I’ve been corresponding with David Jackson of the Innovation Unit who has referred me to the work the Unit has being doing in relation to what they describe as “Radical Efficiency”.

The basic premise is that it’s possible to reduce costs and improve services. As someone who’s at the sharp end of making reductions in budgets I know how sceptical people are when you suggest that this must be our goal.  It’s good to find a model which actually sets this out ina coherent manner.

Thew following is lifted from their wikisite

From operational efficiency to radical efficiency

All of these elements are important and powerful. But it is how these components are combined that determines whether or not an innovation is just operationally efficient (‘same for less’) or radically efficient (‘different, better and cheaper’). For an innovation to be radically efficient, it must employ components both above and below the line.

Operational Efficiency: ‘same for less’
Innovations that employ only the two components that lie below the dotted line offer new solutions to old problems. This is using different resources and maximizing the usefulness of existing ones to offer ‘same for less’.

This kind of innovation basically takes the system – or desired ends – of public services as given and static. This is not to say that exciting innovation is not possible here. User involvement, as discussed earlier, is evident in all segments of the model and is capable of reshaping existing services with dramatic results.

The Arizona Department of Corrections[1] offers an excellent example of this kind of innovation in practice. By engaging recent inmates in the design of programmes that help prisoners to re-integrate into society, savings are made both in the short term and the long term. In the short term, resources are not wasted on expensive programmes that have little impact. Less money can be used on different inputs. In the long term, the prevention of recidivism could have a major impact on the budgets of many public services – from health to policing.

But in any example of this type, prisons are still prisons. The effectiveness of service delivery has been improved but something even more significant is still possible.

Radical efficiency: ‘different, better and cheaper’

Innovations that employ three or four components of the model – that is, above and below the dotted line – offer something truly different, better and cheaper.

Radical efficiency turns the role of provider on its head – they are no longer solution ‘deliverers’, crafting better answers to decades-old questions about how to provide a standardised welfare state for mass consumption. They are pioneers of a new type of public service, asking sometimes difficult questions about who they are trying to serve and what they are trying to achieve.

We only have to look as far as the success of The Open University to see the power of rethinking the possible clients of higher education and the resources best suited to doing so. Designing a system around previous ‘non-customers’ who were unable to participate in expensive, full time, residential education, and taking advantage of cheap, unused bandwidth on public television (amongst other things) has resulted in a system which today serves over 150,000 undergraduates. Unit costs per student are significantly lower than those in the traditional system.

Some of the world’s most well respected, game-changing innovations clearly fit here. The Grameen Bank in Bangladesh did not keep hammering on the question of how the question of adverse selection (unreliable borrowers defaulting and making loans too expensive for reliable members of the community) could be solved in its existing micro-finance system. Instead it asked afresh how capital could be made available cheaply for the small business investments that play a major role in development. It reconceptualised who its customers should be (mostly women – the ones responsible in practice for family business investments), it reconceptualised who its suppliers should be (members of the local community who know each other) and what its available resources were (close-knit groups of women who know all about each others lives, their reliability and who were able to issue meaningful social sanctions against defaulters). All this was initiated not by the old system-designers (private lenders) but by a new ‘knowledge-generator’ – Professor Muhammed Yunus – an economist who has since been awarded the Nobel Peace Prize for his efforts. This was a whole new system in microcosm, which has since been replicated throughout and beyond Bangladesh.

So Grameen represents radical efficiency that re-thinks the challenges its community faces (and the outcomes it wants to see) as well as employing different resources to make those outcomes happen more effectively. In doing so, it seeds a whole new system, rather than perpetuating the existing one.

In health, education and social care, we can see equally compelling examples from across the globe. In the UK, School of Everything[4] starts from the premise that ‘everyone has something to teach, everyone has something to learn’, offering a new conception of adult education and new tools for teachers and students to connect and agree fees. In a totally different context, a mental health first aid kit developed in Australia enables friends, colleagues and family to help keep people healthy (and prevent costly, crisis interventions), whilst lunar powered street lights in San Francisco (that dim when the moonlight is sufficient to illuminate the area) help save money and the environment.