Over the past year I have spotted – I fear – a 7 stage process that many people will be going through in responding to the forthcoming government cuts.

It is something I shared with public sector and charity managers at a CIPFA event I spoke at this week in Manchester, just down the road from the TUC annual bash.

Most public bodies are facing severe budget reductions. How well staff, customers and other stakeholders cope will depend much on the quality of leadership in those organisations (as well as their unions and professional bodies). This, I would argue, is particularly bound up with keeping people informed, and getting them quickly to a point where they can make constructive contributions to change.

Here are the 7 stages I suspect many individuals (as well as groups and organisations) will find themselves going through:

1. Ignorance – Here people know there is a fiscal crisis but have not bothered themselves with the details
2. Denial – At this point, awareness increases about cuts, but there’s a belief that somehow it’s not going to affect them in any significant way
3. Shock – Here the reality hits: yes, this is coming their way and this is what it’s going to mean (and how severe it will be)
4. Special pleading – Now arguments are made by individuals, professions, service departments or entire organisations that they are a ‘special case’ and should be excluded from extreme cut backs
5. Anger – Once it sinks in that we’re all in this together, real anger begins – combined, no doubt, with a range of other emotional responses
6. Adjustment – By this stage people recognise they have to deal with the world the way it is and start to look constructively at how to respond. This will include contemplating some things that would have been unthinkable or unacceptable earlier on, including cutting services and jobs, remodelling the way services are delivered, entering into partnerships and outsourcing work
7. Action – At this stage tangible action is taken, change is implemented and various innovations are put into effect.

Two points are important here.

-          First, while people go through stages 1-5, time, energies and opportunities will be lost

-          Second, getting people quickly to stage 6 is the responsibility of the organisation’s leaders.

Looking at the media this week, I can’t help but feel that many people (particularly in certain unions and professional bodies) are being poorly served by their bosses in this regard. Certainly, making an argument about the value you provide is important. But this needs to be combined with an honest examination of the activities that really make a difference to users/customers.

The years ahead are going to be difficult, but unless politicians and senior managers help staff and other stakeholders to focus positively on addressing the new reality, action will be delayed, change will be harder and opportunities for innovation will be missed.

What’s often most exciting about new technology – the Web in particular – is not the new gadgets it ushers in; nor even the new user channels it brings.

Perhaps more profound are the ways it shakes up established ways of doing things. This is all the more interesting when such developments playfully interweave other innovations in new and unanticipated ways.

This is happening, for instance, in the way today’s Web technologies and online services are enabling changes in the way we pay for things and move money about.

For the most part, e-commerce would be inconceivable without the ability to digitalise payments using debit and credit cards. Online systems such as WorldPay have oiled the wheels of online shopping and donating, providing a means of integrating Websites and payment systems.

But with the rise of new financial players such as PayPal - particularly once it opened its code up to outside developers - a new wave of creativity has been kicked off.

1 + 1 makes 3 (or more, or £ billions)

Today, PayPal is on the road to being a major global bank. While its financial flows and transactions may still be small compared to the established players, its growing share of the market and innovative services make it a strategic threat to the big boys.

Now there’s a thought. No more waiting days for the banks to push money sluggishly around, no more creaming off bank fees; just the immediate, frictionless flow of money.

Okay, that’s interesting enough, but what’s even more attractive is the possibility to combine this with new services such as Twitter. Which is exactly what TwitPay has done, allowing for money to be moved between users’ PayPal accounts simply by using their Twitter IDs. RT2Give provides an online giving version of this, supporting rapid fundraising.

The new face of Banking?

It’s even been suggested that Facebook could profit from its massive network of users to get into the banking business, and indeed is already building financial mechanisms that could eventually lead to £ Billions cascading around and between networks of ‘friends’.

In the UK www.zopa.com has sought to cut out the banks by allowing lenders and borrows to come together via the Internet. Lenders choose the amounts they wish to lend, the sort of (credit rated) customer they want to lend to, and they are duly rewarded with corresponding rates of interest – which are promised to be better than the banks. (Out of interest, risk is mitigating by spreading individual customers across a range of borrows.)

What next, mobile money?

Indeed…and it’s already here. Take Obopay, for instance – a service that allows you to transfer money via mobile phones, which can then be downloaded to a bank account or prepaid MasterCard (US only at the moment).

So what are future possibilities?

Once Web applications are combined with online (PayPal-type) accounts, subsequently linked to mobile divides, integrated again with new Web technologies and thrown into a network of social contacts (of perhaps millions), the possibilities are endless as to what happens next.

We can imagine a world in which Facebook groups, linked to special interests and causes, are targeted to respond to emergencies (think Haiti). Within minutes you might have thousands or millions of pounds flooding (virtually transaction free) into an online account, ready to be transferred instantly to the part of the world that needs it most.

On the business-to-business side, there is the chance of seamless, Web-based applications for invoice processing, again with money changing hands more quickly and efficiently, and with less of the banks taking their share.

One thing’s for sure, things will probably happen fast and no doubt where you least expect it.