Understanding Problems Applying Soft Systems Methodology (SSM) for Better Regulation

1. Understanding the Problems Applying Soft Systems Methodology (SSM) for Better RegulationIan Mitchell BA BSc FORS Operational Research UnitAnalytical Decision Support Strategy, Better Regulation and Economics (SABR)OR54 XVII - September 2012

2. Introduction • This presentation describes the application of Peter Checkland’s SSM to OR support to the Better Regulation Executive in early 2011. • The benefit was a better understanding of the processes and gaps in the creation of regulation and its place as a policy lever. • The presentation covers the technical use of SSM, the techniques adopted and how social aspects of the work allowed OR to have an impact.

3. U is for UNDERSTAND THE O.R. METHOD Understand the Problem • Operational Research Method • University of Buckingham • 11% of Business Modelling exam • 7 Stages (iterative) – U-D-F-S-I-V-I • U- UNDERSTAND • Describe-Predict-Prescribe • Soft Systems Methodology (SSM) • A structure to understand a situation • 1993 work for European Space Agency • Economic benefits from telecommunication satellites • “Soft Systems Methodology in action” Checkland & Scholes 1990 J Wiley Determine the key variables Formulate the variables Solve the formula Interpret the results Validate the findings Implement action

4. U is also for URGENT • Late on Sunday evening • Sent: 06 February 2011 21:04 Subject: URGENT: BRE options - mapping the regulatory management system • Andy - I've been given your name by Tera as someone who might be able to help us in BRE to redesign the framework we have put in place for managing regulation under the Coalition agreement. • We urgently need to map the system that now exists to understand the potential cause and effects of different parts of the system as it affects different actors (and there are lots....) • By teatime on Monday • As we agreed I do think some soft systems analysis of where we are, where we want to get to and how we might do it would be enormously valuable. Any help you think you can offer would be much appreciated. • Tuesday Dark O’Clock • OR Analyst on way to the options workshop

5. Introduction to BRE Better Regulation Executive How to apply less Resource What options are there? Which is better (or less worse)? Soft System Methodology (SSM) A system transforms inputs into outputs Do X by Y in order to achieve Z 5

6. SSM uses terms to prompt a view CATWOE Customers – Victims or beneficiaries of T Actors – Those who would do T Transformation – Conversion of inputs to outputs Weltanschauung – World view making T meaningful Owners – those who could stop T Environment – Elements outside system taken as given Answers give Root definitions and Rich Pictures 6

7. CATWOE from Tuesday 7 Transformation Department Department Customers Department Regulation Process per flowchart Department Department Regulators BRE Actors Options Gatekeeper Consultant Balanced overall reduction Thought Leader Transfer Functions

8. Changing the worldview 8 Weltanschauung Transformation Customers Society Citizens Economy Businesses Process per flowchart Regulation Process per flowchart Regulation Regulation Department Process per flowchart Department Department Process per flowchart Department Department Actors OIOO Regulators BRE Options Gatekeeper Consultant Balanced overall reduction Thought Leader Transfer Functions Owners Environment

9. Next steps Complete the picture and description “To do X by Y in order to achieve Z” Identify Efficacy, Effectiveness and Efficiency Which option generates greater value in the broader system? What other options are there? Means Discuss views 1:1 per CATWOE (30 minutes) Develop Rich Pictures and Root Definitions Review these next Thursday 9

10. Outline (as used) • Progress since last week • Discuss views 1:1 per CATWOE (30 minutes) • 6 so far 2 to go (30 minutes plus...) • Develop Rich Pictures and Root Definitions • Review these next Thursday - Now • Use SSM to describe the System “As is”: • CATWOE Pictures and Definition • Overall System • Components – Sub-systems • Describe how the System is wanted to be • Potential changes already becoming apparent • Identify what do we have to do to move from where we are to where we want to be

11. System - As Is Side effects from interventions Pressures Political Media Public Global Economy Systemic Risk Disasters Society Economy Interventions other than Regulation Regulation Options what to do Exhort Fund Legislate Ideas: Something should be done Choice Events EU Transposition Regulation Regulation Regulation Domestic Regulation Citizens EU OIOO RPC RRC Interested Parties Businesses BRE Cabinet Policy Committees Regulators Ministers Civil Society Organisations Enforcers BR Ministers LBRO Departments

12. Players Actors Customers Owners Better Reg Intermediaries OGDs Advisors BRE RMs RPC Secretariat Perm Secs Comms BLCs Legal BRE policy RPC Members Officials BRUs Economists Policy officials Private Offices SpAds A OGD Ministers B Ministers RRC C

13. Domestic Regulation Domestic Regulation RPC Interest Groups Ministers Individuals RRC Impact Assessment Impact Analysis is Fit for purpose ID Problem Consider Options Policy Makers Clearance process to consult PolicyCommittees Minister Principles fit for purpose Alternatives Motivation to act Better Impact Assessment Voluntary Compulsion Consultation Clear Government response Statutory Instrument implemented Final Impact Assessment Secondary Legislation Primary Legislation HoC – HoL Impact Assessment Clearance to draft Impact Assessment Clearance for amendments Sun setting 7 years Post Implementation Review 3-5 years on Duty to review

14. CATWOE Elements Customers – Citizens and Businesses Actors – Central and Local Government, Enforcement organisations Transformation – Improvement of Society-Economy Weltanschauung – Policy can improve Society and Economy Owners – Ministers Environment – Machinery of Government, Policy levers, World Events 14

15. Root Definition • BRE enables UK Government policy makers and deliverers across Government and Partner Organisations to create and enforce the right stock of the right regulations in order to improve the state of the Society and Economy of Britain.

16. Changing the System • Fri 04/03/2011 11:04- I hope that, in the coming weeks we can start to use Ian's work as a basis for discussion of various aspects of the regulatory system and how it's going to need to change. • 8 March - Three Boards Workshop • What is good about the System as is? • What is bad about the System as is? • What are your brightest ideas for a better System? • Issues and Solutions

17. System - As Is FINAL Side effects from interventions Pressures Political Media Public Global Economy Systemic Risk Disasters Society Economy Interventions other than Regulation Stock of Regulation Options what to do Exhort Fund Legislate Ideas: Something should be done Choice Events EU Transposition Regulation Domestic Regulation Citizens EU OIOO RPC RRC Interested Parties Businesses BRE Cabinet Policy Committees Regulators Ministers Civil Society Organisations Enforcers BR Ministers LBRO Departments

18. System - As It could Be Pressures Political Media Public Side effects from interventions Global Economy Systemic Risk Disasters Society Economy Interventions other than Regulation Main Gate Events Initial Gate EU Transposition Regulation Ideas: Something should be done Regulation Options what to do Exhort Fund Legislate Choice Regulation Domestic Regulation Citizens OIOO Interested Parties Regulation Framework Policy Committees Businesses Cabinet RRC EU Regulators Civil Society Organisations Ministers BR Ministers RPC Enforcers LBRO Departments BRE

19. SSM – Lessons Indicated • Technical • Insights rather than “Answers” • For the Analyst –then and later • For Decision Makers • Develop Common Language • Top level system was accepted • Lower level areas linked to it • Share Understanding • Social • Benevolent Patronage enables OR • Interest from DG and senior staff • Close liaison with BRE • Arrival of New Director, Selection and Restructuring • OR enables change by illumination

21. Departments Clearance Choice Domestic Regulation Lead Department Cabinet Committee Policy Team Legal BRU BRE Finance Impact Assessment Economists