Julian Corner argues that voluntary sector organisations urgently need to reframe their roles as catalysts of system change by rediscovering a strengths-based ethos and making better use of the strong relationships they have with the people they serve. This article is adapted from a keynote address delivered at Northern Ballet, Leeds, on 5 November 2013, at an event held by IPPR North in collaboration with VONNE, Involve Yorkshire and Humber, and VSNW.

There are number of things that voluntary organisations should sensibly be considering in order to protect themselves from austerity: diversifying income streams, scaling back management tiers, shifting to volunteering, cutting unit costs, merging back-office functions, moving into new markets, commodifying services for payment-by-results markets, exploring social enterprise and investment models, and so on.

None of these things will feature in what I am about to say. This presentation is less about organisational survival and more about how we ensure that the right things survive austerity. By which I mean, how do we safeguard the values, ideas and approaches that we don't want to see lost over the next 10 years? And more positively, is austerity actually a painful opportunity to advance some values, ideas and approaches that didn't fare so well during the good times?

An obvious starting point is that a decade of retrenchment is far too long a period simply to be 'survived'. It is conceivable that some of us may emerge blinking into the sunlight having spent 10 years clinging on. However, the reality for most is that we operate within complex systems that are not going to remain still over the course of what amounts to a generation. Austerity will radically reshape and redraw our environment - by which I mean the fundamental tenets of the welfare state. It is already happening.

So in asking what the values, ideas and approaches are that we want to see survive or even thrive, we have to recognise that we are going to need a much more powerful strategy than one that tries only to save some scraps from the fire. It is going to require a very different mind-set, and one that we haven't been conditioned to use by the previous decade or so of plenty.

The decade of plenty

One way of shifting our mind-set is to ask whether we want to go back to and recapture the halcyon days before the crash of 2008. Was that the best we could hope for? Is it downhill from there?

We are all familiar with the pre-2008 paradigm, with its machinery of targets and service-level agreements. Its belief in a delivery chain extending from Whitehall, where a public service agreement was signed off by the Treasury, right through to tiny community-based organisations who were mapped in giant flowcharts as units of delivery. This paradigm was grounded in the philosophy of 'what works', which persists today, and which suggests that our main task is to identify effective interventions with an evidence base and then roll them out as widely as possible.

The attraction of this paradigm is obvious: a government that needs to drive through a social result by the end of a parliament can more or less guarantee that, with enough focus, drive and resources, it will hit its own target. But it has produced all sorts of problems.

It has diminished trust between agencies, eroded local capacity to problem-solve, ignored social capital, introduced a highly transactional relationship between the service user and the provider and, ultimately, it didn't change as much as the results suggested.

The problem with evidence-based interventions is that they don't tend to replace rigid siloed systems - they usually augment or mitigate those systems. So in good economic times, we accrete all sorts of pockets of intervention for all sorts of groups and needs. These in turn create an increasingly complex maze of services, each negotiating interfaces with each other.

One solution that we like to apply is case co-ordination, whereby people are employed to help vulnerable individuals to navigate the maze. This can reach surreal levels of inefficiency when each part of the system invents its own locus of co-ordination, so you can end up with a room full of case co-ordinators all negotiating with each other over the same person, none of whom actually has any real help or resources to offer.

This focus on interventions and co-ordination has provided a welcome distraction from the much harder work of fundamentally reforming existing systems. The result is that you often get islands of excellent practice in a relative desert of moribund system failure. The systems themselves aren't required to change - they are just subject to the brokerage, advocacy and special pleading of professionals employed to champion the most disadvantaged. In other words, we employ one set of workers to try to persuade another set of workers to do the right thing.

Indeed, many of the interventions generated by the 'what works' agenda were put in place to address or soak up the social needs caused by poor systems that don't work. This is a phenomenon that the systems thinker John Seddon calls 'failure demand'. Huge amounts of public money are spent mitigating the failure of public services elsewhere in the system. If you look at any system that is set up for highly excluded people - such as many homelessness services, the criminal justice system, mental health hospitals, and arguably a large proportion of advice and legal services - most of these are dealing with the fallout of failures elsewhere.

As you might be able to tell, my view is that the voluntary sector has been, on the whole, heavily implicated in creating this culture that dodged the hard decisions that needed to be made to improve outcomes for the most disadvantaged. We have competed to become suppliers of interventions in unreformed systems that we knew weren't working, and some organisations have expanded rapidly as a consequence. Now that the economic chips are down, is this not an opportunity to take a stand for an alternative vision of what is possible? As Chris Grayling's rehabilitation revolution has taught us all, if you don't write the script, someone else will write it for you.

Evidently we can no longer afford massive failure demand, but there is a clear risk that demand will actually grow as mainstream systems tighten their belts and gate-keep their services. This is evidently a burning platform, and it creates an imperative for changes that simply weren't possible during the times of plenty.

I have painted a picture of massive inefficiency, but that doesn't necessarily mean that the basis for a better system becomes obvious just because we can't afford inefficiency. My contention is that voluntary sector organisations hold many of the values, ideas and approaches that will equip us well to create and promote an alternative vision of reformed public services that will make the next 10 years worth surviving. To survive, you either have to adapt to your environment, or make your environment adapt to you. This is the choice that faces us.

I want to propose a few values, ideas and approaches that I think the voluntary sector should be promoting with considerable urgency.

i. Systems thinking

First, systems thinking. The voluntary sector has tended to assume that the system - by which I mean the way in which resources are structured and prioritised - is out of its control, and is therefore someone else's responsibility. I would contend that we are much sophisticated than we give ourselves credit for. Wherever there are faultlines in the system, you will find voluntary organisations working to deal with the consequences, trying either to bridge across the faultline or to catch people who are falling through. This gives us an extraordinary grasp of systems failure. Most obviously, we can see the failings of services further upstream that cause disadvantaged people to seek our help downstream.

If you follow the trail backwards from a prison or homeless service, what you tend to find are multiple missed opportunities: episodes in which systems have been engaged in risk-assessing, gatekeeping and referral processes (each very expensive in their own right) that have offered almost nothing to the individual by way of real help.

If we don't shine a light back on the systems that we occupy, then we squander the opportunity that our vantage point gives us to help improve the wider response to the people we are set up to serve. We often hold key performance data that the rest of the system needs, but which is locked away in organisations that either aren't sufficiently resourced or don't see it as their role to use that data to drive change.

To draw an analogy, if the fire service had only ever viewed its purpose as putting out fires then we wouldn't have seen a year-on-year fall in house fires in the UK. This success story was not achieved with better fire engines, but by fire officers using the data they collect from the investigation of each fire to work with housing departments, the police, schools, builders and other stakeholders to instil fire prevention systematically.

Advice UK has concluded that there is an equivalent role for the voluntary sector. In work funded by LankellyChase they are using the 'vanguard methodology' devised by John Seddon to try to identify the system failures that are routinely picked up by local advice providers. If you think about it, when someone seeks advice it is often because something has gone wrong somewhere, and if you analyse the data you start to see patterns emerging - just as there are patterns in the way fires occur. Rather than arguing for more advice to solve the failures, Advice UK is working with local agencies to highlight where system changes could alleviate the need to call on advice in the first place.

This seems critical to me. If we can no longer afford more and more services to soak up failure demand, then we have to devise strategies that stem the demand for those services. If we don't, commissioners will have no choice but to increase the supply thresholds.

The WomenCentre in Calderdale is doing something quite similar. They are taking individual cases of the most vulnerable young women who come to their service and pulling together a panel of local services and commissioners to work out how the issues affecting those young women could have been avoided so that others don't find themselves in the same position. In other words, they are trying to expose and thereby eliminate blind-spots in the system.

This reframing of the voluntary sector's role as catalysts of system change does imply that we might be trying to do ourselves out of business, but that is surely the beauty of mission-led strategies.

ii. Resource creation

My second point relates to the scarcity paradigm that always characterises discourse on the public and voluntary sectors, and which is now dominant. The scarcity paradigm suggests that there are never enough resources in services to support the most disadvantaged, and that reductions in those resources will inevitably erode the wellbeing of the most disadvantaged even further.

If you think about it, scarcity is the same paradigm that leads us to measure everything and value nothing, to fixate on unit costs and expend huge resources on competitive procurement. It is also shares a mind-set with the deficit model of service delivery, whose first question is always: What is the gap that needs to be filled?

I think an alternative view is emerging strongly - one which starts from an assumption that there is always an abundance of resources, and just different ways of relating to them. This view is variously described as an 'asset', 'strength' or 'capability' approach, and its first question is: What are the pre-existing resources that can be built upon?

This approach is not without its own resource requirements, but its fundamental function is not to be the resource itself but to unlock resource. It is an approach that has its roots in a long tradition of community development, where voluntary organisations have interpreted their role as galvanisers of the community's energy and creativity.

In recent decades, there has been a strong divergence of practice between organisations focused on communities of place and organisations focused on communities of need, to the extent that they have come to form almost unrelated siloes. Within government this divergence was enshrined in the creation of the Neighbourhood Renewal Unit that focused on communities of place, and the Social Exclusion Unit that focused on communities of need.

Those organisations in the latter camp have been encouraged to describe themselves as 'meeting the needs' of disadvantaged people, and indeed to view 'needs met' as their end goal. Some organisations have lost the strengths-based ethos, and this has arguably led to a dangerous pathologisation of need.

Of course there are plenty of organisations that never lost that strengths-based ethos, and encouragingly many are starting to reclaim or reinvent it. We are supporting a fascinating project developed by St Mary's Community Centre in Sheffield which works with highly disadvantaged Pakistani women, a group who might normally be viewed as being at the extreme end of social exclusion. St Mary's have chosen to use an 'appreciative enquiry' methodology which focuses on the strengths of these women, shifting their frame of reference so that they can reconnect with themselves as powerful people within their communities. The appreciative enquiry method is delivered by Pakistani women who are trained to reach and engage their peers and to work with them to co-produce solutions. It has proven to be a highly empowering and liberating experience.

We also support another co-production methodology developed by the Wandsworth Community Empowerment Network which, as the name suggests, has its roots in neighbourhood renewal. In line with national trends, Wandsworth's black and minority ethnic communities suffer from poor mental health outcomes and have poor experiences of mental health services. In responding to this, WCEN saw that the people whom these communities trust and look to are not public services but their local faith leaders. Yet the local faith leaders knew little or nothing about the public services being delivered to their communities, so they were powerless to help build bridges - a massive waste of social capital. To cut a long story short, they have worked with faith leaders and commissioners to co-produce some surprising service solutions, such as an IAPT (improving access to psychological therapies) service in a Mosque and systemic family therapy delivered by pastors from black-majority churches. By facilitating co-production, St Mary's and WCEN have reinvented themselves as resource creators, not resource absorbers. Or rather, they have interpreted their role as tapping into abundance, rather than competing for scarcity.

iii. The relational approach

A prerequisite to my previous two points is that voluntary sector organisations often have very strong relationships with the people they serve. The reason they are able to see how a person has been affected by system failure is because they are working with the whole person. The reason they are able to co-produce services is because there is a pre-existing bond of trust and respect.

There is a growing recognition across public services that a strong relationship between a disadvantaged person and a service provider is the key enabler of most outcomes. Without that relationship, whatever the person needs to help them move on - whether it be safety, empathy, trust, inspiration or role modelling - just isn't available. The person gets stuck in a cycle of process-driven transactions that don't allow progression and that instil a sense of alienation and isolation.

But how consciously and assertively is the voluntary sector trying to capture and account for the value of the relationships that lie at the heart of its approach? In particular, what strategies do we have for persuading commissioners of the wisdom of investing in something so nebulous? When a voluntary organisation says that it never gives up on its clients, treats them as a whole person, and responds flexibly to their needs, you often discover that what allows them to be so person-centred is independent funding.

We are partnering with the Social Research Unit on piece of work exploring the lives of severely disadvantaged young people. The dominant message coming from that work, especially from young people themselves, is that a quality relationship is critical and is missing from most services offered to them. A group of young people we worked with captured this in three simple words. They want a relationship with someone who can bring 'head, heart and hands'.

Clearly these are not qualities that only voluntary organisations can offer. After all, 'head, heart and hands' sounds remarkably similar to the probation service's old tag line, 'advise, assist and befriend'. But, as that example testifies, these are qualities that have been stripped out of some areas of public service, and if voluntary organisations are not careful we will see the quality of our own relationships going the same way.

The warning signs are already there. If voluntary organisations create deep, valued relationships then how is that they can also be viewed as interchangeable providers by commissioning and procurement departments? The more we are boxed into delivering standardised process models, underpinned by a risk paradigm, the less claim we will have to the very qualities we most prize in ourselves.

This seems to go to the heart of the question of what should survive austerity. If voluntary organisations survive at the cost of their relationships with their service users, then it is a high price to pay. We are currently supporting a Liverpool-based charity called Local Solutions, who have a small-scale project in which they offer high intensity mentoring to young people who have been routinely failed by wider services in Liverpool. What they are trying to establish is how they can capture the value of this relational approach so that it can be scaled up or replicated. How can commissioners be persuaded that genuinely person-centred models make economic sense? What evidence do they need? And how can they be helped to shift the system so that the relational value of the model is not lost by the process of scaling up?

These are complex and challenging issues that need to be explored with real urgency as austerity bites harder. My concern is that, as competition for resources and payment-by-results contracts kick in, the honesty and humility required to explore these big questions will seem too risky for some, as they feel forced to overstate their confidence in the effectiveness of their work.

iv. Leadership

This brings me to the role that the voluntary sector has to play in providing leadership throughout austerity. This leadership role is constantly diminished in the language of even those who would champion the voluntary sector. The constant allusion to the innovation of the voluntary and community sector (VCS) artfully both contains and diminishes the fundamental power of our values, ideas and approaches. It positions the VCS as ultimately marginal to the serious business of running public services.

If the voluntary sector is going to survive then it needs to survive on its own terms - and that means constructing a bigger argument for the value that it embodies. Unfortunately, the VCS doesn't always help itself, particularly in the way in which it fragments itself into sub-sectors which, from the outside (and if I'm unkind), can feel parochial.

If you work with multiple sub-sectors (which is one of the privileges of being a funder) then you start to see the same ideas and philosophies repeating themselves again and again. I have seen youth work, community development, child protection, mental health, ETE support and offender services all recently rediscover the power of relationships as a key - and apparently unique - issue for their sub-sector. Without anyone to take these parts and create a bigger whole, the radical power of the idea is lost, and becomes consigned to the dustbin of best-practice guidance.

Recently, the drugs, homeless, offending and mental health sub-sectors separately identified multiple needs as a key issue. Almost surreally, each sub-sector interpreted multiple needs in its own image, and produced reports and conferences on homelessness and multiple needs, mental health and multiple needs, and so on. In other words, their attempts to come to terms with the issue served to demonstrate how entrenched it was. If the voluntary sector only manages to reflect the system's structures and siloes back to it, then we can expect to be divided and ruled. Put even more crudely, if we play the system at its own game, we can expect to be bested by more powerful players in that game.

The voluntary sector needs to invest in common ground where bigger questions and answers can be explored. Fortunately, in the case of multiple needs the umbrella bodies Homeless Link, Drugscope, Clinks and Mind realised the extent of the overlap between their respective agendas, and they have come together under the wider umbrella of Making Every Adult Matter to provide common leadership. In doing so, they are simply reflecting the reality faced by most of their members' clients, people whose lives do not fit neatly into the siloes constructed by the system.

This brings me to my final point. If the voluntary sector is going to survive a decade of austerity on its own terms, this will require diligent, painstaking adherence to the lived reality of the people they serve.

v. Power shift

I was recently struck by the comment of a senior and very thoughtful commissioner, who expressed some gentle scepticism about the leadership role that the voluntary sector might play. His concern was that many commissioners and decision-makers view voluntary organisations as principally representing their own organisational interests, not necessarily those of their service users. He said that most commissioners would much rather hear messages directly from service users locally, rather than mediated through organisations whose analysis may be skewed by their own business imperatives or who might be viewed as a special interest group.

If the voluntary sector is really going to be able to shape its environment then it needs to be viewed as an equal player round the table, not as a cab for hire. To gain that equality, it needs to address its legitimacy. Legitimacy is less of an issue for many statutory bodies, who answer directly to elected officials and who are responsible for whole populations. VCS organisations typically appeal to their values and expertise, but they also talk about being led by the needs and views of their service users and communities. This latter claim is certainly the more powerful, but we need to ensure we are walking the talk.

Here is a classic catch-22 for many VCS organisations. On the one hand, equality of power appears to come from growth and diversification, but on the other hand this is exactly what draws the VCS away from a radical connection with service users and communities, which is the source of its legitimacy. Having said that, the power that comes from growth is surely going to be a diminishing commodity in a time of austerity, whereas the power that comes from user-led legitimacy will remain in plentiful supply. Looked at in a different way, VCS organisations should be positioning themselves as facilitators of shifts in power towards their service users: rather than speaking for their clients, they should be creating platform after platform that allows the voices of our most disadvantaged citizens to be amplified. This obviously happens, but nowhere near enough. It is, in some ways, the biggest battle left to fight: to give voice and power to people who not only lack voice and power, but who many would consider either incapable or undeserving of it.

LankellyChase is supporting a number of projects that aim to move beyond service-user forums towards creating leadership platforms for service users. For example, Providence Row Housing Association in Tower Hamlets are working with a service-user forum of the most excluded people on their caseloads and those of other organisations, training them to become consultants on system reform to local commissioners. A very similar phenomenon has emerged in Stoke, where service users have renamed themselves Expert Citizens, and they have become a pivotal group in shaping Stoke's bid to the Big Lottery's Fulfilling Lives programme.

This inversion of power, in which the most excluded become the litmus test of system success, is a long way from the Social Exclusion Unit days when the least excluded of the excluded were creamed off to meet targets.

I would also cite the work of Coventry Law Centre and Grapevine who are working together to build a network of support and rights-based advocacy that can offer the most excluded families in Coventry genuine choices. Again, 'choice' is not a concept that translates well into the social exclusion sphere, but they are hoping to demonstrate that affording people real citizenship will produce demonstrably better outcomes.

If this were a business talk, I would be talking about leverage and asking how our strategy is going to gain maximum purchase on the system. I would be warning against disinvesting in approaches that are the source of our leverage. In this case, my concern is that genuine service-user empowerment starts to look like a further cost, and not the source of our power. By working with service users as rightful citizens, the voluntary sector can lever change in ways that simply aren't open to other sectors.

I started by saying that I wouldn't cover business strategy, and what I have ended up describing adds up to a case for a social movement. Systems thinking, resource creation, relational approaches, leadership and power shifts, if pieced together and properly evidenced, start to answer the core question, What are our public services for? My assertion is that the keys to a renaissance in public services - despite, or even because of, austerity - already reside in the values, ideas and practices of the voluntary sector. But this alternative vision is only going to emerge if we focus on the distinctive value that we bring, if we reframe our role as leading actors, and if we work together to shape a much bigger argument.