Using the three horizons framework to transform the public sectorImproving the public sector is an important subject because we like to use the terms transformation and reforming, but what exactly do they mean? It is not simply about going to an organisation and changing things, doing that tends not to work well. Here, I will use the 3 Horizons framework, which provides very useful concepts, to look at the reasons why reforming is so difficult, and what we can do to successfully sustain and grow real change. I will be highlighting the three horizons framework, which is often thought of as a way of developing the future. But here, we will look at how it is also most helpful in providing a framework and a base for a theory and practice of change. If you would like to look at this article in a video, you can view it below We often see change as an unwelcome distraction in the task of leading and managing an organisation. Our business world is defined by the way we think about work, reducing cost, getting the right people, being flexible, manage demand, improving the numbers. We have to keep ontop of society and their needs today, and how that will change tomorrow. One thing we do know is that this complexity pushing change is increasing. What we tend to do today to change elements of the organisation, to reduce all of these drivers for change down to their individual parts, and create separate change initiatives. This often creates silos of change, which are often uncoordinated. Sometimes this change is simply a reaction to one aspect of what we want to do. We know that this piecemeal approach is not suited to how an organisation really works. What can take us forward is to do the opposite of what we have been doing. Instead of looking at each part separately, we stand back and look at the whole of what is going on. Look at this complexity as a whole system in itself. In simplistic terms, this is the underlying message of this article: We have our current organisation, its way of working, its people, its thinking, rules and procedures. If we change things in the organisation, we often simply place new ways of working ontop of what we already do. The current system reacts negatively to this change, Any innovation in this change simply gets swallowed up in the current ways of thinking and working. The real change gets watered down - often slowly sinking into oblivion over time. We are now going to see why this happens, and how to avoid it. Understanding the three horizonsIn the diagram below, we start by asking ourselves: What is the dominant pattern or focus in an organisation at a particular time. (Y axis) Let’s start with where we are now, and project that forward . (X axis) Horizon 1. Business as usual - we work like this every day. It is static. But this way of working erodes over time because of changes and pressures that open up that force an organisation to change. Horizon 3. Let’s put in our organisation and our place in the future. It does not exist yet, and we often do not know what the detail is in here, as this emerges over time.  Horizon 2. The area of change and transformation. It is when the current pattern of Horizon 1 gives way, and we begin to move to the future organisation. Horizon 2 enables the shift, it is entrepreneurial and innovative, - Instead of pushing H3 onto H1, we consciously separate the two from each other, to allow H3 to emerge. Each horizon can be seen as three different qualities that, if we don’t want to knee-jerk into the future, all three should be understood and designed for in the leadership of an organisation. There comes a point when we begin the transformation from H1 to H3, and we can ask the questions:
These questions are a provocation to us to begin that shift. We need to allow for experimentation and design to emerge as we find out what works in H3. How horizon 2 gives us the focus through 'test and learn'To successfully move with H2, learn, develop new ideas, we have to be able to disconnect from our current ways of working. If we don’t, then whatever we try and come up with will simply be absorbed into the current H1 constraints and thinking. H2 is not about doing what we do better, but about how we can we do different things. It is about transformation. It is about seeing our organisation through a new lens rather than our current paradigm. Test and learn is an iterative approach that is often used to develop this. Most importantly, H2 is about the process of how we take ourselves through this - by what path do we move to the future state, by what method? When we ask these questions, we generally don’t know the answer because this mode of working isn't what we normally do.  The public sector and reform The 3 Horizons concept is a helpful way to highlight systemic change. And in helping us to recognise the difficulty and so many failures we have in change and reforming the public sector over the past decades. The car and the aeroplaneLet us use a metaphor to describe how the three horizon concept can be so helpful. If we have a small car and we wanted to fly, one way we could do this is to take the car and begin to modify it - adding wings, making the engine lighter, modifying most of the car over time. Perhaps after lots of time and effort, we might just come up with something that might leave the ground. But it will never fly well, and the modification time would be huge. Alternatively, we could simply start designing a small aeroplane from scratch. This would take far less time and effort, and result in a machine that would fly well. Modifying the car to make a plane is in fact like taking H1 and modifying that. Hoping to create H3 from H1. Attempting to change what we have today, is what much of the public sector has been doing for decades. This is the change that is like walking in treacle. Pushing to make things happen, and then realising that not much has actually improved   This demonstrates the failure of transformation as we have not managed to leave behind the legacy ways of working so it dominates H2 Alternatively, starting with a new design for a plane is like focusing on H3, and then applying a method of change focused on new principles, that are separate from H1. This is very different, as we don't bring with us all the restrictions and thinking from H1. We then have the opportunity to undertake transformation - moving from one state to the next. This movement is the definition of reform. Let us summarise where we are: When using the 3 horizons concept we find it has three helpful properties: 1st. Helps us to makes sense of complexity, and the emergence of possibilities of looking at the future. 2. We can see our own roles in this, design the patterns that are forming, who and how people can be a part of this change. 3.It helps to visualise and understand the shift that we need to leave behind our legacy thinking and approaches. Let’s get back to today. Taking an example from the NHS, they recently attempted to implement approaches like Buurtzorg and Toyota - both that worked well in other health services. But in the UK they did not work. Why? Because they were implemented ontop of the current H1 system. And therefore the thinking, policies, rules, and approaches of the current system simply overwhelmed the new initiatives. A method for horizon 2 and theory of changeOne useful and successful method to do H2, is when we set a small group of people to work together, dis-connected from H1, with permission to experiment, focused by the missions of H3. We might call this an innovation team, but it is much more than that, as it links to all parts of the organisation together - it must be rooted in reality. The teams primary activity is to learn what is possible and practical, and that learning has to be shared with those that need to lead into H3. This approach is well known in the private sector and systemic change, and by bringing in this thinking to the public sector, we might have an opportunity to highlight how real reform can happen. This approach is characterised by test and learn concepts and methods where we have been part of the Human Learning Systems research. Other names for this approach are the liberated method, safe to fail experiments.  making horizon 2 work with a method An example In one example in health, this is how they worked in H2. They got 8 front line people in a room, they were given permission to do what they needed to do to achieve purpose - and they were not bound by the current organisation policies, rules and procedures. They experimented with different ways that they could help people with their health needs. After some weeks, they had worked with 35 people in need. They had learned new approaches, some of which were very different to what they had ever experienced before. hey learned was not what was wrong with people, but what really matters to people and how to best help. They moved from simply learning to creating a prototype new way of working. Based on this, the team achieved more, at 14% less cost, face to face time increased 15%, and administration was slashed.  Concluding
The 3 Horizon framework points to the fact that we need to be clear how to separate ourselves from our legacy thinking and doing. We also need to apply well defined and proven methods of change, and that change is a competence that is not simply another way of doing change. But It is a specialised and expert driven discipline that involves leadership, systemic change, and understanding how to deal with complexity. I hope this yes of the three horizons framework helps to introduce effective systemic transformation and reform. There is of course much more to this, I have further materials and case studies on my website. https://www.improconsult.co.uk/systemic-design-portfolio.html If you would like to explore this, please get in touch. And thanks for watching.
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What is the difference between efficiency and effectiveness As managers, one of the key activities of what we do are in the methods and practices we bring to how we design and manage organisations. We need to make a difference, to improve things, to cut costs and boost profits. We need to do a good job. How do we know how to do that? It is somehow inherent in us, or do we learn it? I am going to highlight two basic ways that we can approach this; by improving efficiency or effectiveness EfficiencyOne common action we look for are those that increase efficiencies. By making things more efficient, we cut costs, we improve. Typically, to make efficiencies, we identify problem areas, and analyse them in detail. We pull them apart, and see how we can cut out or simplify something. When we have achieved this change, we can put the results of the improvements into our spreadsheet, and we are satisfied by its contribution to the bottom line. This type of activity, is often a product of firefighting to solve issues. At best, they maintain the status quo, Is there anything wrong with this way of problem solving and improving? Lets find out. EffectivenessBut what about the real impact that this efficiency change has had on what we actually do? What we have not noticed is that this change has caused some extra work to be done by someone else in another department. It has also created increasing rejections and rework of some communication between department and additional admin. The change has also simplified the way that some customers interact with the organisation, and as a result, some of those customers are getting a poorer experience of the service. Improving one part of an organisation will often mean that we have had an impact on other parts, of the way that we interact, and reduce efficiency in those other areas. As managers we might have been working on the assumption that increasing efficiency is the same thing as improving effectiveness. And in this situation overall effectiveness both across the organisation and for the customer, has fallen. This has led to more unnecessary work, and less customers over time. If that manager had a perspective of the value that the activity that they had changed had, they would have made different decisions. An example is if we wish front line staff in the contact centre to be more efficient — reduce costs, by taking more calls. So we measure call handling time, and give those operatives a target to meet. What happens? the failure calls, or calls that are repeated increase. This always happens! It reminds me of the quote: ‘We know the price (cost) of everything, and the value of nothing ‘ It is very easy to identify and measure cost, it is much more difficult to identify and quantify value. Efficiency is usually about reducing problems in a particular place in an organisation. Usually we do this by assessing costs, focusing on KPIs, numbers, averages, etc Effectiveness is about understanding how well we are working, and the contribution that we are making to the purpose of the service to the customer. Creating value. For those of us in an organisation, not only do we not usually measure this, we are often not aware of it. But our customers are keenly aware of this and thats why they come to us, or our competitors! Our focus Both are totally different things., therefore the concepts and activities we apply to deal with both efficiency and effectiveness are different to each other. A reductionist mentality of solving individual problems (efficiency) is very different to understanding how things work (effectiveness). Therefore we can’t really do both at the same time. We have to use different methods. Now here is an interesting thing, when we focus on effectiveness, then we should also look at the causes of cost. Causes of cost are what creates cost, therefore effectiveness should also reduce costs to the level they should be at. So it can be said that efficiency becomes an outcome of working on effectiveness — which is usually the case. Consultants Beware, when an organisation gores to a consultant, with a problem and the consultant is expected to ‘remedy’ the problem, then the great majority of cases the solution will be around the efficiency of the situation. Whilst initially this might seem what is required, in reality this often does not provide the underlying effectiveness. This is one of the reasons why consultants have a bad name. Digital In the UK digital Service Design (SD) is popular. If we actually look at the tasks that external SDs do, they are predominantly products. Implementing these often solve a problem, but the effectiveness of the overall service often drops! In the UK local government, the implementation of a digital front end has often been at the expense of people with complex needs being pushed away. Improving the performance of the parts of a system taken separately will necessarily improve the performance of the whole. False. In fact, it can destroy an organization Definitions of Effectiveness Effectiveness is measured by understanding elements of work like value creation and waste work. By understanding value and how we have designed operations around that, we can then begin to get a good sense as to why the problems we have exist, and then take steps to reducing those. This systemic change drives the improvement. In summary I have added in some comments from Linkedin responses:
From Tony Gradwell efficiency = “doing things right” = following process accurately. Of course, processes can embed redundant steps. Effectiveness = “doing the right things” = reducing non-value adding activities whilst focusing on those that do. The ideal is “to do the right things right”. From Sam Spencer 💚 I see it as a relationship between the two things.If you can learn to become more effective, you’ll become more efficient as a consequence. But if you make efficiency the aim in itself, you’re likely to become less effective and, ironically, less efficient! From Alex Toth, CSEP Seeing the forest before optimising the trees? I have added: in an organisation efficiency is about doing the task the quickest — how good we do it. Effectiveness is asking how worthwhile is the task? NHS reform and the Darzy health reportLike many people, I was holding my breath again waiting for another report of the ills of the NHS, but with the experience of being let down each time. The Darzy report does not hide from uncovering the issues Darzy believes the NHS faces. The report has gone into depths that have previously been hidden, and that is welcome. It is scathing, and reflects what many of those in the NHS have been saying for a long time. However, the report does suffer from a flaw and that is that the review has been conducted from the perspective of the NHS, retaining the current principles that its design rests on. Those principles are the mechanistic paradigm of a central health organisation that processes people through it. Health is far more than this. Having said that, the report does identify some of its underlying principles, but it could and should go further:
There is little in the report that would address these. In the end it gives some good behaviours that would provide a better NHS. But it does not recognise the reasons why they are not there today. The barriers to good working that are in place today need to be highlighted and banished. And it is the remedy that we always miss the point. Ultimately, where is Darzy pointing towards. Him primary tenants of change are technical and improvements to the current way of working. This is not wrong when we are facing a crisis, we need rapid improvement. However, we also need real reform. And real reform can only occur when we can understand the whole of health and the NHS as a system. Wes Streeting, the Health Secretary does highlight three shifts that are needed:
He recognises short term and long term reform. The reliance on digital as being the saviour - why have we not learned the less from so many failed attempts at real improvement through digital? But the common patient record is a potential threat to real change, it was tried once and resulted in the largest ever failed cost in the public sector. The problem lies in attempting to tie everything together when they are not designed to do so. When in fact the patient record problems is one far bigger than simply a new implementation. It will also hardwire in centrally designed flows of work that are highly inefficient, thus making change even more difficult. Systems thinking allows us to shift our perspective from the traditional machine based paradigm, to other perspectives where we can see things that we could not see before. Systems thinking highlights the causes of cost, rather than simply focusing on cost, so where are these causes recognised? There is only partial understanding, and little knowledge of how the whole works together to create a dysfunctional system. It is still very much the parable of the six wise men and the elephant, each person recognising their part of the whole system and none recognising the elephant.  The mindset for reformDarzy's traditional paradigm is clear from the report, and also some of the wording that highlights that paradigm: ‘A core tenet of industrialisation that transformed our prosperity in the 19th and 20th centuries was increased use of capital relative to labour to drive up productivity. In recent years, it appears that the NHS has been subjected to a kind of capitalism-in- reverse: forced to increase labour relative to capital, rather than the other way round.’ His mindset is still lingering in Command & Control - or New Public Management, which was still the predominant paradigm when he was in government. Looking at the concept of the systems thinking iceberg, the deepest roots of how an organisation is understood is down to the mindset of those that make the decisions. Traditionally, our organisations work through Taylorism, or as some call it, Command & Control. This is not one thing, but a myriad of beliefs about how organisations work. If we look at the changes Thatcher put in, they were underpinned by one set of principles, which we now call New Public Management, NPM. Everything that has occurred to the NHS since then, has been in line with those principles. The Darzy report begins to reject some of those principles, but it offers no alternative. Infact it potentiality retains some of those principles. So, no matter what improvements are made, the principles will ultimately dictate the fundamental design and behaviour. This analysis is the result of many interventions where alternatives to NPM have occurred, and the results studied.
The next steps for reformThe 'health system' is not in fact one thing, but a collection if many and complex systems. We need to start by recognising that when we put it all together and thought off it as one system, we have already design it in a way that causes it to fail.
These are highly complex and interrelated systems. As with any complex system, and to avoid the mistakes of the past, we need to try things out to discover what works, and what does not work. What we need next is to create new systems with those that work in them, and with patients. For those of us looking with systems thinking lenses, and that have tried out systemic approaches in the NHS, we know what needs to shift for true reform. And much of what we know is not in the report. This example is of a reform prototype that was performed by avoiding any of the rules, structures and procedures of the current NHS. And this is what they achieved:
Integrated health & social care case study How can we break free from falling into the trap of silo departments working against each other, and empower staff to work together in a seamless, error free, flow of work that adapts to rapid changing circumstances? Here we are going to learn from ‘the liberated method’ and ‘self managed’ teams.  Designing complex systemic person centred services fail unless we use strength based approaches like the liberated method  The way we manage today calls on us to be more focused on our people, respond quicker to business problems, and deal with an increasing number of different type of issues.  Complex person-centred public services and digital have to be designed in ways that are fundamentally different, to how we design transactional services.   Moving service design forwards into systemic design to incorporate systems thinking, allows us to expand the depth of how we can evolve organisations and design for complexity
Local government response to COVID-19 is giving us a glimpse of a new way of delivering our public services. What can we learn from this, and make Working Smarter the new way of working?
 Tim Brown, IDEO The context used to be we were designing things within systems that were relatively stable. Now we're designing things when the systems themselves need designing.
 Understanding complexity and then applying that to dealing with people is critical to true service and systems design in our health services and ICS.
 Data sharing, often a major stumbling block to joined-up working in the public sector. How to use a systemic approach to thinking about the problem and delivering a different and far easier solution.
 Standardisation and centralisation in the public sector - another example of the unintended outcomes
Value and failure demand analysis. Using it will help you to see why certain issues remain resistant to change, regardless of how many consultants, or how much money is thrown at it.  Commissioning and outsourcing has failed in the public sector, new ways of understanding commissioning are taking hold in the UNDP and in many third sector organisations.
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