Summary - Key Lessons for Managers and Consultants

• Bringing down the barriers within and between organizations may reduce one set of obstacles to change, but it creates another - multiple stakeholders. Successful change management involves confronting and reconciling, not bypassing, the different - sometimes conflicting - aims of those involved.

• Radical change can be easier than incremental change because it demonstrates the willingness of senior managers to resolve - rather than pay lip-service to - serious issues.

• Effective change management consulting follows Teddy Roosevelt's advice of ‘speak softly and carry a big stick'. In terms of its public interaction with employees, it needs to adopt innovative, even unexpected approaches. Behind the scenes, consultants have an important role to play in maintaining momentum and credibility.

Case Study 3.1: Living the Brand - For Real

The UK's biggest retailer is making strides in customer service by working at the personal level. This is a story about individual attitudes rather than information systems, and how organizations change when change becomes catching.

Tesco is the UK's most successful retailer. Its half-year profits announced in September 2003 were £628 million, and profits were expected to reach £1.65 billion for the year. The company has grown from being an efficient grocery operation to a one-stop supplier of everything from DVDs to children's clothes, and from dental floss to computers. While we might associate supermarkets with baked beans, during December 2003 Tesco sold eight pairs of jeans every minute. To give some measure of its impact on daily life, £1 in every £8 spent in Britain goes to Tesco.

The company is often used by the media to symbolize the growing homogenization of the national scene, and the concentration of power in the hands of a small number of powerful retail behemoths. The reality for customers, staff and leadership alike is very different. Tesco is, like any other customer-facing organization, powerfully aware of its role in the community and the value it represents for families. The company knows that its continued success does not just rely on excellent supply chain systems, judicious store siting and keen prices. Tesco is also a collection of 220,000 human beings, interacting minute by minute with customers, representing the store's values and functioning as its effective market presence. The company is highly aware that its brand is very much more than its name. For Tesco, the concept of ‘living the brand' is manifest in the attitudes and behaviours of each member of its vast staff. Customer loyalty is not primarily a function of schemes such as Tesco's Clubcard, though such mechanisms undoubtedly help. Loyalty is, at root, driven by personal relationships.

Tesco's firm intention to remain as market leader drives the company's belief in customer service. Customer service can be a real differentiator for general retailers, and a powerful multiplier of sales. Tesco's recognition of customer service as a key determinant of continued success coincided with two concurrent research projects commissioned by the company. The results of the first project showed that customers were not experiencing consistently warm and friendly service from Tesco. The second project's results indicated that internal levels of staff morale were suffering in reaction to increasingly ambitious cost and efficiency targets in stores. As the company pursued ever-finer improvements to its processes, so its staff took the strain - with an inevitable knock-on effect on perceived levels of service.

Tesco engaged a team from Trilogy, a three-member consortium of specialist consulting companies (WhatIf, InterAction and Bridge), to help transform the quality of its customer service and raise it to the market-leading standard shared by Tesco's business processes and commercial offerings. Trilogy brought a clear, crisp and compelling belief to bear on Tesco's situation. The team maintained that in order to develop the emotional loyalty of customers through a rich experience of personal service, Tesco must create an environment that made staff feel motivated and valued. There would be no short cut to a customer service nirvana. Great service would have to be built store by store, person by person. Trilogy developed the Living Service Programme with Tesco in order to build an environment in which personal service would flourish naturally, touching the lives of every Tesco employee, and reaching beyond to the needs of its millions of customers.

Reaching the heart

The board tasked a joint Tesco/Trilogy team with delivering a service-led culture to the retail business. Central to the change would be the concept that attitude differentiates good service from great service. The team would build the skills to demonstrate this concept in action, and develop a process to deliver excellent personal service for customers while simultaneously improving staff morale in stores.

The project was also clear in its aim that the change process would not be done to Tesco people, but by, with and for Tesco people. Staff members would be trained to deliver the process for themselves, and to make it their own personal property. The project was tasked with building a critical mass of people who would act as role models of great service right on the floor of every store.

The team developed the Living Service Programme, a 26-week process to be undertaken by 660 stores. The programme's unique proposition is that a culture of service excellence for customers can only be built if the staff feel served by the organization. A revitalized, customer-centric culture cannot be grafted on to an organization, nor can it be magicked from thin air. Such a culture needs strong, flexible and consistent support from the organization. As emotional loyalty is inculcated within staff, it infects customers. ‘Living Service' really does live and breathe, and touch the people who share in it.

The Living Service Programme has seven core components:

• A dedicated Tesco coach, trained to be an internal change agent, is attached to the programme.

• The programme includes in-store diagnosis of staff and customer needs.

• Leadership development workshops are run to build a service culture for staff and customers.

• The programme builds a Local Service Vision based on three unique Service Expressions.

• Shop floor ‘firelighters' are developed to embody great personal service.

• Whole-store Energizer events enlist all employees.

• Learning teams are created to sustain the momentum after the 26-week roll-out programme.

A philosophy of service

Trilogy used a blend of four complementary methods to design and deliver the programme. These are brand alignment, interactive intelligence™, viral change and systemic consulting.

Brand alignment is an approach to building market leadership by fostering companies with strong personalities. The approach derives from the work of Kunde (1999). Kunde believes that great companies are created by aligning the internal brand, or the experience of the employee, with the external brand, or the promise made to the customer. The brand alignment approach stresses the need for authenticity. In conversation with Tom Peters, Kunde explains:

The word religion derives from the Latin religare - to bind something together in a common expression. Corporate Religion is that which expresses the soul of a company and supports the building of a strong market position. In order to make a Corporate Religion come alive you have to describe your internal organization as well as your external market. These internal values create an internal movement which delivers the whole heart and soul of the company. (Source: www.tompeters.com/cool_friends)

Trilogy partner InterAction was the source of the interactive intelligence™ principles used in the project. Chairman, K Bradford Brown's techniques for ‘Choosing your attitude' were a core platform for the behavioural change delivered at Tesco, and a major means of empowering Tesco's people. Much of the technique's impact lies in simplicity and transferability, enabling individuals to change themselves and sustain change over time. This principle underlies the core message of the programme: ‘Everyone gains from giving great service.'

Viral techniques for spreading messages have gained a lot of attention in the marketing arena, particularly following the success of groundswell, word-of-mouth campaign for films such as ‘The Blair Witch Project'. Viral marketing encourages consumers to propagate messages through their personal networks, gaining quality attention not readily accessible to the originator of the message contents. Trilogy adapted the viral approach to the propagation of the new style of working. Early adopters had real power to shape the change process, and to make sure that the project's themes were framed in the most effective, usable terms. Generating momentum among 220,000 people requires a systematic approach, and the viral change technique acts as a powerful forward force.

Lastly, the team used a systemic consulting technique to embed the new approach in the organization through the processes of recruitment, performance management and communication. Bonding the new approach with the organization's ongoing renewal processes ensures that this is no once-only exercise, having an affect on one generation but failing to affect the company's DNA.

Each technique used in the project addresses the joining of personal actions with corporate objectives in a different way. The combination of techniques lent the project unique power and durability.

Elements of delivery

Tesco built a highly successful organization based on a strong head office team providing clear guidance and direction to the store network. This hub-and-spoke design works well as a way of coordinating supply and monitoring performance, but it does not support the empowerment of individuals needed to create excellent, personal customer service. The company needed an approach to leadership that encouraged greater staff ownership and discretion. Trilogy therefore developed a series of three-day workshops for all the retail business leaders. The shift in leadership practice across Tesco has been felt profoundly. One store manager says: ‘Staff feel that their managers are there for them. This has encouraged general assistants to grab hold of the store and see it as theirs. The Director now expects the GAs to set the tone as much as the management team.'

The 26-week roll-out process is owned by a cross-section of staff at every level, the critical mass being among general assistants. The in-store diagnosis tailors the approach to the issues that are particular to that store.

Part of the project's philosophy is that people must lead themselves. From Tesco's existing Corporate Values ‘No one tries harder for customers' and ‘Treat people how you want to be treated', three core Service Expressions emerged from the team's work with staff and customers, which are used to support individual application of customer service principles. These three expressions were:

• Know your stuff.

• Show you care.

• Share a smile.

The Service Expressions are easy to understand and remember. Couched in everyday language and free of any hint of spin, they help to foster warm, personal service as a natural part of daily activity.

Living service and lighting fires

Two new roles were created to guarantee total ownership of the programme and the achievement of sustainable culture change. A full-time role - Living Service coach - was created to deliver the programme to the stores and 80 Living Service coaches were recruited from all areas of Tesco's business. According to one Living Service coach: ‘To our staff, this looks like a totally Tesco-driven process. Trilogy has built deep internal capacity for us coaches, and provides invaluable support in the background.'

The coaches are trained to embody the values and behaviours of the programme so that each store has known individuals responsible for acting as low-key but consistent role models. For example, coaches are trained in advanced attitude and listening skills so that they can genuinely empathize with customers and reflect back their attitudes and needs. Being able to ‘be in someone else's world' helps staff to interact with customers even in situations where they might traditionally feel helpless. So, for example, staff members are not empowered to change the price of products but they can choose whether or not to help someone who is looking quizzically at a range of products. Coaches learn to apply personal insight into customers' needs, and because they do so every day in the real store environment, their behaviour infects others around them.

One of the project's challenges was the obvious one: scepticism. Change campaigns that attempt to address hearts and minds immediately attract suspicion. People may also feel vulnerable to the importation of techniques that may appear to criticize their values or styles of interaction. Trilogy therefore made great effort to involve key decision-makers, and actively sought out sceptics. ‘You can't just preach to the converted,' says Trilogy's Jane Sassienie. ‘Inside every cynic is a frustrated dreamer. There's something there that they wanted, and didn't get. We can help them to make it happen, rather than waiting for life to bring it to them.'

The programme was designed to improve commitment bottom-up as well top-down in the organization. Healthy and successful organizations have always valued the people in their front line. In many ways, the Living Service Programme is Tesco's recognition, through committed investment of time and money, of that fundamental business truth. Tesco's general assistants, who operate the stores' checkouts and fill their shelves, were the key audience for the project's messages, and they supplied the key agents of change.

The project therefore introduced a second novel role dubbed ‘firelighter'. Firelighters are change agents given skills to change themselves and the people around them. In each store, 5 per cent of the staff were trained as firelighters, creating a population of 20,000 committed, locally based champions of change. The firelighters were responsible for enlisting shop floor colleagues to the Living Service principles. They also performed as role models for personal service, putting the principles into practice in their daily work. As one store director says: ‘The firelighters are the single biggest reason that the programme is having such an impact. The programme has switched on for the people that really matter, the customer assistants.'

Registering the impact

Tesco's commitment to the programme is evidenced by its investment over several years. The board was impressed by the results of this investment and were prepared to increase investment halfway through the roll-out of the project in order to create more firelighters.

The Tesco/Trilogy team has been careful to measure the outcomes produced by the Living Service Programme. The full national roll-out was planned to be completed in the Autumn of 2004. Key Performance Indicators tracked for the first 30 trial stores gave clear initial indicators of the project's beneficial impact. These early results set a trend for the national picture.

On the staff side, stores that had been through the programme outperformed others by an average of 20 per cent in all the key categories of an internal staff survey. These categories include morale, feeling listened to, helpful management, being first for customers, and enjoying work and celebrating success. Absence figures were down in the same stores, and staff retention was improved.

Among the project's significant intangible benefits is the widely noted enhancement in the quality of dialogue and communication within stores. Staff report that the ‘them and us' culture is practically a thing of the past, with deep effects on the work climate and employee attitudes to the company. There is now a more challenging culture both within stores and between stores and the centre. Staff now have greater involvement in the shaping of decisions, and know that their ideas and opinions are valued.

A further knock-on effect, and evidence of the deep-rooted nature of the change that has occurred, is a greater willingness to embrace other change initiatives. The happy experience of the Living Service Programme has helped to recalibrate people's attitude to new initiatives. The development of the business inevitably means that staff will be involved in many subsequent changes, both at the macro and micro levels.

Perhaps most remarkably, Tesco is proud and excited to note that the programme has had a profound impact on individuals' quality of life outside the workplace. One Living Service coach says: ‘This has been fantastic at work, but most important to me is that the skill of choosing my attitude has turned me from a grumpy, stressed-out guy into a dad who has rediscovered his spark.'

Customers are noticing a big difference in the atmosphere at Tesco stores, and in the attitude shown by staff. For their part, staff are enjoying work much more. One firelighter sums up the effect such a change programme can have on an individual and his career: ‘To be honest, before this I was considering leaving Tesco. The ability to choose my attitude has changed my whole life. I now enjoy my job and get on with my colleagues more. Now I'm thinking about going for a section manager position. It's the best thing that's happened to me.'

The Living Service Programme is the result of a unique combination of approaches that is unlikely to occur within an organization. Driving cultural change from a personal basis is a novel technique, and not one that many companies would necessarily embrace. In this case, the mixture of elements created for Tesco added up to a holistic programme that the organization could put its faith in and roll out across the business. If it is doubtful whether such a package would be created from scratch within a large, established organization, it is even harder to imagine such a home-grown change programme gaining acceptance among its target population. Initiatives with truly innovative attributes may be treated with suspicion if they emanate from the organization's leadership: their apparent oddity can be interpreted as a failure to understand the day-to-day reality of the business, and as confirmation of the leadership's irrelevance. Equally, where innovative initiatives arise in the periphery of an organization, gaining endorsement from the leadership is often hard to achieve. One of the key enemies of change is the perception that change is being imposed by one group upon another. When the ideas, rationale and modelling of the change programme originate in an external agency, as in this project, it is often easier for the organization to swing its weight behind the programme.

Tesco took Trilogy's concepts and made them an integral part of the company's living fabric. By importing an approach, and taking complete ownership of its expression within the organization, Tesco managed to redirect the evolution of its culture in a way that keyed into its employees' beliefs and motivations while focusing faithfully on the needs of its customers. This was a project in which the personal became the practical: a case of cultural change carried out at the human scale, person by person, and action by action.

Finally, the composition of the Trilogy partnership indicates one direction in which management consultancy is developing. By turning three competitive agencies into a creative partnership (WhatIf, InterAction and Bridge), the consulting group was able to cover different aspects of the process of change while also offering specialist skills in each area: they were masters of all their trades, rather than none. But perhaps most satisfying of all for those involved is that Trilogy's team worked so closely and effectively with its client. As Sassienie says: ‘Trilogy was actually four partners, because of Tesco …' But what's in a name?

Case Study 3.2: Delivering Safer Buses

Reducing crime and fear of crime on London's surface transport and improving the flow of its buses has helped drive a 13 per cent increase in users over two years. Modelling complex systems made it possible.

One of the key objectives of London's strategic transport authority, Transport for London (TfL), has been to deliver a safer and more reliable bus network for London. The bus network in London is one of the largest and most comprehensive urban transport systems in the world. Every weekday over 7,000 scheduled buses carry around 5.5 million passengers on over 700 different routes, a total of more than 1.5 billion passengers a year. London's buses are now carrying the highest number of passengers since 1968, and experiencing the fastest rate of growth in passengers since World War II.

Given the complex physical and commercial structure of the city's underground and overground rail systems, and the expense and technical difficulty of creating entirely new transport systems in a congested area, the bus system offers London's administration its best route for improving communications in the short to medium term. Buses exploit the existing roads system, so do not need direct investment in route infrastructure. Buses can be permanently or temporarily re-routed much more easily than train services. They are the preferred means of transport for short journeys, and they are the most accessible form of transport - both in terms of price and physical access - available to Londoners. Lastly, the principal technologies underpinning the bus industry are mature and stable while innovation delivers ever more efficient vehicles.

TfL is continually improving the bus system. The double-decker Routemaster bus, launched in 1954, may be a design icon and a symbol of London recognized the world over, but the poor accessibility, durability and manoeuvrability of this workhorse and its successors is no longer enough to keep up with growing demand. The new, two-segment ‘bendy bus' is 18 metres long and can carry up to 140 people, at least 60 more than a double-decker bus. Bendy buses are also cashless and equipped with CCTV. Journeys are more reliable and quicker as passengers must have a ticket before boarding and can enter or exit the bus from all three doors.

However, perceptions of buses as dangerous places to be dissuade passengers from using buses as often as they might. Delays to buses are also very apparent to passengers, whether they are stuck on a non-moving bus or waiting at a stop. Poor perceptions of the safety and reliability of buses drive down their effective value to the Londoners whom they serve.

When Ken Livingstone was elected Mayor of London, two of his key election promises were to reduce congestion and to improve the public transport system. TfL was formed in 2000 to take responsibility for London's transport system and the delivery of the Mayor's transport strategy.

Traffic congestion in London costs local, national and international businesses billions of pounds every year. With the city's population projected to increase by over three quarters of a million residents over the next 10 years, the problem would have become intractable without intervention. A major element of the Mayor's strategy was the congestion charging scheme, implemented in February 2003. On its own, the congestion charge acts as an influencer on traffic flow. But without accompanying public transport measures it would have a negative effect on London's business performance as workers were priced out of the city. To make the congestion charging scheme effective, the strategy had to improve alternative methods of transport. Encouraging people to switch away from cars and towards public transport, in particular buses, was therefore a key part of the Mayor's transport strategy. While the congestion charge would act as the ‘stick', removal of the barriers to greater bus usage would act as a ‘carrot'.

Removing the barriers to bus usage

Consultation with Londoners confirmed that fear of crime and violence was a key barrier to increased bus usage. The crime statistics showed that there were over 9,000 incidents on buses in 2002, typically involving illegal weapons, drug dealing and aggression towards staff and fellow passengers. In order to change attitudes to bus travel TfL needed to address this criminal activity. TfL was also concerned about the number of illegal taxi touts, which reflected a failure to enforce the law relating to taxis and private hire vehicles.

The Metropolitan Police Service (MPS) is responsible for dealing with the majority of criminal activity across London. However, the MPS has limited resources. Higher profile issues of antiterrorism, street and gun crimes inevitably take priority over transport policing. Transport crime can easily be seen as merely a ‘quality of life' issue.

However, the ‘zero tolerance' theory of policing suggests that tackling apparently low-level crimes has a profound impact on more serious offences. Based on his experience of reducing transport crime in New York, and the policy's knock-on effect on the safety of the city as a whole, TfL Commissioner Bob Kiley agreed with MPS Commissioner Sir John Stevens and the Mayor to fund a pilot project. A unit would be created with the objective of reducing crime on London's bus network, improving bus flow and reducing taxi touting.

A further disincentive to bus travel, confirmed by research, was the length and unpredictability of bus journey times, caused in part by obstructions on bus routes. TfL was in the process of increasing the network of dedicated bus priority lanes. However, the high number of vehicles illegally using the special bus lanes was limiting their effectiveness.

The MPS Transport Operational Command Unit (TOCU)

TfL already had initiatives under way to deliver the transport strategy. However, the desired rate of increase in bus usage was not yet being achieved. A joint TfL/PA team was formed to create and deliver a detailed strategy that would:

• reduce crime and fear of crime on buses, and also in the street environment surrounding them, including waiting areas and bus lanes;

• reduce the number of illegal private hire vehicles;

• improve bus flow demonstrably.

The assignment had two phases. During phase 1, the team was to identify and validate a set of initiatives for achieving both of these objectives. At the same time, the team would establish the MPS Transport Operational Command Unit (TOCU) to deliver the pilot initiative between TfL and the MPS. The TOCU involved police officers, traffic wardens and police community support officers in the partnership with TfL staff. The TOCU would be responsible for policing agreed bus corridors on the London bus network, and enforcing the law on taxis and private hire vehicles.

Once the approach had validated the success of the TOCU pilot, phase 2 would deploy the new transport policing strategy, including the establishment of a new Transport Policing and Enforcement Directorate (TPED) within TfL. This directorate would have overall responsibility for all transport policing and enforcement activities provided by TfL and the MPS.

The TOCU had to be implemented prior to the introduction of the congestion charging scheme, due to be launched in February 2003.

The TPED management also had to be established by mid-2003 without any loss of momentum.

The team's work had three main components:

• Strategic analysis of alternative approaches to achieving the business objectives, in order to formulate a viable change programme. This analysis was achieved using systems dynamics modelling.

• Building a robust change programme, while taking account of the complexity of effective change in a city the size of London. This change programme was critically dependent on senior management commitment from both TfL and MPS.

• Delivering timely, tangible results, which could only be achieved by working hand-in-hand with TfL to address issues as they arose. The team focused on providing a clear governance structure, rapid issue resolution and results-oriented management to ensure deliverables were achieved in full and on time.

Modelling for synergies

Systems Dynamics Modelling has its roots in work done in the 1960s by Professor Jay W Forrester at MIT. Forrester applied his knowledge of electrical engineering systems to other kinds of system, including ‘soft' ones such as organizations. Systems dynamics has since been developed into a mature methodology that clearly and comprehensively maps cause, effect and linkages to explain complex environments.

The systems dynamics approach incorporates the concept of the feedback loop. While earlier approaches to complex systems tried to define them as static entities, systems dynamics recognizes that systems can only be understood in terms of their behaviour over time, and especially the ways in which the system's current state can influence future states. Incorporating feedback into models creates the non-linear, or unpredictable, behaviour that we associate with complex systems such as the weather.

Simulations of the system under examination provide the basic mechanism of systems dynamics modelling. A simulation can be defined, loaded with a set of initial conditions and then tested in a range of different scenarios. The systems dynamics approach lets researchers ‘play with' complex systems in safety, manipulating factors that would be expensive to adjust in the real world, and measuring the impact of each configuration in a very short time. Lessons from the modelling can then be compared, refined and translated into real-world interventions. The technique has been applied in thousands of organizations around the world, and even to the US economy.

PA's Nick Chaffey describes the modelling process like this:

We combined our experience and insights from London and elsewhere with that of TfL's managers and their suppliers in order to build a robust understanding of the factors that drive performance and then incorporated these into a model. Then we put the starting conditions in the model and say ‘go'. Then we can compare different effects and see the correlation with what actually happened. We can also drill down to detail, to understand different parts of the model.

In the context of TfL's project, systems dynamics modelling allowed the team to explore the factors influencing crime and the fear of crime, as well as the factors contributing to bus flow. The team could then examine linkages between related factors: patterns that only emerge fully and repeatedly through system simulation.

In this way the team could begin to assess the potential levers that might alter behaviour within the system, and see how these levers would affect crime issues and bus flow. As measures were introduced and tested within the model, the team constructed an optimal portfolio of initiatives that would increase bus usage and improve bus flow, within existing operational and funding constraints.

Figure 3.1: Systems dynamics model of London's bus network

The portfolio analysis revealed that one specific set of measures would deliver the greatest benefit to both crime and traffic flow objectives. This portfolio focused resources on increasing police presence and coordinating the activities of the many TfL operating units involved. This set of measures performed much better in simulations than packages made up of initiatives such as extra parking attendants or further investment in bus-lane enforcement cameras.

Portfolio analysis allows genuine synergies to emerge. ‘Synergy' is a much abused word, often used to yoke together initiatives that may appear complementary, but whose interrelationship does not generate true benefits above and beyond the sum of the parts. Systems dynamics modelling can show that collections of seemingly beneficial measures actually undermine each other in practice. Alternatively, the method can highlight factors that have no obvious structural relationships with each other. Modelling allows such cocktail effects to express themselves in the timeline of the simulations, revealing real-world synergies that can radically change the outcomes associated with a fixed spend.

Above all, systems dynamics modelling can be used to assess the practical implications of different initiatives: the team could be confident that their recommendations would work on the streets of London.

Real-world challenges

Away from the tractable world of its models and simulations, the team had to deal with a range of pressing organizational, political and commercial challenges.

The team had to manage decisions and deliver results across the two largest agencies funded by the Mayor, each with its own culture. The TfL/PA team therefore agreed clear joint objectives with senior stake-holders across both agencies. Linked to specific performance measures, these objectives became the basis for monitoring the output of working groups set up by the team. The project also required joint working between civilian and police operations, on a scale unprecedented in Europe. Peter Hendy, TfL's Managing Director of Surface Transport, believes that successful collaboration among the different groups was a key component of the project's ultimate delivery:

PA's contribution to the Transport Enforcement initiative has been pivotal in shaping and delivering this key programme for Transport for London and the Mayor. The PA consultants have become part of our joint team with the Metropolitan Police Service and through working together have enhanced our capability to deliver a safer and better London Bus Network.

PA worked with US consultants to draw upon their relevant experience in New York in tackling urban crime. Several elements were used from models that had been built for other transport and crime projects, ensuring that the work for London was seeded with relevant data. The consulting team members therefore acted as an entry point for new information as well as a source of skills.

The joint team also had to move fast, given the immovable date for the planned introduction of congestion charging. The team established a timetable and clear governance structure, and was vigilant in identifying operational hitches and getting them resolved without delay. Management was encouraged to focus firmly on the project's milestones and deliverables. The great media attention levelled at the congestion charge scheme also meant that this project was under intense scrutiny.

Finally, the funding of MPS staff by TfL was an unprecedented relationship, requiring a new species of contract, tailored to the particular needs and scale of the project. TfL worked with leading UK police lawyers to create the contract while PA colleagues provided a vital bridge between the operational content and legal considerations.

Early measurable results

The performance of the TOCU was measured in July 2003, less than a year after its launch. At this time more than 45,000 fixed penalty notices had been issued to drivers of vehicles illegally parked on bus routes. In addition more than 1,800 illegally parked vehicles had been removed from bus routes. More than 1,700 arrests had been made, for crimes including serious offences such as assault, possession of offensive weapons, drugs, sexual assaults and rape. Arrests had also been made for possession of false driving documents and vandalism on buses including arson. Meanwhile, a crackdown on illegal minicab operators had resulted in 240 arrests. Sir John Stevens, Commissioner of the Metropolitan Police Service, said: ‘Given that the TOCU is only a year old, remarkable achievements have been made. The unit has grown to over 500 dedicated members of staff in a short period of time and thanks to the continued partnership between TfL and ourselves will continue to grow and build on the impressive results we have had so far.'

The strategy had also contributed to a positive impact on bus usage and bus flow, with a measured 13 per cent aggregate growth in the number of people travelling by bus in London in the previous two years. Bus reliability had increased and levels of lost mileage due to traffic issues had been reduced on those bus routes covered by the TOCU.

The high profile of the initiative, as well as visible policing and enforcement activities on buses and in the street environment, has also reduced fear of crime. Feedback from customers has reflected growing confidence in public transport.

The establishment of the TPED has for the first time brought together all of the key agencies with an interest in safety and security on London's roads. This integration has greatly improved coordination and information sharing, resulting in more effective intelligence-driven operations, which have proved pivotal to identifying and targeting incidents in London.

In October 2003 the Mayor announced an extra £25 million for the initiative, intended to take the number of staff at TOCU to more than 900. The new money funded more officers for the dedicated cab enforcement unit tackling taxi touting. There were also new teams of Traffic Police Community Support Officers, to help clear critical congestion points as well as being a visible deterrent to criminals. These officers have the power to direct traffic and issue parking tickets. The TOCU's operations were extended to cover night buses and enhanced area task force teams were put in place to respond to issues anywhere on the bus network.

By December 2003 the Mayor was reporting the continued success of the cab enforcement section of the TOCU, which had now made 650 arrests.

The Mayor has said: ‘This [TOCU] is another vital weapon in our armoury to tackle crime and congestion in London and I'm delighted by the results. The unit is responding quickly to crimes as they happen and shows that by tackling apparently petty criminals you frequently uncover much more serious offenders.'

TfL's success in this project demonstrates how subjective perceptions can fuel objective changes to a complex system. While the crime figures recorded for the bus system are all too real, their effect on passengers' behaviour is hard to judge. TfL could not respond simply with persuasion. The organization also had to adopt visible measures that would reassure passengers that TfL had safety and reliability at the forefront of their concerns. The TfL/PA team used scientific analytical measures to highlight workable solutions in collection of evidence, and steered clear of making unsupported, but possibly popular, gestures. Just as the zero tolerance approach to petty crime has had a ripple effect on the general quality of life in New York, so TfL's bus measures have helped to make life in the British capital less stressful for everyone. Bob Kiley is convinced that the TOCU is making a major contribution to London life: ‘I'm delighted that the excellent partnership we have developed with the Metropolitan Police Service has brought results to be proud of. The unit's focus on safety, reduction of congestion to complement congestion charging and bus priority will help make London's transport system work.'

The package of measures brought to bear by the TOCU derive ultimately from the simulation work done by the TfL/PA team. Loading, configuring, running and interpreting complex, multi-variable models is not a job for the novice. The modelling of dynamic systems is clearly a specialist area, and one in which a global consulting firm can add significant value. Broadly based consultancies can foster specialist skill sets that support a range of practices while smaller organizations must concentrate solely on line-of-business services. Client organizations such as TfL, while containing the engineering and systems expertise needed to appreciate the output and contribution of an advanced technique such as systems dynamics, cannot justifiably maintain full-time modelling experts on their staff. Even if client organizations could engage full-time modellers, those experts would not have exposure to other projects and the data supplied by them. PA was able to mine its experience with other complex systems around the world, including transport projects in major cities.

This project is a prime example of the confluence of technique and experience the best consulting firms can apply to their clients' problems and opportunities. In this case, the simulation activity is matched by pragmatic general management skills, creating a service that combines the fact-based ‘what to do' part of the project with an action-oriented ‘how to do it' element that ensures successful delivery. The result was a rapid and assured transition from credible what-if modelling to a managed solution deployed and visible in the midst of the city's daily life. Most important of all, PA's approach ensured that the project was led by outcomes, rather than driven by random beliefs.

Case Study 3.3: Electronic Payments for 13 Million Citizens

Large-scale public sector projects usually make the mainstream agenda when they fail to deliver. Winners are out there too, but part of their success lies in communicating with the people who count rather than feeding the news agenda. This project is bringing 13 million people into the world of modern banking, while helping to safeguard the UK's network of local post offices.

The current era of business change is notable for the sheer scale of the impact being felt by large, established institutions. As key private and public sector organizations have matured during the latter part of the 20th century, they have frequently reached inflection points where small improvements to current practice are not enough to keep them in business. Industries and governments have fallen around the world as organizations grapple with structural pressures. Others manage to flex with the pressures, and to respond with renewed vigour and vision.

This case study focuses on not one but two large concerns under pressure to effect fundamental changes: the organization delivering social security payments to more than 23 million UK citizens, and the 16,900 branch network of post offices serving local communities throughout the country. The Department for Work and Pensions (DWP) worked with PA to bring social security payment methods into the 21st century, in order to save the public a projected £0.5 billion per annum. In the process the project helped to effect change in the Post Office, revitalizing its consumer offering and protecting the livelihood of many thousands of local post office staff.

The paper trail

Prior to the modernization initiative, over half of benefits and pensions were paid using paper-based transactions at post offices. Recognizing that the process was both expensive and open to abuse, the government set a target to increase the proportion of benefits paid electronically into bank accounts from 40 per cent to a minimum of 85 per cent over a two-year period. The remaining population of ‘unbanked' customers would be provided with an alternative that did not rely on the existing order book process.

The business efficiency of the payments process was not the government's only concern in setting this target. The target also addressed the government's interest in increasing the levels of financial and social inclusion within the UK. The initiative would help to improve citizens' access to services and opportunities for advancement.

The initiative was implemented through two programmes. The first of these was the Payment Modernization Programme (PMP). This programme created the strategy for converting 13 million customers' payments to electronic methods, managed the communications necessary to persuade these customers to embrace the change, and implemented the conversion process itself.

The second programme was the universal banking programme. As a result of this programme, nationwide access to basic banking services has been provided at post offices so that customers can, if they choose, continue to collect their benefits there. This new facility required the cooperation not only of the DWP and the Post Office, but also of the Inland Revenue, Northern Ireland Social Security Agency and the high street banks.

PA's support for both programmes helped to ensure that they stayed on target, with the customer conversion process starting in the autumn of 2002 and universal banking becoming available in April 2003. Andrew Heley, who led PA's work with the DWP, comments: ‘This is a great achievement for the Department - one we have facilitated through some innovative management and technical approaches, plus a good deal of multi-disciplinary teamwork.'

Switch to electronic payments

The DWP and Northern Ireland Social Security Agency (NISSA) are responsible for the payment of social security benefits and pensions in the UK. Until recently, around 13 million customers received these payments via order books and Girocheques, cashable at the post office. The remaining 10 million customers were paid electronically via their bank accounts. Analysis of the existing system revealed that the paper-based payments cost over 50 times as much as their electronic equivalents. Electronic payments can be processed for just 1p each.

Clearly, if all customers could be paid electronically, enormous savings would follow - savings that could be spent on other public service priorities. The move would also eliminate counterfeiting and other abuses associated with paper-based transactions.

Desirable as it was to transact all payments electronically, the DWP also has to cater for those unable or unwilling to use conventional banking facilities. The Prime Minister had publicly assured customers that they would continue to be able to access benefits via the post office. The primary solution was to be ‘universal banking', a scheme allowing everyone to open a basic account, either with a bank or with the post office itself, into which benefits can be paid electronically. The money can then be withdrawn at a post office counter using a card and personal identification number (PIN).

The aim may appear simple, but succeeding with a change of this nature is far from assured. In the first place, the planned conversion was the largest of its kind in the world to date. Having 13 million customers convert from paper to electronic payment would affect hundreds of thousands of staff in government departments, post offices and banks. Transaction volumes would increase dramatically in all these organizations, causing a massive rise in the number of transactions passing through the UK's financial infrastructure, principally BACS (which makes electronic payments between banks) and LINK (the national cash machine network).

To make matters even more challenging, the timescale for conversion was tight. Conversion could not start until April 2003, when universal banking was to be launched. Between that date and the government's 2005 deadline was a two-year window in which the conversion task had to be completed.

High volumes and tight timescales are easier to manage when the project team commands all the resources and stakeholders involved in the change. In this case, however, there was a complex web of relationships to be understood, negotiated and aligned. Universal banking activities had to harmonize with other government initiatives, including the Inland Revenue's new Tax Credits programme that also offered universal banking options among its payment methods. Then there was a large number of stakeholder groups, each with its own interests and information needs. These included the public, politicians, trade unions, financial institutions and government departments. The change process and its success (or otherwise) would be highly visible, not least to voters.

Finally, the novelty of the proposed change meant that uptake rates were uncertain. Government cannot compel customers to convert. Nor would the government offer financial incentives for customers to give up their order books. Media coverage and the activities of pressure groups have unpredictable effects on the public's response to change. Essentially, the change would have to be managed in an environment the project team could neither control nor predict. The team would have to influence rather than instruct.

Making conversion a reality

The DWP formed a multi-disciplinary team with PA to develop its conversion strategy and support business processes for the Payment Modernization Programme. PA gathered specialists in programme delivery, strategy, IT, modelling and contact centre design. Colleagues from PA worked closely with DWP staff at all levels, and remained on hand throughout the programme to advise departmental senior management on everything from overall feasibility to detailed security issues. PA's overall role was to manage the entire process of the conversion. Heley says: ‘We had to understand the dependencies among all the tasks and maintain an end-to-end picture, so that things didn't fall down cracks.'

An early task was to design a strategy for informing customers about conversion, recognizing the differing needs of groups such as pensioners and child benefit recipients. The team produced a dynamic simulation model to evaluate alternative approaches, varying the frequency and timing of invitation and reminder letters, telephone calls and other marketing activities. This model allowed the team to compare the impact of the various scenarios not only on conversion timing, but also on the DWP's ability to deliver ‘business as usual' and the demands on its resources.

The simulations fed directly into the conversion strategy. Within a 12-month period, the team specified a customer conversion centre and arranged for its operation to be outsourced to a third party. This supplier, managed by DWP with close operational support from PA, now handles most communications relating to conversion.

Meanwhile the DWP developed the Direct Payment ‘Giving it to you straight' campaign in order to communicate the changes underway. The campaign gave clear, straightforward information to make sure that people understood the changes and how they would be affected. The strapline ‘Giving it to you straight' signalled the campaign's commitment to clear communication, while referring to the direct payment of benefits and pensions.

The campaign explained the account options, so that people could choose one suitable for themselves. It also highlighted the fact that people would have more options for when and where they collected their money; for example cash machines and supermarkets operating a cashback facility could now be used to collect payments. The campaign was set to run for two years, using press, radio and TV advertising, and posters and leaflets to support direct mailings to customers.

The pattern of simulation, specification and implementation used for the communications strategy was reflected in the team's approach to stakeholder relationships. The team worked with stakeholders to create an integrated Critical Milestone Plan giving shared visibility of key tasks and dependencies. This plan balanced the programme's requirements against the DWP's other commitments - a capability that was particularly valuable when it came to allocation of scarce IT resources.

The team also developed a management information capability to provide an integrated picture of progress. This was achieved in the face of the fragmented nature of the DWP's legacy IT environment, which included 17 separate benefit systems with limited ability to communicate with each other. The management information yielded was high-level enough to support ministerial reporting, yet detailed enough to drive programme decision-making.

Banking for all

The Post Office is one of the UK's largest and best-known businesses. In 2003, the Post Office estimated that it served around 29 million people making some 42 million visits to its branches each week. The Post Office also calculated that 27 pence in every £1 circulating in the UK passes through a Post Office branch. Its pivotal role in the lives of countless people is summed up in its slogan: ‘For the little things that make the big things happen™.'

The objective of the Universal Banking Programme was to make banking services available to everyone at post offices, so that any benefit claimant can receive payments electronically. The leading UK banks developed basic accounts that can be accessed electronically at the post office. The Post Office itself developed its own card account, accessible only at its branches. The Post Office card account can only be used to receive benefits, state pensions and tax credit payments. No other payments, such as wages, can be paid into it. This account suits customers who want a simple account without overdraft facilities or charges. No credit checks are carried out for customers opening the account. The simplicity of the account makes it suitable for any customer, including the homeless. Customers can take cash out, free of charge, at any post office, using a plastic card and PIN.

The introduction of the card account was not just a key part of the universal banking programme, but a major element in the modernization of the Post Office network. Post Office branches were already under threat from lost business. Thriving branches were adding newsagent and grocery services to their offerings in an attempt to stay profitable. The government's contract with the Post Office to pay benefits via order books was already due to cease in 2005. Without that guaranteed income, and the customer traffic the payments service brought, the future existence of many Post Office branches was in doubt.

The card account was introduced to meet the needs of universal banking, but it has also had other benefits for the Post Office. Being part of the electronic banking network means that it can offer cash withdrawal facilities to bank customers, increasing each branch's utility to the community it serves. Research suggests that many customers prefer using post offices to banks, so the introduction of banking facilities to post office outlets may have a multiplier effect on customer visits and spend.

Joined-up government in action

Implementing universal banking brought together a large number of stakeholders. As well as the main government departments and the Post Office, the programme also impacted the Inland Revenue, Treasury, Department of Trade and Industry and the UK banks. Several private sector suppliers were also involved. At the outset, the PA team helped to establish a decision-making and programme management structure to ensure that all these participants could work together effectively. A monitoring framework was created to gather information continually from all players, together with a reporting structure to keep stakeholders, including government ministers, informed of progress on both programmes.

The team's role, as in the conversion programme, was to understand the relationships among all these players, ensure continuity of activity and make sure that everyone involved knew their role in the unfolding project. Heley says: ‘It's been a huge task for everyone involved. PA's support has been the part that glued it all together. We could act as the catalyst, do the end-to-end assurance role. People see things from their own perspective; the hardest thing is looking at [the project] across the piece.'

The team also had to deal with inevitable conflicts of interest, and ensure that they were resolved in ways that met the best interests of the customer. For example, in stark terms, the government would benefit more if customers opted for direct payments rather than Post Office card accounts, since the former have cheaper transaction costs. However, the Post Office's interests would be better served by a greater uptake in card accounts. Communicating the options as clearly as possible to the target population therefore became even more important. In this way the customers would drive the eventual profile of payment delivery, not marginal interests among the service providers.

While most stakeholders' objectives were interdependent, there were occasional clashes in the priority and timing of different organizations' activities. In order to pre-empt such clashes, the team devised governance structures that gave all parties early warning of issues that would require action. The team also put considerable effort into encouraging collaboration across organizational boundaries.

The programme team also implemented cross-programme risk management and critical contingency planning mechanisms, focusing on areas introducing new business processes, or where transaction volumes were set to increase substantially. In this way resources and management attention could be directed to potential failure points before problems occurred.

The scale of the undertaking and its tight timescales demanded regular assessment of progress towards the launch, and early warning of any risks threatening it. The reporting framework provided ministers and other decision-makers with clear, consistent and focused information on both progress and risks. The information delivered was always related to programme objectives, and made appropriate to the current stage reached in the programme. By managing the horizon in this way, the team ensured that issues were dealt with in a timely way but also within the context of the greater plan.

Top-level governance of the work was the responsibility of a Cabinet committee. Unusually for such committees, officials were invited to meetings and key implementation scenarios were often pursued in detail. Hands-on involvement from ministers made an important contribution to the success of the programmes. Heley says:

Although [conversion] was a policy issue, it has very far-reaching consequences for millions of voters. It was clear to ministers what the effect on voters would be, so they were interested in details. For example, this letter is going to an 80-year-old person who can't read. It'll be read by her relatives, so what do you want it to sound like?

Delivering true benefits

The ultimate measure of any change initiative is the promptness and fullness of its delivery. Both these programmes were delivered on time and on budget. The Customer Conversion Centre went live on schedule, with war pensioners and child benefit claimants the first to be invited to convert. By March 2004, over 10 million invitation letters had been issued, and over 65 per cent had received a positive response. This response rate was in line with the aggressive targets that had been set.

In April 2003, the Post Office and banks switched on universal banking. By March 2004, millions of transactions had been conducted over the Post Office banking infrastructure and more than a million customers had opened a Post Office card account.

Mechanisms were also firmly in place to allow tracking of conversion, and to manage the delivery of the Payment Modernization Programme's projected savings. The quality of these mechanisms gave ministers the confidence to launch the programme on time, and facilitated its successful completion. By March 2004 more than 5 million of the targeted 13 million customers had already converted, with every indication that overall conversion goals would be met in full.

In classic management consulting style, the joint DWP/PA team acted as a catalyst for business change. PA deployed an appropriate mix of internal expertise at each stage of the programmes, but also tapped into DWP's know-how. The collaboration between colleagues in government departments and consultants has been genuine and sustained. Skills transfer was assured throughout the programmes by handing over programme elements to operations staff as soon as they were established.

PA has shown the great value of an independent consulting presence in the management of a complex, time-constrained initiative. The PA team members were able to manage all the streams of activity without being themselves on the critical path. They could maintain a ‘30,000-foot view' and turn their attention objectively to any detailed area that needed addressing to keep it on track. This would have been less easy to achieve if the firm had had an interest in, say, the development of the systems components involved in the solution. A clean separation of concerns put PA clearly in the driving seat, and also allowed the firm to act as an effective link between the government and its agencies. With its focus on delivery, the PA presence was the pacemaker of the process, making sure that every activity contributed to the achievement of the overall goal. Public recognition for the firm's achievement has, however, to be measured by the overwhelming silence of the media. Heley jokes: ‘It hasn't been in the news because it's worked!'

Meanwhile, the DWP's achievement is being acclaimed as a prime example of best practice in joined-up government. The modernization initiative combines a major delivery effort with cross-departmental and industry working. Other public sector programmes continue to benefit from the lessons learned.

Payment modernization and universal banking have been highly successful programmes. Neither programme has had much exposure in the media. We have become used to stories about large project failures in the government sector, and can even find it hard to comprehend the achievements of those unsung projects that deliver their planned benefits on time and to budget, despite the foreseen difficulties and unforeseen challenges with which they have to deal. Experience at the DWP, and by extension at the Post Office, show that sound programme management techniques can effect change to timescale even where large populations and systems are involved.

Above all, these two programmes demonstrate the primacy of communications in making change happen. Communicating in the right styles and at the right times for the right audiences has been crucial to the enduring success of both programmes. Allowing different stakeholders to appreciate each others' perspectives, and maintaining support for a diversity of goals, has saved the state operational resources, reduced fraud, safeguarded local post offices, expanded payment options for customers, and brought a new population into the modern electronic banking era.

The last word goes to 83-year-old pensioner Edith Richardson, describing her experiences of the pilot in the Sun newspaper of 26 March 2003: ‘I haven't had any problems getting used to the new system …. I know some of my friends are worried about the changes but it is quite simple …. I can take all [of my pension] out or take out £10 at a time if I want.'

There is no better description of the convenience and security modern banking offers to people of all ages and needs.