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What is Public Sector Innovation?

by Eleanor Glor
This article reviews definitions of innovation. It discusses why innovation in
government is slow or ineffective, and examines the impact of defining
innovation properly.
Many definitions of innovation are used, often leading to a lack of clarity about
what public sector innovation means.
Because innovation is portrayed as something desirable in the current public
administration and business management literature, public administrators want
to be innovative. Governments often assume the mantel without adopting the
substance of innovation, in order to avoid real change to the existing
management paradigms.
Definitions of innovation by Lee Zhuang can be summarized as follows:

unique and new activities or ideas,


the people who innovate,


improving existing processes, and


the dissemination of new activities or ideas.

a) Unique and new activities or ideas emphasizes the act of creation, viz.
inventing something new, generating new ideas, or seeing something from a
different perspective. The newness and uniqueness features are emphasized.
Categories of innovation could be developed from this definition, based on how
new or unique the innovation is, compared to other innovations.
Moving outside of existing paradigms and finding new ways to look at things is
key to the innovation process within this definition. Process would be most
b) The people who innovate are a definite asset for governments to attract.
This category of innovation recognizes the role of individuals in innovation.
Recruiting the right people would be the most important factor to the capacity of
the organization to innovate.
c) Improving existing processes and functions entails redesigning. It
improves something that already exists.
This definition looks at performing a task in a new way, as opposed to inventing
new and better ways of accomplishing the same (or more)objectives. Again, the
management process would be most important here.

d) The dissemination of new activities or ideas emphasizes the adoption of

innovations, and treats all adoptions as innovations, independent of how long the
ideas have been around. This grouping includes: following the market leader,
adopting something that has been successfully tried elsewhere, spreading new
ideas, or introducing changes. Change management and the management
process would be most important here.
Stu Conger has found that social inventions in the education field in the early
1900's took 50 years to be adopted by half the educational institutions. Perhaps
a government adopting an innovation so many years after its invention would still
be considered an innovator! Worst, innovations can be double-counted thousands
of times when the same activity is re-newed in different parts of the same
organization or with a government.
The implications of analysing innovation are important. While the first two
definitions (uniqueness and people) hold out the possibility of real change, the
second pair (improvements and dissemination) would never challenge the
existing regime to change. Using the term "innovation" to describe an "adoption"
or "dissemination" muddies the challenge to innovate while allowing conservative
structures and administrators to label themselves innovative. The first two can
deliver good managers.
Lee Zhuang's article "Bridging the gap between technology and business
strategy: a pilot study on the innovation process.", Management Decision, Vol.
33 No. 8. 1995, pp. 13-21, Table IV.
Eleanor D. Glor edited "Policy Innovation in the Saskatchewan Public Sector,
1971-82", Toronto: Captus Press, 1997.

Public Sector Innovation

Page Contents:
What is public sector innovation?
How important is public sector innovation?
What are the policy challenges facing public sector innovation?

What is public sector innovation?

It is not only firms who innovate; public sector entities also innovate by
introducing new approaches to provide quality public services and better respond
to societys needs. The public sector includes all public corporations and general
government at central, state and local levels. Its duties cover administration,
ensuring public order and safety, education, health and social care, and a variety
of other functions for citizens and business.

The OECDs Observatory of Public Sector Innovation (OPSI) is collecting and analysing countries
examples of innovation to build knowledge on its scale and form, and what governments can do to
encourage it.

Drawing on definitions developed in the business sector (OECD/Eurostat 2005), their adaptation in the
Measuring Public Innovation (MEPIN) project, and evidence of innovation collected by the OPSI, the
following principles emerge to characterise public sector innovation:

Novelty: it is about a novel practice or approach, relative to its context.

Implementation: innovation is not just an idea, but has to be implemented.
Utility: it aims to improve public sector results and outcomes.

Innovations may apply to the structure of the public sector itself, or the way in which public services are

The OPSI has started to build systematic knowledge on how the public sector innovates and achieves
results. The OPSI enables governments to highlight innovative practices and provides a platform for

public sector innovators to inspire each other, share ideas and collaborate.

The OPSIs online platform serves as a hub presenting countries innovative practices via an
interactive database alongside analysis of public sector innovation. Collaborative features (discussion
groups, live documents) which will enable a community of practitioners and experts to interact and
work together are under development and will be available from autumn 2014.

Observatory of Public Sector Innovation Online Platform

How important is public sector innovation?

The public sector is an important economic actor, accounting for between onethird and over one-half of GDP in most OECD countries. The share of general
government expenditures as a percentage of GDP reached over 45% in 2009 in
the OECD as a whole and ranged from over 55% in Denmark, Finland, France and
Sweden, around 40% in the United States and Japan, to less than 30% in Chile
and Mexico (OECD, 2011).

Today the public sector and the public services it provides are confronted by
increasing demands, such as how to manage the complex issues of demographic
and climate change and how to respond to the diverse needs of its population. At
the same time public sectors across OECD countries are operating under tight
fiscal constraint, making it necessary to deliver better outcomes at lower costs.
Many governments and public sector organizations around the world now see
public sector innovation as an essential ingredient to meet these demanding

OECD countries are pursuing various types of innovation in public service

delivery, with technology being just one among the many enablers. Many of
these approaches create services that are more user-focused, are better defined
and better target user demand. Innovation can alter both the supply of services,
by improving their characteristics, and the demand for services, by introducing
new ways to articulate demand for and procure them.

Innovative approaches to service delivery include:

Improving accessibility. Simplifying how users access different public

services by providing a single point of access. This includes through physical one
stop shops, and increasingly, exploiting digital technologies to provide 24/7
online access to public services. Countries are integrating services from different
delivery bodies, and in some cases, from different levels of government, such as
Denmarks borger.dk which provides citizens with an online entrance to public
services across the local, regional and national level. Effective approaches may

integrate not just frontend services but also the administrations supporting
back office. This may create new possibilities to treat citizens in a more holistic
way, by providing an overview of how each citizen interacts with the public
administration across a range of different services.
Engaging users in service design. Countries are innovating with more

open, participatory models for the design and development of public services by








involvement in the design and delivery of public services can help services to
meet user needs more accurately while new input from users can offer creative
solutions. Approaches to achieve this include workshops such as Finlands
Cardboard Hospital that brought together staff, patients, architects and
researchers to develop a new hospital environment, and making use of the
opportunities offered by digital technology to ask the public for their views in
response to specific issues such as Australias Speechbubble.
Targeting user needs more accurately. Innovations are creating public

services more tailored to users specific needs and behaviours. Services are
being provided more flexibly to meet citizens needs, while public policies and
messages are being adapted to respond to user behaviours. In the United
Kingdom for example, insights from behavioural science are being applied to
communications with citizens to increase the collection of tax debts, resulting in
increased revenues. This approach uses evidence on how people respond to
different messages and incentives to trial and design more effective government

Countries have adopted various approaches at the national level to foster public
sector innovation. They range from developing whole-of-government innovation
strategies that address the role of the public sector as innovator (e.g. Finland) to
creating structures to support individual organisations in their innovation
processes (e.g. Denmark). Dedicated strategies and action plans for innovation in
public services have been developed, such as Australias Centrelink Concept Lab,










improvements in actual workplace conditions. Innovation strategies can also be

adopted in individual public sector organisations.

What are the policy challenges facing public sector

Public sector entities are clearly innovating; across different services, sectors and
levels of government. Yet knowledge and analysis remains limited and
fragmented. Harnessing creativity in the public sector requires developing
knowledge of what creates successful innovations where the mechanics of
change and its enabling factors are understood, alongside an understanding of
the particular challenges faced by the public sector, and the needs and
preferences of its users.

The OPSI intends to advance the OECDs understanding of these issues with a
view to growing the evidence-base on policy approaches that promote successful
innovation in the public sector.

Discussions held among the OECD and its

member countries highlight the following problems in developing public sector

innovation systems:

Measurement and analysis. An appropriate framework and tools for

measurement of public sector innovation are needed. Although internationally
agreed concepts and metrics for measuring innovation exist for the private
sector, there is not as yet a similar framework for the public sector.
Measurement efforts should focus not only on monitoring efficiency and costs,
but also on providing a broad set of indicators that can shed light on innovation
processes in public sector organisations and show how these can help
governments meet their goals. Work is currently ongoing on

developing a

measurement framework for innovation building on OECD long-standing

expertise on business and public sector measurement.

Structural Barriers. Public sector organisations face a number of inherent

barriers with regard to innovation, due in part to the specific contexts in which
they operate. These can include complex, rigid organisational structures which
limit the flow of information and reduce openness; regulation and formal
processes that constrain creativity; and limited investment for innovation. A
key challenge is to understand how organisational structures, processes, and
competences should be adapted to design, monitor, implement public sector
innovations, and make them work efficiently.

Cultural Barriers. The disruptive nature of innovation can sometimes

appear to be at odds with the fundamental role of government institutions of
reducing uncertainty and ensuring stability (Bason, 2010). The political context
of public sector organisations, their highly visible activities and potentially high
consequences of failure can reinforce a culture of risk aversion. Another key
challenge is to develop risk management approaches, such as prototyping and
piloting, and incentive structures that enable and reward public sectors to
innovate efficiently while continuing to prioritise safety and the stewardship of
public resources.

Bason, C. (2010), Leading Public Sector Innovation: Co-creating for a Better

Society, The Policy Press, Bristol, UK.

Koch, P. and J. Hauknes (2005), On Innovation in the Public Sector, Public

Report D20, NIFU Step, Oslo.

OECD (2011), Together for Better Public Services: Partnering with Citizens
and Civil Society, OECD, ParisOECD (2010), Measuring innovation in the public
sector, in Measuring Innovation: A New Perspective, OECD Publishing. doi:

OECD (2012), "Public-sector innovation", in OECD Science, Technology and

Industry Outlook 2012, OECD Publishing. doi: 10.1787/sti_outlook-2012-18-en

OECD (2013), Government at a Glance 2013, OECD, Paris

In the past, governments were often pioneers of social innovation. The great municipal reforms of the
19th century created a new social infrastructure, as did the welfare reforms of the late 19th and 20th
centuries. More recently some of the most important technological innovations were associated with
public organisations from the Internet (DARPA) to the World Wide Web (CERN). But there are
many structural features of government that inhibit risk taking and innovation. There are barriers
(from cost based budgeting and departmental structures, to audit and accountability processes, as well
as a lack of career rewards) and few enabling conditions such as the dedicated budgets, teams, and
processes found in business or science. These conditions too often squeeze out new ideas and impose
standardised solutions rather than allowing many flowers to bloom.
The result is not necessarily a lack of innovation in government. Government at every level has been
the site of almost constant change particularly in the last 30 years. The problem is that the public
innovation process (centred on political manifestos and commitments) is by its nature centralised and

episodic, a problem compounded by the structural limitations to innovation on the front line of service
delivery. One response to this has been to reduce the scope of the state and parcel various activities
and services out to contractors from the market and third sector such as prisons, healthcare, adult
education and so on. But this trend has had its own problems.
If the state is to fully realise its potential as a critical force for the kind of social innovation required in
the current period of transition, then there are profound structural issues that need to be addressed
around how the state raises and allocates its funds, and how it is accountable for them. In this section
we look at some of the devices that have been used to make public bureaucracies more creative and
innovative. Some of the thinking here is set out in more detail in a series of publications on public
innovation that have been published by the Young Foundation and NESTA. We begin with some of
the high level issues and then move onto more specific tools.