From New Public Management to Lean thinking: understanding and managing 'potentially avoidable failure induced demand'

The central objective of this thesis is to investigate, understand and explain the conditions under which the administrative problem known as potentially avoidable failure induced demand (PAFID) arises in UK public services and might be prevented. PAFID is defined as “customer contacts that appear to be precipitated by earlier failures, such as failures to do things right first time, which cause additional and potentially avoidable demands to impinge upon public services”. A secondary objective of the thesis is to establish how, and under what better conditions, the public sector could successfully exploit the management paradigm called Lean thinking, as an alternative to the current New Public Management method, in order to address the PAFID problem. An analysis of the results from three case-studies conducted in UK local authority settings confirms that nearly half of all customer contacts in high-volume services such as housing benefits are potentially avoidable. The extrapolation of this finding to the contact volumes and handling costs in one UK council alone suggests possible savings of more than £1 million a year. The potential benefits that are available to the case-study councils and nearly 500 other local councils, together with numerous other providers of UK public services, are also very substantial. A variety of conceptual lenses are applied to the PAFID problem in order to generate alternative explanations and policy options. This thesis makes a number of contributions to public sector management theory and practice, including the finding that councils might reduce principal-agent problems that add to PAFID by espousing more supportive and enabling environments, and by adopting systems-oriented approaches that acknowledge the complex and subjective nature of real-world problems. The findings also suggest that, while the deployment of Lean ‘tools’ can result in short-term savings and performance improvements, the adoption of Lean thinking as a comprehensive management approach is more likely to bring about fundamental changes.