Back in 2015, I wrote A Rabbit in the NDIS Headlights, a blog that went viral about disability organisations stuck in old ways of thinking, paying for bad advice about the need to get bigger or merge while they were being fed random ideas about how to tinker with broken service models.
My call back then was it was time for the rabbits to get off the road by developing new organisational structures, new service models, new methods of engaging staff and of course new technology. Yet since then, nothing much has changed in the advice coming from a lot of the industry experts. The advice ranges from the latest marketing fads to cost cutting approaches drawn from sectors that have nothing in common with disability. That’s not strategic, it’s not really about the NDIS and it’s still pretty random.
So, this blog has a focus on what we are still seeing go wrong in the sector and what can be done. Some of it repeats key lessons from previous analysis, but we figure we have to keep repeating some of this stuff until it gets heard. And since I wrote the Rabbits blog we have learned that this is not just opinion anymore, it’s the lessons from NDIS hard experience.
While many people are talking about the new NDIS ‘market’, it's not a single market. It’s a shedload of quasi-markets broken down into a truckload of market segments: diverse geographic segments, multiple consumer cohorts, with heaps and heaps of different service and product types.
It's all quasi-markets (not real markets) because the NDIA have a bunch of transitional and in-kind arrangements and they have capped prices. Genuine market forces (demand, supply, quantity and price) really do not come into play the way they are meant to. You cannot put up your prices to attract better staff or increase your fees to make ends meet when you are providing services for people in high cost, low margin areas.
So, in this sea of disability heterogeneity and high risk, a great way to get run over by the NDIS is to be a provider of multiple, diverse, low margin services.
While block funding enabled many to provide a variety of services to a wide diversity of consumers and cross subsidise where needed, specialisation is now proving essential in the NDIS environment. Organisations need to focus on where they can deliver high value services while generating a surplus, they need to develop business models that provide the services they can efficiently deliver (and will be able to recoup). Providers no longer have to be a charity that takes all comers. We all need to learn that control and choice goes two ways, providers can choose which services they provide.
So, specialise your service offerings, learn to say no. Learn who you are, where you excel and specialise in that.
Encouraged by self-serving consulting companies making (lots of) money from mergers, some organisations are using the ‘fail fast fail big’ approach by focusing on growth at all costs. In the NDIS crazy world, some organisations have set big revenue targets, others are using new, more aggressive marketing strategies to grow. Bottom line: many organisations are growing new ways to lose money.
Blinded by the light of big NDIS money, many organisations do not see the dangers of losing big.
Avoiding this danger means a focus on margins. You need more revenue than costs and it’s as simple and as complex as that. But, this does not mean you should overly focus on unit costing. Unit costing is an accounting driven approach relying on risk averse processes and despite all the activity, it has produced remarkably little benefit to organisations in the NDIS (other than huge returns for accounting consulting firms). Unit costing often narrows, rather than expands possibilities. It has its place, but it’s best towards the end of service development processes, not the beginning and certainly not in the driver’s seat.
To build profitable margins you need to see the big picture. Economies of scale are incredibly elusive in the NDIS, so you will need to find other ways to deliver better services at lower cost using processes that enhance productivity and morale. The big picture includes enhanced customer and staff satisfaction, improving participant outcomes and profit margins.
Growth will not fix your margins, so stop growing until you work out ways to fix the margins. D’oh!
Given that services are no longer designed by government, the challenge is for organisations to develop innovative service development processes. A great new framework in this space is Lean Start-up methodology.
Lean Start-up should not be confused with the Lean Manufacturing approach with its obsession on reducing costs and lack of focus on service innovation. We are now seeing organisations that focus on cost cutting while they know they will never reach the margin they need on their current service types. Overemphasis on cost cutting also very quickly alienates staff and kills culture when what we desperately need is happy staff and happy return customers.
Lean Start-up is different, it gets organisations thinking about how they can develop new services at lower cost with minimum stress. The ability to develop prototypes and test new service models is critical to success. We like it because it’s simple, it looks like Action Learning and a lot like DSC’s own Learn Engage Adapt NDIS capabilities framework. Essentially, the message is start small, learn as you go and constantly adapt.
Makes a lot of sense.
The NDIS poses not just technical systems challenges but also big adaptive challenges. Adaptive challenges require change in beliefs, habits and practices and cannot be solved from above. These challenges require distributed leadership, by those directly connected to the problem.
We’ve being saying it since the start, organisations in the NDIS need to build organisation-wide participation, engagement and ownership of the change. The smartest organisations are making significant investments in organisation-wide training that is tailored to their needs. If you are looking for inspiration, we gave the DSC 2017 ‘Learn Award” to TeamHEALTH (to be profiled in a forthcoming article) for their wonderful in-house approach to the levels of learning required in the NDIS.
As 2017 ends, we are starting to see some real pioneer organisations that are adapting to the NDIS. It is genuinely exciting to see organisations that are taking the time to engage their staff in this perilous journey, organisations ensuring the Board knows what’s going on and the fabulous few that are engaging participants in service design and decision making.
Watch this space. Watch it change.
Get off the road!
My prediction for 2018 is we will see two sets of outliers on the NDIS bell curve.
The organisations on the right will be specialising. They will focus on margin not revenue and be great at learning, engaging and constantly adapting.
The ones on the left will be the increasing numbers of NDIS roadkill.