The programme provided a productivity expert to support Mendip District Council in enhancing its approach to commercialising service delivery and building capacity and resilience for the future. It has built upon, and strengthened, an existing transformational programme. This case study forms part of our productivity experts resource.
The aims were to support the following:
- the production of a commercial strategy and framework feeding into the council’s corporate Plan;
- the adoption of a framework approach to commercialising service delivery;
- identifying new income generating sources that are available to the council, beyond its current activities and programme.
The challenge
Local government is going through a sustained period of funding reductions that is having a detrimental impact on the ability of services to continue operating as they have in the past. As a result, like other local authorities, the council must develop innovative solutions to generating income and adopting a more commercial approach to service delivery.
The overarching aim of this programme was to help safeguard frontline services by supporting income generation and helping the council meet efficiency and income targets.
The solution
The productivity expert began by gaining a thorough understanding of the council’s current commercial activities and income generation proposals. Meetings were held with strategic leaders and there were small group workshops with senior managers and accountants.
This approach involved the following activities:
- evaluating and making recommendations to Mendip District Council on generating additional revenue income by adopting a commercial approach to service delivery
- identifying new opportunities for income generation and suggesting new business opportunities
- defining savings targets for services that are deliverable
- testing the viability of individual options and realistic timescales for development, and identifying similar case studies that have been successful and could help shape Mendip options
- cost-benefit exercises for each income generation option.
This led to the development of a commercial strategy and framework,.
The strategy identified key deliverables for individual services and potential delivery options. The framework has provided a standard way for evaluating the potential of future income generation ideas.
The best ideas were then developed in more detail. In parallel, a tactical marketing plan template was developed for future projects.
The impact
Although the full impact of the project is still emerging, the programme has confirmed the potential for significant income generation.
By adopting the commercial strategy and framework, there is now a consolidated approach in place for further developing the council’s in-house expertise and capacity, as well as new rationale for commercial activity by identifying and better managing income generation opportunities against clear objectives and financial targets.
Our key outputs from the programme are:
- the development and adoption of a commercial strategy and framework, approved by cabinet in May 2018, that feeds into the council’s corporate plan
- an assessment of an advisory and consultancy services outline business case
- an assessment of an energy provider outline business case
- an assessment of an existing outline business case to grow and commercialise an established shared legal service, including additional support for developing a marketing plan.
MDC is a lean organisation and we would struggle to fund external private sector commercial advisors, which is why this programme has been so useful. We have focused on upskilling our own staff, with great success, building on previous experiences in delivering transformational projects – examples being creating a public sector services hub at our civic site, building a commercial property portfolio and developing commercially-driven contracts with partners. Whilst staff involved had limited experience of working in a commercial way, all had a can-do attitude, a flexible approach and a desire to be part of something innovative.
Learning has been very much through practical experience. We now have a pool of experienced and multi-skilled commercial project experts and their learning is being shared and extended across the council through our organisational development initiative Shape Our Future.
The programme has benefitted the council by:
- highlighting the need for a robust commercial approach to identifying and developing service delivery income generation opportunities;
- gaining full support from senior managers and accountants on testing the viability of different options
- assisting the council in delivering its key commercial priorities and setting its annual budget with no use of working balances
- helping protect and strengthen the council’s financial position from further cuts to its current funding streams.
How is the new approach being sustained?
The council has embedded a more commercial approach across the organisation in a number of ways:
- Corporate Plan: agreeing a new plan with transformation and inclusive growth as the two priorities for the council
- Medium-Term Resource Strategy: feeding service level commercial transformation financial targets and savings into the MTRS. A financial target of £4.3 million for income generation and savings has been set to 2023-24. The council over-achieved in 2018-19 and is on-track to meet its 2019-20 target.
This approach is closely linked to:
- Shape Our Future is an ambitious organisational development programme for staff and elected members that is a key vehicle for embedding a commercial approach throughout the organisation. Its approach includes sharing ideas, learning from each other and trying out new ideas. The programme builds on our successes as an innovative council delivering high quality projects and services and is designed to help everyone make the most of the opportunities and tackle the challenges.
- Phoenix Sponsorship Board governance structure was established in 2016 with delegated powers allowing decisions on commercial projects to be made responsively and quickly.
The key goals of the commercial strategy in terms of service delivery are:
- Income Generation – the objective is to make a surplus. This will be achieved by providing a service that can be charged for, generating revenue that can be reinvested in council services; and,
- Creating a Commercial Culture –the objective is for the council to act in a more business-like way. The roll-out of our Shape Our Future programme is ensuring staff and members have the right skills and a can-do attitude associated with commercial success.
- The key aims and goals are broken down as follows:
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Short Term Goals (2018-19) |
Medium Term Goals (2019-20) |
Long Term Goals (2020-21 +) |
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General |
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Commercial strategy to be adopted by Mendip District Council. |
Continue to develop commercial and investment opportunities to impact on annual financial targets. |
Be financially self-sufficient by 2020. |
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Income Generation |
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Commercial framework to be adopted by Mendip District Council |
Use the framework to continue developing commercial opportunities. |
Long-term goals being managed flexibly to allow a quick response to new opportunities. |
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Identify the top three commercial opportunities |
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Framework embedded. |
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Business cases to be developed around high priority existing and potential income generating services, in line with commercial strategy and framework |
Develop business cases for new commercial initiatives and opportunities |
Reinvest income generated to improve the services we deliver and protect frontline services. |
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Further specific objectives based on top three initiatives |
On-going review. |
On-going review. |
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Develop marketing plans for the top three priorities to achieve greater market share |
Continue to promote existing services, whilst launching new income generating services. |
Increase awareness throughout the district and partnership area on the services that the council can provide. |
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Determine the right commercial delivery mechanisms for the council. |
Continue to develop and explore commercial opportunities and delivery mechanisms. |
Establish successful delivery mechanisms that contribute profits annually to be reinvested in council services. |
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Creating a Commercial Culture |
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Identify council’s current cultural state and develop a plan on how we can achieve the desired future cultural state. |
Implement the plan using the organisational change programme, ‘Shape Our Future’ and align resources behind to achieve a common goal. |
Council to adopt appropriate positive culture aspects and behaviours associated with commercial organisations, including:
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Complete back-office service reviews to assess if current delivery models are the most effective and cost-efficient |
Periodically review services.
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Become a commercially-focused organisation with a national reputation for high quality services |
Lessons learned
Anticipating the impacts of cuts to central government funding, MDC has been honing its commercial approach for a number of years – asset management, approach to contract letting and their management, and securing a sustainable future for leisure services. We had already recognised that to commercialise it is essential we fully support staff and this is why we had developed Shape Our Future to continuously develop and refine commercial skills.
The LGA programme was fully aligned with this ethos and, by summarising what commercialism means to service delivery, this exercise has helped change mind-sets across the organisation and strengthen project governance and management competencies. The production of robust high value examples that can be rolled out is building confidence in how the commercial process can be successfully applied to service delivery to generate income and make savings.
Contacts
Mendip District Council
Jane Sharp
[email protected]
LGA
Grace Abel, LGA Productivity Advisor
[email protected]
Useful links
Commercial Strategy and Framework