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Beware of the digital bandwagon

The rush to become ‘digital by default’ could drive costs up and have a damaging effect on understanding customer demand, writes John Seddon

I was surprised to read a report from The Institute for Government outlining how Digital Public Services will save £46bn.

Leaving aside my frequent criticisms of Universal Credit (“digital by default”) where I have explained why the service will never work in a digital mode, why didn’t the authors of the report have anything to say about why Universal Credit is failing? Do they really think, as they imply, that public services are akin to Amazon, Uber and Google?

Unfortunately, the public sector has no rudder of profit, so they should listen carefully to what private sector organisations have discovered by jumping on the digital bandwagon – that is, how it has driven costs up and had a deleterious impact on customers. As a result, these companies have completely changed the way they tackle the design of digital services.

So why isn’t the public sector also changing the way it tackles digital services? Ignoring the marketing blurb from the big consultancies that say, “Everyone is doing it, you’d better catch up”, the truth is that everyone is doing it because digital channels are “cheaper” – well, they are if they work, but all too frequently they do not.

A sign of ineffectiveness

The first sign, as ever when any service is ineffective, is an incredible rise in the volume of failure demand, which is demand caused by a failure to provide for the customer.

As customers are pushed down the digital channels, more will contact the service centres because the digital service isn’t helping them get what they want. This startling realisation – and its shockingly big numbers – opens private sector leader’s minds to the problem.

Unfortunately, recognising the problem isn’t the same as understanding how to solve it.

Typically, people jump to the assumptions that failure demand is a cost (which is correct), the types of failure demand should be counted and investigated to assign causes, and customers’ behaviour needs to be changed – which is plausible, but wrong.

Failure demand is a signal of ineffectiveness; you won’t get far by blaming people or processes. The current rush to digital is not, as is often argued, like getting customers to change their behaviour to using ATMs instead of going into bank branches.

The signal is telling us that the services, whether digital or not, aren’t working and are ineffective. The solution is to redesign the services. When you do that, failure demand drops like a stone and you get a massive increase in capacity. Happy days.

Understanding customer demand

My company, consultancy firm Vanguard, has worked with leading financial services organisations on this very problem, and we found the first step had to be repairing many newly created digital services. Why spend millions building a mortgage tracker digital app when the focus ought to be designing a mortgage service where the customer would never have cause to get in touch?

Only by understanding customer demand can you begin to understand where digital services can work for customers (as ATMs did) and where you’ve created digital services that are institutionalising failure demand or have created services that will never work with customer demands.

The latter takes me back to Universal Credit. Digital media are useless at dealing with high-variety demands, so this means some of the newly created digital services have to be abandoned.

But this is easy to do when it comes down to a simple choice: either stick with a costly endeavour that isn’t working for your customers and is driving your operating costs up, or solve the problem by making the service effective in a non-digital way.

When you get over the repair work, you can move on to the question of method: how are these new digital services being designed? Typically, teams of designers, software engineers and big consultancy suits – costing eye-watering amounts – have been dreaming the services up, taking things the organisation does or could do and developing digital “solutions”. Something few people know is that as much as 80% of the coding that gets done never gets used (but you pay for it).

The bigger problem, however, is that the method is “IT first”. Only when you understand demand in customer terms with knowledge about its context, variety and predictability can you then set about designing a service that works and then, lastly, you can consider what can be digitised.

It’s not about changing customers behaviour to make them comply with our ambition to cut costs, it’s about changing the way we serve customers. Effective services mean happier customers and lower costs. That’s the thing – focus on cost and your costs go up, but focus on value and you drive costs out.

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