Lean in the Public Sector
a Wired-GOV Special Report
Spotlight on Lean December 2010
Spotlight on Lean December 2010 Page 1 of 23
Welcome to Wired-GOV’s Spotlight on Lean.
This is the first in a series of features we will be to highlight how Lean is having dramatic effects will, almost certainly, soften the blow of the
running, the aim of which is to focus on a within certain departments and agencies today. spending cuts.
significant part of public sector management, to
examine the philosophy behind it, the drivers And Lean is a subject to which government is The stresses now placed on departmental budgets
which underpin it and to assess the impact of its committed to and, in the main, wholeheartedly are clear. But, whilst putting these tight fiscal
implementation across the public sector. This embracing. Its principles are endorsed within the measures in place, the Government is looking for
provides an ideal opportunity for all parties to take Operational Efficiency Programme Final Report, minimal impact on service delivery, with the focus
stock of some of the most important policy stating that “public service organisations that are being entirely on the value provided to the
initiatives of the day, to delve deep into how introducing ongoing cycles of continuous customer. Lean principles seek to address
different approaches are being applied and to improvement, often based on the Lean approach, operational process inefficiencies at their source –
extract best practice examples from across are improving cost effectiveness, quality of very often at the frontline delivery of services – so
government. In this we will be inviting the leading services, timeliness of services and are engaging issues such as organisational performance
figures and thinkers from government and more successfully with their workforce.” (www.hm- measures, culture, skills, technology and location
academia, as well as bringing the views and treasury.gov.uk/oep_final_report_210409_pu728 must all be looked at from a Lean perspective.
opinions of the best and most innovative minds .pdf)
from the private sector. In most organisations this means re-shaping
So what’s it all about? To pin down one clear people’s roles and the way they behave – two
The first Spotlight on... looks at Lean, a discipline definition of Lean is not easy but in essence Lean change factors that are notoriously difficult to
which has been mistakenly thought to be a thinly is a systemic approach to reducing costs and manage and which require strong and astute
veiled ruse to reduce headcount and cut spending. cutting waste whilst driving up quality and leadership, to inspire and support staff in doing
On the contrary, for those who understand its true improving services for the customer. From its things differently – and doing things better. To
intentions and outcomes, Lean can deliver huge roots in the car manufacturing industry, Lean has successfully embed Lean into an organisation
benefits to the organisation, its staff and developed through the analysis of operational sometimes takes something of a leap of faith but,
customers and can become the keystone in the data, with the use of business intelligence as the following articles and case studies reveal,
management of the severe budget reductions all technologies, innovative workflow processes, the with careful planning, strong leadership and a
public bodies are now facing. We aim to explode productivity of the workforce is enhanced for the dedicated and informed workforce, the long-term
the myths surrounding Lean, to reveal the real benefit of all – the organisation, the staff and the strategic goals of the organisation can be reached
value that its successful application can bring, and customer. Achieving this in a public sector context to the ultimate satisfaction of us all.
Philip Cunliffe & Christine Barnicoat
cunliffe & barnicoat 01706 824518
& media services limited www.cunliffeandbarnicoat.co.uk
Specialist writers and editors for public sector efficiency | procurement | project management | ICT | finance | estates management
Spotlight on Lean December 2010 Page 2 of 23
4 Dr Zoe Radnor Zoe Radnor is one of the UK’s leading academics focusing on Lean in the public
Associate Professor services. She is currently advising on a number of government Lean projects and,
Warwick Business School in the lead article, will outline the principles of Lean, its historical background and
how it is delivering significant savings across the whole of the public sector.
6 David Whale Unipart explains how the public and private sectors can work together, learn from
Head of Public Sector, each other and adopt Lean methods.
8 Daniel Jones Daniel is a management thought leader and adviser on applying lean and process
Chairman thinkingand is dedicated to pushing forward Lean thinking. Describing the work of
Lean Enterprise Academy the Lean Enterprise Academy, he will describe how it is pioneering certain
techniques and advising their application in the public sector, as well as setting
out his views on how Lean can be further exploited by public organisations.
10 Mastercard MasterCard decribes how its third generation Government Procurement Card
(GPCIII) can make a significant contribution to cutting public expenditure.
11 Alison McDonald Case study profiling the PaceSetter project which has led the way for Lean to be
Performance & Improvement Deputy Director developed more widely within the department.
HM Revenue & Customs
13 Mark Eaton FIOM Transformation for the Public Good.
The problems of applying lean and how to overcome it within the new public
16 Brendan McCarron Brendan is CIPFA’s lead adviser on performance, policy and quality issues. He will
CIPFA Performance Improvement Network set the local government scene, how the value proposition has led local
government to adopt Lean methodology and techniques to cut waste and what
the future holds for local government post-Spending Review.
17 James Brady Case study examining the groundbreaking QUEST project which is showing
Value for Money remarkable results in the Police service.
19 Simon Elias As the leading academic lean research centre in the world, the LERC and has
Lean Enterprise Research Centre established an international reputation and strong presence in its role of
Cardiff University researching, applying and communicating lean thinking. Simon will highlight the
LERC’s recent research on Sustainable Lean (how lean thinking can be
implemented in a way that ensures lasting, organisational change. He will also
describe the work of the newly-established Public Sector Think Tank.
21 Lisa Nother Case study of the Court Service Lean programme and the benefits this approach
HM Court Service Lean Programme Manager has brought, together with the difference that the project has made to staff.
Ministry of Justice
23 About wired-GOV
Spotlight on Lean December 2010 Page 3 of 23
Now that the Spending Review has been
published, government departments are
working on the detail of how budget
cuts will be implemented. One key
element to this must be a focus on Lean
processes, according to Professor Zoe
Radnor, a leading academic thinker on
the subject. She points to several
projects she has worked on which
highlight the myriad benefits that Lean
can deliver for the public sector.
“Is Lean just about cutting job and costs?” is In 2006, HMRC began to roll out an organisation- Standard Operating Procedures (SOPs). Like HMRC
something I am frequently asked especially at the wide programme across processing areas with the and DWP these practices include the introduction
moment in the public sector. My answer is “No – help of management consultants. In my study of of Team Information or Performance Boards to
the spending review and budget cuts direct where this programme, it became clear that there was a manage workload allocation, identify problems
and decide when cuts are made - not Lean.” If direct correlation between how senior management within the skills of team members and report
used properly, Lean can help public sector engaged in Lean and how their staff then perceived successes. There are also daily team meetings.
organisations to maintain the high standard of it.
services that they currently deliver, despite the My main findings show that the Lean programme
cuts. Where there was negative engagement or poor is having an exceptional impact – with break-even
communication by senior management, staff were within six months. The positive elements are
The call is to do ‘more with less’ – in other words, less likely to link Lean with improved quality and immediate or ‘quick win’ improvements in
to be more efficient. But care must be taken to productivity, and customers were more likely to processes, with the use of performance boards and
ensure that the focus is not solely on taking the have a mixed understanding of the potential trays highlighting the current state of work. The
money out – this to a degree is the easy bit. There outcomes. role of the internal change agents is making a huge
are, in fact, two ways in which to increase value: difference at sites where they spend significant
one, by reducing waste and thus the cost of a Where senior managers showed positive amounts of time. As a result of these
product or service; the other, by increasing engagement, staff and customers were more likely improvements, many staff have stated that they
value-adding activities. The challenge for public to perceive increased quality, a structured do not want to go back to the pre-programme
sector organisations is to reduce spend whilst approach to problem solving, better teamworking, processes.
retaining or even improving service delivery. as well as a well-supported process for transferring
Getting ‘the same or better for less’ is to be capabilities from the consultancy to HMRC. Pan-government perceptions
effective as well as efficient!
Evaluation of the Lean Programme in HMCS Across government Lean is being introduced to
I am an Advanced Institute of Management (AIM) Radnor and Bucci, 20102 improve service delivery by eliminating waste,
Research Fellow considering the sustainability of simplifying processes and creating capacity to do
Lean in Public Services. I have worked with the The HMCS Lean three-year programme was more work with fewer resources. However, in my
Scottish Government, HM Revenue & Customs launched in Autumn 2008 and will have carried out research into the effectiveness of Lean in the public
(HMRC) and health trusts and am aiming to develop an ‘initial touch’ of all jurisdictions of courts in services3, I found that there are a number of
my thinking through further work with HMRC as well England and Wales by December 2011. recurrent issues which could be better addressed:
as HM Courts Services (HMCS), Department of Work The programme, designed to be consultant-free,
and Pensions and local government. In this article, is developing internal capability in the form of 1. Recognition of the importance of the
I want to share some highlights from my findings. change agents; HMCS staff having undergone commitment and understanding of senior
training through a Lean Academy. managers. In all cases there is a direct correlation
Evaluation of Pacesetter, Lean, Senior between the enthusiasm and drive of senior
Leadership and Operational Management Each court starts with a Lean event to introduce managers and the positive experience of Lean
within HMRC Processing Radnor and Bucci, 20071 the revised processes and new practices through across the organisation.
Spotlight on Lean December 2010 Page 4 of 23
2. Many staff, whilst acknowledging that Lean has improved patterns to three, reducing six forms to one, removing tons of Success Factors
their own working environment, could not quite see the impact rubbish), if other Lean tools are not employed - particularly
it was having upon the delivery of the service to the customer. visual management and ongoing problem solving tools - then Five key success factors have consistently emerged during my
inefficiencies may slowly return. work on Lean in the Public Services. The most effective
3. Staff often used phrases such as “when Lean was here” or programmes are those where:
“after Lean had gone”, giving the impression that Lean is The key elements of organisational readiness may well include:
something external to the organisation, carried out by the the engagement of staff through appropriate training and · a culture of continuous improvement has been developed
change agents or management consultants. It is important to development; having an improvement strategy; having a process · there is senior management commitment and leadership
recognise that Lean is a long-term programme and not a view; understanding customer requirements; strong, committed throughout the organisation, in actions as well as words
short-term fix; it is about both tools and behaviours. leadership; and understanding demand, capacity and variation. · time and adequate, capable resources are committed
· a clear communication strategy has been developed and
4. Lean is not a ‘one-off’ process redesign, Lean event or a Rapid Figure 1 below illustrates how these elements support the implemented through appropriate channels to ensure
Improvement Event (RIE). A series of RIEs does not Lean make! principles of Lean and the delivery of value. Together with a clear messages penetrate
Although these events can result in a radical process redesign communication strategy and supported by a steering group and · (perhaps the most significant) ensuring organisational
removing ‘low hanging’ waste (eg, moving from 14 shift project team, they are the bedrock and foundation of developing readiness is in place to support the implementation.
Lean in Public Services.
Figure 1: House of Lean
for Public Services There is enormous pressure on the public sector to reduce costs
and to become more efficient and there is no doubt that Lean
can contribute to this. But, importantly, this must not give the
wrong message about the aims of Lean. It should be seen
instead as an approach which could turn a difficult situation
into an organisational opportunity, allowing the ways in which
public services are delivered to be re-structured.
The challenges outlined in the Spending Review can be
addressed by Lean programmes across government -
systematically and effectively.
Professor Zoe Radnor
AIM Management Practice Fellow
1RadnorZ. and Bucci G., (2010), Evaluation of the Lean Programme in HMCS,
2Radnor Z. and Bucci, G., (2007), Evaluation of Pacesetter, Lean, Senior
Leadership and Operational Management within HMRC Processing, HMRC, London.
3Radnor ZJ (2010) Review of Business Process Improvement Methodologies in
the Public Sector, AIM Report, London 2010 (May)
Spotlight on Lean December 2010 Page 5 of 23
The impact of the Comprehensive Spending
Review on the public sector is now being played
out across the UK.
A lean approach to the
Government programmes, services and entire
levels of infrastructure are in danger of fast
disappearing as local authorities and public
sector organisations search for ways to reduce
Many will slice and dice ruthlessly for short term Some people suggest that a malaise exists in how to implement a method for determining and
goals or quick returns. Others, who might try to public service delivery; an accepted mind set that delivering precisely what the ‘customer’ requires
‘wait out the storm’ will be seen as complacent Britain must pay more for public services as costs and how to eliminate activity that does not add
and unresponsive. In either case, it is most likely escalate. value.
that their ‘customers’ ultimately will lose out.
An alternative view – often found at the Parts of the Public Sector have already borrowed
A number of UK private sector organisations have operational level - is that many people are aware these ideas from industry. HMRC’s PaceSetter
found a solution to addressing cost pressures and of barriers that inhibit their performance, but are programme, which sought to transform the
deliver more and better for less for their still unable to address them. efficiency of the department and bed down the
customers. merger between the Inland Revenue and Customs
Our work with central government, health trusts and Excise, used Lean techniques and practices
‘Lean thinking’ was, until recently, seen as the and local authorities has confirmed to us that there that were based on our own architecture, The
province of manufacturing companies that were is a commitment to delivering the most efficient Unipart Way.
able to reduce costs and increase value by service at the lowest possible cost. However, that
improving the quality of their products and the commitment is stifled by a lack of understanding With our support in building the architecture for
efficiencies of their processes. But a few of improvement tools and confidence in using change and the capability of the PaceSetter
companies have taken the lessons from the factory them. Civil servants recognise the need to provide practitioners, PaceSetter has generated a return
floor and applied them in sales, marketing, finance better value for taxpayers, but they don’t always of over £900m savings for the department. On
and other parts of the business. have the knowledge and operational framework to average, productivity has increased by at least
achieve this. 30%, lead times for customers have reduced and
The Lean process involves educating employees the quality of work through reduced errors has
about how to implement improvements. It means Talking to public sector workers it is clear that vastly improved (from 49 to 99% in some cases).
retraining employees in structured problem solving engagement has been poor, some are disillusioned
to reduce waste. It means changing the style of and previous programmes have often been This has led to increased debt recovery in
management to give employees greater unsustainable. But it is easy to teach those working mainstream taxes and work and error and fraud
independence to make decisions. And it means in the public services how to create their own returns in HMRC’s Benefits and Credits business.
working on small scale improvements that models of operational excellence including how to Productivity improvements have allowed for more
gradually build confidence to really embed change. adopt a systematic process for solving problems, headroom to be created to take in new work.
Spotlight on Lean December 2010 Page 6 of 23
We also worked with the Department of Communities staff attendance rates in the North West and one of
and Local Government to implement Lean. It was the best for an acute hospital in the country. In
falling short of its Public Service agreement targets, November, the Trust won the Lean Healthcare
but by working closely with civil servants over a 12 Academy Project of the Year award 2010 for the
week period, Lean techniques were used to both meet Countess Way transformation programme, supported
the PSA targets and to save £146,000 per annum as by Unipart.
But the best way of implementing Lean in the public
There have been similar experiences in the NHS. sector can be through an industrial partnership. In
South Central Strategic Health Authority used Lean practice, this means a commercial organisation
methods to meet the Government’s target that no co-operating, co-ordinating and collaborating with the
Head of Public Sector
patient would wait longer than 18 weeks from GP public sector as Unipart is doing with a partnership of
referral to hospital treatment. We helped the Health government departments, NHS organisations,
Authority engage clinical staff, build capacity in new universities, local authorities and not for profit Unipart Expert Practices(UEP) partner with a wide range of
ways of working, standardise practices and ensure organisations in Thames Valley. public sector clients to help them achieve more and better
cost reduction. As a result, waiting times were for less.
reduced from 8 to 2 weeks and there was a 20% Together, the public and private sectors can work
reduction in inappropriate referrals – saving time and together and learn from one another. Adopting Lean Click here to receive a selection of our pan-government and
money. methods might just give government the chance to public sector case studies.
reform without the need for excessive cuts. And it
In addition, our work with the high performing could just help the public sector make efficiencies
Countess of Chester NHS Foundation Trust, is without services being harmed.
enabling the Trust to transform its culture.
Organisational restructuring, reductions in absence, A lean approach can help deliver public services that
improved materials management and workforce Britain can sustain financially. And of which we can
redesign have resulted in cost savings of £2.5m. By all be proud.
engaging employees, the Trust now has the highest
Spotlight on Lean December 2010 Page 7 of 23
Despite a number pioneering government departments being several years into 2. How can you close the performance gaps
What makes Lean work?
which are critical for the organisation?
their lean journeys, and seeing significant changes in staff engagement and step
changes in performance, it is clear that there is still more to learn about lean than The lean answer to this is to remove the obstacles
was originally thought. to the flow of work that creates the value for
which customers are paying, which lean thinkers
call a ‘value stream’. This involves combining
Daniel Jones, Chairman of the influential Lean Enterprise Academy and author of
activities which were once separately managed
two of the most influential books on lean, outlines his recipe for future success. into an integrated value stream, eliminating the
sources of unnecessary variation, optimising the
whole rather than the parts, removing queues,
One of the most significant consequences of the common. Addressing these causes is much more bottlenecks and handoffs as they cross from one
UK government’s recent spending review may effective than jumping to many different solutions department to another, and aligning the flow of
well be the acceleration in the use of lean thinking and launching hundreds of projects, in the hope work with the rate of demand.
to improve both the quality and productivity of that some of them succeed.
the delivery of public services. In most organisations, no one sees or is
It is no accident that the first things given to a responsible for these horizontal, end-to-end value
Car manufacturer Toyota’s lasting contribution to new manager by their superior when they join streams. There is now a wealth of experience in
the practice of management is that it created a Toyota are a problem and an A3 form. (See using the right lean principles and tools in the
unique synthesis of three fundamental over-page) right sequence to redesign all kinds of value
approaches to improvement: the analysis of streams.
quality and the use of the scientific method learnt The A3 frames the dialogue between the manager
from Walter Shewhart and Edwards Deming; and the superior, and ensures that no step is However, exactly the same principles are needed
process thinking about organising the flow of work missed in finding a solution to the problem. This to streamline and synchronise all the support
inspired by the early Henry Ford and honed begins by defining the problem, gathering facts activities that enable the primary value streams
through Taiichi Ohno’s own experiments at (rather than just relying on past data), to flow, such as delivering the right drawings and
Toyota; and how people learn by doing, drawn establishing a target condition or the gap to be parts to assemble an aircraft or delivering the
from the Training Within Industry programme closed, understanding the root causes of a right test results, take-home drugs and therapies
developed by the US Government during World problem, proposing a series of countermeasures to be able to discharge a patient from hospital.
War II. (not just one), checking whether these worked
and reflecting on the lessons learnt. Throughout The third critical dimension to enable value
Many organisations have experienced the power this process the superior is asking questions streams to flow is aligning the management
of engaging employees in using lean tools to rather than telling the subordinate the answers. decision-making processes with the heart-beat of
eliminate waste in their workplaces. Others have the value stream, so problems are escalated and
gone on to use the lean principles to streamline Defining the problem, understanding the root responded to quickly and projects are not held up
the flow of work. But in fact these are only part of causes and coming up with alternative ways of waiting for infrequently held review meetings.
a very different way of managing and leading addressing the problem isn’t always easy, yet can
change. While a lot has been written recently be a truly formative experience which can lay the Quite simply, this means seeing and managing
about Toyota’s management tools, such as A3 basis for a deeper understanding of more the organisation as a collection of inter-connected
thinking and strategy deployment, it is equally complicated problems as managers rise through processes or value streams as well as the
important to understand the purpose (or the glue) the ranks of the organisation. traditional, vertical organisation chart.
that makes them effective.
This experience greatly facilitates the tough
The key is not the tools themselves but how you discussions about which of the vital few issues
use them. A good way of seeing this is by asking that need to be focused on when drawing up the
four fundamental questions. strategy. It also helps to frame the deployment
discussions with each level down the organisation
1. How can you focus everyone on the vital in order to translate these vital few ‘goals’ into the
few improvements that will make the vital few ‘actions’ that will close the important
biggest difference to the organisation? performance gaps.
The lean answer to this is to use the scientific The significant point of using this scientific
method to understand the choices and to dig method to focus on the vital few is that everyone
down beyond what are, in many cases, symptoms learns to think in the right way about the
to the underlying causes, many of which are right things.
Spotlight on Lean December 2010 Page 8 of 23
Learning by doing is also the basis for a very and to focus on the vital few improvements
different approach to lean transformation. that would make the biggest difference to their
Instead of spending a lot of time planning and hospital.
then deploying a centrally designed training
programme across the organisation, that is Lean thinking is the way the public sector can
quickly forgotten when the experts move on, follow private sector service delivery
a lean transformation begins with a series of organisations in steadily improving the services
controlled experiments in key activities to they deliver without any additional resources.
build an experience base as quickly as Given this change in mindset, and the similarity
possible. of much of the work being done, there is no
intrinsic reason why productivity growth should
This then forms the basis of further be any different in the public sector than it is
experiments and for building communities of in the private sector. Indeed, the opportunities
practice to share results and experiences. are probably greater in the public sector over
These may also be consolidated on an intranet the next few years.
accessible to everyone in the organisation and
reinforced by competitions and recognition
ceremonies for the winning projects. This
By taking a value stream perspective one is them resolve the most important hindrances experimental, evidence-based approach
learning to see the whole and where to to doing so. ensures that everyone learns how to learn Daniel T Jones is the author of The Machine
act to close the critical performance gaps. by doing and reflecting. that Changed the World and Lean Thinking and
This is equally true in a project environment. the Chairman of the Lean Enterprise Academy
3. How can you change behaviour in Toyota’s Oobeya (visual project room) is an The Government’s recent Spending Review not – www.leanuk.org.
order to work together more effectively effective way to gain agreement from different only focused on ‘out-of-the-box’ thinking
along these value streams? departments on common actions and to agree about where cuts could be made, but it also Daniel T Jones
the few common metrics on which the project challenged the assumption that improvements Chairman
The lean answer is to plan not only what will be measured. Breaking the work into daily in public services can only come about by Lean Enterprise Academy
should happen to every product or patient as or weekly increments and reviewing progress spending more. Increased spending over the The Old Vicarage
they progress through the value stream but daily means that slippages and issues that last decade on the NHS, for instance, has not Goodrich
exactly when this should happen - and to arise can be dealt with quickly, rather than lead to vastly improved productivity. Ross-on-Wye
make any progress and/or deviations from waiting for the next gate review meeting. Herefordshire
this plan as visible as possible. Reviewing The Lean Enterprise Academy’s work in HR9 6JE
progress on an hourly or daily basis enables Capturing these issues also provides a rich several NHS hospitals has shown that it is
teams to respond quickly so as to get back on source of learning for future projects. Making possible to reduce a patient’s length of stay by Phone: 01600 890590
plan and also ensures that recurrent problems everything visual is vitally important in over 50% within 50 days if frontline staff are Fax: 01600 890540
are tracked to their root causes. learning to work together to optimise the shown how to redesign and manage the end- Email: firstname.lastname@example.org
whole system. to-end patient journey from admission to
Making progress and problems visible in a discharge. But we have also learned that this
no-blame environment is much more 4. How can you sustain the gains? can only be sustained if management is
productive than hiding them from view or in a liberated from the blizzard of policy initiatives,
computer system. It is also essential to be The lean answer is to build new knowledge
able to manage a much more interdependent through learning and by doing. We have
process to ensure that any interruptions have already described the power of organisational
less impact on the overall system mentoring using A3s but, in a complicated
performance. social environment where causality is not
always clear, real learning comes from doing a
Anyone who has been part of a value stream number of controlled experiments to see what
mapping exercise will have witnessed the works and what does not. Very often problems
dramatic change in behaviour as participants do not occur where people think they do and
stand in front of the map and see for the first the root causes are also not always obvious.
time how to fix their broken process rather Establishing a common language for all kinds
than blaming each other. Managers also begin of problem-solving makes it possible to
to recognise that their role is to support capture and share not only what works but
frontline staff in doing their work and to help also how problems can be solved, so others
can learn from them.
Spotlight on Lean December 2010 Page 9 of 23
Taking a lean approach to cost reduction is
Taking a lean approach in the only way to make a real difference and
MasterCard believes that the third generation
Government Procurement Card (GPC III) can
make a really significant contribution.
the UK public sector The message is clear. With the current deficit the
Public Sector must reduce cost if it is to continue
to provide effective services with limited budgets.
GPC III is not simply a set of tools for processing
low value orders. Deployed strategically in a total
lean approach it can make a contribution to
And it is also clear that progress is being made at improving procurement processes and in supplier
an, unusually, fast pace. The ERG is certainly management and development.
making a mark and is quite right to be putting
considerable emphasis on government There is no doubt that the GPC improves payment
expenditure, which, of course, is huge. processing but it can be used to achieve much
more. There is scope to use GPC functionality not Taking a strategic approach to settlements will
Re-negotiating contracts with major suppliers and only for low value transactions but also for much improve management information and control. The
moving towards centralised category procurement higher proportions of expenditure, notably with third generation of GPC includes ancillary products
makes perfect sense but, to make a real embedded, lodged and prepaid cards, and achieve such as MasterCard’s Smart Data and InControl
difference, the Public Sector will, probably, be much higher levels of process efficiency and which are being deployed to provide better
taking a lean approach to cost reduction across headcount reduction or redeployment. Position management information and greater visibility and
the whole of their supply chains. In this they will GPC functionality within an overall settlement or control in transactions. The old obstacles of
be looking at the demand for and specification of eProcurement strategy, potentially through an potential lack of control and visibility have been
the services they provide and the way that they eSettlement hub, and the benefits will be even taken away.
are delivered or commissioned; they will be greater.
looking at the optimisation of processes to deliver To make maximum use of the management
these front-office services; and they will be looking GPC III embedded within the new category information it will be beneficial if groups of like-
also at how they can make back-office processes contracts will ensure that suppliers are paid within minded bodies adopt a collaborative approach to GPO
more effective. They will be looking at procurement four days, reduce their own internal costs by III, also avoiding the cost of multiple re-tendering
in terms of specifications and demand, pricing and decreasing the costs of invoice errors and debt exercises. Putting groups of organisations on the
total cost and supplier development – for long- collection and, in turn, drive compliance with the same GPO III platform will have provide
term, sustainable cost management. Or will negotiated contracts. Suppliers will always prefer consolidated information as well as contract
they? Surely, beating up the big suppliers and the hassle-free route to the maverick route. compliance and through-put rebate.
centralising strategic sourcing is not where it will Reducing total cost in this way will have a positive
stop! effect on price especially if new contracts are MasterCard have recently produced a paper
going to be volume-bound. And, of course, the in collaboration with Cap Gemini Consulting
The target operating model for centralising bigger the volume through the GPC the bigger the on how, in the current economic
category procurement requires the right issuer rebate. environment, an efficient procurement
management information, effective enabling process can be instrumental in driving
technology and efficient payment processing if it This also contributes to Government’s prompt efficiency improvements and reducing cost.
is to deliver and it is to be expected that GPC III payment and support to SME initiatives. This can
will play a major role in both the effectiveness of go even further if linked to Supply Chain Finance. Click here to find out more and receive the
the operating model and lean procurement. paper in full.
If you would like further information on
MasterCard’s approach to GPC and strategic
eSettlements please visit the website:
or e-mail us at:
We look forward to hearing from you.
Spotlight on Lean December 2010 Page 10 of 23
Case Study: The Pace of Groundbreaking PaceSetter, HMRC’s
innovative Lean project, continues to
provide the department with significant
savings and efficiencies and this is only
making. They now view PaceSetter as one of the
key ways that HMRC can achieve its Vision and
deliver better outcomes for its customers.
Develop a strong internal cadre of
set to increase as 95 percent of the practitioners, reducing the reliance on
workforce plan to use PaceSetter in
their work by 2013. But it’s not all been Although reliant on consultants for specialist
plain sailing, according to Alison knowledge in the early days of the project, HMRC
McDonald, Deputy Director for soon developed a structured academy and
coaching programme to help staff become
PaceSetter, who highlights some PaceSetter Practitioners. It recognised that a key
important lessons that HMRC has risk was putting too much stock in consultancy
learned. support for too long, with insufficient skills transfer
to HMRC staff, particularly for delivering leadership
For some time now, continuous improvement But it has not been an easy ride for HMRC in development programmes and challenging
techniques, such as Lean, have been seen as key implementing PaceSetter. The department has management teams.
driving forces for transforming public services for learned, and continues to learn, valuable lessons
customers. Its particular attraction now, in this about how to embed and sustain its tools, Now accredited by Cardiff University’s Lean
climate of austerity, is that while years may be techniques and behaviours – and to be flexible in Enterprise Resource Centre (LERC), the PaceSetter
needed to fully embed a high performance adapting these to the needs of different business Academy Programme has helped over 300 staff
culture, high initial returns can be achieved in a areas. become Practitioners so far, helping HMRC to be
relatively short space of time. largely independent of external consultancy
We’ll now focus on some of the key lessons learned resource.
This is certainly the case for HMRC which began and the steps that HMRC is taking to continually
implementing Lean in 2005 to drive efficiencies in improve PaceSetter for its staff and customers. Performance improvements need to be
its volume-processing work. Early successes in translated into clear benefits and be visible
tax-form handling reported a 50 percent reduction Leaders are the most critical success factor, to everyone
in processing time and a reported uplift from 55 along with disciplined adoption of tools and
percent to 98 percent in quality, reducing the need techniques After the Capability Review in November 2007,
for re-work. However, it soon became clear that HMRC began to develop a robust Performance
introducing Lean was not enough by itself to Back in 2005, HMRC’s attention was focused on Management Framework, consolidating over 70
maintain momentum. As a result, the PaceSetter driving efficiency in the frontline, with minimal performance frameworks into one set of Key
brand was created to ensure future senior leadership engagement. This balance was Performance Indicators. These have streamlined
implementations focused on developing leadership soon readdressed, and PaceSetter started to data collection, reporting and decision making. As
capability alongside system change. engage leaders at all levels with continuous PaceSetter became recognised as one of the key
improvement tools and techniques. mechanisms to improve performance, HMRC began
With nearly 50 percent of HMRC now operating in to develop a Benefits Realisation Framework to
a PaceSetter way, the business has reported over A series of ‘Top Layer Programmes’ continue to both measure and report the effect PaceSetter was
£600m in additional tax yield and an average 30 help leaders to understand the pivotal role they having on these metrics.
percent increase in productivity, leading to play in making PaceSetter a success. Today,
reported gross salary savings of well over £300m. upwards of 1,000 leaders across HMRC have taken This Framework continues to help those business
And this success is only set to continue, with part in these programmes - including the areas which are implementing PaceSetter to
HMRC’s ambition of 95 percent of its workforce Executive Committee, DGs and Directors - with understand the effect on productivity, quality,
using PaceSetter by 2013. many using PaceSetter to aid their decision customer experience, staff engagement and
leadership. Importantly, this creates the evidence
needed for future resourcing and staff buy-in.
“PaceSetter has transformed the way that DGs and ExCom manage performance. They are now
passionate about releasing the talents of those who do the work, enabling them to continuously Performance Hubs and Boards, implemented at
improve what they do every day as part of their everyday activities.” management and team levels, are also helping
everyone to visualise performance and benefits,
Steve Lamey, DG Benefits and Credits HMRC with a clear line of sight from the Executive
Committee to the frontline.
Spotlight on Lean December 2010 Page 11 of 23
Give your staff a Voice Greater accountability in the business In the Leadership space, PaceSetter has Alison McDonald OBE
aligned and integrated its core management Deputy Director, Central PaceSetter
Whatever method of continuous improvement As the organisation matures, individual behaviours, with the newly launched HMRC-
is used, it is critical that staff feel that they business areas should be given greater wide Leadership Behaviours. This avoids any With 25 years’ operational and management
have the opportunity to have a voice in their accountability for translating performance conflicting messages and (perceived) experience gained in the civil service, Alison
work. By actively engaging them in improvements into benefits realised. However, competing management training or reward McDonald leads the implementation of
performance meetings around the hub - they should be supported by a common systems across the department. PaceSetter across HMRC.
problem solving and creating new standards - operating model, from front-line practitioner
HMRC has seen overall improvements in staff through to senior teams. But it’s not only HR initiatives to which Joining the Inland Revenue in 1985, Alison
engagement in PaceSetter areas. PaceSetter is aligned. It continues to work worked in a variety of technical and
Assure the benefits closely with other enabling functions, such as management roles in Sussex local offices,
Of PaceSetter, HMRC staff say: Finance for performance management, IT for whilst completing her BSc (Hons) degree and
Change control and assurance are required to information management and our customer Tax Inspector training.
“We are now able to put our points across maintain the integrity of implementations, strategy work.
in an open environment.” along with a strong, consistent brand image. In 2003, Alison became the senior manager in
Greater cross-government working Portsmouth - one of the largest processing
“It’s a natural part of our working life and Substantial benefits can be derived by offices in HMRC. Introducing Lean tools and
culture.” looking at the end-to-end enterprise level Reduced funding, as well as pressure to techniques to redesign their processes, Alison
improve efficiency across government, must and her team developed pioneering techniques
HMRC Managers say: To reach a ‘tipping point’ of credibility and lead to greater cross-department working, for wider application and became the first
understanding, HMRC initially focused on sharing experiences, best practice and PaceSetter model office for HMRC.
“Our people are now seeing the big picture re-engineering sub-processes in organisational methodologies.
and getting actively involved in pockets. This generated ‘quick wins’ and clearly Her strong advocacy of Lean tools and
continuously improving what they do.” demonstrated the value of PaceSetter to the This is exactly what is being encouraged with techniques, coupled with her wealth of
organisation. PaceSetter Practitioners and specialist staff operational experience, proved invaluable in
“The success of PaceSetter is really within HMRC. Over 600 internal staff are now May 2008, when she became the Deputy
attributable to the management teams and However, HMRC recognised early on that accessing a workspace portal, sharing Director of Central PaceSetter in HMRC.
frontline staff. Of course, there is a way to substantial benefits would come from knowledge, experience and new approaches.
go yet, but staff are really taking the identifying ‘hot spots’ of waste at enterprise This is something that could be replicated Now with nearly half of the department working
initiative to continually look at ways to level, focusing on end-to end processes and across government, to share knowledge and in a PaceSetter way and over £900m savings,
improve what they do.” customer journeys. expertise. it is widely recognised as one of HMRC’s key
enablers for continually improving outcomes
‘One size does not fit all’ Work closely with enabling functions and HMRC still has a way to go to achieve its aim for customers and delivering its Spending
initiatives of the majority of its workforce to be using Review challenge.
As PaceSetter began to be implemented in less PaceSetter by 2013, but it continues to nurture
transactional areas, HMRC recognised that A key priority for PaceSetter has been the a culture that is open to change, realising that PaceSetter combines lean tools and techniques
there were certain business areas that needed integration of its work with other key continuous improvement is not just a with active leadership engagement - helping to
to adapt rather than simply adopt the existing programmes of activity. This includes the management fad – it is here to stay. create a culture that is genuinely open to
standards and tools of PaceSetter. HMRC Strategy (for which it is a key enabler), change and continuous improvement.
Leadership Behaviours and Corporate and
Working closely with the policy teams in Social Responsibility. Alison McDonald
Personal Tax and Business Tax revealed that Deputy Director Central PaceSetter
almost 80 percent of the existing PaceSetter HMRC
tools were applicable to these environments. 100 Parliament Street
The remaining 20 percent were either adapted London
or new tools developed which could be used SW1A 2BQ
again in other areas of its business. Phone: 020 7147 2675
Tackling these ‘considerative’ areas from the
start helps avoid the prejudice that continuous
improvement only works in ‘processing’ areas.
Spotlight on Lean December 2010 Page 12 of 23
Transformation for the Public Good
The problems of applying lean and how to overcome it within the new public environment
An impending storm: the new public sector environment
A review of public expenditure over the period 1900–2010 shows that it has
increased from less than 15% of the UK gross domestic product (GDP) to over
48% in 2009–10. Much of the increase over this period has been driven by
tremendous changes in the scale and type of publicly funded services
available, including the introduction of the NHS, social care reforms and
expansion of investment in education.
However, the current public sector spend as a The fact that there is also around an 11% gap the UK, the impending storm will also impact on
percentage of GDP is among the highest over this between the Government’s income and tens of thousands of private sector businesses,
period, only being exceeded by the peaks during expenditure means that without significant from suppliers of pharmaceuticals to outsourced
the First and Second World Wars and during the efficiency savings the UK will need to borrow even services providers.
social and economic disruption of the mid-1970s. more, adding to our current £930 billion worth of
More worrying is that public sector spend has public debt – approximately £14,000 for every The need for a completely different approach to
been increasing at a rate not matched at any man, woman and child in the UK. transformation in the public sector can be
point in the recent past, increasing from less than summed up in the words of one public sector Chief
40% of GDP in 2004 to the 2010 level of 48%. It is against this backdrop that the Executive: ‘We are not going to achieve this level
Comprehensive Spending Review was published of saving by buying paperclips more cheaply or
Public sector expenditure 2010 in October 2010, with the aim of bringing the banning the purchase of Post-It notes.’
Major Categories deficit under control and cut the gap in funding
from its current 11% to 1.1% by 2014–15, as well
Total budget: £661 billion as setting it on a downward trend beyond 2015.
Pensions £117 billion This equates to an average cut in spending across
Welfare £105 billion all departments of 19%, although this varies
Health £104 billion significantly from areas such as the NHS and
Education £86 billion international development that will actually see
Defence £44 billion an increase to cuts of up to 33% for other
General Government £25 billion departments, with HM Treasury, local
government and the Home Office being hit by
cuts of greater than the average.
The interest that the country needs to pay to
service the debt that underpins this spend is This reform of public sector finances is not just
already £43 billion a year, and this is before we restricted to administrative costs but also affects
factor in the additional liabilities for public sector the public sector capital budgets, which will see a
pensions and any costs that arise from the former net reduction of 29% between 2010 and 2015
Government’s commitment to underwrite across all areas.
Collectively, this means we face the need for an
It is against this backdrop that the Coalition almost unprecedented level of transformational
Government announced the emergency budget in change within the public sector, bringing radical
May 2010 and with it an initial £6.25 billion worth changes to the way services are commissioned
of efficiency savings. However, this figure was and managed and the disappearance or merger of
dwarfed by the Institute of Fiscal Studies’ non-core and inefficient services.
statement that the UK public sector needs to find
an initial £35 billion of efficiency savings in the If you think this is just a problem for the public
next 18 months, adding that all of the initiatives sector, then think again. As the public sector is
undertaken so far have only delivered £8.5 billion the largest purchaser of products and services in
Spotlight on Lean Page 13 of 23
Spotlight on Lean December 2010 December 2010
Lean: at the heart of public sector Summary case studies the new public sector environment will be an reports has meant that most of the lean
efficiency improvements for a decade acceptance that it will not be possible for every projects undertaken to date have tackled point
1. Housing association organisation to win every time. issues without the strategic will being present
The need for massive efficiency improvements Effective management of gas servicing of to look at whole systems.
in the public sector does not mean that properties is essential to ensure the safety of Real efficiencies will come by ensuring that
services can just be cut unilaterally. Most properties and also to control costs. A short, services are delivered by the most efficient In the new public sector environment, we will
people want to see improving performance in high-impact programme reduced the associ- organisation and that will mean changes to the need to see a greater focus on whole-system
public services, whether this means faster ated costs by more than 25% and reduced way that money flows in the public sector. This transformation, where organisations look at
access to a GP, a faster turnaround on their the number of properties that were not being will be complicated by organisations the core services they deliver as a whole
passport application or improving standards serviced within a 12-month period by just attempting to retain budgets when the best rather than using lean to address small-scale
within education. Lean has found its way into under 75%. value approach would be achieved by projects in isolation. To achieve this will
a wide range of public sector programmes to transferring the funds to a different require a change in the way that senior teams
help deliver the improvements people have 2. Local council organisation. think and work within the public sector, with a
wanted with their public service operations Swift processing of Disabled Facilities reduction in the amount of time spent
from local and central government to public Grants, which are provided to help people Another core lean concept that needs to be managing the status quo and the need to
healthcare and the armed forces. Reported adapt their home to enable them to continue understood for any project to be successful in allocate more time to transformational change
achievements have often been impressive, to live there, impacts directly on the quality the public sector is the customer’s perspective and to dealing with the people, political and
with improvements in the performance of of lives of many people. Focusing lean on the on which activities are value-adding. Whereas funding issues that will inevitably arise.
specific services being accompanied by end-to-end process helped to reduce the in the private sector this will include all
financial savings that exceed the currently overall lead-time from application to grant activities that a customer is prepared to pay The problems that will arise with the wider
required 15% as can be seen in the by 85%, whilst reducing the associated ad- for we need to take a wider view of value-add application of lean across the public sector will
accompanying three short case studies. ministration costs by 38%. in the public sector. For one thing, many not be in the use of the tools and concepts that
customers do not pay directly for the public are as applicable in the public sector as
Whilst there are many more case studies of 3. Community healthcare services they receive, and for another some anywhere else, but in creating and managing
the successful application of lean in the public In the absence of a safe and effective choice, services do not benefit any individual person, the right environment for lean to be applied
sector of all different sizes and scales, it can ambulance crews will often convey a vulner- instead benefiting society as a whole. It is this and embedded, and this needs to tackle many
be seen that lean has mostly been applied on able patient to hospital rather than leave him wider concept of public value that means we of the limiting beliefs that prevent public
small to medium-scale projects with easily or her at risk at home. This leads to many cannot just consider the direct impact of sector organisations doing anything other than
standardised processes that experience unnecessary admissions and excessive cost. services delivered. delivering the services the way they have
relatively low levels of variability. Many of the Working with an NHS Community Healthcare done it previously. Therefore, a key skill for
examples of lean in the public sector have also organisation to provide an out of hours rapid people looking to lead lean programmes in the
Value-adding activities in the public public sector will be their ability to overcome
been internal and have avoided cutting across response service has given ambulance crews
sector some of the limiting factors that are
organisational borders. the options they need and reduced the over-
all costs associated with these patients by preventing the widespread adoption of lean to
An activity is value-adding if you can answer tackle whole-system transformation.
In the public sector, many of the most 45% whilst enabling more patients to remain
yes to the following three questions:
important and highest cost processes are in their own home.
Does the customer experience it? Lean limiting factors in the public sector
complex and have high levels of variability. Does the customer want it to happen?
These strategic and complex processes often Would the customer or the wider society if it
also cut across the borders of departments This can be complicated further when multiple Without the profit motive that drives efficiency
were significantly changed or dropped? within the private sector, it is not surprising
and external organisations. The maximum organisations are involved in the delivery of a
value of lean will only come when it is applied single value stream as each organisation can that there is not the same sense of urgency for
strategically to these more complex pathways. be funded from a different pot and has The lack of a financial crisis and a general transformation programmes in the public
different corporate objectives. increase in the level of funding within the sector. For nearly all public sector employees,
This can be a problem because public sector This leads to the first requirement of any public sector as a whole over the last 10 years there is not the same risk that their salaries
organisations are frequently structured like a successful lean programme in the public has meant that there has often been a lack of will not be paid at the end of the month that
multinational conglomerate, with many sector being the need for all parties to decide will to apply lean to efficiency improvements there is in an under-performing private sector
separate corporations engaged in different what they are trying to deliver for the benefit that cut across whole systems. The lack of a organisation. Another limiting factor is the
activities under a single management of the customer, whether that is a member of perceived financial crisis in the public sector, different attitude to perceived risk in the
structure, making co-ordination much harder the public, the wider society or another despite such things as the 2004 Gershon public sector and in particular what might end
to achieve. agency. One maxim that will be important in Report and other, more localised efficiency up on the front page of local and national
Spotlight on Lean Page 14 of 23
Spotlight on Lean December 2010 December 2010
media if mistakes are made. This is one of the Lean transformation in the new public 3. Manage perceptions of stakeholders Mark Eaton FIOM is an active Fellow of The
reasons why there is often a committee sector environment Institute of Operations Management.
approach to decision-making that means that Staff will need to understand the scale and
decisions can take a long time to reach and Lean has already been shown to work within scope of the changes that are required and He has been leading transformational change
are then difficult to change if, for example, the the public sector in small and medium-scale also how important the need for programmes in and for the public sector for
situation changes rapidly. transformation projects, whether it is reducing transformational change is. This requires over 10 years and has led flagship publicly
the costs associated with managing vacant effective, regular and high-impact funded programmes and worked with major
This need for group consensus in decision- properties, reducing the time from referral to communications. The perceptions of public sector organisations across the UK. In
making is one of the reasons that public sector treatment in the NHS or improving the customers and other stakeholders also need to addition, his experience of working within the
managers can spend up to twice as long in processes associated with home fire risk be managed in a more proactive way if you are manufacturing and service sectors has led to
meetings each week as their private sector assessments. to avoid significant levels of adverse feedback him being asked to write a number of public
counterparts. The consensus approach to when changes do start to happen on a large sector strategies focused on supporting and
decision-making also manifests itself in Delivering the whole-system transformational scale. developing UK industry, for which he was
another limiting factor, namely the need for change that will be required by the current awarded the Viscount Nuffield Medal in 2004.
reports and analysis. Many transformation financial crisis will only be possible if limiting 4. Share information to reduce variation
programmes have either been thwarted or beliefs are tackled head on, mostly through a Email: email@example.com
delayed by an extended period of data change in the behaviour of senior leaders in Looking for transformation partners who you
gathering and analysis followed by periods of the public sector through five distinct actions: can learn from and educate, as well as being The Institute of Operations Management
strategising and further planning. This need prepared to share information more openly on (IOM) is the principal UK professional society
for analysis is not aided by the difficulties of 1. Put transformation as a core business how you have achieved what you have – or the for operations management in
accessing reliable information on historic function problems you have encountered – will speed manufacturing, service industries and the
performance and potential future demand up the learning process. public sector. IOM is a membership body
within most public sector organisations and is The first step will be to allocate as much air within The Chartered Institute of Logistics
also complicated by competing budgets time in management meetings to the 5. Focus end-to-end and Transport (UK) – CILT(UK); and
between different organisations and a legacy transformational change process as is International Associate for APICS in Great
of poor working relationships, all of which allocated to managing day to day operations. Focusing on the end-to-end process and Britain. IOM is a not for profit organisation,
need to be overcome to enable lean to be This will need to be preceded by the creation involving all the various parties in the redesign run as an educational charity to help develop
successful. of a transformation map that looks at the of services or changes to the commissioning its members. IOM provides learning and
whole system and puts together a roadmap of processes is the key to avoiding the creation career opportunities in four key ways:
I would like to emphasise the limiting the steps that will be taken over a one to of islands of excellence that are swamped by
environment that exists in most public sector three-year period. In addition, it may be problems and issues created by organisations Networking: Events, connections and
organisations by adapting a statement made necessary to invest in establishing a upstream or downstream of your organisation. industry insights
by Jim Easton when he was CEO of an NHS transformation management office to rival
Strategic Health Authority – he is now the NHS current project management offices. Perhaps the biggest challenge for senior teams Knowledge: Access to exclusive industry
National Director for Efficiency & will be to encourage staff and managers at all intelligence
Improvement – to enable it to apply to the 2. Cut through the politics levels within the public sector to develop three
whole public sector: key lean behaviours: Career: Personal advice, support and
Some of the drive for this will need to come information
The lack of a ‘burning platform’ in the public from the very highest parts of Government, Ÿ Be obsessive about finding better and more
sector can be traced back to three limiting but at a local level this is about building efficient ways of doing things Development: Workshops, training and
beliefs: effective relationships between organisations Ÿ Constantly search for the hidden part of the qualifications
1. An aspiration to mediocrity and getting to grips with the tough decisions, organisation that is adding no value and
2. The desire to blame others for failings in the especially those that are likely to lead to eliminate it
system significant financial cuts and even staff losses. Ÿ Tackle limiting beliefs that prevent the Why not find out more about lean in the public
3. A belief in a normative level of performance It will not be acceptable to repeat the words of organisation from becoming more efficient. sector through the Institute’s new lean for
one Chief Operating Officer entering a public sector workshop programme? IoM’s
It will take a different approach to leading lean strategic planning meeting who said: Organisations that can successfully get staff to forthcoming lean programme is dedicated to
programmes in the public sector if adopt these three behaviours will be the local authorities and the public sector.
organisations are to be able to rise to the ‘If we are going to talk about any cuts, winners in the new public sector environment.
challenge in the new environment and I’m leaving right now.’ Click here to find out more and to register.
overcome these limiting beliefs.
Spotlight on Lean Page 15 of 23
Spotlight on Lean December 2010 December 2010
even the best) systems approach
Lean is not the only (nor maybe Systems ideas are a crucial part of determining how public services – especially those
provided by local authorities – are delivered. But, as Brendan McCarron, an associate with
CIPFA Training and Development examines here, the tricky issues of value measurement and
the choice of system approaches need careful consideration by all public sector organisations.
Apart from the public sector, my professional life authorities, in which staff are making this Lean post-Spending Review
includes working in the aerospace and high-tech assumption. This works because they are drawing
manufacturing industries. Systems ideas have the boundaries of the systems they are working At the moment, in the wake of the Spending
been thoroughly internalised by these industries, on very tightly. For example, consider a planning Review, the public sector is concerned with how to
in which manufacturers are lucky in that they deal function of a local authority as a system. If you make significant cuts to spending while, at the
in tangible products which can be easily include in the ‘planning system’ everything from same time, it is under pressure to maintain or even
understood and measured. They have ridden political policy through planning application expand services. A local authority using lean ideas
successive waves of innovative approaches to processing to enforcement, then there will be to improve the processing of planning applications
improving manufacturing operations to arrive at many potential customers who value different is not going to solve this political dilemma. The big
state-of-the-art facilities that are well thought- things. By reducing the scope of the system it is savings will only come from profound changes to
through to maximise long-term profitability. possible to be fairly clear about customers and large systems. The Government’s proposals on
what they value. The danger of breaking a service changing the housing benefit cap and other tax
As the social sciences are the source of many function into a series of smaller systems is that changes are examples of decisions that profoundly
systems ideas, it is not surprising that public sector you risk sub-optimising the whole system. alter the system; whether for better or worse we
organisations have also been using systems ideas will see.
for many years. But they are saddled with the The Choice of Systems Ideas
problem of producing services which are less Thinking differently about what we want the state
intangible than products which makes The complexity of the system and the level of to do, and the goals we set for public services, has
understanding and measuring these services more agreement about its purpose can be used to a large impact throughout the machinery of
difficult. In addition, there is no public sector identify where various systems ideas can be used. government. Higher political goals shape the
equivalent of long-term profitability as an aim or Lean systems ideas are useful in situations where objectives for public sector organisations which, in
as a measure in the public sector. Instead, we are the work systems are fairly straightforward, where turn, determine the type and volume of services
faced with a confused not-quite-consensus about there is a clear customer and where there is a required. These requirements determine the
what public sector organisations exist to provide consensus about the purpose of the system. specifications of services which are straightforward
and lots of possible ways of measuring how well Where services are complex and there is little enough in terms of the number of competing
the services are provided. agreement about the purpose or even who the requirements users and stakeholders place on
customer is, then other systems approaches such them and in terms of their complexity, that it is
What is ‘value’? as Soft Systems Methodology (SSM) may provide possible to use lean systems ideas to help design,
more insight. manage and improve them.
Lean is based on a relentless focus on optimising
profitability by systematically improving the way The limitations on the type of system where lean I am not setting out a manifesto for inaction; I just
value is created for customers with the minimum systems ideas can be used are not an issue in most want to recommend some care before applying
of wasted effort. Central to this approach is the manufacturing, and indeed most of the any systems idea - not just lean systems thinking
idea of value. In the commercial world, where profitability-focused private sector organisations, to the public sector. The purpose of the larger
customers pay for products, value is fairly easy to because their purpose, to make money, is clear. system (and there always is a larger system) needs
determine. In the public sector, the ‘not-quite- But this is a serious issue in the public sector thinking-through before embarking on reducing
consensus’ and payment through taxes and grants because, as Henry Mintzberg continually points the system scope, so that hard systems ideas like
makes determining value harder. out, many services are in the public sector because lean can be applied to a manageable area of work.
In the public services, lean and systems ideas have of measurement problems and these are Knowing what the overall purpose is will be a useful
been used by assuming that the user of a service themselves caused by the intangibility and check on any changes made to the manageable
is the ‘customer’ and that whatever benefits them disagreement about the desired outcome. area to ensure improvements are really made.
must therefore add ‘value’. I have just started
working with a group of services for local Brendan McCarron is a Senior Associate with CIPFA Training and Development where he runs CIPFA’s
open courses on lean systems approaches in public services as well as courses on performance
management and the application of the balanced scorecard. He also consults, writes and teaches widely
in the areas of performance management, leadership and improvement.
Brendan.firstname.lastname@example.org or email@example.com and on 01249 783489.
Cato the Younger Blog: www.localgov.co.uk
Spotlight on Lean December 2010 Page 16 of 23
While spending cuts dominate the and that of their colleagues, to make the biggest capability and performance. Suffolk Constabulary
impact, QUEST has harnessed the power of the has now sustained substantially better customer
headlines and police chiefs frontline to deliver public sector reform. The Chief service for over two years. Sussex police officers,
contemplate how to equip themselves Constable of a large force says: who joined the work in 2007, have acquired the
for the future, it is tempting and skills and applied it to a range of policing activities,
Case Study: A Noble
dangerous to forget the importance of “One of the most profound outcomes…has been so that the QUEST-way is impacting
the personal and professional development of the simultaneously on custody waiting times, the time
improving services. Operation QUEST staff from the Force in delivering QUEST. …[The in attending scenes and the quality of victim care.
has helped seventeen police forces and team has] been careful to understand and fit with
law enforcement organisations over our values and have been mentors to the West Yorkshire police have significantly reduced
the last 3 years to generate more than representatives of the customer. I expect QUEST the time in investigating a crime, reinvesting that
to make a significant difference to our business capacity into problem-solving neighbourhood
£100m per annum of operational processes but the real legacy is in the learning of policing and serving the needs of the vulnerable,
efficiency savings, whilst the people who have been involved.” while also reducing predictable demand on the
simultaneously transforming the service. These solutions centred on improving the
performance of frontline services. standard of initial investigation with frontline
QUEST incorporates a rapid upfront diagnostic to officers and on simplifying and managing the
James Brady, who has been involved quickly identify priority areas in terms of investigation process more effectively, focusing
the development of QUEST since its performance and cost to focus on the larger precious investigative time on productive
inception, explains how this ongoing organisational opportunities. The approach uses investigative tasks and on crimes with clear
programme is having a dramatic effect detailed cost modelling and frontline demand ‘solvability’. The project has resulted in reducing
analysis to develop robust business cases that the average time to investigate low-level crime by
on staff and the delivery of services clearly articulate the scale of benefit, both in terms 85%.
alike. of cost saving and productivity. Robert Arnott,
sponsor of the work, and Head of Value for Money Greater Manchester Police (GMP) has initiated its
at the Home Office, comments: vulnerable people workstream, introducing a
Operation QUEST was first introduced by the Home broad-ranging training package for staff and
Office in 3 police forces during 2006, once the rigorous performance management. The Force has
concept that business process re-engineering “QUEST takes the simple concepts of rigour and also worked to implement incident and crime
techniques could be successfully applied to vigour and applies them to the management of management changes that can be rolled out across
frontline operational policing had been proven. day-to-day tasks. We have seen profound results 12 divisions. Kevin Mulligan, a Chief
Since then some 15 forces have been involved in where a focus on what matters and delivers Superintendent in GMP, says:
the QUEST programme and it is anticipated that positive outcome is understood and prioritised”.
others will also become involved in the months
and years to come. “QUEST…has lifted the mist around a whole range
Programme performance is managed at force level of previously intractable management and
The Home Office‘s pioneering work with Operation as that is where ownership lies. During the course resourcing decisions. The bottom line is that,
QUEST drew its inspiration from some of the most of a force engagement with QUEST, the thanks to the work of Salford Division and QUEST,
successful organisations in the UK and overseas, programme works to develop the benefits the service we provide to our community has
in which those bodies had set out to achieve a management frameworks and supporting greatly improved”.
programme of continuous improvement based on infrastructure. Forces report performance and
systematic reform of ‘nuts-and-bolts’ processes. benefits to the Home Office, while the department,
QUEST’s strong focus on internal co-operation, in turn, provides benefits management oversight Quiet revolutions
with its implied reversal of traditional hierarchy and post-implementation assurance to help secure
and unremitting focus on quantified analysis and sustainability. QUEST takes officers and staff with a variety of
implementation of what works, is fairly different skills and experiences and shows them
uncharacteristic in large UK organisations QUEST Around the UK how to effect ‘quiet revolutions’. Officers learn how
generally, including in the public sector and in the to draw on ‘canteen culture’ – the idea that casual
Police Service. Operation QUEST is a national programme. conversations can be used to spread the word - to
However, each project demonstrates a local persuade and influence. They sell the benefits of
By allowing officers and staff to work out (through priority or focus linking into the strategic productivity, value for money and culture change
the rigour of the best in process and change objectives of the organisation. The thread that to their peers and then feel honour and obligation
methodology) how they can best use their time, joins them is sustainable improvements in to deliver a better service for their colleagues and
Spotlight on Lean December 2010 Page 17 of 23
service users. QUEST also re-ignites the role This element of the work is supported by a The emphasis, however, will remain on local James Brady joined the Home Office in 2004
of leaders as listeners and facilitators. Senior relentless focus on building skills. Long-term ownership and not national mandation. and has worked predominantly on improving
management must take responsibility for sustainability rests on an organisation’s ability policing efficiency. For the last three years he
fostering the adoption of an organisational to replicate improvement itself. To help build The revolutionary programme challenges has worked to embed QUEST across the
culture in which working level staff are this capacity QUEST incorporates: traditional practices and this is something Police Service and has also worked with
expected constantly to identify new ideas for David Crompton, ACPO lead for Continuous colleagues in the Treasury and Cabinet Office
improvement, while line managers are (i) individual coaching and skills development Improvement and a Deputy Chief Constable, to deliver a cross-public sector strategy on
expected to embrace and progress those ideas through supported, hands-on learning; believes can have dramatic effects on the continuous improvement.
and realise measurable benefits. (ii) the establishment of robust benefits organisation.
management regimes, James Brady
This is the keystone to QUEST’s success; it is (iii) development of the supporting He concludes by describing the culture that Value for Money, Home Office
built on the premise that frontline staff know mechanisms and processes required to sweeps through the organisation: Phone: 020 7035 1747
what stands in the way of their doing the best implement and manage new projects. Mobile: 07801802448
possible job. Katherine Govier, Assistant Chief
Constable in Bedfordshire was struck by the QUEST Moving Forward “when the force first used QUEST, there was or
empowering nature of the work: mystery amongst divisional commanders.
The success of QUEST points the way for other Positive results filtered back. A demand was Steve Hassall
“I am delighted with the response of public sector organisations to follow and we are created. Eventually there was a bidding war. Ch. Supt. Head of Continuous Improvement,
officers…it’s allowing them to use their developing the programme further to support Everyone wanted to be the next to implement NPIA
discretion to resolve issues and will increase forces in a flexible manner. it”. Phone: 07595 010386
victim satisfaction and public confidence”. Email: Steve.Hassall@npia.pnn.police.uk
Spotlight on Lean December 2010 Page 18 of 23
With its wealth of experience and internal
Making Lean Sustainable
knowledge the Lean Enterprise Research Centre
(LERC) is perfectly placed to comment on the
whys and wherefores on lean thinking and how the
various approaches can be applied in the public
sector. Simon Elias, a director of LERC, promotes
the idea of Sustainable Lean, plus the work of the
LERC’s innovative Public Sector Think Tank.
About LERC Position on Lean understanding of the unique nature of services
compared to manufacturing – and the implications
Formed in 1994 by The Machine that Changed the LERC generally promotes a holistic, ‘systems’ of these for ‘going lean’. Furthermore, in the public
World and Lean Thinking co-author Dan Jones, the approach to lean improvement, acknowledging sector notions of ‘value’ and ‘the customer’ can
Lean Enterprise Research Centre (LERC) It is the that lean is much more than simply improving differ significantly from the private world and this
largest dedicated academic lean research centre processes through the application of tools and further complicates the application of ‘traditional’
in the world and has established an international prescriptive principles. Lean is primarily positioned lean thinking in this area and reinforces the need
reputation and strong presence in its role of as a means for organisations to create capacity, for this contingent approach.
researching, applying and communicating lean enhance value-adding activities and improve the
thinking. flow of productive activities. Successful lean LERC’s recent research has focused on Sustainable
organisations employ lean strategies, lean Lean - that is, how lean thinking can be
LERC’s strategy has evolved over the past 16 leadership and understand the need for an implemented in a way that ensures lasting,
years, and its activities now encompasses engaged, empowered workforce. LERC’s strength organisational change. The findings of this work
master’s degree education (for executives) and a stems from an understanding of the many different have been published in Staying Lean (which can
range of engagement activities, which include ‘lean’ methodologies and an appreciation that be downloaded as a PDF from LERC’s website).
knowledge transfer activities, short courses, lean different organisations require their own, bespoke
networks, conferences, workshops and elearning. solutions for sustained implementation - in other The Public Sector
Such activities are channels through which words, they need to adopt a contingent approach
research outputs and new lean knowledge are to lean. LERC’s projects and activities have followed lean’s
disseminated to the practitioner communities. expansion in many different sectors, starting with
They also play an important role in feeding back As lean thinking has rapidly spread in recent years automotive and manufacturing sectors and then,
key issues and trends which inform LERC’s into both consumer services and the public sector, since the turn of the 21st century, in consumer
evolving research agenda and degree it has become evident that while the underlying services and the public sector - the latter including
programme syllabus. The linkage among these principles are highly relevant in a service context, defence, healthcare, government agencies, higher
three activities is important and provides LERC there have been several examples of education, local government and central
with a unique perspective and offering. implementation failures, highlighting a lack of government. From a research perspective, the
challenge is to understand how to successfully
translate and apply the lean philosophy within
complex public organisations.
It is clear that despite some problems, lean is
having a significant impact in many parts of the
public sector, and there are several documented
success stories (for example, see Leaner and Fitter
- Boosting Productivity in Public Services, CBI,
2010). However, it can be argued that success does
vary considerably. For instance, many parts of the
armed forces have been implementing lean for
much of the past decade, though the focus has
largely been ‘cost down’ which, while leading to
undoubted financial savings, has not endeared the
approach to service personnel and has meant that
Spotlight on Lean December 2010 Page 19 of 23
sustainability of change has been questionable. improvement approach can be highly effective Those interested in joining the Public Sector network should contact
Healthcare has seen many highly successful in achieving real and tangible change for Sarah Lethbridge
examples of lean-related implementations, citizens, though it is clear more research (firstname.lastname@example.org)
while the local authority sector is a recent evidence is required to help understanding and
convert to lean, though again driven largely by clarify many of the issues. Simon Elias, Director, LERC
a cost saving agenda. Cardiff Business School
The idea for LERC’s Public Sector Think Tank Cardiff University
Some of the biggest lean implementations in emerged out of this apparent lack of clarity and Cardiff Business Technology Centre
the public sector have been the large the desire from public sector managers for an Senghennydd Road, Cardiff CF24 4AY
government departments, such as Her independent network to debate and discuss
Majesty’s Revenue & Customs and the lean related issues, where they could learn Phone: (029) 2064 7027
Department of Work & Pensions, which have from each others’ experiences and share a Mobile: 07767 371012
implemented highly structured programmes, dialogue about lean in their environments. Email: email@example.com
focusing on improving transactional Website: www.leanenterprise.org.uk
effectiveness. An initial meeting took place to scope out the
network’s modus operandi, which will be
Having observed lean’s impact on the public characterised by events hosted at members’
sector, researchers in LERC have concluded organisations, which will provide an
that there is still a degree of confusion among opportunity to witness first hand the results of
public sector managers on not only what lean a range of business improvement approaches.
is, but how it should be applied in their The first of these was hosted by the Ministry
particular environments. There have also been of Justice’s Court Services (HMCS), at Liverpool
several challenges to the traditional lean County Court, which provided an opportunity
orthodoxy, which has complicated the situation to learn more about how HMCS delivered its
further. improvement programme, to discover what
results it has achieved and to talk to staff about
LERC’s research project ‘Systems Thinking in the experience.
the Public Sector’, commissioned by the Wales
Audit Office (available from: Membership of the network is free and open to
www.leanenterprise.org.uk), is a recent any public sector manager interested or
attempt to demonstrate how a particular involved improvement activities.
Spotlight on Lean December 2010 Page 20 of 23
Transformation for Courts
HM Courts Service has been at the forefront of Lean in
the public sector, developing a robust Lean programme
throughout the organisation. When it was introduced it
was estimated that it would take over three years to
break even between the investment made and the
benefits returned – in fact it took just a year. Lisa
Nother, HMCS’ Lean Programme Manager, explains how
this has been achieved and looks at how the Programme
Case Study: Lean
has brought other benefits to the agency too.
HMCS first became acquainted with Lean in early Visual Management and Standardisation of Once courts have begun using Lean, progress is
2007 when the South East region began trialling Procedures monitored. The ‘tipping point’ measure has been
short Lean improvement (kaizen) events as a devised to show when courts are at a stage in their
means of enabling courts to manage their business Two important tools used by change agents are journey where they no longer require intensive
better in spite of financial limitations. This visual management and standardisation of work support.
achieved quick results and a small number of other processes.
parts of the agency also adopted the approach. Courts that reach the tipping point can begin to
Team Information Boards (TIBs) visually display refer to the Shingo* Model for Operational
There was an increasing need for the Ministry of information about team workload, performance Excellence to define their next steps for ongoing
Justice (HMCS’s parent organisation) to reduce and plans for improvement. They highlight any improvement.
operating costs and to preserve service standards. issues and so are excellent management tools.
avoid falling service standards. HMCS needed to TIBs are also a good means of communication As the agency’s financial position has become more
find out if Lean could benefit the wider business. within a team – and courts use them to hold daily stringent, it has been essential to demonstrate the
To this end, a three-month pilot study was team meetings to discuss handling of work. impact of Lean. At the outset, it was estimated
undertaken in May 2008 – led by consultants – at that it would take over three years to break even
three large court centres, covering administrative The Lean programme has introduced Standard between the investment made and the benefits
functions in the civil, magistrates’ and Crown court Operating Procedures (SOPs), which document returned. In actuality, the programme broke even
jurisdictions. The study identified substantial administrative processes, taking best practice after a year.
opportunity for improvement, resulting in an from across the business and sharing it to reduce
HMCS-wide Lean programme being set up in wasteful activity. This has raised standards to a While Lean has undoubtedly brought financial
Autumn 2008. common platform, upon which improvement can benefits, it has also yielded a range of qualitative
be based. SOPs are mandatory. Resulting cases benefits. Standardising work has improved
HMCS Change Agents in the magistrates’ courts has improved so that productivity and helped focus more on activities
within a month of implementing the SOP, the that add value, while staff feel more engaged and
To avoid spending excessive amounts of money average time-saving for courts per month is empowered by having the chance to shape
on Lean consultancy, it was decided that HMCS around eighty hours of staff time. This is a huge decisions about the way they work.
would build its own Lean capability. Each region improvement for HMCS, and for court users.
has trained a number of staff as Lean change
agents using the Ministry of Justice’s Lean As well as introducing Lean tools, change agents
Academy. This has been a significant achievement, have played an important role in engaging staff *Shingo is a prestigious Lean award seen
ensuring that we have the know-how to keep and encouraging problem solving. Developing a as an international ‘gold standard’.
improving in the longer term. culture of continuous improvement and increasing
the quality of the service delivered to court users For more information, visit:
Change agents have driven Lean change in the is crucial for the sustainability of Lean within http://www.shingoprize.org/
business. Their role is to lead Lean implementation HMCS.
events in courts lasting from two to eight weeks,
depending on the court’s size. They work with a Lean is being introduced in all 500 courts over
small team of staff within each court, using a set three years. Covering such a large number of sites
of Lean tools to identify waste in processes, and over such a short space of time (more than 320
to work towards improving the quality of the courts in the 21 months so far) has been a
service the court delivers. challenge and a steep learning curve for all
Spotlight on Lean December 2010 Page 21 of 23
Lean Innovation Staff Commitment Key to Success Lisa has been a part of HMCS’s Lean
Programme since 2008, playing a key role in
There are countless examples of local Lean It has not all been plain sailing, however. There the development of Standard Operating
innovation. was early concern that Lean meant reducing Procedures, and she has been Programme
staff numbers, but clear messages and positive Manager since August 2010. Prior to this, Lisa
In the South West region, staff and change experiences helped staff to understand that was an operational court manager in the South
agents brought together a range of problem- Lean is about improving the way we work and West of England.
solving tools to create a space for staff to take helping the courts to live within reduced
time out to focus on improvement. This is now means. Lisa Nother
used across HMCS. More recently, a challenge has been to match HMCS Lean Programme Manager
resources to demand for events and new SOPs. 7th Floor
A magistrates’ court in the Midlands This has been handled by offering more 102 Petty France
documented its own approach to processing guidance and materials for courts to use before London
legal aid means-testing applications, which their official Lean implementation event, SW1H 9AJ
formed the basis of what is now a SOP. refining the SOP development process.
Phone: 020 3334 6679
A South East magistrates’ court removed Lean is a powerful methodology, but the firstname.lastname@example.org
duplicate checking from one process and commitment of staff has been key to its
stopped using auto-generated letters with a success within HMCS, and is viewed as vital to
resultant saving of £4,000. enabling HMCS to meet financial and
operational challenges by both the past Chief
All courts have revised the way files are Executive, Chris Mayer, and her successor,
archived following the initiative of one court Peter Handcock. Also invaluable has been the
with large savings in space and financial terms. sponsorship of Keith Budgen, Regional Director
for the South East, who has championed Lean
A model Lean court has been developed, from the start. The central programme team
offering a powerful ‘go and see’ opportunity. and change agents - who have devoted
Every team in the court uses a TIB, problem working and personal time to implementing
solving is a routine part of the approach to and learning about Lean – have driven the
working, standard processes are in place and programme “relentlessly” forward, as Zoe
the entire office is structured to improve the Radnor observed in her evaluation of our
way that work flows in order to maximise approach to implementing Lean.
productivity and the service provided to court
users. Our greatest future challenges are making
Lean sustainable, and embedding it in our
In 2009, HMCS began working with a small culture. We will do this by ensuring staff at all
number of Local Criminal Justice Boards to levels have a proper understanding of Lean
assess the potential for Lean improvement principles and how to manage Lean systems.
across the Criminal Justice System. This We also need to ensure Lean permeates all
showed huge scope to improve system capacity parts of the organisation – not just the
and further work has been done since towards frontline, as the focus has been hereto. Lean
developing a ‘toolkit’ for other LCJBs wishing must become part of our organisational
to do the same. strategy for the future.
Spotlight on Lean December 2010 Page 22 of 23
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Spotlight on Lean December 2010 Page 23 of 23