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Promoting Innovation in the Public Sector: Case Studies

Management Advisory Committee Report 9 - ANNEX 1

Assessing Policies, Programs and Other Initiatives to Promote Innovation in the Public Sector: International Case Studies

Don Scott-Kemmis

November 2009

The Challenge of Sustaining Innovation in the Public Sector
The Challenge of Sustaining Innovation in the
Public Sector

Don Scott-Kemmis & Associates

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Promoting Innovation in the Public Sector: Case Studies

Assessing Policies, Programs and Other Initiatives to Promote Innovation in the Public Sector: International Case Studies

Contents

Summary

 

3

A

Framework for Assessing Policies, Programs and

Initiatives to Promote Innovation in the Public Sector

6

B. Case Studies:

 
 

B.1

United Kingdom

28

B.2

Canada

44

B.3

Singapore

60

B.4

Netherlands

68

C. Prior Research on Public Sector Innovation – References.

79

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Promoting Innovation in the Public Sector: Case Studies

Summary

The factors that are driving the strong interest in innovation in the public sector are likely to increase. This will ensure that greater innovativeness in the public sector will remain a priority. These factors include the increasingly pervasive role of ICT, and the resulting transformative changes in organisation, services, culture and relationships, and social expectations regarding the quality of service delivery, openness, accountability and opportunities for participation in policy development. Another set of drivers arise from the rising importance of innovation (for competitiveness, sustainability, security etc) and the recognition of the importance of innovation in all aspects of industrial and social activity (ie in organisation, services, institutions, policies etc). A dynamic national innovation system requires a dynamic and innovative public sector.

The primary purpose of this paper is to review the approaches to public sector innovation through case studies of four comparator countries: the UK; Canada; Netherlands; and, Singapore. Our focus is on: the extent to which improving innovation performance in the public sector is a goal; how that goal is being pursued; and, what has been achieved.

While all of these countries have a history of innovation in the public sector, the focus on that dimension of performance is quite recent. There is a diverse range of case studies of public sector innovations and some surveys, but there is little systematic analysis. There are even fewer evaluations of the recent initiatives to raise innovation performance. The available information tends to be more normative than analytical and more descriptive than evaluative.

The report prefaces the case studies with a discussion of the challenges of innovation, particularly in the public sector context. These include recognising that:

there are many types of innovation and different degrees of novelty and discontinuity - the innovation management systems that are appropriate for incremental innovation are unlikely to be effective for the much greater challenge of innovation involving higher levels of discontinuity with established structures and norms;

the innovation process involves mobilising a widening range of stakeholders, addressing an range of performance criteria, and driving the development of the innovation, along the path from conception to implementation;

an organisational capacity for innovation is embodied in individuals and in the structures, routines, culture and norms of an organisation – this capacity must be built through what is essentially a learning process, it is not simply a question of declaring new priorities;

the capabilities and processes that underpin the capacity for innovation are to a large extent organisation and context-specific, they have relevance and value in the context of the strategies of an organisation, and they are shaped by an organisation’s past strategies – ie the challenges it has addressed;

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Promoting Innovation in the Public Sector: Case Studies

the relationships between capabilities, processes, culture and strategy on the one hand, and the various mechanisms for their adaptation, upgrading and integration on the other, constitute an organisational innovation system - building robust innovation systems at the organisation level will be the foundation of public sector innovation, just as innovation systems at the firm level are the essential foundation of national innovation systems.

Those challenges have significant implications for the development and implementation of measures to raise innovation. Innovation cannot be simply another objective added to the already demanding list of outcomes. It is a systemic challenge that will involve a process of change in organisations and their external relationships.

Over recent years public sector agencies in many countries have become more innovative as a consequence of developing new approaches to service delivery or policy. Many have also developed initiatives to foster innovation as a goal in itself. Initiatives to promote or support innovation include:

central units, funds, or competitions at the public sector level that promote innovation or mobilise resources for specific innovations;

units or programs at the agency/department level that promote innovation or mobilise resources to support specific innovations;

measures at the overall public service level to build resources to support innovation through eg on-line resources, training, research, surveys etc;

measures at the overall public service level to develop external bases of support through external innovation support units or research and training programs as independent entities or in collaboration with eg universities;

measures to embed an orientation to innovation in strategies, audits, performance criteria, benchmarking, selection criteria etc.

The paper provides examples of each of these types of initiatives and identifies key challenges for their implementation.

The four case studies are organised in seven sections: the contextual, policy and organisational drivers for innovation in the public sector; the scope of innovative activity; the role of IT; the specific initiatives that are being used to promote innovation; the features of the public sector context in the case study country the outcomes of initiatives; and the lessons learnt.

The UK has recently developed a strong focus on innovation in the public sector. It is a component of the national innovation strategy and a wide range of organisational units and programs have been created to drive this agenda. There has been a substantial effort to review experience, develop new metrics and case studies and adapt approaches. The measures to promote innovation are driven from the centre of the public sector but implementing change at the grass roots level is slower and more challenging. Australia can learn a great deal from the UK experience.

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Promoting Innovation in the Public Sector: Case Studies

Canada provides a contrasting case. Here innovation is less a high level goal than an outcome of a range of measures which more directly influence behaviour at the grass roots level. A focus on service improvement, adapting audit approaches to address risk management, the promotion of best practice guidelines, the provision of innovation ‘toolkits’, and a well established national innovation award program direct incentives and support those responding to specific challenges in their domain of responsibility.

Singapore is perhaps a unique case; a small and dynamic country where the public sector has a pervasive role in the economy and society. Within an overall policy of continuous improvement there is a strong emphasis on empowerment, responsibility and innovation throughout the public sector. The Enterprise Challenge is a major program run from the Prime Minister’s Department that selects innovation projects, both major and minor and proposed from within and outside of the public service, for funding and fast tracking.

The Netherlands is similar to Canada in that innovation is an element of a broader focus on service improvement, joined up government and the development of e-government approaches. But there has been a particular emphasis on policy innovation. For several years the Netherlands has been developing a distinctive and participative approach to the evolution of policy for addressing complex challenges, such as the transformation of the economy and society toward environmental sustainability.

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Promoting Innovation in the Public Sector: Case Studies

A. Framework for Assessing Policies, Programs and

Other Initiatives to Promote Innovation in the Public Sector

1.

Introduction

While there has been over the last few years a sustained increase in the emphasis on innovation in the public sector it remains the case that the basis of systematic empirically-based analysis remains limited. The empirical base is limited both with regard to the nature of innovation in the public sector – its drivers, characteristics, barriers etc – and also to the types of innovation support initiatives that are effective.

It is clearly the case that the recent focus on innovation in the public sector isn’t because the public sector has recently become innovative. In many countries the public sector has been highly innovative, and it appears that it has become more so over time. It is the case however that there are rising expectations on the public service to deliver better services and policies in new ways, at lower costs, and often in response to increasingly complex issues. It is also the case that, with the extraordinary potential of IT, and the high level capabilities of the human resources in the public services, there are opportunities to deliver on those expectations.

The ‘knowledge base’ for informing initiatives to increase innovation in the public sector derives from the large body of knowledge about innovation in the private sector (although the extent of applicability to the public sector is uncertain), a large number of case studies (often based on quite different methodologies and with considerable uncertainty about the extent to which experience in one type of innovation in one context provides general lessons), some broad surveys of innovations (usually derived from applicants who are winners in innovation award competitions and often without a rigorous conceptual methodology), some more systematic survey-based studies, fairly normative frameworks based on direct experience, and/or involvement in research in particular domains.

Drawing on this diverse literature a framework has been developed to guide the development and interpretation of a set of case studies of how a number of comparator countries are responding to the challenge of raising the level of innovation in the public sector. This framework is outlined below. Our primary interest in these case studies is in how that goal is being pursued and what has been achieved.

The following discussion in this introductory section is organised into the following four sections:

What is Innovation in the Public Sector?

Managing Innovation: Processes, Competencies and Context

Addressing the Challenges of Managing Innovation in the Public Sector.

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Promoting Innovation in the Public Sector: Case Studies

Promoting Innovation in the Public Sector: Developing Competencies and Processes and Improving the Context.

2. What is Innovation in the Public Sector?

The drivers for innovation in the public sector arise from several sources, that are more or less common to the public sector across the OECD, and include:

pressure on government budgets; rising public expectations for more accessible and flexible services and greater participation in service and policy development and review; and complex social, environmental and economic challenges. The more proximate drivers arise from: the priorities of politicians; the specific problems that arise in areas of policy, administration, and services; and, the identification of options for improvement.

The term ‘innovation’ is a heterogeneous category. The Publin project 1 provides the following examples of innovation in the public sector:

new or improved services (for example, health care at home)

process innovation (a change in the manufacturing of a service or product)

administrative innovation (for example, the use of a new policy instrument, which may be a result of policy change)

system innovation (a new system or a fundamental change of an existing system, for instance by the establishment of new organizations or new patterns of co-operation and interaction)

conceptual innovation (a change in the outlook of actors; such changes are accompanied by the use of new concepts, for example integrated water management or mobility leasing)

radical (or paradigmatic) changes of belief systems or rationalities (meaning that the world view or the mental matrix of the employees of an organization is shifting, eg joined-up-government)

A complementary set of categories is that of Bekkers et al. 2 :

Product or service innovation, focused on the creation of new public

services or products.

Technological innovations that emerge through the creation and use of new technologies, such as the use of mobile devices and cell broadcasting to warn citizens in the case of an emergency;

Process innovations, focused on the improvement of the quality and efficiency of the internal and external business processes, like the direct filing and automated assessment of taxes;

1 Koch, P., Cunningham, P., Schwabsky, N. and Hauknes, J. Innovation in the Public Sector- Summary and policy recommendations Publin Report No. D24 Published by NIFU STEP Studies in Innovation, Research and Education

http://www.step.no/publin/reports/d24-summary-final.pdf

2 V. Bekkers, H. van Duivenboden and M. Thaens, Public Innovation and Communication technology: relevant backgrounds and concepts, in: Information and Communication Technology and Public Innovation, V. Bekkers, H. van Duivenboden and M. Thaens, eds, IOS Press, Amsterdam/Berlin/Oxford/Tokyo/Washington DC, 2006, pp. 3–21.

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Promoting Innovation in the Public Sector: Case Studies

Organizational innovations, focused on the creation of new organizational forms, the introduction of new management methods and techniques, and new working methods. Examples are the creation of shared service centres or the use of quality systems;

Conceptual innovations. These innovations occur in relation to the introduction of new concepts, frames of reference or even new paradigms, like the concept of New Public Management or the notion of governance; and

Institutional innovations, which refer to fundamental transformations in the institutional relations between organizations, institutions, and other actors in the public sector. An example is the introduction of elements of direct democracy, through referenda in a representative democracy.

While the terminology is far from consistent, ‘systems innovation’ and

‘institutional innovation’ is similar to what is elsewhere termed ‘innovations in

governance’. There is certainly a good deal of evidence that:

going through a revolution in the governance of public production systems as

governments seek to reach beyond their borders to find additional resources, additional operational capacity, and even additional legitimacy to achieve their assigned goals [in some cases] innovations involve new ways of knitting elements of different organizations together to create a more effective problem-

solving approach to a given problem

associated with ‘networked governance.3 p 5-6.

we seem to be

These shifts, in line with other changes

These forms of innovation in governance are likely to change information and resource flows, and lead to changes in the behaviour of other actors in the target or related ‘systems’, and in so doing stimulate other innovations. A recent review emphasises the increasing importance of innovations in governance and draws out the distinctive characteristics of these types of innovation:

These innovations change production systems that cut across the boundaries of organizations, not just those of a single organization. They enlarge the range of resources that can be tapped to enlarge and improve the performance of the production system. They involve changes in what instruments government uses to animate and direct the production system for achieving the desired goals. They alter the configuration of decision-making rights with respect to how private and public resources will be used. And they raise important questions about the distribution of burdens and privileges in the society.” p.18 4

It is often far from clear how one might allocate a particular innovation to one of these conceptual categories. For example, Sabatier (1993, p.19) defines policy learning as “a relatively enduring alteration of thought or behavioural intentions that are concerned with the attainment (or revision) of the precepts of a policy

3 Moore, M & Hartley, J. (2008) ‘Innovations in Governance’. Public Management Review

10(1):3-20

4 Ibid, p.18

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Promoting Innovation in the Public Sector: Case Studies

belief system’” 5 . There is also a need for some caution about the extent to which generalisations about the management of innovation apply with equal appropriateness to all types of innovation. While all of these types of innovation may be cases of the general definition – the effective application of a new idea - there are nevertheless many differences among them. Mechanisms that are effective in promoting one type of innovation may be ineffective for others.

The public service context

As noted above, there is a very large body of knowledge regarding innovation in the public sector - but nevertheless much continuing uncertainty about how best to measure, promote and manage it. The EU Publin project included a study which sought to characterise the differences between innovation in the private and in the public sector, and this is set out below.

We will return to the nature of the public sector context in the third section of this paper. We will show how the public sector context sets particular challenges that require innovation in how to promote innovation, rather than simply imitates the approaches that worked in the organisationally and socially much simpler context of the private sector. The public sector has a critical role to play in leading innovation in a diverse range of areas where private sector innovation has failed to provide solutions to such social problems as sustainability, affordable health, and social inclusion.

Table 1: Differences between private and public sector innovation

 

Private Sector

Public Sector

Organising

Pursuit of Profit, Stability or Growth of Revenues, Market Share, Return on Investment while minimising risk and surviving.

Enactment of Public Policies.

Principles

Organisational

Firms of many sizes, with options for new entrants.

Complex system of organisations with various (and to some extent conflicting) tasks

Structures

Performance

Return on Investment

Multiple performance indicators and targets which are political, social etc and may be contradictory.

Metrics

Management

Some managers have considerable autonomy, others constrained by shareholders, corporate governance, or financial stringency. Successful managers liable to be rewarded with substantial material benefits and promotion.

While there are efforts to emulate private sector management practice, mangers are typically under high levels of political scrutiny. Successful managers likely to receive lower material benefits than comparable private sector managers.

Issues

Relations

Markets may be consumer or industrial ones, and firms vary in the intimacy of their links with the end-users of their products, but typically market feedback provides the verdict on innovation.

End-users are the general public, traditionally seen as citizens, though recently there have been efforts to introduce market-type principles and move to see them as customers or consumers.

with:

~ End-Users

5 This could be considered an administrative innovation but includes changes in frames, values and meanings. Publin report D15 René Kemp and Rifka Weehuizen: Policy learning, what does it and how can we study it?

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Promoting Innovation in the Public Sector: Case Studies

~ Supply

Most firms are parts of one or more supply chains, with larger firms tending to organise and control these chains.

Public sector is typically dependent on private suppliers for much of its equipment, and is a very important market for many firms.

Chains

~ Employees

Nature of workforce varies considerably, and relations between employees and management range from fractious to harmonious. Efforts are made in some firms to instil company loyalty and/or a customer- centric approach, but employee motivations are often mainly economic ones of securing a reasonable income and stability.

Public sector employees are typically highly unionised (economists and social scientists in the central administration and health - and social professionals as nurses, social workers, child-care workers, teachers etc in the public services). Many are also professional workers organised through professional associations. While usual concerns about status and salary are experienced, many workers enter public service with idealistic motivations.

~ Sources of

Companies have considerable flexibility in sourcing innovation- related information from consultants, trade associations, and public sector researchers, but many smaller firms have limited resources to do so.

Despite large resources, parts of the public sector may be constrained from using private sources of knowledge (other than those of suppliers). Public sector sources of knowledge (e.g. universities) may be highly oriented to other parts of the public sector.

Knowledge

Time Horizon

Short-term in many sectors, though utilities and infrastructural services may have very long horizons

Short-term: policy-initiated innovations need to pay off within the election period.

Based on: Koch, P., Cunningham, P., Schwabsky, N. and Hauknes, J. Innovation in the Public Sector- Summary and policy recommendations Publin Report No. D24 Published by NIFU STEP Studies in Innovation, Research and Education

http://www.step.no/publin/reports/d24-summary-final.pdf

3. Managing Innovation: Processes Competencies and Context

While remaining mindful of the limitations of transferring models from the analysis of innovation in the private sector, we will set out five robust general frameworks/models of innovation processes in the private sector.

We will then draw some basic points from this assessment that we carry forward into addressing the challenges of innovation in the public sector. In discussing these five frameworks/models we will be considering the question: What capabilities are required at the individual, group, organisational and public service levels to develop and sustain innovation systems?

Framework 1: Bringing a New Idea into Application

There are many models of the innovation process - Figure 1, below, outlines five stages and four bridges along the process of creating value through innovation. There are two key points to draw from this model. First, the development of an idea generally progresses through a series of stages (five are shown) each with different stakeholders and each stage involves different criteria and different communication patterns. So, for example, the first stage is essentially developing the idea through thought experiments and discussion to build confidence in and develop the basic concept, and the second stage is ‘incubating’

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Promoting Innovation in the Public Sector: Case Studies

the idea to assess and develop it further. Second, the progress between stages involves a form of transition bridge, when the idea and evolving project must win additional stakeholders and resources. A failure to cross this bridge means a failure to progress – although very often ideas are kept alive within a stage hoping for further development or a more positive reception at another time. Innovation champions often need persuasiveness and tenacity to pilot an innovation through these stages 6 . The key point here is that the transition across these bridges requires a focused effort by the proponents to addre ss the selection environment for the next stage. From the perspective of the overall organisation the assessment processes involved with these bridges need to be transparent and well managed. An organisation would be likely to have a portfolio of projects at each of these stages. That portfolio might include a range of projects as shown in the following framework – in which case not only would the assessment criteria be different for each stage of the progress of the innovation but they would also be different for each type of innovation.

Figure 1: Bringing an Innovation from Idea to Application

Subprocesses: Building the Value of an Innovation 3. 5. 7. 9. 1. Incubating Demonstrating Promoting
Subprocesses: Building the Value of an Innovation
3.
5.
7.
9.
1.
Incubating
Demonstrating
Promoting
Sustaining
Imagining
to Define
Contextually
Adoption
Full Implementation
the Dual
Commerc- in
2.
8.
(Techno-
ializability
4. Products
Mobilizing
Mobilizing
Market)
and
6.
Mobilizing
Interest and
Comple-
Insight
Processes
Mobilizing
Resources
Endorse-
mentary
‘Market’
for Demon-
ment
Assets for
Constituents
stration
Delivery
Bridges: Satisfying and Mobilizing Stakeholders at Each Stage

Source: V.J. Jolly (1997) Mind to Market. Harvard Business Press

6 Crawford, C. B. (2001) Leadership and Innovation: Champions and Techies as Agents of Influence. Association of Leadership Educators.; Shane, S. , Venkataraman, Sl and MacMillan, I. (1995) Cultural Differences in Innovation Championing Strategies. Journal of Management. 21(5): 931 952.; Howell, J. et al (2005) Champions of product Innovations: defining, developing and validating a measure of champion behaviour. Journal of Business Venturing 20: 641 661.

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Promoting Innovation in the Public Sector: Case Studies

Framework 2:

The majority of innovations are incremental improvements within existing structures, products, services etc. However, the improvements that can be achieved through incremental processes tend to reach diminishing returns without more radical change in the framework of organisation, service, policy etc. Incremental and more radical innovation tend to be inter-related in that incremental innovation tends to both develop the potential of an existing arrangement (major innovations quite often perform poorly until a host of follow up minor improvements are made) while often identifying the required directions (if not mechanisms) of more major change. One essential issue is that organisations need to develop the capacities for all types of innovation. An approach that works quite well for minor innovation may lead to a form of ‘lock – in’ to existing approaches (in which the organisation and its members have committed enormous improvement effort) and a reluctance to explore a quite different path involving different perspectives and capabilities. A second issue is that addressing innovation that involves greater discontinuity with established organisational arrangements, knowledge bases, norms and routines is usually quite difficult in organisations focused on short term performance and its improvement – ie almost all organisations. This can be a dilemma - approaches that support continuous improvements in productivity and quality, while reducing the risk of change, are unlikely to also support more disruptive change.

Innovation Portfolios

There is much debate about how best to manage radical innovation. While the competencies and processes that support incremental innovation are reasonably well know, this is not the case for radical innovation. It is recognised that successful radical innovation will be likely to involve, to a greater extent than other forms of innovation, the formation of separate organisations (eg spin offs, or new corporate ventures) and a higher level of collaboration with other organisations that bring complementary capabilities and perspectives (eg though strategic alliances, business service providers or co-innovation with users). Because of the high levels of uncertainty and risk, radical innovation requires an action-learning orientation, rather than a project execution approach.

Figure 2: Types of Innovation and Innovation Portfolios

Paradigm

Radical

of Innovation and Innovation Portfolios Paradigm Radical Risk Management capability Collaboration Communication

Risk Management capability Collaboration Communication

Processes Services Policies
Processes
Services
Policies

External Impacts & Linkages

Uncertainty

&Complexity

Major

Incremental

Source: Author

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Promoting Innovation in the Public Sector: Case Studies

Framework 3:

Processes and Capabilities

Organisations must develop the capabilities for innovation. Those capabilities cannot be imported, nor achieved simply by hiring people or by implementing a blueprint. They must be learned. Such learning involves an evolutionary process of investment, action and evaluation. Innovativeness and innovation capability is accumulated over time and is embodied in the capabilities of individuals (involving both cognitive frameworks and specific skills) and also it is embodied in the specific policies, structures, management processes, communication patterns, culture, ‘ways of doing things’ of an organisation. Table 2 below provides an indicative identification of key processes and capabilities in relation to major stages of the typical innovation process.

Table 2. Innovation Management Processes and Capabilities.

Processes

Capabilities [Resources , Positions]

Innovation

Enabling Routines/ Systems

Cognitive

Skills

Processes

Frameworks

Recognising technical and economic clues

Scanning Forecasting Assessing Business intelligence

Relevant Technologies Market, social & industry dynamics Technology evolution

Analysis Communication Persuasion Leadership Tolerating ambiguity & uncertainty

[Sensing, Opportunity discovery]

Aligning business strategy and innovation strategy

Risk Management Road-mapping Business case analysis Financial analysis Impact assessment Risk analysis Decision making

Competitor Analysis Strategic analysis Business planning

Cultural awareness Culture change Planning

Acquiring new knowledge from outside the firm

Collaboration management Alliance management Licensing IP management Networking

Knowledge transfer

Negotiation

Valuation

Generating new knowledge in-house through eg research, development, engineering

Stage gate Product development

Relevant science

Creativity

and technology,

IP management

 

organisational

Research

application,

Design

 

regulatory

knowledge

Choosing an innovation focus appropriate to the opportunity & capability

Evaluation Portfolio management

 

Communication

Persuasion

 

Leadership

Executing projects

Project Management Team Management Problem Solving Marketing Cross Functional teams IP management

Budgeting

Communication Team building Delegation Empowerment Motivation Conflict resolution Leadership Self management

Implementing change in the organisation

Change management

Organisational

Stress management Change management

change dynamics

Learning through the evaluation of experience and the incorporation of

Review

 

Problem solving

Monitoring

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Promoting Innovation in the Public Sector: Case Studies

‘lessons’ into routines

   

Developing the Organisation through embedding effective

Failure tolerance Training TQM Codification Experiment Auditing Idea management Incentive systems Continuous improvement Human resource mngmt Knowledge management

Communication

Team building

Delegation

 

Empowerment

routines in structures, processes and behaviours.

Motivation

Based on: Tidd, J. Bessant, J. and Pavitt, K. (2005) Managing Innovation. Integrating, Technological, Market and Organizational Change. 3 rd Edition. Chichester. Wiley; Carlopio, J. (2003) Changing Gears. The Strategic Implementation of Technology. Palgrave Macmillan; IMP³rove for Innovation Management Professionals. The IMP³rove Approach The IMP³rove Platform. Version 1.3 November, 2007,

vice_id=1; Rae, D.M. (1997), “Teaching entrepreneurship in Asia: impact of a pedagogical innovation”, Entrepreneurship, Innovation and Change, Vol. 6 No. 3, pp. 193-227.

Framework 4: Linking Strategy to Building Capabilities and Processes

The processes and capabilities that constitute the innovativeness of an organisation are to a certain extent organisation-specific and also direction and strategy-specific, as summarised below.

Figure 3:

Foundations of Organisational Innovativeness

Processes Capabilities & Culture Organisational Innovativeness Strategy & Resources
Processes
Capabilities
& Culture
Organisational
Innovativeness
Strategy & Resources

Source: Author

If an organisation changes direction in a major way, eg from policy to service delivery, its innovative capability may decline until it goes through a process of ‘creative destruction’ and evolutionary reconstruction. The resources for any particular innovation path must be linked to organisational strategies, ie innovation cannot be a chance event or maintained at the level of rhetoric. To achieve strong innovative capability the organisation would need to actively choose experiences (ie being innovative) that build capability and work through the implications of experience for all aspects of structure, management etc, ie evolve toward a strategic priority of greater innovation. An organisation’s

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Promoting Innovation in the Public Sector: Case Studies

innovation ‘system’ will in large part be shaped by the innovation challenges it chooses and how it pursues them.

Joyce (2007) comments that an innovation initiative will require additional resources and that in making the case for these resources performance information could be a source of the data needed. KPMG’s surveybased study on performance in government made a similar point:

the “

determine the true costs of individual projects and programs. That beats even the challenge of raising funds in the first place. Many feel they cannot communicate the true benefits of the program, and costs of individual projects often remain obscure. The best way to overcome these problems, according to respondents, is to integrate financial and performance information.” ((KPMG International, 2007):p. 23)

main difficulty in financing and funding projects is the inability to

It is important to add that the capabilities that an organisation uses for innovation need not be internal, but they do need to be accessible. Hence, an important part of an organisations capability is embodied in its links to external sources of capability. These may be straightforward market-based links or more strategic relationships with providers of training, research or strategic assessment services.

Framework 5: Building an Innovation System

As change become more frequent, and the knowledge intensity of change increases, organisations are continually renovating their processes and capabilities. Hence, a key output of all activities of an organisation is learning. The more frequent, novel and complex change is, the more important is an organisation’s innovation and learning system - as shown below. From this perspective an organisation’s procedures, promotion criteria, strategic plans etc should be designed to address both the short term performance requirements and the task of continual renovation.

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Promoting Innovation in the Public Sector: Case Studies

Figure 4: Building an Innovation System in the Organisation

Clarify Drivers & Provide Incentives Developing Implement innovative ideas innovations: from staff, leadership,
Clarify Drivers &
Provide Incentives
Developing
Implement
innovative ideas
innovations:
from staff,
leadership, risk
Scale up for
wider
implementation
suppliers,
management,
customers, other
address barriers
organisations
Learning: about generating ideas, incentives that work, project
management, leadership, scaling up
Building confidence, networks, linkages outside the organisation,
reputation, new organisational arrangements

Source: Modified from UK, Comptroller and Auditor General (2009) Innovation Across Central Government. National Audit Office, HC 12 Session 2008-9

Summarising the discussion in this section, we can identify eight key requirements for innovative public sector organisations, as set out in Table 3.

Table 3:

Requirements for Effective Innovation 7

Key

Criteria

Requirement

Leadership

Champions who set goals and provide organisational support and protect the ideas from premature judgement

Resources

Commitments of resources through each stage of the innovation process. Short term budget & planning horizons can limit sustained commitment.

Networks

Informal networks linking individuals to sources of capability and to communities of practice; formal networks linking organisations to others related vertically or horizontally or outside the public sector.

Culture

Cultures that support the identification and exploration of ideas from any source, experimentation and risk taking, that supports learning; good internal communications; lack on internal politicking

Competencies

Accessible competencies inside or outside the organisation.

Ideas

Ideas, the starting point for innovation, may come from any source. Analysis of the external environment

Learning

Individuals, teams and organisations learn from training activities, case studies, experience, reviews

Organisational

Strategies that recognise the role of renovating systems and capabilities for innovation, and that develop performance evaluation approaches to assess the effectiveness of the organisation’s innovation systems; future orientation

strategies

7 Based on Albury (2006), Borins (2006), Roste (2004);Koch & Hauknes, Publin (2005);Mulgan & Albury (2003); Mulgan (2007); UK, NAO (2006); LSE Public Policy Group (2008).

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Promoting Innovation in the Public Sector: Case Studies

4. Addressing the Challenges of Managing Innovation in the

Public Sector.

Public sector organisations face a more complex context in which to innovate:

They have multiple objectives, some of which are ambiguous and may be conflicting;

They are often part of complex organisational arrangements that involve extensive consultation and coordination;

Most public sector organisations are quite large and responsible for a diverse range of activity, compared with most private sector firms;

There is less tolerance from politicians and the public for (perceived) failure and for not meeting the needs of some social groups;

In the context of external accountability to Parliament, following rules and procedures may be seen as more important as achieving outcomes;

The nature of public service employment may be more likely to attract recruits who are less focused on monetary reward and also perhaps less inclined to be entrepreneurial risk takers.

At the heart of the challenge of improving innovation in the public sector is a set of contradictions 8 :

Audits focus on deviation from rules rather than what is working well, despite the rules - leading to a risk that staff are required to focus on results but are judged on compliance;

Accountability frameworks also focus more on compliance than learning;

Operating as a hierarchical rule-bound organisation in an increasingly turbulent, uncertain, interactive and rapidly changing world; and,

Designed to serve all of the citizens, rather than focus on only a segment (as do most private sector firms).

In this complex and contested context it is often more difficult for innovations to gain the required political and/or bureaucratic support, unless they are seen as lower risk and directly address priority policy goals or cost savings.

Barriers to Innovation

A great deal has been written about the barriers to innovation in public sector

organisations. Certainly, in designing initiatives to improve innovativeness and innovation performance it is essential to address these barriers. Table 4, which

is based on a wide range of studies and literature reviews of innovation in the

public sector, aims to characterise the key barriers identified in these studies and to also characterise types of response to these challenges, ranging from

incremental to more radical.

8 This perspective is influenced by Brodtrick, O. (2007) Searching for High Performance in Rule-Bound Systems: Tensions between Innovation and Accountability. A presentation to IPAC CEPMA. Also: Balancing risk and accountability http://www.ccaf- fcvi.com/IRCSymposium/english/IRC-TakingChances.pdf

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Promoting Innovation in the Public Sector: Case Studies

Table 4:

Specific Challenges Related to Innovation Barriers and Possible Responses

Challenge

More Incremental Responses

More Radical Responses

Dealing with the risk of failure. Public organisations are under the close scrutiny of both politicians and the media, and employees are not normally rewarded for taking risks.

Pilots; learning-oriented evaluation; Accepting that more mistakes will occur and having a strategy to deal with these.; Engage all stakeholders in assessing needs, options, goals, risks; look at exemplars. Develop performance assessment which includes participation in change; Increase ownership of new initiatives.

Develop in politicians and the public a greater awareness the risk is involved in more innovative approaches. Develop new programs or services through small ‘spin out’ organisations. Launch high profile public sector innovation challenges.

Lack of orientation to innovation, lack of ‘competitive spur’.

Growth of a culture of review. Assessment practices may stimulate innovation. Performance evaluation that includes how ideas are assessed, etc; incentive schemes.

Avoid lock-in the dominant ideas and approaches, cultivate plurality of perspectives. Increase collaboration and networking in as many functions of the organisation as possible.

Lack of budget allocation and time for exploration

Establish clear goals for policy and program performance and link innovation initiatives to these. Improve the extent to which evaluations identify useful learning.

Develop separate parallel evaluation studies focussed only on identifying and capturing relevant learning from programs.

Dealing with rule bound organisations- in a low trust context; Heritage and legacy - with entrenched practices and procedures. Professional resistance, linked to belief systems and perspectives. Union and middle management opposition. Innovation ‘fatigue’.

Increase staff mobility and exchange Strengthen leadership. Models developed by NGOs and private companies may be adopted by public institutions.

Introduce learning sabbaticals of varying durations. Develop longer term visions of the future of the relevant functions in the public sector.

Poor skills in change and risk management Lack of alignment of technological, cultural, organisational aspects.

Develop mentoring, training, staff suggestion schemes, staff exchanges; knowledge management systems; Review projects for learning.

Support sabbaticals for dynamic staff to innovative organisations. Codify and assess the development of the organisational innovation system.

Lack of innovative ideas and perspectives.

Training to understand the options arising from change in target user groups and in delivery mechanisms. Benchmarking; Case studies of exemplar innovations.

Foresight to develop insight into the likely evolution of industries, issues, technologies etc. ‘ Develop whole system modelling to assess dynamics; Develop future oriented organisational strategies for the longer term

Absence of capacity for organisational learning. There may be a lack of structures or mechanisms for the enhancement of organisational learning.; Lack of systematic policy learning.

Articulate a strategy for policy learning Form ad hoc working groups, workshops. Modify audit processes and carry out post project reviews.

Develop learning alliances with external groups.

Sources: Publin (2007) ; iDea (2005); Mulgan (2007); Mulgan & Albury (2003); Vigoda-Gadot et al (2005)

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Promoting Innovation in the Public Sector: Case Studies

Barriers to Developing a More Effective Focus on Innovation

As discussed above an essential process in developing capacities to innovate and to sustain innovation performance is learning – the development of skill and knowledge embodied in individuals and in routines, processes, guidelines etc.

However, there typically are obstacles to effective learning in the public sector. These arise from 9 :

An aversion to failure, which can be reinforced by the political processes, at the parliamentary and intra-organisational level, which uses failure to score points rather than learn lessons;

The pressure of uniformity in public services;

Shared assumptions between civil servants and ministers that command and control remains the most appropriate regime for management control;

Lack of evaluation of previous policies and particularly lack of evaluation focused on learning;

Lack of time and resources to do anything other than cope with events;

A tradition of secrecy used to stifle feedback and learning; and,

The role of turf wars in negotiations between departments.

These are likely to be, to a greater or less degree, continuing realities of the public sector context. This suggests that effective measures to raise innovation performance will require strong overall leadership from senior levels, an integrated set of measures to change the context and provide support resources, and a sustained effort to identify and pursue opportunities for change. Without such opportunities, which act as focusing devices, change will not be embedded in organisations and routine will prevail.

5. Promoting Innovation in the Public Sector: Developing

Competencies and Processes and Improving the Context.

Initiatives to improve innovation performance have three types of outcome:

Specific innovation activities – that may result in the implementation of a

successful innovation;

Experiences and learning processes by all involved – that may build capability at the individual level, at the group level, and at the organisational level (eg via developing external links); and

Learning about how to promote and support innovation – which may be diffused more widely.

All or some of these outcomes could range from highly negative to highly positive, depending on how the process is managed. For example, an unsuccessful innovation project might nevertheless yield vital learning which improves overall

9 This list is largely based on René Kemp & Rifka Weehuizen Policy learning, what does it mean and how can we study it? Publin report D15

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Promoting Innovation in the Public Sector: Case Studies

innovativeness, and a highly successful project, in the narrow functional sense, may have been destructive of trust and good-will to the extent that innovativeness declines. Managing innovation activity for multiple outcomes is a key role of management.

In Table 5 and in Figure 5 below we identify the key types of initiative that have been used to raise innovation capability in the public sector, and the objectives of the expected outcomes of these initiatives. In Table 6 we characterise each of these initiatives, providing some examples of their implementation.

Table5: Types of Initiative to Raise Innovation Capability & Performance

 

Awareness

Capability

Learning

Diffusion

Building

Training Programs

 

 

On-line resources support tools

   

 

 

Development of case studies, resources

   

Position guidelines and selection criteria

   

Individual and group incentives

 

   

Organisational performance and audit guidelines

     

Organisation level innovation strategies

   

Organisation level innovation performance assessment

Central fund for supporting trials

 

   

Central organisation for capturing and diffusing experience

   

 

 

Innovation awards and competitions

   

Innovation units at the Central level

 

 

Innovation units at the Departmental level

 

 

Funds for pilots at the Departmental level

 

   

Innovation units outside government

     

Research on PS innovation

   

 

Surveys of PS innovation- with metrics

 

 

Benchmarking, intra and inter- national

 

 

Tables 7 and 8 provide some additional checklists for agency and department level innovation development initiatives.

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Promoting Innovation in the Public Sector: Case Studies

Figure 5: Overall Public Service Strategy for Innovation Performance- Types of Initiative Support Resources Direct
Figure 5: Overall Public Service Strategy for Innovation Performance- Types of Initiative
Support Resources
Direct Initiatives
Embedding in Performance
Assessment
External
Central
Central
Central
Establishment of
External Innovation
Support Unit
Development of On-Line
Support Resources
Central Innovation Unit to
Lead Specific Projects
Requirement for Organisation
Level Innovation Strategies
Central Level Training
Programs
Central Fund for Supporting
Trials
Organisational Performance &
Assessment Guidelines
Establishment of
External Training
Facility/Program
Development of Case
Studies & Support
resources
Central Unit for Capturing &
Disseminating Learning
Innovation Awards &
Competitions
Development of Frameworks
& Metrics for Innovation
Performance Assessment
Research on PS
Innovation – Aust. &
International
Department/Agency
Benchmarking- intra & Inter-
national
Surveys of PS
Innovation &
development of metrics
Organisation Level Innovation
Unit to Lead or Support
Projects
Department/Agency
Department Level Training
Programs
Organisation Level Innovation
Performance Assessment
Individual & Group Incentives
Position Guidelines and
Selection Criteria
Don Scott-Kemmis & Associates

22

Promoting Innovation in the Public Sector: Case Studies

Table 6:

Initiatives to Promote Innovation

 

Mechanism

 

How

Examples

Training Programs

Training on innovation management in general or in relation to specific aspects (eg procurement, service delivery, e- government, policy development), either through public sector agencies or through specialised higher education organisations.

The UK National School of Government is developing a set of case studies to use in training programs. The ICCS in Canada is developing a training and certification program for public sector managers in the area of best practice service delivery.

On-line resources

Guidelines, case studies, reports, tools etc available through

The Canadian School of Public Service has an innovation ‘tool kit’ available on-line.

support tools

central mechanism. Such sites may also facilitate networking.

a

Development of case studies, resources

Build networks to promote diffusion

The Sunningdale Institute in the UK is capturing learning from across the public service and disseminating the ‘lessons’.

Central fund for supporting trials

A

central fund signals the overall significance of innovation

Singapore promoted innovations through the ‘Enterprise Challenge’, by the Prime Minister’s office, which funds trial applications. The US, SBIR program also facilitates the funding of trials of new technologies.

and creates a channel outside of the intra-departmental channels and budgets – so encouraging greater risk taking.

Central organisation for capturing and diffusing experience

Specialised units to promote new ideas. Central agencies facilitating the formation of networks among all departments/agencies to share experience.

In the UK, NESTA and the UK National School of Government are collaborating to distil and communicate experience.

Innovation oriented procurement policies and/or support funding.

Development of best practice guidelines, requirements that functional specifications in tenders, specific programs to invite proposals, specific funding for trials.

The most widely influential is the US SBIR program, now emulated in several countries. The Netherlands now has programs to promote innovative procurement and networks among departments to share experience of suppliers and project management. The NAO in the UK is promoting approaches which encourage innovation.

Innovation awards and competitions

Some awards such as those of the Kennedy School at Harvard and the CAPAM awards have a long history.

The UK has opened in 2007 an on-line suggestion box inviting ideas for improving regulation- the approach includes public responses to suggestions and updates on progress 10 . The Institute of Public Administration in Canada has for many years run the IPAC Award for Innovative Management.

Innovation units at the Central level

Networks and other initiatives to improve information flows and reduce the barriers to horizontal communication and collaboration. Organising experiments while maintaining as much flexibility as possible

In the UK, the Department of Department for Business Innovation & Skills has government wide role in promoting innovation within government.

10 www.betteregulation.gov.uk/

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Promoting Innovation in the Public Sector: Case Studies

Organisational

The development of performance audit and program evaluation frameworks which include an assessment of innovation management processes and outcomes.

The UK National Audit Office is encouraging a more systematic approach to assessment and to learning from experience. The Treasury Board in Canada is developing new performance reporting guidelines for departments.

performance and

audit guidelines

Research on PS innovation

There are now groups focused on innovation in the public sector in several countries. These are either within public sector management schools or within innovation research groups.

In the UK NESTA has commissioned research on public sector innovation.

Surveys of PS innovation- with metrics

The current stage focuses on the development of common approaches to enable internationally comparative research.

 

Organisation level innovation strategies

Whether as functions or as roles innovative organisations need innovation champions, gatekeepers and patrons:

Although there are risks of missing the wood for the trees, many public sector organisations have introduced forms of knowledge management. The Department for Business Innovation & Skills in the UK assists departments in developing their innovation strategies.

Publicising projects; Rewarding innovators. Identifying specific challenges for improvement and canvassing diverse views on solutions from diverse sources. Use IT to make more information on programs and processes available internally to encourage continuous performance review.

Organisation level innovation performance assessment

Many public sector organisations have introduced forms of evaluation, either on the basis of processes (eg benchmarking or using comprehensive frameworks such as the EFQM), or on a policy/program basis.

NESTA in the UK is developing a framework for public sector innovation metrics

Innovation units at the Departmental level

Senior managers in whose responsibility is innovation performance; Organising experiments while maintaining as much flexibility as possible. Develop processes to pursue, support and reward innovation. Allocate specific budgets for innovation

UK-The Department for Education set up an innovation unit which has supported imaginative communities of practice, and the Department of Health has established an NHS Institute for Innovation and Improvement. Within individual agencies, too, smaller innovation funds have been widely used to give front line managers a chance to try out new ideas.

Funds for pilots at the Departmental level

Seeking to reduce the risks for individuals and groups. Managing the costs of disruption associated with change. Assessing experience, Make clear it is an experiment Acquiring competencies. Building links Possibly cross department problem-focused teams. Substantial change in design may be necessary Actively learning from experience in other levels of government and in other countries.

Support for pilots and trials is increasingly common throughout the UK public sector. In the UK NESTA’s ‘Lab’ is an initiative to develop and test new policies, particularly social policy.

11 See for example the discussion in Mulgan (2007) p21-2

24

Promoting Innovation in the Public Sector: Case Studies

 

Early evaluations can be highly ambiguous – it is important to be realistic about the duration necessary for impacts to be clear 11 .

 

Innovation units outside government

Use independent organisations to run pilots.

NESTA is a semi-independent organisation in the UK linked to the Department for Business Innovation & Skills, and with a mandate to promote innovation in all sectors including the public sector.

Benchmarking - intra and inter-national

Use benchmarking to raise awareness of improvement opportunities

The Canadian Institute of Public Administration’s Smart Tape Centre diffuses best practice standards.

Leadership that supports innovation

Entrepreneurial leadership or leaders who support greater entrepreneurial initiative is important because hierarchical structures progressively limit degrees of freedom in lower levels of the organisation: Encouraging new ideas; setting improvement goals; clearing indicating that innovation is a valued activity

 

Position guidelines and selection criteria

Include supporting and leading innovation among the attributes for selection and advancement.

In the UK innovation-related skills are now included in the competency framework for public servants.

Individual and group incentives

Incentives can include bonus payments, promotion, awards, internal publicity, opportunities for training or sabbaticals.

The Victorian Dept of Premier and Cabinet introduced a ‘policy idol’ program in 2007 to solicit ideas from all employees. Proponents of selected proposals would have the opportunity to develop their ideas.

Programs to fund new initiatives and facilitate greater risk taking

These can be attached to broad programs, departments/agencies or whole-of-government.

Singapore promoted innovations through the ‘Enterprise Challenge’, by the Prime Minister’s office. Examples of the 68 funded proposals include a ‘virtual policing centre’ for non-urgent enquiries directed to the Singapore Police Force. The ‘Invest to Save Budget’ provided a large pool of money to back promising innovations that crossed organisational boundaries 12 .

Procurement programs that incorporate a specific objective of promoting innovation by suppliers

There are many examples of pro-innovation procurement approaches (and a large literature on the issue).

One of the longest running and reviewed programs is the US Small Business Innovation Research (SBIR) which required research agencies with annual expenditure over US$100m for extra-mural R&D to allocate at least 2.5% to assist SMEs develop innovations with public benefits 13 .

12 www.isb.gov.uk

13 Wessner, C.W., Converting Research into Innovation and Growth, SBIR, the University and the Park, National Research Council, April 10 2008. http://www.unece. org/ceci/ppt_presentations/2008/fid/Charles%20Wessner.pdf

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Promoting Innovation in the Public Sector: Case Studies

Table 7:

A Simple Checklist for Public Agencies and Departments

Seeking to Improve their Innovation Performance -

Assessing priority areas for innovation

What steps have been taken to determine the most important fields, issues, and problems for innovation? These include: fields of relative policy or delivery failure; areas where new technologies create opportunities; cross-cutting fields.

Assigning &

Who has board and ministerial level responsibility for innovation? What units, teams or groups are there to organise innovation? Whose job is it to scan internationally for promising ideas; to scan domestically; and to learn from neighbouring fields?

defining roles

Budgets

How are broad and specific budgets to support innovation determined, and what methods are used to determine spending levels, metrics etc?

Processes

What processes are used to promote innovation; take stock of successes and failures and determine which innovations should be scaled up (eg spending reviews, strategy reviews)?

Shapers,

What mechanisms exist to develop promising ideas into workable prototypes, either through mixed in-house teams or arm’s length bodies?

incubators,

accelerators.

Recruitment

What steps are taken to ensure recruitment and retention of creative, entrepreneurial people?

Piloting & testing

What mix of pilots, pathfinders, ventures is used and why?

User pull

How are users, consumers and citizens engaged in innovation – for example through networks, holding funds, etc?

Testing &

What methods are used to define and measure success?

Measurement

Leadership

What signals do political and official leaders provide to validate innovation?

Culture shaping

What cultural measures exist to shape a pro-innovation culture (eg awards, heroes, stories, champions, pay-determination)?

Networks

Which networks support innovation and ensure that successful innovations are nurtured?

Risk management

What methods are used to manage risks, including appropriate risk/reward ratios, handling of political risk, financial risk, etc?

Source: Mulgan (2007)

Table 8:

Lessons for public sector innovators

Make the project exciting for staff

Promote the program and ensure positive media coverage

Make sure that the program objectives reflect and are in line with the organisation’s aims and objectives

The project manager who is the primary change agent should be task- oriented

Involve stakeholders as far as possible throughout the innovation stages

Establish and maintain effective communication with all program participants

Secure support from senior management

Have a clear mission and end goal

Allow staff the freedom to innovate and tolerate mistakes

Have a small implementation team who hold the decision-making power

Think strategically and consider the wider implications of the program

Have a champion who feels ownership for the program

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Promoting Innovation in the Public Sector: Case Studies

Be dedicated and persistent as innovation programs are not easy

Well managed documentation is tedious but essential

Develop adequate control mechanisms and support governance structures with agreements

Solicit regular feedback from program participants and demonstrate early ongoing success

Implement quickly to avoid losing focus and momentum

Learn from mistakes as they occur and do not be afraid to change plans based on new information or in response to a changing environment

Learn from other innovators

Ensure that you have the necessary resources

Source: iDea (2005) Innovation in Public Services

Future Directions of Innovation

As suggested in the following table, much of the innovation in the public sector is essentially improving and extending a model of public administration developed over many decades. It may be the case that more radical approaches, greater paradigmatic changes, are necessary to innovate policies and services for the future.

Table 9:

Shifts in public administrations’ emphasis

Shifts in emphasis towards a more open, responsive and creative public administration

FROM

Distant Vertical Design logic Power-based rule-based Efficiency Independence Policy-based steering Political accountability Discrete organization Professional autonomy Detailed central steering Indirect participation

TO

Open Horizontal Action logic Trust-based Context-based Responsiveness Interdependence Frontline steering Societal responsibility Embedded organization Professional responsibility Indirect, global steering Direct participation

Source: H. van Duivenboden and M. Thaens (2008) / ICT-driven innovation and the culture of public administration.Information Polity 13 (2008) 213–232, p.228

“Even if serious attempts are being undertaken to deal with cultural change issues, it is increasingly difficult to make a success out of them because it is no longer a matter of changing one particular organizational culture but of changing a number of routines, values, rites, rules and styles of several parties at the same time. After all, due to the linkage capacity of modern technology and the penetration of ICT into the primary processes of public administration, many ICT-innovations have an inter-organizational and/or relational character. This observation stresses the necessity of collaboration between relevant stakeholders and the emergence of intermediary organizations, like trusted third parties or shared service centres, which facilitate collaboration. Hereby, (personal and/or mutual) trust can be seen as an important condition for actors

27

Promoting Innovation in the Public Sector: Case Studies

to get engaged in a learning and communication process in which a process of creative destruction actually can take place and actors do not have to fear for

sheer power politics and opportunismH. van Duivenboden and M. Thaens (2008) ICT-driven innovation and the culture of public administration. Information Polity 13 (2008) 213–232, p.229 14

14 See also: van Duivenboden, H. V. Bekkers and M. Thaens, Creative Destruction of Public Administration Practices: An Assessment of ICT-Driven Public Innovations, in:

Information and Communication Technology and Public Innovation, Assessing the ICT- Driven Modernization of Public Administration, V. Bekkers, H. van Duivenboden and M. Thaens, eds, IOS Press, Amsterdam, 2006, pp. 230–242.

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Promoting Innovation in the Public Sector: Case Studies

Part B: Case Studies

B.1 United Kingdom

1. Promoting Innovation in the Public Sector.

The strong focus on innovation in the UK public sector is driven by the search for productivity in the context of tightening budgets, the challenges arising from complex social and environmental issues, and rising demands from the public for more accessible and responsive and flexible services. Almost all organisations saw innovation as a potential contributor to efficiency, policy development, improved procurement, internal administrative processes, and communication with users, staff training, delivery of services, and changing citizen behaviour. The recent report reviewing public sector innovation performance 15 considers that:

“These factors will mean that government cannot simply do more of what it has always done, but that it will need to develop radical and new approaches and seize ideas within and outside organisations that can lead to greater efficiency and effectiveness.p11.

According to the Comptroller and Auditor General (2009) the government allocated over 3 billion a year for innovation through departmental innovation budgets and will allocate a further 2.5 billion to support public sector innovation from 2008-9.

Over the past two years the promotion of innovation in the public sector has become a new and important responsibility for a number of organisations that are themselves new. Hence, while there are bold plans and initiatives it remains to be seen how effective these will be.

Organisations responsible for promoting innovation include both those with a role across government and those at the department or agency level. The Department of Department for Business Innovation & Skills (DBIS) has the primary responsibility for innovation in the public sector. This role is set out in the White Paper (of March, 2008), Innovation Nation. The Prime Minister’s Strategy Unit in the Cabinet Office also has a responsibility to promote innovation in policy development 16 and delivery, as part of wider responsibilities to promote ‘long term and cross cutting strategic issues’, and hence there is some overlap of responsibility. These two organisations work closely together. The Treasury’s Operational Efficiency Program includes strategies for facilitating ‘front line innovation’. Innovation is now also one of the components of the skills included in the competency framework for the public sector.

15 UK, Comptroller and Auditor General (2009) Innovation Across Central Government. National Audit Office, HC 12 Session 2008-9. p.15. 16 See UK Cabinet Office. Excellence and fairness: Achieving world class public services, August 2008; and UK Cabinet Office. Transformational Government, Enabled by Technology, November 2005.

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Promoting Innovation in the Public Sector: Case Studies

DBIS has a Steering Group for its Public Sector Innovation Policy Team, which includes representation from the Cabinet Office, Treasury, Institute for Government and others. The head of this DBIS team also sits on the Cabinet Office council with oversight for the long term strategy of public sector transformation.

In pursuing these innovation goals DBIS works closely with the National Endowment for Science, Technology and the Arts (NESTA), which is primarily funded by a public endowment. NESTA has established in March 2009 ‘the Lab’, a public sector Innovation Laboratory, to trial new approaches to developing and supporting public sector innovation. The Design Council is partly sponsored by DBIS and it is trialling an innovation enabling program, ‘Public Services by Design’.

The Sunningdale Institute, which is managed by the National School of Government (a non-Ministerial government department), is collaborating with other public sector organisations to establish a Whitehall Hub for Innovators. This hub is intended to be a mechanism for capturing and disseminating learning about public sector innovation.

and disseminating learning about public sector innovation. Source:UK,.Comptroller and Auditor General (2009) Innovation

Source:UK,.Comptroller and Auditor General (2009) Innovation Across Central Government. National Audit Office, HC 12 Session 2008-9. p.15

The promotion and implementation of innovation is also a responsibility of other public sector organisations, from those with broad responsibilities - like the Technology Strategy Board which promotes the adoption in the public sector of technological innovations developed in the private sector - to units in Departments. For example, initiatives within the Department of Health focus on

30

Promoting Innovation in the Public Sector: Case Studies

how it can best support and enable innovation in the NHS. The Ministry of Defence also has a unit to promote innovation.

Examples of innovation units

At the Department for Environment Food and Rural Affairs’ Innovation Centre policy or delivery teams can run workshops designed to enable the generation of innovative solutions to problems.

The Department for Work and Pensions’ IT Innovation Centre and Solutions Centre are designed to inspire creativity and innovation as well as being a site where new ideas can be tested before implementation. The Centres are also available for use by other government bodies.

The Ministry of Defence’s Centre for defence Enterprise invites proposals for funding and support from companies with scientific or technological innovations that have a potential application in defence.

The NHS Institute for Innovation and Improvement, sponsored by the Department of Health, promotes service innovations by producing guidance and spreading information about good practices such as Case 1.

The NHS National Innovation Centre (part of the NHS Institute) supports the adoption of technological innovation from industry. It uses a web-based screening tool to allow innovators to self- assess potential ideas, and assistance for the most promising ones to be developed within the health service. The Government Gateway team in the Department for Work and Pensions is working on an adapting the screening tools so that they can be made available across government.

In local government, the Social Innovation Lab for Kent helps council staff solve local problems. For instance academic experts have used ethnographic techniques to help the council understand the experience of service users, leading to changes such as services for fathers at children’s centres and better internet access to information on care services.

Source: UK, Comptroller and Auditor General (2009) Innovation Across Central Government. National Audit Office, HC 12 Session 2008-9

In regard to procurement the Treasury, the Office of Government Commerce and DIUS have encouraged departments to use procurement approaches which lead suppliers to innovate. A Treasury report 17 makes the case for a strong initiative to seek greater innovation through procurement practices. The Office of Government Commerce will have stronger powers to set standards for department’s procurement performance, monitor progress against them, and seek improvements where these are likely to generate value.

In response to the 2005 Transformational Government Strategy, the Cabinet Office set up the Customer Insight Forum as a mechanism to diffuse good practice, identify the barriers that impede change and promote improved policy and delivery. Follow-up reviews have sought to continue to drive this direction of change 18 .

17 HM Treasury. Transforming Government Procurement. January 2007.

18 David Varney. Service Transformation: A better service for citizens and businesses, a better deal for the taxpayer. 2006; 2007 Comprehensive Spending Review

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Promoting Innovation in the Public Sector: Case Studies

Focus groups of public servants and consultants to the public sector, convened by the LSE Public Policy Group in 2006, provided a good deal of evidence of an increasing focus on innovation in the UK public service with relevant change in culture and organisation 19 .

NESTA In response to what they see as a major gap between the demands for new policy and service responses to such challenges as climate change, and the capacities of the public sector to respond sufficiently rapidly and effectively NESTA has established ‘ the LAB’ in 2008 to facilitate fresh thinking 20 . The LAB, which is a series of projects rather than a physical space, has three components:

Challenge Lab: explores how innovation can help services respond to critical social and economic issues, starting with ageing, climate change and health.

Methods Lab: puts radical thinking into action and is where we test and assess the best ways of fostering public service innovation. The current focus projects are: risk capital; incubating social innovation, and; attacking the recession.

Learning Lab: helps you to apply and spread what we learn.

“NESTA has created the Lab to meet this need for new ideas that work. By bringing together experience and ingenuity from across the public, private and third sectors, and drawing on the insights of citizens and consumers, the Lab plays a vital role in making public services fit for the 21st century. The Lab provides the freedom, flexible capital and expertise to undertake radical experiments. It tests out new ways of finding and spreading the best ideas - this might be by running a challenge prize, building a social ventures incubator, or creating powerful new teams of users, front-line staff and decision- makers.” 21

2 .

The Scope of Innovation Initiatives and Activity

The UK has a long history of public sector innovation from minor improvements in services to such initiatives as the formation of the BBC, Open University, the National Health Service. Innovations include those that increase efficiency, improvem ents in the quality of services, new services or ways of delivering s ervices.

Organisations draw on ideas for innovation from a wide range of sources but the major source in practice tends to be internal, particularly senior management – a s is the perspective that arises from similar surveys in the private sector.

19 Bartholomeou, P. et al (2006) Report of Seven Focus Groups conducted for the Achieving Innovation in Central Government Organisations report. LSE Public Policy Group.

20 http://www.nesta.org.uk/the-lab-innovating-public-services/

21 http://www.nesta.org.uk/the-lab-innovating-public-services/

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Promoting Innovation in the Public Sector: Case Studies

The NAO survey of 27 government organisations found that 80% considered innovation to be ‘very important’ in meeting future challenges. However a wider consultation amongst staff indicated that many were less convinced of the importance of innovation and more inclined to see it as just another top-down cost cutting tool. A compilation of case studies for the 2009 NAO review of innovation-related performance is summarised below?

Innovation Case Studies for the NAO (2009) report.

1

The department of

Luton PCT’s analysis of recent stillbirths in its area showed a number of significant trends, and through engagement with local women they came up with a number of innovative changes to processes which were designed to reduce the number of stillbirths.

Health: work to address the issue of stillbirth at Luton and Dunstable hospitals.

2

The Ministry of

The program aims to tackle crime and anti social behaviour by bringing all the criminal justice agencies together to learn which crimes most concern local people, provide information to local people and encourage the community to develop solutions to the problems.

Justice’s Community Justice Program.

3

The Cabinet Office’s

A

Cabinet Office taskforce ran a competition which encouraged

Show Us a Better Way competition

individuals to submit innovative ideas as to how government could make its data available to citizens in a more useful way.

4

The Environment

This system uses new technology to enable registered users to be notified of flood warnings in their area via their preferred means, such as by text message or e-mail.

Agency’s Flood Warning direct system.

5

The Higher Education

HEIF is a funding stream which encourages universities to engage with the wider world in innovative ways. universities are able to create their own plans for how they are to achieve this interaction.

Funding Council for the Higher Education Innovation Fund (HEIF).

6

The Prison Service’s

The use of an innovative procurement process allowed the private sector to develop innovative solutions to the Prison Service’s problem of the high cost of replacing prison mattresses.

procurement of prison mattresses.

7

The Home Office’s

An innovation that results in registered passengers being processed more efficiently at UK airport borders. The solution is based on gates that scan individuals’ irises, which means that they do not have to interact with Immigration Officers.

IRIS border control system

8

The department for

The concept of lean processing was initially developed in the automotive industry as a means of eliminating waste from the production cycle. The DWP are using it to see how their processes could be improved and made more efficient.

Work and Pensions’

Lean Program.

9

The Environment

This team provides a link between the science and operations functions of the Agency to provide innovative solutions to operational issues. They assist with the piloting and implementation of projects, and direct the Agency’s horizon scanning work into areas that would benefit operations most.

Agency’s Innovation 4 Efficiency team.

10

The Pension

This program is a process of complete business transformation

Service’s Pension Transformation Program.

in

The Pension Service, covering everything that it does

operationally, as well as some support services, in order to

improve the service offered, and generate efficiencies.

11

BERR’s Business

BERR embarked on a large scale project that set out to make it easier for businesses to engage with government by reducing the number of available support schemes from around 3,000 to around 30.

Support Simplification

scheme.

33

Promoting Innovation in the Public Sector: Case Studies

NESTA has a substantial program of work under way to follow up on a recommendation of the Innovation Nation White Paper to strengthen innovation indicators and metrics. One aspect of that work includes the development of indicators for the public sector. A working paper commissioned by NESTA reviewed the literature on innovation in the public sector (and the wider innovation literature) and proposed a Public Sector Innovation Index based on 54 individual indicators, grouped into categories: R&D activities (8 indicators); consultancy and strategic alliances (4 indicators); intangible assets (4 indicators);ICT Infrastructure (7 indicators); human resources (8 indicators); institutional performance (8 indicators);e-government, online services (2 indicators); origin of innovations (6 indicators); innovation inputs (4 indicators);impacts and scope (3 indicators) 22 .

To inform the development of policy an additional set of detailed case studies has been developed by the National School of Government in collaboration with the Young Foundation and NESTA 23 . These focus on service innovations as shown below:

Case Studies of Innovation in the UK Public Sector.

 

Innovation

 

Description

1. Patient Opinion

A

user-generated website and independent, non-profit company,

founded by a social entrepreneur, which enables patients to share

opinions about their health care with the NHS and each other.

2. Positive Futures

An experimental approach to support youth sport in deprived areas, which are delivered through various local organisations.

3. The Sure Start

A

program bringing together a range of agencies to support parents

Program

and young children, leading to several hundred local programs.

4.

Safer Routes to

Stimulated local action to develop safe routes to school, leading to local initiatives to improve safety.

School

5. Keeping House

A

local initiative to provide social care for older and disabled people.

6. Community

Police officers specifically for low level crime and anti-social behaviour.

Support Officers

7.

The Phoenix

Fund to support enterprise in disadvantaged communities and social groups.

Development Fund

8.

Creative Industry

Informal networks and intermediary organisations that link local interest groups in the art and creative industry communities.

Networks

9.

Patients Co-design

Mechanism to listen to patient views I the assessment and redesign of services.

Services; Experience-

based Design

 

10. Next Practice Education Program

Developed by the Education department’s Innovation Unit the program facilitates links between schools and local authorities in order to support innovate practices and to disseminate the findings of these developments.

22 LSE Public Policy Group (2008) Innovation in Government Organisations, Public Sector Agencies and Public Service NGOs. Innovation Index Working Paper NESTA. 23 Su Maddock (2007) Creating the Conditions for Public Innovation. National School of Government; The Young Foundation and NESTA. p57

34

Promoting Innovation in the Public Sector: Case Studies

Overall the selection of case studies tends to focus on new services and service improvements, with few examples of policy innovation. It appears that this is the result of selection bias. The recent NESTA initiative to establish the ‘Lab’ aims particularly at new policy development.

3. The Role of Information Technology as a major driver of

Innovation

There is surprisingly little discussion of the role of IT in the recent reviews of innovation in the UK public sector. The reviews focus on more generic issues.

However, the rising significance of the internet had attracted strong interest from government. It was clear that the internet raised issues inter alia, regarding the reuse of information generated in the public sector, and regarding participation by the public sector in the new media. The internet is undoubtedly one of the most significant innovations of the modern era. In the UK internet usage grew from 9% of households in 1998 to almost 60% in 2006.

It became clear that:

new forms of large-scale self-help on public policy issues had been emerging online and gathering public attention;

new social and economic value were being created from public information using new technology;

government initiatives regarding the web had been ad hoc and had mixed effect;

The role for government and its capability were unclear.

There was little systematic information about these developments and their significance

The Policy Review Building on progress: Public services had raised awareness in government regarding new forms of online activity:

“The Government should support the development of new and innovative services that provide tailored advice to specific groups (for example the netmums.com website which provides a discussion and advice forum for mothers). These are outside government’s direct influence, but government has a role to play in supporting them – for example by ensuring that they are not undermined by government programs or websites with similar objectives, and have easy access to publicly available information.” 24

Recognising these trends the government commissioned a report on the appropriate response by government. The independent reviewed 25

recommended that government should respond to three particular challenges:

engaging in partnership with user-led online communities;

24 HM Government (2007). Building on progress: Public services, p.38, available at www.cabinetoffice.gov.uk/policy_review/index.asp

25 Mayo, E. & Steinberg, T. (2007). The Power of Information: An independent review:

www.cabinetoffice.gov.uk/publications/reports/power_information/power_information.pd

f

35

Promoting Innovation in the Public Sector: Case Studies

ensuring that it fully understands and responds appropriately to changes in the information market; and

advising civil servants on how best to participate in new media.

After the Cross Cutting Review of the Knowledge Economy in 2000 the government established the Office of Public Sector Information (OPSI) as a regulator and an Information Asset Register was introduced 26 . Both the NHS and the National Library for Health work with user-led online communities to disseminate information from the NHS 27 .

Following the Power of Information report in 2007, a Power of Information Task Force was created in 2008. This task force delivered its final report in 2009 28 . The report identifies six where action is needed to improve the government’s use of digital technologies. Some of these are relevant to the broader public sector innovation agenda:

enhancing Digital Britons’ online experience by providing expert help from the public sector online where people seek it;

creating a capability for the UK public sector to work with both internal and external innovators;

improving the way government consults with the public;

building capacity in the UK public sector to take advantage of the opportunities offered by digital technologies.

For example, the report suggests extending to other areas of the public sector the BBC’s model for innovation in its ‘backstage’ service which encourages people to innovate by re-using the BBC’s data and services. The report recommends that UK central government should create a ‘backstage’ capability to unlock the innovation potential of the information held in government data bases.

Recognising that when mainstreaming any innovation, systemic culture and behaviour change is required, the Taskforce makes the case for initiatives to bring into the mainstream of UK government the innovative approaches it recommends. The report therefore calls for action to help the public sector to acquire the new skills and practices required to support this.

26 HM Government (2000). Cross-cutting review of the knowledge economy, available at

www.hm-

treasury.gov.uk/spending_review/spending_review_2000/associated_documents/spend_

sr00_ad_ccrcontents.cfm

27 www.nhsdirect.nhs.uk

28 http://poit.cabinetoffice.gov.uk/poit/2009/02/summary-final/

36

Promoting Innovation in the Public Sector: Case Studies

4. Initiatives to Promote Innovation in the Public Sector

To promote innovation across the public sector DBIS has selected five focal areas 29 :

Creating the conditions for innovation by aligning the major forces of the public sector to be pro-innovative.

Leading innovation by promoting awareness at the highest levels of the importance of innovation and of the principal tools to support it.

Supporting and disseminating exemplars.

Drawing on all sources of innovation by engaging users and front-line staff and looking at innovation systems in the third sector, private sector, Devolved Administrations and public sectors in other countries.

Realising the potential of innovation as an enabling force in driving related policy initiatives.

5. The UK Public Sector Context

It is important to note that a number of initiatives have been introduced in the UK public sector that intersect with the innovation agenda 30 , these include:

Capability building and assessment (Departmental Capability Reviews, Comprehensive Performance Assessments, National School of Government, public sector academies).

Procurement and efficiency (Efficiency Program, shared services).

Focus on outcomes of public services (PSA targets, introducing contestability into service provision).

Service transformation (electronic interface with citizens).

Sustainability (Green Whitehall, published reports on performance).

Well-being (public services as employers).

It is also worth noting a point made in a comparative study of public sector innovation. This recent study of public sector innovation in four European countries found some marked differences between the smaller countries and the UK 31 :

“… bigger country size of the UK leads to a larger and more complicated institutional set-up and services, which makes the innovation process more costly and, therefore, riskier. Risks can be allocated and confidence gained through the political demand and commitment to long-term major projects, strong top-management commitment and support, close cooperation with technology suppliers and future users, as well as just through better market (demand) knowledge, which all are relatively more important in the UK than in other countries. More important hampering factors in the UK are the lack of supportive strategy, stagnating organisational culture, rigid structures, and the

29 DIUS, March, 2008 30 See UK Design Council. Public Sector Innovation Workshop. December 2007.

31 Ott Parna, O. and von Tunzelmann, N. (2007) Innovation in the public sector: Key features influencing the development and implementation of technologically innovative public sector services in the UK, Denmark, Finland and Estonia. Information Polity 12 (2007) 109–125

37

Promoting Innovation in the Public Sector: Case Studies

existence of previous failures – all common issues to bigger countries. Moreover, even if not important in absolute terms, gaining social and political popularity as a goal of innovation was assessed slightly more important in the UK than in other countries. “p.122

6. Evidence of Improvement in Innovation Performance

In preparing the 2009 report on innovation the National Audit Office conducted a survey of 27 government departments, held an online discussion with 120 front line public servants and carried out 11 case studies. The overall report concluded that the need for innovation is being emphasised more strongly by the highest levels of the public sector. The report found that many more organisations were establishing innovation units, conducting customer research and staff suggestion schemes.

The NAO (2009) review concludes that government organisations are not systematically pursuing approaches to procurement that promote innovation.

While there has been a series of initiatives to encourage government organisations to seek and use feedback from users, and many such organisations have introduced discussion groups, workshops, online communities, and message boards, the 2009 NAO review found little evidence of these having an impact on innovation 32 . The review’s findings in relation to progress in implementing their earlier recommendations provide some insight into performance:

Progress in implementing recommendations from the 2006 NAO report.

Summary of recommendation

Summary of progress

1

Government should give more focus

There is more emphasis on innovation from the centre of government, and central government organisations consider the amount of innovation has increased. The Innovation Nation White Paper spells out the imperative for innovation in public services. Increasing efficiency is only one of the drivers for departments to innovate.

to fostering innovation in central government, particularly to improve productivity.

2

Departments need better data on

There are significant gaps in cost and performance reporting in government. At a project level good cost information has facilitated some innovation, while its absence has been a barrier.

where costs are incurred in their operations and on the costs of possible innovations.

3

Individual incentives to encourage

There is still a lack of incentives for managers to support innovation, but it is important to link these with organisational incentives.

managers in central government organisations to develop or promote

innovations need to be improved.

 

4

Departments and agencies should

Most innovations we examined used some form of piloting and testing. Those that did not

ensure that they use piloting, small-

32 In 2008 the Cabinet Office launched a new standard, Customer Service Excellence, to support customer focused service delivery.

38

Promoting Innovation in the Public Sector: Case Studies

scale testing, and quicker decision- making processes.

recognise this would have been beneficial.

5

Central government organisations

Departments have put mechanisms in place to learn from outside, but the relatively small proportion of successful innovations generated from external sources indicates more can be done.

should strengthen their ability to learn from each other and from outside.

6

There should be mechanisms to seek

Mechanisms such as suggestion schemes generally exist, but there are remaining barriers to generating and developing ideas from frontline staff and customers.

ideas from staff, the front line, and

customers.

Source: UK,.Comptroller and Auditor General (2009) Innovation Across Central Government. National Audit Office, HC 12 Session 2008-9

7. Lessons of Experience

The National Audit Office examined innovation performance in its 2006 report Achieving Innovation in Central Government Organisations. It found that approaches tended to be, focused at the top level of organisations, ad hoc, there was little incentive for individual managers to take initiatives and that information on the costs and outcomes of innovation was generally not collected.

It proposed more systematic approaches to these issues and to seeking ideas

from front line staff, encouraging learning from other organisations, and using

piloting for developing innovations. The development of new initiatives will inevitably mean that some will fail and most will need substantial modification before full implementation.

A set of focus group discussions was convened by the LES Public Policy Group in

2006 in order to provide greater insight for the 2006 NAO report on innovation in central government 33 . These groups were composed of public servants and consultants who work with government. The groups felt that the perspective on innovation that came from the NAO survey of organisations tended to underplay the role of front line staff in innovation, but strongly supported the view that ideas needed support from senior managers if they were to progress, that change was particularly complex due to the cautious hierarchical approaches, lack of working across groups, that risk avoidance due to the fear of failure was

a barrier, as was often a lack of clarity over costs and benefits (due to having a range of objectives).

The 2009 report of the NAO makes observations on the barriers and opportunities for innovation, and identifies a range of ‘lessons’ based on its case studies, surveys and focus group discussions. The figure below, drawn from the survey carried out for the 2009 NAO report identifies the factors considered to support or hinder innovation in the public sector:

33 Bartholomeou, P. et al (2006) Report of Seven Focus Groups conducted for the Achieving Innovation in Central Government Organisations report. LSE Public Policy Group.

39

Promoting Innovation in the Public Sector: Case Studies

Factors considered to help and hinder innovation

Studies Factors considered to help and hinder innovation Source:UK,.Comptroller and Auditor General (2009) Innovation

Source:UK,.Comptroller and Auditor General (2009) Innovation Across Central Government. National Audit Office, HC 12 Session 2008-9. p.15

The report suggests that the case studies of recent innovations show 34 :

good performance and cost information can help identify where innovation is needed and would be beneficial;

customer insight can be used to identify areas for innovation and possible solutions;

technological innovations can be applied to service delivery to generate efficiency and service improvements;

34 UK,.Comptroller and Auditor General (2009) Innovation Across Central Government. National Audit Office, HC 12 Session 2008-9. p.15

40

Promoting Innovation in the Public Sector: Case Studies

engaging with suppliers and delivery partners can help bring about innovation;

innovation can be a means to greater organisational efficiency;

taking a structured approach can help ideas from frontline staff flourish; and

good project management, use of piloting and risk management disciplines are important to success.

The analysis of the case studies also provided the basis for identifying the issues that need to be addressed to ensure the successful delivery of innovative projects. These are:

Involving service users, suppliers and citizens in the development of innovation.

Good management information to allow scope for innovation to be identified and make the case for adopting and rolling out an innovative approach.

Openness to identifying opportunities from outside the organisation, including new technology, ideas tried elsewhere or opportunities for partnership.

The role of leaders in endorsing the development of ideas.

Change management and project management skills to ensure success. A key part of this is securing buy-in from staff throughout the organisation.

Learning from testing and piloting when trying something new, and quickly identifying what is not working.

A good understanding of risks, including risks of not innovating.

Source: National Audit Office analysis of innovation case examples

The case studies and surveys also provided the basis for identifying the critical success factors, as seen by the NAO, at the departmental level 35 :

Leaders have a good understanding about, and communicate, what innovation means in relation to the organisation’s objectives, where innovation is needed, and what they expect staff to do.

Individual and organisational targets and objectives create incentives that focus leaders and staff throughout the organisation on continuous and radical improvement and which are outcome based (as opposed to prescribing how they do their jobs) so as to give flexibility in allowing for innovative responses.

Staff are given the time and resources to develop innovative ideas and available funding is used to support innovations being tested, piloted and rolled out where there are demonstrable benefits to be achieved.

The organisation responds to customer feedback and develops innovations with suppliers.

35 UK,.Comptroller and Auditor General (2009) Innovation Across Central Government. National Audit Office, HC 12 Session 2008-9. p.15

41

Promoting Innovation in the Public Sector: Case Studies

Innovations are delivered effectively, risks are well managed, the signs of failure are quickly acted upon, and staff support is secured for changes in processes.

Measures of success are in place for individual innovations and there are mechanisms for learning lessons from successful and failed projects.

There are systems in place for disseminating what works, to other parts of the organisation and other delivery bodies, and for adopting innovative ideas developed elsewhere. These are underpinned by budgets, senior management direction and incentives.

The 2009 NAO review concluded that government organisations could go much

further in encouraging suppliers to propose innovative solutions. Drawing on this review and previous work by NAO the review report highlighted several ‘lessons learned about procuring for better outcomes’:

Suppliers may be discouraged from innovating if they do not acquire the intellectual property rights that result. - there was a need to balance capturing as much of the value of an innovation for the taxpayer, while giving the supplier sufficient incentive to innovate.

The type of contract involved is significant. contracts specifying detailed, frequently changing short- term annual work programs meant suppliers did not have incentives to innovate in order to provide long- term value for money.

Specify the desired end-point. -innovation can result from specifying the desired end-point, but relying on the supplier to conduct the research and development necessary to define the technical solution.

Use a whole life costing approach. whole life costing is a systematic approach of balancing capital costs with revenue costs to achieve an optimum solution over a project’s life

Overall perspective on progress from the 2009 Report 36 The overall recommendations of the 2009 NAO report provide an overall perspective on progress and the directions for improvement. These are:

The Department for Innovation, Universities and Skills currently has no means for measuring the impact of its policies or other central government initiatives on innovation. DIUS should develop these sources into a tool to track departmental innovation, including progress against all the recommendations.”

Confusion about the purpose of innovation prevents government organisations taking opportunities to innovate. At a local level, organisations and managers do not see how innovation fits in with their other priorities…DIUS should agree with the Cabinet Office and Treasury what role innovation is expected to play in achieving overarching objectives … The centre of government should then

36 Source:UK,.Comptroller and Auditor General (2009) Innovation Across Central Government. National Audit Office, HC 12 Session 2008-9.

42

Promoting Innovation in the Public Sector: Case Studies

collectively articulate a clearer message across …that innovation can help departments achieve their own strategic objectives, and that frontline staff can be empowered to make improvements.”

Few central government organisations have considered strategically where they need innovation or how to encourage and support it. Departments need to develop plans which set out their own priorities and the means by which innovation will be facilitated, including how they will use management information, horizon scanning and customer feedback to identify specific areas for innovation….DIUS should assist departments in developing these strategies and should highlight and spread good practice.”

Most current innovation is generated and driven by senior management, and central government organisations need to do more to develop ideas from the frontline, users and suppliers. “Departments are prepared to learn and seek ideas from staff working at the frontline, suppliers and service users, but these sources are not being fully exploited…. Where central government organisations have a portfolio of innovations at any one time, not all of which are expected to succeed, leaders need to make clear it is acceptable for a project to fail, providing that lessons are learned from it Departments should experiment with different mechanisms to encourage frontline staff to play an active role in innovation, supporting the message from leaders by trialling incentives, including reward schemes, budgeting for outcomes and using innovation units to provide time, resources and expert support for the development of ideas… DIUS and its delivery partners such as the National School of Government should demonstrate the benefits of innovation by drawing together and promoting successful practice in the above areas and support departments in adopting the best innovations.”

Innovative projects have had to overcome structural and cultural barriers and need access to support and expertise to succeed. Some departments have innovation units or similar support, but awareness amongst staff of what they