The transformation of a third party: the case of the UK Liberal Democrats

“It's amazing what you can accomplish when you do not care who gets the credit.” Harry Truman

British parties are once again in focus in the context of party transformation. Both Labour and the Tories have tried to transform themselves in recent years – unsuccessfully in the case of Labour under Jeremy Corbyn; and in the case of the Tories, although some think the party has declined “beyond the point of renewal”, the process is ongoing, and the verdict is still out.

Like American parties, British parties operate in a first-past-the-post electoral system that fosters the build-up of two large political groups, and that makes it hard for third parties to succeed. Despite the challenges, the Liberal Democrats managed to enter Government from 2010 to 2015. Tim Gordon was Chief Executive of the Liberal Democrats from 2012 to 2017. His challenge was to transform a party that suddenly had gone “from nothing into Government” and (in an experience in common with most smaller parties in European coalition governments) that would pay a heavy electoral price for that in 2015. I spoke to him about the things achieved and the lessons learned.

What were the challenges you faced when you took over as Chief Executive?

Tim: Having joined the Government in 2010, with a resulting collapse in our polling numbers, there were three challenges for the party organization by 2012: First, financial issues - we were on the verge of not being able to pay salaries. Second, the membership was plummeting; it was basically in free fall, so we had a long term structural problem. Once you go below a certain threshold, there’s no coming back. Third, much of what the party did was still paper-based and the competition were investing in new techniques and could outspend us at every step. Political parties are data operations, so lacking crucial data and being at a smaller scale held us back in many ways.

What did you achieve with the membership?

We transformed the membership. We reversed decades of collapse, and over the course of 5 years went from just over 40,000 to well over 100,000 members.? We did not accept the traditional view of membership, which is that it’s like the weather and hard to control: it falls every year, goes up with elections, then down again; you bring people in, then you lose them again. The key thing is that you have to stop the leaky bucket, and for this you need to change your incentives. This was a new thing: people in the party at first thought we were lying when we said that we had started to grow the membership!

So we digitised the whole membership process, and modeled the product a bit on Apple –we went from a soggy cardboard membership card to a choice of modern-looking plastic cards, beautiful packaging and a metal pin badge.. We changed the internal incentives so local parties could keep significant sums if they retained people. And we took advantage of key moments – referendums, the election of Trump – to optimize online advertising. We also changed internal communication – we started with an apologetic tone of voice about the Coalition, which was in response to internal critics, and turned it into a more positive one.

How did you get party finances under control?

On the cost side, I signed off every penny that was spent. The risk is that you take initiative away from your people, but you do get spending under control.

With online fundraising, we boosted our revenues from €40,000 to €2.5 million. To achieve this, we changed our online platform and approach. More broadly, we recruited a professional Fundraising Director who introduced a series of new initiatives, including a proper Fundraising Board.

We incentivised the entire party – we split the money between the several levels of the the party, so as a local party you benefitted when you managed to retain people. The aim being to encourage local organisations to engage with and support new and existing members. This is ultimately far more important for the member experience than anything that the HQ can do. And happier members drive better finances.

How did you go about data?

It's hard to imagine now but we had to prove to ourselves how campaigning and fundraising could work well digitally. We used data to populate our recruitment funnels for membership and fundraising. We rolled out new software across all levels of the party, and used digital modeling to support targeted campaigning. A key part of this was bringing in digital tools from the US, although we spent a tiny amount to benefit from the fortune spent by the likes of Obama. At one stage we were, I think, the only party in the world deploying what had been Democrat and Republican software – and of course they blocked any API access between them.?

What was your role in this whole process?

?I saw myself as the Chief Operating Officer and the Party Leader, Nick Clegg, as the Chief Executive Officer. Essentially though it was to put the right people in the right jobs, give them a sense of direction, make sure that we knew what we were measuring and then let them get on with their jobs. Political parties can recruit the most amazing people, especially early in their careers.??

Before politics, you had worked as a business consultant and executive. Does experience outside of politics help in a party transformation?

Business problem solving is often different from political problem solving. So you have to be aware of that. But experience outside of politics can also help, particularly when it comes to understanding data and processes. In ay room with politicians, there are only a few people who get excited by numbers. And being one of them helps keep you focused on long term goals, no matter what the demands of the day’s news agenda.?

What were your key learnings from the party transformation process?

In a transformation, you need to know where you are going, and you need to show where you are going. And try to take people with you. One key is to make sure that credit for the wins (no matter how small and especially when times are tough) is shared as widely as possible. Most of the best ideas for the membership transformation came from giving the team the space to come up with ideas and the support to take some risks.

I overestimated how much we might be able to move the Party’s poll numbers. They fell in 2010 and barely budged for the following decade. However I underestimated how much you could transform a party operationally. There are many things we did not achieve, but operationally we achieved more than I would have expected. Membership transformation is at the heart of the Party’s survival and recovery from its time in coalition.

I often thought about that quote from Harry Truman - if you don’t need to get the credit for everything, you can make lots of stuff happen. That’s probably also true of the Liberal Democrat experience in Government – we weren’t going to get the credit but we made lots of stuff happen.