government has plans to attract, recruit and retain specialists in an increasingly competitive marketplace, through improvements to career paths and reward structures, new learning and development programmes and a data science campus and accelerator programme. But there is significant room for improvement.

In 2017, 62% of civil servants placed lack of training for staff among the top three barriers to change.

Civil servants called out acute needs for service design, agile delivery and user research skills. And nearly half – 43% of respondents – told us that they personally had not received enough digital training to do their job well (an increase of 6 percentage points since 2015).

What will digital transformation look like over the next three years?

The last twelve months have seen a significant drop in the number of civil servants saying that new restructured services and online channels were live or about to go live (down 16 and 19 percentage points respectively). We do not see this as a negative finding. Rather there has been a recalibration in the way that civil servants think about digital transformation.

The ultimate objective of government is a more secure, coherent and agile government, able to reduce the costs of building, changing and running services.

Civil servants recognise that this requires deeper and far reaching organisational change and new operating models, budget structures and the end of siloed decision-making hierarchies. And this takes time.

In the coming weeks we will be going into more detail about the survey findings and giving our views on ways of addressing barriers to change. In the meantime, you can read more about the survey on our website. We also want to encourage a debate with civil servants and others with an interest in government, so please leave your comment below.

Improving digital services in health care

As I awaited with eager anticipation for the second day of the Digital Health and Care Conference in Edinburgh to see digital innovation and progression in the Scottish Health Sector, a sobering thought from one of the speakers on the first day came to mind.

Whilst many retail and banking sectors have embraced complete digital transformation in their operating models, I’m sure you’ll agree that many areas of the health sector lag behind. Indeed, according to the Department of Health only 2% of current interactions are digital.

Person-centred interaction will always be at the heart of health and care, but that interaction can be better informed, more efficient and better organised , if supported by data and technology? To clarify my point I wanted to provide some examples:

  • GP Referral to Treatment (RTT) – whilst we are progressing in providing information available to the patient, why is it still difficult to provide information to the citizen regarding all the critical points in their pathway? As a patient, the only information one currently obtains is by telephoning the appropriate Health Board, contacting your GP to get them to do it, or receiving one of the paper-based letters to tell you that you’re ready to be seen by the Consultant in XX weeks time.
  • Booking an appointment – online access to GP appointments is available, but if you’ve ever gone through the process with your GP practice (at least in Scotland) it is overly complex and convoluted. I consider myself to be IT literate, but this process doesn’t seem to have the most important person in mind – the citizen. In effect, this has made little impact on a citizen’s day-to-day experience with their practice and the business model within it.

At the risk of sounding obvious, these two examples – of which there are many more – cry out for a rethink of the way the citizen interacts with services. Do we ask how a user wants to interact with the RTT process? Well, here’s an example in point. One of my family members is going for a hip replacement sometime soon. I want to emphasise ‘soon’, as they don’t actually know when. I’m sure the medical speciality know, so why can’t we provide this information to the user who wants to know to be able to plan their life effectively? Indeed, can we take learning from other sectors e.g. retail where the user is able to track the progress of their product from purchase to receipt. Why can’t we make this possible for the above example…? And I’ve not even considered the potential financial savings.

How do you get into the hearts and minds of the citizen?

The challenge that most commercial organisations had when the digital revolution started was that they created brilliant online presences which nobody used. Picture technological tumbleweed… So, commercial organisations incentivised customers to use the online functionality by offering discounts, online-only tariffs, faster fulfilment, flexibility etc. But how does this transpose itself to health care?

Looking to our Nordic neighbours, Daniel Forslund, Commissioner for Innovation and eHealth, Stockholm County Council conveyed it so well during the conference. Digital has to become the new norm. However, in order to do so, we need to incentivise citizens to use these services. This means providing digital services that the public want to use, as  and when it becomes beneficial.

Using the GP appointments example above, citizens choosing to use digital services could be given preferential appointment times – i.e., most early session appointments could be reserved for online bookings, whilst still maintaining slots for other methods of booking later in the day. These early morning sessions could also be available to book using SMS facilities from the citizen’s mobile phone.

As many of the key speakers at the Conference mentioned, digital transformation doesn’t have to be difficult, but we have to focus on the value it brings to the citizen – what information do we expect, how do we want to interact, etc?

Using service redesign techniques with the focus on putting the citizen first will enable us to deliver transformational services. It’s been done in so many areas already, so why don’t we do more for our ‘Health Consumers’? Indeed, one of the delegates argued that it’s about applying good practice that already exists in other sectors and transforming its use to new areas. Whilst I agree partly with this, I don’t think a ‘one size fits all approach’ can be taken – what happens when good practice doesn’t exist for a similar service? For me, and it sounds obvious, driving the input from service users is the key to transformational change in the way citizens interact with Health, designed by the user for the user.

Interested in hearing more about our approach to transforming customer journeys through service redesign? Leave a reply below, or contact me by email.

Platforms on Platforms: Innovation by subtraction

One of the competitive advantages of Digital Transformation is that it empowers an organisation to rationalise (or subtract) processes to innovate the customer and employee experience. So as organisations face new economic and competitive challenges how can adopting such capabilities benefit them?

Disruptors like Amazon and Uber have transformed markets using a global approach that removes the need for customers to use locally based, often more expensive incumbent competitors. This advantage is generated by their high volume, fast turnaround digital platform services that enable them to achieve economies of scale that drive greater choice and better prices for customers.

One wonders what further opportunities could emerge for “innovation by subtraction” delivered using Digital Transformation

In response, we have seen incumbents imitate this platform model such as Sainsbury’s intended integration of Grocer and Retail Catalogue propositions through its acquisition of Home Retail Group (that owns Argos). Such a move not only increases the level of choice Sainsbury’s can offer to match Amazon but also offers it other advantages in terms of more efficient logistics and faster deliveries (Argos, like Amazon, offers same day fulfilment).

Yet one wonders what further opportunities could emerge for “innovation by subtraction” delivered using Digital Transformation to disrupt sectors further – not just for engaging more demanding customers, but also to capitalise on increasingly fluid labour market dynamics like the Gig Economy.

Such a model potentially confers a range of co-opetitive benefits including deeper engagement in the Sharing Economy

Could the next disruption be “Platforms on Platforms”? This is where a disruptor creates a digital platform that enables a customer to consume personalised services from any competitor through one channel, effectively removing or subtracting the inconvenience or restrictions of engaging only a single retailer? Price comparison websites, for example, are an established form of the “Platform on Platform” concept, yet they arguably lack the ability for a customer to pick and mix offerings from different retailers into one truly personalised shopping basket.

Such a model potentially confers a range of co-opetitive benefits for contributing retailers – including opportunities to sell to previously unreachable customers, logistics efficiencies and deeper engagement in the Sharing Economy popular with millennials.

Organisations creating “Platforms on Platforms” to further disrupt their sectors or markets could become a key strategic trend over the coming years

Low skilled and temporary workers could also benefit from using a “Platform on Platform” service that pulls together in one place shift opportunities or short term assignments available during the same week (or even day) from different – potentially competing – organisations. Given the anticipated impact of automation, high wage costs (like the National Living Wage in the UK) and greater demands for labour flexibility, such a service could materially benefit these workers in the emerging Digital Economy (while also removing the need for employers to search and procure such flexible people resources independently).

Organisations creating “Platforms on Platforms” to further disrupt their sectors or markets could become a key strategic trend over the coming years. But to master this new form of competitive advantage will require innovation by subtraction using Digital Transformation.

If you would like more information about how digital transformation can benefit your organisation please contact the Sopra Steria Digital Practice.