Why demand management matters to Europe’s cities. The best idea you’ve never heard of

A simple logic underpins demand management. Supply-side reforms can only go so far. Without properly understanding the root causes of social demand, public services will continue to treat symptoms instead of preventing them. Without doing more to influence behaviour, rising demand and shifting demographics will be overwhelming. And without examining where government itself creates ‘failure demand’ through fragmentation and poor service design, we are condemned to repeating mistakes that fail citizens and cost money.  

Demand management has taken root in the UK during a context of austerity – which local government has felt most keenly in the form of massive, front-loaded budget cuts. Local leaders know that there is only so much cutting that can be done. If key services are to be maintained and city governments are to play a role beyond managing decline, they must look to reduce and re-shape demand as a top priority. They are using a spectrum of techniques from behavioural insight to digital ‘channel shift’, some of which I will describe below.

Why does this matter to cities?

All of this matters to URBACT because the city is the level at which demand management thinking can influence the relationship between community resilience, public service reform and economic growth. Here are three reasons why. 

Reason 1 – city leaders can’t manage what they don’t understand

Most of the work Collaborate does starts with an honest conversation about how much we really understand about service demand. Do citizens access services at crisis point because we fail to support them earlier? Do we reinforce dependence by delivering on the basis of citizens needs but ignoring their capabilities? Do our own fragmented services create demand through shunting problems from one agency or department to another? The better we understand patterns of demand and the assumptions that underpin them, the more effectively we can act upstream to manage them. The World Bank’s enthusiasm for behavioural insights is a global example of this, as are efforts by UK cities such as Sheffield and Manchester combat debt-induced family crisis through offering alternatives to high-interest lending.

Reason 2 – growth and prosperity isn’t a zero-sum game

Demand management, economic growth and community resilience are interdependent and mutually reinforcing. Getting more people into jobs reduces demand for welfare services.  Stronger community ties reduce loneliness and social isolation. Less reactive spending on social services enables city governments to invest in human capital and place-shaping.  A key part of managing demand is therefore to understand where it needs to increase, as well as be managed down. Think of the Buurtzog model of community healthcare in the Netherlands, which encourages people to proactively manage their healthcare with networked teams in community settings; or New York City’s NYC311 initiative which created an integrated, visible single point of contact for citizen and business enquiries. Enabling citizens to demand more from local public services through Citizen Report Cards (CRCs) has helped pull up the quality of Rwanda’s public infrastructure and contribute to impressive economic growth.  Creating demand from active citizens is key to the social and economic productivity of our cities. 

Reason 3 – demand management needs collaborative leadership

In their celebrated recent book The Smartest Places on Earth authors Antoine Agtmael and Fred Bakker contend that the key to stimulating innovation and growth in post-industrial (what they call ‘rustbelt’) cities is ‘connectors creating communities’. This is an important insight. Managing demand and influencing behaviour cannot be done through command-and-control – it takes humility to look outside of the service lens, agility to build new ways of working around citizen insights, and community leadership to engage citizens in the process in a meaningful way.  As Benjamin Barber argues, this mix of attributes is more often found at a city level – because “people don’t care whether you’re a communist or a Tory; you still have to pick up the garbage”.  Collaborative leadership takes this further: it is about creating the conditions for others to lead as much as doing it yourself. 

Flipping the starting point

Demand management is about flipping the starting point for reform of public services in our cities. It can be a route in to a whole range of actions from service ‘nudges’ to whole system changes. It is distinct because it starts with a rigorous focus on demand – where it comes from, how it presents, and what the implications are for a range of social partners. It puts the citizen journey at the heart of reform strategies, and forces leaders to really think about how the services they control can sustain – as well as solve – social problems. Demand Management is a core part of our work at Collaborate, and we are excited about the possibility of exploring its power with a new generation of city leaders who want to combine radical ambition with credible reform. We are also pleased to see that these core issues for cities are being explored by new URBACT networks like CHANGE! and BoostInno.

Dr Henry Kippin is executive director of Collaborate CIC.