Diseconomies of Scale webinar
description
Transcript of Diseconomies of Scale webinar
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Poll 1Which sector are you
from?
* Public* Private* Third* None (Individual)
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Poll 2Do you believe that scale
in public services delivers….
* Lower costs* Little difference* Higher costs
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Poll 3Do you believe that scale
in public services delivers….
* Lower quality* Little difference* Higher quality
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Diseconomy of Scale
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Locality’s interest
• Experience of our Members over many years
• Introduction of Work Programme
• Myths about economy of scale – esp in services
“immutable law of economics”• Lack of any real evidence base
• Encouragement from others
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© Vanguard Consulting Ltdwww.vanguard-method.com
Vanguard and Locality: Having a common Purpose
• An informed recognition that Public services work poorly
• Vanguard brings its experience of working with organisations in all sectors to transform service delivery, reducing costs by solving peoples problems.
• An understanding, based on knowledge of these systems, that the mantra that big services and scale are cheaper and more effective is flawed.
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Questions?
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Methodology
• Third sector experienceo Financial data from 139 VCS
organisations aspiring to deliver public serviceso Survey responses from 96 VCS organisationso Follow up depth interviews with 9 cases
• End-user experience
o Analysis of thousands of demands presented on the system, using “Vanguard Method” techniques
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© Vanguard Consulting Ltdwww.vanguard-method.com
The Vanguard Method
• Change starts by studying, getting knowledge of the “what and why” of performance as a system (we never start change with a “plan”)
• It studies services end-to-end
• It understands service-user demands, following them through the services in order to understand how and how well the services work.
• It identifies the system conditions that hinder achievement of purpose from the services users perspective.
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© Vanguard Consulting Ltdwww.vanguard-method.com
Ruth's experienceLearning the What and why from the service users perspective :
What mattered to Ruth:
“ I need help with
housework ”
“ I need help with
housework ”
“gaining access to the first floor of the property
“gaining access to the first floor of the property
“ These two things would have such a profound effect on
mine and the children's lives “
“ These two things would have such a profound effect on
mine and the children's lives “
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© Vanguard Consulting Ltdwww.vanguard-method.com
What Ruth received
2 anger management courses
2 parenting programs
Help cleaning 1 bedroom
Toilet frame, perching stool and bath board for a bath she could not access
Family Intervention program
And it took this many people to deliver it……
8 social workers22 support workers allocated
30 referrals in core flow16 assessments in core flow
36 teams/services
And it took this many people to deliver it……
8 social workers22 support workers allocated
30 referrals in core flow16 assessments in core flow
36 teams/services
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© Vanguard Consulting Ltdwww.vanguard-method.com
Cost of what Ruth wanted……..
• Cleaner (assume 10hrs/week for 4 years = £14,560
• Move to suitable property (current property unsuitable for adaptation) = £1,200
• And/or stair lift = £5,000
Total = £20,760C
ost o
f wha
t Rut
h G
ot
£106
,777
Cost of doing to, not doing what mattered for Ruth
= £86,000.00
Cost of doing to, not doing what mattered for Ruth
= £86,000.00
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What else we found
• Scale thinking is rife71.2% of aspiring VCS orgs fail the 25% “rule”
• Scale thinking is destroying social capitalLoosening of bonds and multipliers – local SW case studyOrganisations going bust due to unit-cost squeeze
• Scale takes vast resource away from the front lineMega-contracts typically 35-55% management costs
• Potential savings are massiveestimated £16bn worth of diseconomies
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Questions?
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Poll 4Which of the following did
we find was the most common reason given for
going for scale?
* Avoid postcode lottery* Less hassle/management* Less chance of failure* Lower unit costs
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The Drivers to Scale
1. Fear of failure
2. Fear of postcode lotteries
3. System efficiencies (QA, development costs)4. Internal management convenience
5. Belief in economies of scale
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Call to Action
Efficiency comes from Effective services, so these must:
• Be “Local by Default”
• Help people to help themselves
• Focus on purpose, not outcomes
• Manage value, not cost
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Final Question
s?
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Final PollAre you convinced that scale in public services delivers Diseconomies?
* Yes* Not sure* No
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Wednesday 30 April
Neighbourhood Planning: learning from the pioneers
locality.org.uk/events