Can Blue Ocean Strategy help design better council services?

APSE Solutions, as its name suggests, believes in solutions. We think that through improvement and innovation, local government can face up to the huge challenges created by government cuts and keep vital local services going.  One approach we use to systemise innovative thinking is Blue Ocean Strategy.

Blue Ocean Strategy is an approach to business development that consciously seeks to shape the market in a bid to develop new value propositions that can temporarily free a company from competition and allow them to focus on meeting the needs of their customers. At the heart of the strategy is what its creators, W. Chan Kim and Renee Mauborgne, call The Four Action Framework.  This deceptively simple concept seeks to identify those factors of an industry that can be reduced well below a currently taken for granted standard, or eliminated altogether to free up resources to raise other factors well above current standard, and to create wholly new ones.      

The tools and techniques of Blue Ocean Strategy are readily applicable to thinking about public services.  As in business, the application of the eliminate, reduce, raise and create framework can throw up new approaches that are genuinely innovative and can achieve the seemingly impossible objective of reducing cost, whilst simultaneously improving outcomes.

As well as using the powerful Blue Ocean tools to assist with commercialisation, APSE Solutions has applied them to a number of different service areas, including facilities management, bereavement and environmental services.  It has helped to develop innovative ideas, such as that bereavement services can be extended to create an end to end offer that can generate income for the council whilst at the same time pushing down the cost of funerals to make them more affordable. 

To get a to a point where it is possible to apply the four action framework, a lot of work has to be done to understand the current approach to service delivery and in particular, how it delivers or contributes to a required outcome.  This requires a big picture social policy perspective as well as detailed practitioner knowledge.  Only in this way is it possible to work out how delivery mechanisms can change without compromising and preferably, actively improving upon, social policy outcomes. 

One area we have spent a lot of time on is environmental services and in particular, refuse collection.  The result of this is that we have been actively promoting the use of underground bins for around five years. 

Underground bins are significantly less expensive to empty than wheeled bins but have the potential to increase both the quantity and quality of recycling whilst eliminating the need for householders to find space for multiple bins and containers. 

In terms of the four action framework, the value proposition associated with this innovative approach to domestic refuse storage and collection can be shown as a grid:

Blue Ocean Strategy encourages thinking outside of the usual narrow parameters.  It describes 6 paths to the reconstruction of market boundaries, which include thinking about alternative industries and strategic groups to widen the scope of an offer or service. In public service terms, this might mean thinking about how one service can integrate or synergise with others to better meet a big picture objective.  It might also mean identifying how implementation could contribute to objectives not usually directly associated with the refuse collection service.  Thus, underground bins will contribute to waste related objectives, such as higher rates of recycling but such systems can also help with creating cleaner streets, raising the amenity value of residential areas and improving air quality.  The use of access control technology opens up a myriad of opportunities to reward those who recycle and target those who do not. This could be used to link recycling to healthy activities, such as swimming, by giving a free session at the local pool, for example, as an incentive. In this way the initiative opens up another of the 6 paths by associating something that is very functionally oriented - taking out the rubbish - into something that is more emotionally or fun oriented.   

Recently we have been working through the case for installing underground bins in town centres to cater for the needs of commercial waste customers. The potential for revenue cost savings, with a concomitant competitive advantage to the council, is high but the significant capital cost of installation is a barrier where there is no guarantee of a long term market share and income stream.  The answer could be to work with a Business Improvement District to gain agreement to the provision of the service out of business rates. In this way the income could be certain enough to access prudential borrowing to fund installation costs.  The incentive for the BID and its members to agree is primarily a lower cost service but the benefits are much wider as can be seen from the 4 action grid below:        

Focussing on the BID, rather than the individual commercial waste customer, is an example of how, ‘looking across the Chain of Buyers’ (another one of the 6 paths to reconstructing market boundaries) can throw up new approaches and solutions to implementation problems.  A further example of how this helps to deal with the problem of capital cost is the work we have carried out with housing planners and developers.  Supplementary planning guidance can be used to nudge developers in the direction of installing underground systems on new estates but we have also been able to demonstrate that it is actually more cost effective for them than meeting modern requirements for above ground storage areas.  Once installed in new estates the revenue savings to the service will fund the capital cost of retrofitting in other locations and provide a working example of the benefits to residents, to help combat any negative perceptions.   

Blue Ocean solutions are the ones that tick all the boxes.  They satisfy the need to provide services at lower net cost whilst continuing to meet outcome requirements.  In the case of underground bins the huge revenue saving potential might be a sufficiently compelling reason to install them – at least in new developments but the case is made much stronger when the wider social benefits are taken into account.            

If you would like to explore how APSE Solutions could help you to meet the many challenges of the current local government operating environment, we would love to hear from you. Please contact Andy Mudd, Head of APSE Solutions, by email or call 0161 772 1810.

Learn more about how APSE Solutions can support you and your services here.