Innovation in the Public Sector

Abstract

Innovation is something that is new, capable of being implemented, and has a beneficial impact. It is not an event or activity; it is a concept, process, practice, and capability that defines successful organizations. Innovation in the public sector can help create value for society.

In a Word Innovation is something that is new, capable of being implemented, and has a beneficial impact. It is not an event or activity; it is a concept, process, practice, and capability that defines successful organizations. Innovation in the public sector can help create value for society.

Why Innovate?

Innovation has a longer history than the tools, methods, and approaches we mechanically associate with it. (The first image that web browsers return is invariably a lightbulb.)¹ At the intersection of nature and culture, spurred by competition , innovation connotes mankind’s reaction to incessant change .

From the dawn of human organization—after the retreat of continental glaciers opened fertile tracts, especially in the Fertile Crescent, from about 15,000 BC²—increasing size and complexity in many societies forced them evermore to capture energy by consuming raw materials, fuel, and food; accumulate data and information in support; and resort to war—itself a mighty spring of innovation—when access to livelihood assets³ was insecure. Energy drives productivity, wealth, and power, Morris (2010) explains, and innovation serves to satisfy these. The “why,” if not the “how,” of innovation is thus simple: it is the purpose, reason, or cause behind whatever adaptation, improvement, or invention is needed and successfully applied to beget from scarce resources valuable outcomes that meet explicit or latent needs . Innovation is something that is new, capable of being implemented, and has beneficial impact.⁴ Insights from biology, geography, and sociology confirm little distinguishes what impelled our Neolithic ancestors from what drives modern man.⁵

[T]he evolution of the human brain not only overshot the needs of prehistoric man, it is also the only example of evolution providing a species with an organ which it does not know how to use; a luxury organ, which will take its owner thousands of years to learn to put to proper use—if he ever does.

—Arthur Koestler

Still, the environment that most individuals and organizations confront today is not what it was at the recent turn of the century; it is even radically dissimilar from what it was, say, 25, 50, or 100 years ago—market conditions were consistent; assumptions would remain valid for years; decisions would not have to be revisited for some time. This is no longer true: innovations sparked by globalization and, especially, information and communications technology have provoked bewildering change and fuelled globalization and technology to compound intricacy. Goods, ideas, information, money, people, and services flow with growing ease. Massive global competition and cooperation have been enabled; markets have shifted dramatically; and the values , aspirations, motivations, attitudes, and fears of customers and employees everywhere have been altered. In a shrinking world, since the rate of change is exponential, we cannot (yet) live on love alone, and we do not know what the future will bring, one and all must innovate to prepare for and, preferably, fashion change.⁶ (Lest we forget, one and all must also, in equal measure and without trade-off, execute in the present. In successful organizations that last, the social architecture of individual behavior, structure, and culture is primed and leveraged for both exploitation and exploration.)⁷

The intuitive mind is a sacred gift and the rational mind is a faithful servant. We have created a society that honors the servant and has forgotten the gift.

—Albert Einstein

On Yin and Yang

Innovating is interactive, social, and therefore takes time (and effort). Needless to say, some individuals and some forms of organization are more adept at probing possibilities and reaping benefits from the fourfold knowledge-brokering process of idea generation, idea selection, idea implementation (conversion), and idea diffusion—each stage drawing from different values , resources (people, in particular), and processes . Companies live or die by innovation .⁸ To respond to relentless market pressures and stay competitive, drawing from many people with complementary resources, skills, and talents, the finest among them take (and find ways to reduce) risks ⁹: they invest in organizational, technical, and social novelties and reward handsomely for new or significantly improved products , services , processes, and methods of delivery (or other elements of their business model(s), such as policy and strategy or system interaction). To this intent, along a continuum of internal to external orientation, they cultivate, replicate, partner, network, or procure from open source to generate incremental, radical, or transformative (systemic) improvements that sustain or alter performance trajectories. (From this perspective, innovation is perhaps best explained as change that fashions new dimensions of performance.) In Search of Excellence (Peters 1982) praised 43 companies for their long-term profitability and continuing innovation. The fact that many did not hold up only confirms that innovation equates with survival and fitness—this much is generally accepted.

Every act of creation is first of all an act of destruction.

—Picasso

But it is conventional wisdom also that public sector agencies, by contrast, merely hope for incremental improvement. Policy makers have been slow to appreciate that the public sector should build public services around requirements, rather than making them fit existing arrangements with outdated one-size-fits-all approaches. “Business as usual—if possible better” might be the motto of these near-monopolies: it is rare for innovation to be institutionalized in budgets, roles, and processes .¹⁰ Innovation is typically seen as an optional, technological¹¹ extra or an added burden.

Often made from the same mold,¹² civil servants are also short of the discovery skills—viz., observing, questioning, associating, networking, and experimenting—that distinguish innovators from run-of-the-mill administrators. (First and foremost, innovators are good at associating: they make connections between seemingly unrelated problems and solutions, and synthesize ideas.) Immobilized by red tape in functional silos, risk-averse, when innovation happens it is despite rather than because of the way the public sector does things.¹³ (Nobody ever talks of entrepreneurship as survival there; what risks are identified are financial, project, and compliance risks, not the risk of missing an opportunity. Put differently, how many senior civil servants—one might ask—reached the top as a reward for their innovations?)¹⁴

I cannot help fearing that men may reach a point where they look on every new theory as a danger, every innovation as a toilsome trouble, every social advance as a first step toward revolution, and that they may absolutely refuse to move at all.

—Alexis de Tocqueville

Except when people’s lives are at stake, agreeing also that the public realm should remain legible and coherent and that the public sector should be a stabilizing force, precautionary mindsets are not an excuse. And to push service -improving and bottom-up creativity , an organization intent on innovating for the future should surely—and undoubtedly can—staff itself with a reasonable variety of personality types; where there is a will, there is a way. So, what real extenuating circumstances might the public sector plead? In the private sector , the prime reason to innovate is to increase—or at least maintain—profits to keep going in a more and more competitive global economy. In contrast, the public sector operates under an exigent set of concerns, demands, interests, pressures, and restrictions that make it a far more open—and therefore complex when not chaotic—system.¹⁵ Not surprisingly, therefore, what innovation does come to pass is politically directed innovation instigated by crisis, organizational turnarounds initiated by agency heads, and a modicum of bottom-up innovation driven by champions.¹⁶ The time horizons are typically short.¹⁷ Irrespective, all endeavors must at some point secure political or bureaucratic support.

There is simply no way to keep up with public expectations, to get better value for money, or to solve the deep and wicked problems if you just whip the existing system harder.

—Geoff Mulgan

And yet, in the public sector too, business as usual has become business at risk : lest they forget, public sector organizations must wait on stakeholders and shareholders—perceptions, never mind evidence, that they do not create public value will dissuade the hand that feeds them and lead to destitution. More with less will not get them there either. One should never let a crisis go to waste: the ongoing global recession of 2008–2012 is putting extreme pressure on public spending as fiscal deficits soar. It is high time to lead innovation in public sector agencies to contain costs and maximize the relevance, efficiency, effectiveness, impact, and sustainability of “personalized” outcomes that address old and new public needs with more coordinated approaches. (Delivery , of course, is a function of policy, practice, and provision; fresh thinking is required there, too.) To finish, one should stress an obvious but often overlooked truth: innovation in the public sector is vital, given that it influences the welfare of myriads and is often entrusted with socially important mandates.

Taking Mammon’s Goad to the Body Politic

Organizational performance , including good public service , cannot withstand indifference to the need to innovate: in both the private and public sectors , organizations that consistently generate and execute new ideas tend to be more effective at achieving their goals, whatever these may be, and to be leaders in their fields. Innovation is a concept, process , practice, and capability , better, a culture that should be germane to any kind of organization, or at least systematically pursued where it is inhibited by business as usual, aka operations, or inbred short-termism.

How then might the public sector innovate to be competent in the present and be ready for the future? How might innovation be driven more by public needs than by policy or process? Specifically, how might public sector organizations develop explicit systems to eliminate, reduce, raise, and create for value —thereby giving customers less of what they do not want (or use) and more of what they need—that visibly pervade, quicken streams of ideas, and are seen as vital? Bason (2010) sees four action areas: (i) develop innovation consciousness, (ii) build innovation capacity, (iii) leverage the power of cocreation, and (iv) strengthen leadership so there is the courage to innovate at all levels. So far, so good. But how exactly might they create cultures of innovation that wed individual, group, and organizational creativity so that they stop counting on people succeeding despite the odds and instead shift the odds? Fusing individualistic, structuralist, and—especially—interactive process perspectives, there are three inseparable and mutually reinforcing ways to take innovation in the public sector seriously.

Innovation is the specific instrument of entrepreneurship. It is the act that endows resources with a new capacity to create wealth.

—Peter Drucker

• Values Barring the odd maverick, personnel will not innovate without license: an innovative culture needs pro-innovation governance and support from the top to make sure ideas take carriage. Policies and behaviors matter: tout innovation in every message. Foster a culture of trust in which innovation is seen as natural, even ordinary, and personnel communicate freely in support: new ideas and new ways of doing things are welcome. Align incentives and rewards, fix disincentives, and recognize innovation in every part of the organization, for example, through awards, pay determination, and storytelling. Grow what works to make innovative culture self-reinforcing.

• Resources A resource is a source or supply from which an organization gains profit. Put innovation at the heart of strategy and equip it. Identify priority fields for innovation. Refresh human resource policies to bring out the best from innovators. Build physical surroundings that join people in concert. Exploit differences: engage spirited personnel who think creatively and see new patterns, drawing on new technologies to pull needs and possibilities together. Set up dedicated teams and networks responsible for promoting innovation. Push and pull to create pressure for innovation, also using information and communications technology. Manage stock and flows of knowledge to enrich the raw material of creative thought. Finance innovation to ensure that lack of resources is not a serious constraint. Divert a small proportion of the budget for generating, selecting, implementing, and diffusing innovation, including training. Fund for outcomes achieved, not rules adhered to. Take stock with appreciative inquiry, inspections, and audits of what is working, promising, or emerging.

The greatest mistake you can make in life is to be continually fearing you will make one.

—Elbert Hubbard

• Processes A business process is a collection of related, structured activities or tasks that serve a particular goal: it begins with a mission objective and ends with the achievement of that objective.¹⁸ Endow the organization with management, operational, and supporting processes that improve knowledge brokering of ideas from generation to selection, implementation, and diffusion. Make innovation a job prerequisite and define jobs around it. Give time to think. Open up the space for ideas and draw these from people at all levels. Develop a menu of tools, methods, and approaches for trying things out, including incubators, laboratories, pathfinders, pilots , and skunk works. Tinker and try with prototypes and pilots. Evaluate experiments. Emphasize user-pull over technology-push to co-opt consumers in innovation . Collaborate with outsiders to help solve problems. Seek also information from the outside, for example, by benchmarking, making site visits, and participating in professional networks. Relax evidence-based procedures. Shape inducements for adoption, scaling, and diffusion by teams and networks. Be smart about risks and how they can be managed.