Getting Organisational Diagnosis Right in Local Government: Data, Dialogue and Doing It Well

Local Authorities: Navigating Complexity in an Era of Constraint and Change

Local authorities today operate in an environment defined by financial austerity, escalating demand, and the imperative for innovation. The scale of the challenge is stark. According to the Local Government Association (LGA), cost and demand pressures will add £15 billion an increase of nearly 29% to the cost of delivering council services by 2024/25 compared to 2021/22, even as councils grapple with a 27% real-terms reduction in core spending power since 2010. This is not a marginal squeeze; it is a structural crisis.

The financial strain is compounded by the dominance of statutory services in local budgets. Upper-tier councils allocate an average of 78% of their net revenue expenditure to social care for adults and children, leaving little room for discretionary services such as libraries, parks, and community development. In fact, the latest government figures show that adult social care alone is budgeted at £24.5 billion for 2024/25, up 9.1% in real terms from the previous year, while children’s social care will rise by 10.7% to £14.1 billion. These increases reflect demographic pressures, rising complexity of need, and inflationary costs in care provision.

The consequences are visible: councils are issuing Section 114 notices effectively declaring bankruptcy at an unprecedented rate, and the Chartered Institute of Public Finance and Accountancy warns that without systemic reform, many authorities will remain on the brink of insolvency. Meanwhile, discretionary services have been hollowed out: between 2010 and 2023, over 1,200 youth centres and 1,100 children’s centres closed, alongside a sharp decline in libraries and public amenities.

Complexity and Leadership in Public Sector Systems

This financial turbulence coincides with a deeper organisational challenge: complexity. Public services are increasingly characterised by “wicked problems” issues that are interconnected, ambiguous, and resistant to linear solutions (Head & Alford, 2015). As Joanne Murphy and colleagues argue,

“Complexity and environmental uncertainty in public sector systems requires leaders to balance the administrative practices necessary to be aligned and efficient… and the adaptive practices required to respond to complex and dynamic circumstances”.

Traditional command-and-control approaches falter in this context; councils must embrace adaptive strategies that enable learning, collaboration, and innovation.

Academic literature reinforces this point. Eppel, Rhodes, and Gerrits (2021) note that complexity theory offers a lens for understanding multi-actor governance networks and institutional change, providing tools to navigate unpredictability and emergent behaviour in public systems. Similarly, Haynes (2003) warns that the complexity of policy processes limits the usefulness of New Public Management techniques, calling for approaches grounded in systems thinking and adaptive leadership.

Why This Matters for Organisational Diagnosis

In this environment, councils cannot rely on intuition or incrementalism. They need deep organisational insight, built on robust evidence and inclusive dialogue. That means:

• Collecting the right data both quantitative metrics and qualitative narratives.

• Diagnosing effectively using structured models and analytical tools.

• Engaging teams meaningfully through dialogic processes that co-create solutions.

This blog explores how to achieve that balance, drawing on diagnostic and dialogic approaches, systems models, and strategic tools to help local authorities thrive amid complexity.

Why Data Matters

Data is the cornerstone of informed decision-making in local government. Without robust evidence, councils risk relying on assumptions that lead to ineffective strategies and wasted resources. In an era of fiscal constraint and rising demand, data is not optional it is essential.

The Role of Data in Organisational Insight

Good data does three critical things:

• Reveals gaps between current and desired performance, enabling targeted interventions.

• Highlights lived experiences of residents and staff, ensuring that decisions reflect real-world needs rather than abstract metrics.

• Builds trust through transparency, fostering accountability and public confidence.

The Scale of the Data Challenge

The UK public sector is undergoing what many describe as a “data revolution”. Councils are increasingly leveraging predictive analytics, artificial intelligence, and integrated dashboards to optimise resource allocation and anticipate demand. For example:

• Adult social care demand is projected to rise by 25% by 2035, driven by demographic ageing and complex health needs.

• Children’s social care referrals have increased by 19% since 2018, adding pressure to safeguarding systems.

• Councils collectively process billions of data points annually, from housing applications to waste collection metrics, yet many still struggle with siloed systems and inconsistent data quality.

Academic Perspective

“Triangulating data sources using qualitative and quantitative methods is a key means to offset the inherent biases in different methods” Cresswell (2003).

This principle is vital for councils seeking to balance hard numbers with human narratives. Quantitative data provides scale and trend analysis, while qualitative insights capture context and meaning.

Why It Matters for Strategy

Data-driven decision-making enables councils to navigate complex challenges with precision and foresight, formulate targeted policies based on demographic and economic trends, and evaluate the impact of interventions in real time. In short, data transforms uncertainty into actionable intelligence.

Models and Frameworks for Diagnosis

Organisational models provide structure, clarity, and consistency during diagnosis. They act as a roadmap for consultants and leaders, ensuring that analysis is systematic rather than ad hoc. Harrison (2005) emphasises that open system models help practitioners,

“choose topics for diagnosis, develop criteria for assessing organisational effectiveness, gather data, prepare feedback, and decide what steps, if any, will help clients solve problems and enhance effectiveness.” 

In short, models turn complexity into something manageable.

Why Models Matter

Local authorities are complex systems with multiple interdependent parts strategy, structure, culture, processes, and people. Without a model, diagnosis risks becoming fragmented or biased. Models:

• Provide Uniformity: They ensure all organisational elements are considered. You wouldn’t design a car without a braking system; likewise, you shouldn’t redesign an organisation without considering culture, leadership, and processes.

• Enable Communication: They create a shared language for discussing organisational dynamics, moving beyond the simplicity of an org chart.

• Focus Attention: They help identify where to concentrate effort whether improving operational systems, accelerating decision-making, or driving cultural change.

Common Systems Models

Each organisational model offers a unique lens for understanding complexity and diagnosing performance issues. These frameworks are not just theoretical they provide practical guidance for structuring analysis and identifying leverage points for change.

McKinsey 7-S Framework

The McKinsey 7-S model is one of the most widely used diagnostic tools in organisational development. It identifies seven interconnected elements:

• Strategy – The organisation’s plan for achieving competitive advantage or public value.

• Structure – How roles, responsibilities, and reporting lines are arranged.

• Systems – Processes and procedures that govern day-to-day operations.

• Shared Values – The cultural core and guiding principles.

• Skills – The capabilities and competencies of staff.

• Style – Leadership approach and management behaviour.

• Staff – Workforce composition and talent management.

Why it matters for councils: Local authorities often focus heavily on structure (e.g., departmental reorganisations) but neglect softer elements like shared values and leadership style. The 7-S model reminds us that alignment across all seven dimensions is critical for successful transformation. For example, a council implementing digital transformation must ensure that staff skills and leadership style evolve alongside new systems.

Galbraith’s STAR™ Model

Galbraith’s STAR™ model emphasises five design elements:

• Strategy – The foundation for organisational design.

• Structure – The formal configuration of roles and units.

• Processes – Information and decision flows.

• Rewards – Incentives that reinforce desired behaviours.

• People – Human capital and talent systems.

Application in local government: When councils pursue shared services or joint ventures, STAR™ helps align processes and rewards with strategic objectives. For instance, if a council wants to improve cross-functional collaboration, STAR™ ensures that process redesign and reward systems support not undermine the goal.

Weisbord’s Six-Box Model

Weisbord’s model examines six key areas:

• Purposes – Clarity of mission and objectives.

• Structure – Organisational configuration.

• Relationships – Interpersonal and interdepartmental dynamics.

• Rewards – Formal and informal recognition systems.

• Leadership – Direction-setting and influence.

• Helpful Mechanisms – Systems that support work (e.g., IT, HR).

Why it’s useful: This model is particularly effective for diagnosing cultural and relational issues. For example, if a council struggles with siloed working, Weisbord’s framework helps uncover whether the root cause lies in unclear purposes, poor relationships, or inadequate mechanisms.

Burke-Litwin Model

The Burke-Litwin model integrates transformational and transactional factors, linking external environment, leadership, and culture to performance outcomes. It distinguishes between:

• Transformational factors (e.g., external environment, leadership, mission).

• Transactional factors (e.g., structure, systems, management practices).

Local authority context: When external shocks such as funding cuts or legislative changes demand cultural and leadership shifts, Burke-Litwin provides a roadmap for understanding how deep-level changes cascade through transactional elements.

Leavitt’s Diamond

Leavitt’s Diamond highlights the interplay between:

• Task

• Structure

• Technology

• People

Why it matters: This model is ideal for councils implementing new technology platforms. It shows that introducing digital tools without adjusting tasks, structures, and skills will lead to failure. Change in one area ripples through the others.

Nadler and Tushman Congruence Model

This model explicitly addresses linkages between business units and organisational components, making it essential for organisation design work in multi-unit councils. It focuses on congruence between:

• Work

• People

• Structure

• Culture

Practical insight: For councils managing complex partnerships (e.g., health and social care integration), Nadler and Tushman helps ensure that interdependencies are recognised and managed, not ignored.

Practical Application in Local Authorities

Applying these models in real-world council settings is not about theory it’s about solving complex, high-stakes problems under pressure. Each framework offers a unique advantage depending on the nature of the challenge:

McKinsey 7-S for Strategic Alignment

When councils undergo major restructuring or transformation programmes, the 7-S model ensures alignment across all organisational elements. For example, during a digital transformation initiative, it’s not enough to upgrade IT systems; councils must also address skills gaps, leadership style, and shared values to embed a culture of innovation. Failure to align these elements often results in expensive technology projects that fail to deliver intended benefits.

Burke-Litwin for Cultural and Leadership Shifts

External pressures such as funding cuts, legislative changes, or new statutory duties often require deep cultural change. Burke-Litwin helps councils understand how transformational factors (leadership, mission, external environment) cascade into transactional elements (structure, systems, management practices). For instance, when a council faces a £50m budget gap, leadership behaviours and organisational culture must shift toward agility and cost-consciousness, not just structural changes.

Nadler and Tushman for Multi-Unit Integration

Large councils and combined authorities often operate as complex ecosystems with multiple business units, partnerships, and shared services. Nadler and Tushman’s Congruence Model is invaluable for diagnosing interdependencies for example, between housing, social care, and health integration. Misalignment here can lead to duplication, inefficiency, and poor outcomes for residents.

Galbraith’s STAR™ for Strategic Design

When councils pursue shared services, joint ventures, or commercialisation strategies, STAR™ ensures that organisational design aligns with strategic priorities. For example, if a council wants to generate income through traded services, STAR™ helps align processes, rewards, and people systems to support entrepreneurial behaviours.

Weisbord’s Six-Box for Cultural and Relational Issues

Collaboration is critical in local government, yet many councils struggle with siloed working. Weisbord’s model helps uncover whether the root cause lies in unclear purposes, poor relationships, or inadequate mechanisms. For example, if housing and planning teams fail to coordinate, the Six-Box model can reveal whether the issue is structural or cultural.

Leavitt’s Diamond for Technology-Driven Change

Digital transformation is high on every council’s agenda, but technology alone does not deliver results. Leavitt’s Diamond reminds leaders that changes in technology must be accompanied by adjustments in tasks, structure, and people. For example, introducing AI-driven case management systems without redefining workflows and retraining staff will lead to resistance and underperformance.

Why This Matters

Choosing the right model is not a tick-box exercise it’s a strategic decision that shapes the success of organisational change. Councils that apply these frameworks thoughtfully can:

• Reduce risk during transformation.

• Improve cross-functional collaboration.

• Align culture and structure with strategic goals.

• Deliver better outcomes for residents under severe financial constraints.

Strategic and Diagnostic Tools

To deepen analysis and prioritisation, councils can use:

• Environmental Scanning – Understand external trends and pressures.

• Business Roadmaps – Visualise strategic initiatives over time.

• Blue Ocean Strategy – Identify uncontested service spaces.

• Entry/Exit Barriers – Assess market dynamics for traded services.

• Experience Curve – Link efficiency gains to cumulative experience.

• Force Field Analysis – Map forces driving or resisting change.

• Fishbone Diagram & Five Whys – Root cause analysis for persistent issues.

• Initiative Prioritisation Matrix – Rank projects by impact and feasibility.

• Issue Tree – Break down complex problems into manageable parts.

• Risk Assessment Matrix – Evaluate likelihood and impact of risks.

• Product Life Cycle – Understand service maturity stages.

• Strategy Map & Value Chain Analysis – Align activities with strategic goals.

• Value Driver Tree – Identify levers for performance improvement.

• Resource Utilisation Analysis – Spot inefficiencies in staffing and assets.

Avoiding Bias

Bias can distort diagnosis. Creswell (2003) advocates triangulation using multiple methods and sources to offset inherent biases.Key principles:

• Listen and learn: Integrate surveys, focus groups, and web-based data.

• Sources: Gather data from at least three sources.

• Models: Use systems models to interpret emerging themes.

• Self-awareness: Recognise personal beliefs that may colour interpretation.

Make Good Use of Technology

Analytics and digital tools can challenge unconscious bias and improve engagement:

• App-based feedback tools: Enable real-time, peer-led feedback.

• Social media analysis: Track employee sentiment and workplace climate.

• Big Data, Network Analysis, and Data Visualisation:

  • Develop scenarios and models.

  • Assess cost and impact of changes.

  • Support strategic workforce planning.

Developing Questions

Examples of diagnostic focus areas:

• Identifying system blockages to diversity.

• Improving day-to-day management efficiency.

• Addressing high turnover among talent.

• Implementing new workforce arrangements.

• Enabling collaborative working.

• Driving digital transformation.

• Improving cross-functional learning.

• Culture change for agility and resilience.

Analyse, Diagnose and Report

Visualisation is critical. Use diagrams of chosen models or create custom graphics to map causal relationships. As Richard Karash notes,

“You need to see structure at various levels.”

Adding arrows to indicate causality helps teams understand systemic dynamics.

From Diagnosis to Transformation 

Effective organisational diagnosis in local government is far more than a technical exercise in data collection, it is a strategic capability that determines whether councils can thrive in an era of volatility and constraint. Numbers alone do not tell the full story; nor do conversations without evidence. The real power lies in connecting robust analytics with meaningful dialogue, creating a shared understanding that drives action.

Councils that succeed in this space do three things exceptionally well:

• Harness data intelligently, not just to measure performance, but to anticipate future demand, model scenarios, and evaluate the impact of change.

• Apply proven frameworks and tools, from McKinsey 7-S and Burke-Litwin to Force Field Analysis and Value Chain Mapping, to bring structure and clarity to complexity.

• Engage inclusively, ensuring that staff, partners, and communities are part of the conversation, co-creating solutions that reflect lived experience as well as strategic priorities.

In a world where local government faces unprecedented financial pressures, demographic shifts, and technological disruption, the ability to diagnose effectively is not optional, it is existential. Councils that combine evidence-based insight with adaptive, dialogic approaches will not only survive but lead the way in shaping resilient, innovative public services. The future of local government belongs to those who can turn complexity into clarity, and clarity into action. That begins with diagnosis done right.