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Innovative thinking

Housing providers who innovate can embrace the challenges facing the sector, says Ross Fraser, chief executive of HouseMark

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How do you define innovation?

We often talk about innovation, when we actually mean efficiency. Efficiency involves continuous incremental improvement - essentially doing the same things better. In contrast, innovation involves asking strategic questions such as, “Should our organisation be doing this at all?”

And, if the answer is “yes”, you embrace new technologies, partnerships and markets to achieve results.

Why is innovation in social housing now essential?

At its simplest level, innovation must help housing providers reduce operating costs and generate new revenue streams to cope with the reduction in sector capacity which will flow from new government policy.

An alignment of factors has created the necessity for innovation and the opportunities to execute it. Protecting service standards and community investment in the face of rent cuts, maintaining some form of social rented programme in the context of a redirection of capital subsidy towards homeownership and securing business viability in the light of welfare reform all require responses that go beyond incremental change.

New opportunities are arising at the same time. Developments in data analytics now enable statutory and voluntary agencies working with specific communities to share client and context data to provide seamless services, which better meet the needs of clients and are cheaper to provide.

This approach is known as ‘community orchestration’ and is currently being deployed, for example, by Brent Council in respect of services to care leavers.

What form might innovation take?

While innovation involves new technologies and data analytics - such as the use of sensors, mobile technology and digital mapping - it is equally about strategy. It can involve new products, like Thames Valley Housing’s acclaimed private rented sector scheme, Fizzy Living. Or developing new partnerships between housing, health and social care. Or entering new markets. All these examples count as innovation.

The best organisations in the sector are working to engender an innovation culture. Some are building this capability in-house, others are looking to partner with experts in the field to accelerate the
process.

How can innovation help reduce costs?

In the current environment, any innovation that fails to reduce costs is likely to be seen as a ‘nice to have’ rather than essential.

There is, however, clear evidence that channel shift (encouraging tenants to interact online where appropriate) can reduce transaction costs. Mobile field working can reduce back office costs while enhancing operational effectiveness. Equally, non-technological innovation, such as a fundamental reappraisal of the role of ‘frontline’ housing officers, can certainly result in reduced operating costs.

In practical terms, organisations will need to prioritise the areas in which to innovate if they are to put together a coherent programme which can demonstrate returns. Effective prioritisation requires a sophisticated understanding of the cost base and an understanding of where the biggest impact is necessary and achievable.

How can innovation improve customer service?

Innovation can improve customer service by enabling users to access services more quickly and easily, with greater flexibility of service outcomes. Equally, innovation that fails to improve the customer experience is unlikely to succeed.

Customers who were used to contacting a call centre to book a repair in their property will transition to a website to do it for themselves if the overall experience is better. Channel shift and the transition to digital services will only work if the overall customer experience is taken into account. Innovation in this space needs to be closely aligned with skills around user experience, design and testing.

What are the barriers to innovation?
The biggest barriers are employee fear of failure and lack of clarity from business leaders about the purpose of innovation and their willingness to support it.

Tackling these issues requires an acceptance of risk and tolerance of creative failure. Leaders need to challenge resistance to innovation in their organisations.

Poor use of data and a lack of skills to analyse it are other barriers which limit the ability of organisations to target innovation and measure its success. There is also a clear IT skills gap, but this is less about knowledge of latest programming trends and more about understanding the potential for technology to transform the business.

How can innovation be funded and incubated?

Partnership and scale are essential here. Our sector presents an attractive market for innovators in technology and services. Being able to partner and deliver joint solutions is essential to attract the right talent. The sector has a good track record of sharing good practice; now we need to take this further and look at ways to jointly fund innovative solutions.

Through HouseMark Business Connect, we organise visits to commercial incubation laboratories, such as JLabs, run by John Lewis, and Wayra, run by Telefonica. From these visits, we have learned that the two key incubation success criteria are external mentoring of innovation and killing off failing initiatives quickly.

What happens if social landlords don’t start innovating?

Innovation is mandatory in the current environment. Landlords who don’t innovate will find it hard to meet current financial and operational challenges.

Failure to adapt will lead to an increasingly residualised sector, unable to attract top employee talent, and struggling to maintain a sense of purpose. With homelessness, housing need and poverty likely to increase as a result of government policy, we can’t allow that to happen.

Conversely, innovation provides hope and excitement for the sector and a means of embracing the new opportunities that will inevitably emerge.

Where can I find out more about innovation?

There is no shortage of information available on the internet, social media, and at events. To pull it together, HouseMark is developing a one-stop shop resource at www.housemarkinnovation.io.

We welcome you to join us and contribute. We’ve just started, so there are bound to be many ways to improve this resource. Tell us what you need, but help us execute it. We are not afraid of failure, and nor should you be.

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Biography

Ross Fraser is the founding chief executive of HouseMark. He has more than 30 years’ experience in the social housing sector, has authored many publications on housing issues and is an expert on performance improvement.

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