The platform isn’t burning, how will you respond?

michael_applebyThe rumours weren’t true. The sector is OK. We all sigh a collective sigh of relief? That’s the wrong response.

As we are starting to see, the devil is in the detail and there is bad news still to come. It’s clear that this Government believes the sector can handle more and with the cuts in other areas reaching saturation point, we’re probably in for more bad news yet. The £12 billion of welfare cuts will in due course have a direct impact on providers’ income.

As one of my colleagues put it – ‘the platform isn’t burning yet but its flames are growing’.

So what do we do about it? Pretending there is no fire is one, likely unsuccessful, option. Recognising there is a fire, but just complaining that it has come for you or that it has been extinguished, is another equally unsuccessful one. If you’ve concluded that you want an independent and successful future, then the only real option is to decide how best to build the platform and make it stronger, more efficient, more flexible and more resilient. That means fundamentally transforming the way that you do business, thinking to 2020 and beyond.

Earlier this month Altair hosted a Chatham House rules roundtable to discuss why and how the sector can transform and how Target Operating Models (TOMs) can be used as a vehicle to manage that change successfully. The event was well attended by a range of housing leaders from across the sector.

With continued pressure on incomes heading our way, it’s unsurprising that there was agreement that salami slice cost cutting and tinkering around the edges, won’t cut it as an adequate strategic response. In many cases only wholesale transformation is needed to drive change in a relatively conservative sector……as one attendee put it “we need to ask the scariest questions…” such as “what if there were no housing officers?”, “how do we distinguish ourselves from each other” and “what if Tesco came into the sector – how would we compete?”

So how do you embark on a transformation project that makes you fit for purpose in a new and potentially completely different operating environment?

The start point has to be clarity. Lots of organisations have been revisiting their strategies and determining whether they are achievable in the future. This should include identifying who your current and future customers are; what your customer value proposition is; and taking an honest look at what services you can and cannot now afford to deliver.

Once that’s in place, you need a fundamental review of all elements of your current way of doing business – your Operating Model – to determine whether it is fit for purpose, before identifying what your future Target Operating Model (TOM) should be.

Through our Organisational Excellence experience, we recommend that organisations consider the following elements when developing a TOM: customer insight, people, organisation design, processes and technology. The key to successful transformation is that you consider all of these at the same time. Too often organisations will embark on individual projects in each of these areas in isolation, where close co-ordination across all areas is required for the full impact.

Another key success factor is leadership. The required level of change in many organisations is going to be difficult to implement and there will be barriers to overcome and tough decisions to be made around culture and behaviours. But you only need to look into transformation case studies such as Transport for London to see how radically an Operating Model can be transformed, when there is a strong support from leadership.

The Spending Review has given the sector a three-four year breather and time to plan. But it shouldn’t be forgotten that the speed of change in other areas such as technology, customer demands and employee expectations are drivers in their own right for transformation and are happening now.

Looking forward no-one will be immune to the current environmental challenges, and all will need to determine how they will respond. Charles Darwin summed it up nicely when he said “It is not the strongest species that survive nor the most intelligent, but the ones who are most responsive to change”.

For further information on TOMs and transformation, please contact:
Michael Appleby, Head of Organisational Excellence
michael.appleby@nullaltairltd.co.uk | 07545 314 749