ESF project 4895: Meer werk maken van innovatie voor werkgelegenheid en arbeidsmarkt
ANALYSIS FICHE OF LITERATURE
TITLE OF LITERATURE: Ready or not? Taking innovation in the public sector seriously
AUTHOR : Geoff Mulgan
TYPE OF AUTHOR (academic, consultants, practitioners, other): practitioner
COMMISSIONER OF LITERATURE (IF APPROPRIATE): NESTA
ORIENTATION OF LITERATURE (check with X):
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innovation in general:
innovation by / within the public sector: X
innovation oriented towards citizens:
innovation oriented towards social and employment issues typically dealt with by ESF:
LESSONS LEARNT REGARDING:
A. How to define innovation e.g. in types
New ideas that work to create public value.
B. How to formulate an innovation strategy (in terms of scope, types of innovation,
requirements)
Public innovation cannot be simply planned or institutionalized but there are some factors
that increase probability.
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Cultivate and scan the hinterland where ideas come from: local governments (who
want public approval), business (seeking profit, stimulated by procurement),
universities (entrepreneurial academics seeking recognition for new knowledge) ,
civil society (seeking growth and recognition, promoting innovations by example,
campaigns)
Recruit proven innovators
Design and test ideas
Provide markets for solutions and outcomes rather than inputs
Create protected spaces for radical ideas to evolve
In the public sector, the road from idea to reality does not follow the predictable path as in the
private sector (basic research gives ideas, then prototypes , then products, although also with feedback loops).
In the public sector there are two gatekeepers who control power and money.
1) Politicians: some can be open, some are natural innovators. They all look for new ideas to
keep the edge over other politicians.
2) Bureaucracy (officials): most innovations are initiated by front line staff or middle
management.
All innovations must pass one of these two actors to become “public”. But they may come
from the hinterland. Of note is that civil society complains that when they innovate,
government just copies them without compensation.
Why is innovation frustrated?
Many innovations remain small scale and fragile. Why?
1) A public sector with a short time horizon is very resistant to innovation. Rather, four time
horizons should exist and have innovation efforts linked to them.
2) However, there are also good reasons to avoid BAD innovation:
a. Control risk taking where people’s lives are involved
b. Taking into account the desire for some stability for citizens (not to change
everything all the time for them)
Experimenting on the whole population all the time is NOT a good idea. Rather ,
testing, adapting at small scale should be done.
3) Bad reasons to avoid good innovation:
a. No one’s job: whereas a vast bureaucracy and budgets exist now for
performance management and audit, there is no such thing for innovation (as in
the private sector)
b. Risk aversion (sometimes strengthened by ill-conceived performance
management)
c. Too many rules: modern bureaucracies are designed to STOP capricious and
unpredictable actions with rules. People attracted to lots of rules tend not to be
so creative or at ease with risk.
d. Uncertain results: there are always periods when something new is
underperforming what is already there because it is still on a learning curve. This
is a problem anywhere but even more for the public sector as it is more visible
and accountable.
e. High walls: organizational and professional boundaries impede the spreading of
tacit knowledge which is even more important for innovation than formal
knowledge. High impact innovations tend to cut across silos but this is more
difficult if power and money are attached to silos.
f. Unsuitable structures: more radical innovation happens in oligopolic markets. A
monopolist has no incentive to innovate and lots of small players usually get no
further than incremental innovation. Oligopolies combine both competitive
pressure and scale which comes with resources. Also, these larger players
provide an incentive for venture capitalists to invest in smaller ones as they are
likely to be bought by the majors. In the public sector, there is a monopolistic
overseer (a national department) and then a multiplicity of small units none of
which really has the capital or the capacity to see through more radical
innovations at a larger scale.
Six elements of an innovative culture:
1) Leadership and culture: the top needs to reinforce the importance of innovation or no one
will risk it. Once the ball gets rolling, an innovative culture can self-reinforce. Symbols also
matter: eg in architecture / office lay-out.
2) Pulls and pushes: Push can come from political leadership, crisis, technology, financial
necessity. But pull is even more important: needs that are not being met. Sometimes these
emerge from civil society, sometimes from campaigners. Users have become more
organised too, sometimes in alliance with radical professionals. They are key in keeping
public services agile and creative.
3) Creativity and recombination:
a. Use formal creativity techniques such as De Bono’s thinking hats
b. Seeing things in new ways: look at positive deviants (who cope with issues better
than others)
c. Try to twin different fields: eg airport designers with hospital managers
d. Engage with the toughest, most extreme users or with the most serious problems to
force more lateral solutions
e. Put an element of competitive pressure
4) Prototypes and pilots: tinkering, trial and error are necessary as few ideas emerge fully
formed. We need to try on a very small scale and then evolve.
a. Pilots: a new model is specified in detail and then tested in practice (with control
groups). But care must be taken not to do this too soon as it may freeze a new model
too soon when it should still be evolving.
b. Pathfinders (feasibility studies, market analysis, and other scoping studies to clear
the way for innovation), learning by doing,… allow iteration rather than being rigid
scientific experiments.
c. Some prototypes are adaptations of successes elsewhere. It is rare that a prototype
is not adapted to local conditions.
5) Scaling and diffusion:
a. Only a small proportion of ideas and pilots will deserve to be replicated. But diffusion
usually requires willing early adopters. Just decreeing and throwing around money is
not sufficient. Even where strong networks are in place to promote diffusion, results
have been disappointing. This is because different professions have different views
of “success”. Also, innovations may threaten power structures. When diffusion does
happen, it is usually because of effective champions within strong networks, doing a
lot of handholding combined with financial inducement.
6) Sophisticated risk management: it is easier to take risks when
a. There is a consensus things are not working
b. When one is clear that one is experimenting with a range of options, rather than
pretending it will all succeed
c. When users have choices (rather than have only one option forced)
d. Where the innovation is managed by an entity removed from the state (eg an NGO,
business) so that if things go wrong, it can take the blame.
Organising for innovation requires:
1) Pro-innovation governance: needs to ensure there is a flow of ideas ranging from high
risk/impact to low risk/impact across different time horizons
2) Teams and networks dedicated to organising innovation: people who scan the world and
other sectors, organize and advance innovation incl. mapping current pilots and assess
them, design and incubate new innovations, acts as brokers/intermediaries linking ideas
and needs. Ideally, they have a mix of skills, experience and contacts ( combining civil
servants, social entrepreneurs, designers, practitioners). This may be easiest to organize
as a separate unit, to enable crossing boundaries (eg situated at the level of the prime
minister). They may be focused on problems, groups or places.
3) Processes that back innovation: look for emerging priorities and which promising
innovations (incl. abroad) should be adopted/adapted.
4) Investment for innovation: innovation resources should be min 1-2% of overall budgets.
More in fields of relative failure. Money can be directed at individual projects, or
better, to teams with good track records and to intermediary organisations.
5) HR policies to bring out the best from innovators: have recruitment and development
procedures that do not squeeze out creative people. Also do training for officials to
become familiar with “innovation”.
6) Options for flexible experimentation: pilots, pathfinders, incubators, labs.
7) Support for the hinterland: funding to develop ideas via universities, civil society, local
authorities and also for “accelerators” that can bring new teams into existence.
8) Investment in diffusion: intense facilitation, databases, personal communication,
combined with a sense of shared mission within networks.
9) Markets for outcomes: funding that rewards outcomes rather than rules.
10) Spirit: have people with imaginative flair communicate the importance of innovation.
C. How to organize innovation as a process in different stages?
D. How to define outputs of innovation e.g. in terms of idea, concept, prototype…?
E. How to make decisions regarding progress of an innovation?
F. What roles exist for different actors in the innovation process? What competences are
required for these roles?
The best public innovators are good at empathy and listening to what it is people really want or
need.
G. How to organize interaction with external stakeholders (open innovation)?
H. Specific tools that are explained (list briefly for each tool in what stage, by which role, why,
how it is to be used).
a) Tool 1: