The document discusses strategies for managing public service demand in the context of austerity. It introduces concepts like Blue Ocean Strategy and demand innovation to help reconstruct market boundaries and create new demand, rather than just focusing on supply-side efficiency. Key principles discussed include value innovation, finding uncontested market space, and avoiding commoditization. Frameworks presented include the four action framework of reducing, raising, eliminating and creating factors, and reconstructing market boundaries by looking across industries, buyer groups, offerings and time.

1. APSE Solutions Demand
Innovation Workshops
Post Efficiency Demand
Management

2. The problem
• The age of austerity
• Coupled with rising demand
• Graph of doom
• Or …….

3. The response so far
Cuts
• Very low lying fruit
• Service reduction
• Service failure
Contestability
• Value chain
• Lean management
•More for less
Competition
• Value chain
• Lean management
• Procurement
•Contract
management
•More for less
Income
generation
•Mostly confined to
existing markets
and services
Emerging
questions about
demand
• Troubled families
• Reablement
Seeing the
public services
as a system:
bigger picture
• Sharing
management
• Collaboration
across sectors

4. Porter’s Value Chain

5. Porter’s Five Forces

6. Back to basics: why we
what we do
• Social policy
– Some things are important to everybody
– Public health
– Social well being
– Economic well-being
• Cost/benefit of public services
– Public provision can be more efficient than the
market

7. So is failure an option?
• What happens when the salami runs out?

8. Beyond supply side
efficiency
• Prevention rather than cure
• Nudge theory and behaviour change
• Income generation

9. On a bigger scale: tackling
causes saves money
Higher Lower
Reactive treatment for
stroke, heart disease,
diabetes
Prophylactic medication
Increasing physical activity
Healthy school meals
Resource
swallowing
potential
Lower
Higher
Behaviour
changing
potential

10. Activities to tackle lifestyle
diseases
Leisure
facilities
Park pitches
Sports
development
Drug
Treatment
Healthy school
food
Hospital
treatment
Prophylactic
drugs Physical
education
Street lighting
Parental
education
Footpath
maintenance
Sports
development
Playgrounds
Parks
maintenance
Dance classes
GP care
Ambulance
service
Food labelling
Cycle lanes
Walk to school
initiative

11. High impact on
underlying problem
Footpath
maintenance
Sports
development
Dance classes
Impact/Cost Matrix
Street lighting
Low cost High cost
Low impact on
underlying problem
Hospital
treatment
GP care
Ambulance
service
Prophylactic
drugs
Drug
Treatment
Leisure
facilities
Park pitches
Food labelling
Healthy school
food
parks
maintenance
Physical
education
Playgrounds
Parental
education
Walk to school
initiative
Cycle lanes

13. Calderdale Home To School
Transport
13

14. The Evidence – create moments
It helped me
gain more
experience
and
confidence..
Its more
grown up...I
will keep fit
I never thought he
would be able to
travel independently
....it will open up so
many doors for him
As parents we were
worried....but the travel team
were professional and
reassuring...when we saw
him walking home on his
first unaccompanied journey
his face was beaming....we
knew we had made the right
decision
I like
travelling with
my friends on
the buses

15. Developing a systematic
approach
• Understanding demand
• Changing the nature of demand
– Reducing it?
– Growing it?
– Redirecting it?
• Looking to the future

16. Blue Ocean Strategy:
Demand Innovation

17. In a public service context
• Trade off between
cost and service
quality
• Ever increasing
pressure on demand
• Ever increasing
burden on staff
• Repeated service
failure
• Ultimate
organisational failure
• Pursuit of excellence
and low cost
• Management of
demand
• Empowerment of staff
• Innovation in service
delivery
• Organisational change

18. Key principles: W Chan Kim and
Renee Mauborgne
Blue Ocean Strategy Unit: INSEAD
• Value innovation
• Thinking beyond competition strategy
• Creating new demand
• Finding uncontested market space
• Avoiding commoditisation of product

19. Key relevance to public
sector
• Blue ocean is consciously concerned with
demand side
– Creating new demand
– Managing demand through re-focussing
• Transcends marginal savings available on
supply side
– Competition and contestability theory focus on
cost control and efficiency – not enough
– Entrenches current approach to delivery

20. 4 Action Framework
Reduce
well below
industry
standard
New
Value
Curve
Create
Raise well
above
industry
standard
Eliminate
taken for
granted
factors

21. Strategy canvas
• Analyse an industry
• Analyse chain of buyers
• Analyse and develop new strategy
Value factors
High
Focus

22. Strategy canvas:
McDonalds

23. Qualities of blue ocean
strategy
• Focus
• Divergence
• Compelling tag-line

24. 6 Path Framework
Head to head competition Blue Ocean Creation
Industry Focus on industry rivals Looks across industry
boundaries
Strategic group Focus on competitive position
within strategic group
Looks across strategic
groups within industry
Buyer group Focusses on better serving the
buyer group
Redefines the industry buyer
group
Scope of
product or
service offer
Focusses on maximising the
value of product within the
bounds of its industry
Looks across to
complimentary products and
service offerings
Functional –
emotional
orientation
Focusses on improving price
performance within existing
orientation
Rethinks the functional –
emotional orientation of its
industry
Time Focusses on adapting to
external trends as they occur
Participates in shaping
external trends over time

25. To reconstruct market
boundaries
• Look across alternative industries
• Look across strategic groups within industries
• Look across the chain of buyers
• Look across complimentary product and
service offerings
• Look across functional or emotional appeal to
buyers
• Look across time

26. The service: What is it?
• Suppliers
• Inputs
• Processes
• Outputs
• Customers

28. Break

29. Exploring demand for
services: exercises
• Who are customers?
• Who are the stakeholders
• Stakeholder analysis
• Kano analysis
• CTQ

30. Stakeholder analysis
High
Keep
satisfied
Manage
closely
Keep
informed
Monitor
(Minimum
Effort)
Side player
• Consult on
potential
interest areas
• Increase
engagement/i
nterest
Observer
• Keep up to
date
• Increase their
interest
• Try to turn
into supporter
Key Player
• Consult
regularly
• Engage in
decision
process
• Privilege face
to face
communication
Supporter
• Keep informed
regularly
• Consult on
interest areas
Low High

31. Kano analysis

32. Lunch

33. Analysing demand:
Exercises
• Demand chain
• Strategy canvas
– Excel spreadsheet or brown paper
• 4 action framework

34. Strategy canvas
10
8
6
4
2
0
Scoring
Industry Strategy Canvas
Key service factors
Your Company / Product
Comp 1
Comp 2
Comp 3

35. Four action framework
Raise Reduce
Eliminate Create

36. Reconstructing market
boundaries
Look across alternative
industries
Look across strategic groups
within industries
Look across the chain of
buyers
Look across complimentary
product and service offerings
Look across functional or
emotional appeal to buyers
Look across time

37. Sequence of Blue Ocean
Strategy
Buyer Utility
• Is there exceptional
buyer utility?
Price
• Is the price
accessible to mass
of buyers?
Cost
• Can you make a
profit at target cost?
Adoption
• What are the
hurdles to
adoption?
• Are you addressing
them?

38. Buyer Utility Mapping

39. Making change happen
• Factors of disproportionate influence
– People, acts, activities
• Fair process
– Keeping the workforce on board
– Stakeholder analysis (power/influence)
• Focus divergence
– Functional to emotional
– Demand chain
• Compelling tag line
– Marketing

40. Hurdles to overcome
Cognitive
• Attachment to
status quo
Political
• Vested interest
Motivational
• Demoralisation
Resource
• Can’t afford to
change
• Ride electric sewer
• Face disgruntled
customers
• Secure a consiglier
• Leverage Angels
• Silence Devils
• Hot spots
• Cold spots
• Horse trading
• Zoom in on King Pins
• Put them in a fishbowl
• Atomise

41. Focus on what matters
Mass of employees
Company
Conventional
organisational change
theory
Focus on changing the mass – time and resources hungry
Tipping point
leadership
Extremes Extremes
Company
Focus on extremes – peoples, acts, activities of disproportionate
influence

42. Influencing attitudes and
behaviour through Fair
Process
Strategy
formulation
process
Fair process
Attitudes Trust and
commitment
Behaviour Voluntary
cooperation
Strategy
execution
Exceeds
Expectations

43. Economic theory
Exogenous (usually
technology) growth theory
• Supply and demand
• Structure – conduct –
peformance (Joe S Bain)
• Stucturalist
• Environmental determinism
• Conventional competition
strategy – capture and
redistribute wealth
• Supply side focus – zero
sum economics
Endogenous growth
theory
• Creative entrepreneur
(Joseph Schumpeter)
• New growth theory
• Reconstructionist
• Blue Ocean strategy -
create new demand and
therefore wealth
• Demand side focus

44. Understanding Demand
‘Giving the people what they want is
fundamentally and disastrously wrong. The
people don’t know what they want…(Give)
them something better’
Samuel ‘Roxy’ Rothapfel

45. www.apse.org.uk
Contact details
Andy Mudd, Principal Consultant, APSE
Email: AMudd@apse.org.uk
Association for Public Service Excellence
2nd floor Washbrook House, Lancastrian Office Centre, Talbot
Road, Old Trafford, Manchester M32 0FP.
telephone: 0161 772 1810
fax: 0161 772 1811
web:www.apse.org.uk