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Running head: INNOVATION PROCESSES FOR PUBLIC AND NONPROFIT

ORGANIZATIONS

Innovation Processes for Public and Nonprofit Organizations


Amy Berger
College of Saint Scholastica

Project Committee
Sponsor: R. John Welsh, Jr., Ph.D.
Reader: Erik C. Burns, MA, MBA
Approved: December 2013

Submitted in partial fulfillment of the requirements for the degree of Master of Business
Administration, The College of St. Scholastica.

UMI Number: 1553208

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INNOVATION PROCESSES FOR PUBLIC AND NONPROFIT ORGANIZATIONS

Acknowledgements
This paper represents a special part of my journey from a career in the public sector to a
new one in the private sector. I have learned so much about myself, and my abilities throughout
this process, and I firmly believe that anything is possible if you truly want to accomplish it. It is
never too late to learn new things and challenge yourself in ways that you never imagined. None
of this would have been possible without my faith, family and friends. Thank you all for your
love and support during these past few months. A special thanks also to John Welsh and Erik
Burns for their support and guidance. I am blessed and grateful to have you all in my life and I
cant wait to take you all along with me on the next step of my journey.

INNOVATION PROCESSES FOR PUBLIC AND NONPROFIT ORGANIZATIONS

Abstract
Public sector and nonprofit organizations are currently facing financial constraints and fall
behind the private sector when it comes to developing new innovative products and services.
This qualitative analysis provides a new model for public sector and nonprofit organizations by
analyzing case studies from two public organizations and one private, as well as the experimental
elimination theory that is proposed by Potts (2010). Analysis of these case studies and theories
resulted in a model that focused on utilizing people and programs within an organization to help
develop innovation. Examples of organizational culture, creativity, and strong communication
tools are recommended and their usage can help improve the people and program side of
organizations. This proposed model provides guidance for innovative development and helps
satisfy the public sectors need for such a model.

Keywords: Innovation, public sector, government

INNOVATION PROCESSES FOR PUBLIC AND NONPROFIT ORGANIZATIONS

Table of Contents
Introduction ..........................................................................................................................6
Introduction to the Problem .......................................................................................6
Background of Study .................................................................................................8
Purpose of the Study ..................................................................................................8
Research Question .....................................................................................................10
Rationale ....................................................................................................................10
Significance of Study .................................................................................................12
Assumptions and Limitations ....................................................................................14
Organization of the Remainder of the Study .............................................................16
Literature Review ................................................................................................................17
Introduction ................................................................................................................17
Theoretical Perspectives ............................................................................................18
Private sector vs. public sector innovation ................................................................21
Innovation implementation ........................................................................................22
Research Approach ...................................................................................................26
Reliability and Validity ..............................................................................................27
Methodology .........................................................................................................................29
Introduction ...............................................................................................................29
Research Design.........................................................................................................29
Research Procedure ....................................................................................................30
Data Collection ..........................................................................................................32
Data Analysis .............................................................................................................38

INNOVATION PROCESSES FOR PUBLIC AND NONPROFIT ORGANIZATIONS

Reliability and Validity ..............................................................................................39


Ethical Considerations ...............................................................................................41
Summary and Discussion of Results ..................................................................................42
Introduction ................................................................................................................42
Summary ...................................................................................................................42
References ..................................................................................................................58
APPENDICES ......................................................................................................................63

INNOVATION PROCESSES FOR PUBLIC AND NONPROFIT ORGANIZATIONS

Introduction
Introduction to the Problem
Government agencies around the country are facing difficult fiscal situations. They
are being forced to make do with less, but at the same time, are still expected to provide
important services to citizens. Innovation is generally thought of as a private sector concept.
Traditionally companies have used innovation to create new products and services and have been
able to increase profitability by doing so. Some public sector agencies are using innovation in
effective ways, but the majority of them choose not to innovate. Reasons against innovation
include risk aversion, lack of financial resources, confusion over who is in charge of the process,
and what innovation itself really means. Innovation has varying definitions. For purposes of this
paper it is defined as the process of introducing, developing, adopting, and using of a new
product or service idea (Hartley, 2005). Innovation can help increase efficiency, profitability, and
contribute to the overall success of the global economy.
Research on public sector innovation is limited, but common themes can be found
through a review of current literature. Public sector theories such as the Traditional Public
Service Model, and New Public Management illustrate how government agencies have evolved
from hierarchies to organizational structures that currently strive to become more efficient. Other
current trends include collaborative innovation, creativity management, as well as the
development of public-private partnerships. All of these trends are important to consider because
their evolution shows the ability of the public sector to slowly change.
Differences between public sector and private sector innovation are also discussed in this
paper. Research has shown that these sectors are different in audiences, structure, and goals.
Although it can certainly learn from existing private sector innovation models, the public sector

INNOVATION PROCESSES FOR PUBLIC AND NONPROFIT ORGANIZATIONS

requires a different innovaton model because it is not the same as the private sector. It should not
be expected to use a model that does not incorporate public sector factors such as limited
financial resources, complex organizational structures, and political influences. Finally, current
innovation trends and processes from existing research are discussed. These include innovation
awards for employees, incorporating lean principles into innovation processes, and an
experimental elimination method as part of the development of new ideas and evaluation of old
ideas.
In addition to the factors listed above, case studies and existing theories will be
analyzed as part of the development of a new innovation model that can be used by government
agencies and nonprofit organizations. Innovation is not a new topic, but based on existing
research, there appears to be a shortage in the number of innovation models that are available for
these organizations to use. This paper provides a new model that can be used in order to further
develop the innovation process. The model includes the concepts of people and programs and
specifically discusses how the concepts of culture, creativity and communication can help
employees and management grow new ideas. For the programs component, the proposed concept
is to take the new ideas that were discovered and evaluate them through an innovation advocate
or innovation board. Old ideas will also be evaluated through this process. By utilizing people
and programs in better ways, the innovation model that is developed will be considered an asset
to public sector organizations.

INNOVATION PROCESSES FOR PUBLIC AND NONPROFIT ORGANIZATIONS

Background of Study
Prior research on this topic has focused on the general benefits of innovation itself
and how it can be used to help an organization become more profitable. Research has also
focused on how the private sector uses innovation. Little research has focused on developing a
specific innovation model that public sector and nonprofit organizations can use. This research
study will provide greater detail regarding public sector innovation and give these organizations
a new model that they can use to grow their organizations innovation priorities. Case studies
will be used to develop this model and special attention will be given to the public sectors
unique innovation challenges.
Statement of Problem
In todays challenging economic climate, government agencies and nonprofit
organizations are being forced to make do with fewer resources. Instead of continuing to use the
same existing processes, innovation can help create an opportunity for these organizations to
grow and become more successful. Innovation has become an important topic in the business
world and most previous research on this topic has focused solely on the private sector. Most
businesses have innovation processes already in place and their management has committed time
and money to producing innovative products. It is not typical for public and nonprofit
organizations to have innovation processes established or even fully comprehend the meaning of
innovation. This can be explained through a variety of reasons, such as lack of knowledge, lack
of financial resources, lack of management support, and lack of procedural ability. Because of
these hindrances, the public sector is at a severe disadvantage. Not only is this sector not able to

INNOVATION PROCESSES FOR PUBLIC AND NONPROFIT ORGANIZATIONS

compete alongside private corporations, public and nonprofit organizations are not contributing
to the improvement of our society.
Public and nonprofit organizations often struggle with how to start the innovation
process. Often they are overwhelmed with how innovation may impact their organization. For
this reason there is a growing need for innovation processes that can be tailored to specific public
and nonprofit organizations. This new process would provide them with the tools and knowledge
that they need to succeed. For other organizations that may not see the benefits of innovation,
these processes can help remind them that innovation can give them competitive advantage and
improve the overall economic health of their organization. If nonprofit and public organizations
could harness the innovation potential that is out there in their field, the business community
would also benefit from its successes.
Purpose of Study
The purpose of this paper is to provide nonprofit and public organizations with a new
innovation process that can be tailored to their specific organization. Background information on
innovation and its benefits will be provided. In order to establish the new process, prior case
studies on this topic will be analyzed as well as innovation processes that are currently being
used by the private sector. Nonprofit and public organizations will be able to use this new
innovation process to help improve existing products and services as well as create new ones.
Hopefully, this process will inspire the nonprofit and public organizations to become known for
their innovation.

INNOVATION PROCESSES FOR PUBLIC AND NONPROFIT ORGANIZATIONS

Research Question
The purpose of this qualitative analysis is to examine the relationship between innovation
and public and nonprofit organizations. This research provides background information as well
as a model that can be used by individual organizations to help them become effective
innovators. The research question is: What type of innovation model can be utilized by public
sector and nonprofit organizations?
Rationale
Businesses in the private sector are familiar with innovation and have designed and
adopted innovation processes to create new products and services. The public sector community
has not focused on innovation. It has grown accustomed to doing things in the same exact way
for a long time. It is important to distinguish between the goals of nonprofit innovation compared
to the goals for innovation for the private sector. In the private sector, innovation can be seen as a
way to increase profitability. Apple is an example of a corporation that has used innovation to
have a competitive advantage over its competitors. In the public sector, the goal of innovation
should be to advance the public good and create public value (Bland, Bruk, Donghin & Lee,
2010). Innovation should improve services such as obtaining a drivers license at the DMV, it
should help a nonprofit promote its mission through unique technology, and it should contribute
to society.
There are significant differences between nonprofit and for profit institutions when it
comes to factors that impact innovation processes. The main areas are: extensive responsibility
structures, motivations and compensations of employees, and the overall goals of the
organization. Private corporations are responsible to shareholders and are likely to take risks in

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order to satisfy shareholders. In nonprofit organizations, the organization provides services to


clients and usually has a board that oversees their work. In terms of motivations and
compensations of employees, nonprofits are often run by volunteers and employees that work for
low wages in exchange for working for a cause that they are passionate about. Corporations pay
their workers higher wages and offer significant compensation packages. Finally, the overall
goals of the organizations are very different. For profit organizations focus on making profits and
giving those profits back to their shareholders. Nonprofits provide services to clients and can be
risk adverse when it comes to innovation (Hull & Lio, 2006).
There are also unique issues that arise in nonprofit and public organizations. There
can be diversity within the organization that causes communication issues. There may be
differences between generations of workers, workers of different cultures, and workers who
dont share ideas. Communication is not always encouraged. Nonprofit and public organizations
also have to deal with competing interests. Government organizations face pressure from
lobbyists, legislators and constituents. Nonprofits face pressure from policy activists and board
members. The organizations have to find a balance between these competing interests. Finally,
there is often no single person in charge of the organizations management, or there may be
many people who do not work together to reach the organizations goals (Bland et.al, 2010). All
of these factors are important when an organization is looking to develop an innovation strategy.
Many companies in the private sector have an innovation process that has been
established by management. If a nonprofit organization decides that it wants to establish an
innovation process, it may find that there are not very many resources available. This may cause
them to not even want to try the process. By examining previous case studies of nonprofits and

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public organizations and taking a closer look at innovation theories, an innovation process
framework for these organizations can be established. These organizations will have the ability
to look at what has worked for similar organizations as well as the benefits of innovation.
Innovation can provide these organizations with the unique opportunity of improving the ways
that they serve the public as well as enhancing their organizations. Having more innovative
nonprofit organizations will also enhance the business community. Additional nonprofits that
choose to innovate may also be able to partner with private corporations to develop joint
innovation processes.
Significance of Study
This qualitative study takes existing case studies and public sector innovation theories
and expands it to create an innovation model that can be utilized by public sector and nonprofit
organizations. This model provides a practical way for organizations who may be deciding
whether to innovate or for those who are already innovating, it may help provide a new
perspective on innovation. Management is given information that reminds them that although
innovation in the public sector may be sometimes perceived as risky, the benefits can outweigh
the risk factors. If management is able to educate its employees about innovation and other
organizations see the success of the model and want to participate, the public sector will benefit.
When the public sector benefits, the private sector and the American economy will as well. In
tough economic times, new innovation processes are needed to ensure that resources are being
utilized in the best way possible. Finally, public policy could also be impacted in a positive way.
The public and nonprofit organizations who choose to use this model may be able to change the
way that the industry views innovation and this could be reflected in future legislation and policy
discussions.

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Definition of Terms
In this research paper, there are terms that will be used that are intended to convey a
specific meaning as it relates to this paper topic. These definitions may vary across research
fields, however in this case they relate to the fields of public sector and nonprofit organizations
that are discussed in this paper. Terms and their definitions are provided below.
Collaborative innovation: The organization works with outside interests to improve goods and
services.
Creativity management: Knowledge management theory that focuses on acquiring new ideas
from an organization and its members to address and solve new challenges (Berman & Ch-Gon,
2010).
e-Governance: Focuses on using technology to provide email updates and current websites for
citizens.
Innovation: The process of introducing, developing, adopting, and using of a new product or
service idea (Hartley, 2005).
Networked Governance: Public sector innovation theory that believes in having a continuously
changing environment and focuses on public value (Hartley, 2005)
New Public Management Theory: A public sector innovation theory from the 1980s and 1990s
that focused on efficiency and accountability. Experimentation through innovation efforts was
viewed as a waste of valuable resources (Townsend, 2013).

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Nonprofit Innovation: Consists of developing new ways to improve the administration of


services to help the organization better serve its constituencies. These organizations often rely on
volunteers and donations (Beekman, Steiner & Wasserman, 2012).
Private-Public Partnership: The private sector partner provides the business development
expertise and the public sector agency provides access to specific resources and networks
(Micheli, Schoeman, Baxter & Goffin, 2012).
Private Sector Innovation: For profit organizations that focus on producing new goods and
services that will help increase company profits. These organizations report to owners and
stakeholders.
Process Innovation: Changing the process by which goods and services are produced
Product Innovation: Creating new goods and services
Public Sector Innovation: Innovation that is guided by principles to reduce waste and improve
the delivery of government services to constituents. The public sector is funded by public
revenue, accountable to citizens, and does not compete for market shares (Hartley, 2005).
Traditional Public Service Theory: The public sector is seen as stable, composed of hierarchies,
and focuses on the public good (Hartley, 2005).
Assumptions and Limitations
An assumption of this research paper is that a nonprofit organization or public sector
agency will be able to use the innovation process that is discussed to improve their current
organization. It is important to recognize that some organizations may not be willing to

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undertake this process and may not fully allow themselves to capitalize on this opportunity due
to lack of resources or management support. It is important for organizations to understand that
this template is not a complete solution for an organization, rather it is to be used as a guide.
Specifications can be altered to fit an organizations size, budget, location, or other internal
factors. The significance of this study is that it provides helpful background information on
innovation in the public sector, its challenges as well as potential opportunities.
A limitation to this study is that there is a knowledge gap on this topic. Innovation
itself is not a new concept, however most of the research available focuses on private sector
innovation. Private sector innovation is seen to be more beneficial because it can help increase
profits and help grow the economy. There is not a significant amount of information on the
importance of public sector innovation and how it can be used in coordination with the private
sector. According to Nahlinder, public sector innovation was not very established even in 2005.
Since then the interest in this topic has increased, but there are still not nearly enough case
studies and existing research that can help provide organizations with the tools they need to
innovate. Potential issues that still need to be further researched include how to handle
incentives, employee motivation when it comes to innovation processes, attitude toward risk, and
the differences between the public and private sectors (2013).
Future research should extend this current innovation process and conduct follow up
studies to analyze how utilizing these innovation processes have impacted the organization. This
data could help further improve the innovation template as economic conditions or
organizational structure changes over time.

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Organization of the Remainder of the Study


The organization of this paper is structured as follows: Chapter 1, provides an
introduction of the problem, background information of the problem, purpose of the study,
research question and limitations of the study. Chapter 2, Literature Review, examines research
on the topic of public sector innovation. Three general themes are identified and evaluated. They
include: theoretical perspectives on public sector innovation, public sector vs. private sector
innovation, and innovation process implementation. The reliability and validity of the literature
that is evaluated is also highlighted. Chapter 3, Methodology, describes the qualitative approach
of the study and specifically discusses the procedures used, data collection and analysis, as well
as reliability, validity and ethics. Data collection focuses on the three case studies and theories
that were chosen to be part of the innovation model. Finally, Chapter 4, Summary and
Discussion of Results, summarizes the new innovation model, discusses its implications, as well
as provides limitations of the current study and opportunities for future research.

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Literature Review
Introduction
Innovation is a relatively new concept in the public and nonprofit organization sectors.
Historically the public sector has not been encouraged to innovate, however this is starting to
change. In recent years there has been an increasing focus on government innovation because of
three main developments. State government agencies around the country are experiencing
government cutbacks as expected state revenues fall short. Second, important policy issues such
as climate change, government run healthcare, and continuing high levels of unemployment are
now becoming impossible to avoid. These issues require unique solutions to be able to solve
them and innovation can offer solutions that never existed before. Not only is technology a
distinct possibility, but collaboration between governments and corporations may also occur. A
relationship between these two sectors can also benefit our economy. Finally, the world has
become more global and will continue to increase its global presence. Products and services are
shipped differently, goods and services can also be administered online from one country to the
next, and people have the desire to have their products and services delivered in a manner that
reflects the changing global dynamic (Sorensen & Torfing, 2012). It is important for government
to change the way it does things to reflect these new ideas.
This literature review will examine three main areas that are important to this
research paper. These include historical perspectives, public sector innovation vs. private sector
innovation, and innovation implementation. Although the existing research on this topic is
somewhat limited, the existing information does help contribute to the development of a new
innovation process that can be utilized by the public sector.

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Theoretical Perspectives
Before establishing a new innovative process for the public sector, it is important to
take a look at the theories of how government has viewed innovation in the past. Examining past
research helps explain the mindset of the public sector and what issues need to be taken into
account. Traditionally, government has a reputation of being very bureaucratic. The traditional
public service model is a good example of this. This particular theory focuses on agencies being
stable, having an organizational structure that is hierarchical in nature, and focuses on the public
good (Hartley, 2005). In the 1980s and 1990s, government started to focus more on efficiency
through New Public Management (NPM). Innovation is done through downsizing of agencies
and there is a focus on improving government services. The concept of E-Government is a result
of this philosophy. E-government focuses on using technology to provide email updates and
current websites for citizens. It has four main components that include e-administration, ecitizens, e-services, and e-society. Some organizations choose to focus only on a few of these
components, others use them all as they have the time and resources to do so.
Because it is technology based, e-government gives organizations the opportunity to
interact with citizens in a unique way. E-administration focuses on the improvement of
government processes. E-citizens focus on connecting with citizens. E-Services provide online
services to constituents. E-society aims to build relationships with citizens and business
organizations (Feller & Finnegan, 2011). E-government is becoming more popular, as traditional
methods of connecting with constituents have become outdated. E-government will continue to
evolve as more government agencies decide to use it.

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Research also suggests that collaborative innovation may be the new trend in government
innovation. Gonzalez, Llopis and Gasco conducted a study of local Spanish government units to
obtain information regarding what type of innovation is most beneficial to them. Those units that
were large cities preferred to use a form of collaborative innovation in which they formed
relationships with external organizations (2013). Additional research by Sorensen and Torfing
suggests that if done correctly, collaborative innovation may help bridge the gap between private
and public sector innovation. Government agencies tend to only share ideas within the walls of
their own organization. Collaborative innovation allows them to share ideas with corporations
and in exchange learn more about how the private sector uses innovation as an advantage (2012).
For example, the Danish government created a program called the Danish Mindlab to see how
collaborative innovation could be used in their country. The goal was to provide a safe
environment where key stakeholders, businesses, and citizens could interact and discuss new
ways for government and businesses to work together to innovate. The lab has gone through
three different stages since its formation in 2001. Its first focus was on employees and idea
generation. In Mindlab 2.0 in 2006, value creation was its goal and users were the target. The
most recent Mind Lab focuses on both users and organizations (Carstensen & Bason, 2012).
Through this unique concept, the Danish government has improved its processes and has reduced
government waste. This effective collaborative model could be applied to other governments
around the world.
One of the newer innovation theories in the public sector is creativity management.
Creativity is not new in all public sector organizations, but using it as an innovation model tool is
certainly new. Creativity management focuses on developing new ideas through idea generation,
orientation and training, incentives and rewards for new ideas, and an appraisal process for ideas

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(Berman & Chan-Gon, 2010). Idea generation can be accomplished through individual and group
brainstorming sessions and ideas can be collected and reviewed by management or other staff
members. Orientation and training sessions can be conducted a few times a year so that staff
members are aware of new ideas and any upcoming changes to the new innovation process.
Depending on the size and budget of the organization, employees may be rewarded for new ideas
they have submitted and ones that have actually been implemented by management as part of the
organizations innovation platform. Finally, an appraisal process can be established for ideas that
are submitted. All of these tools can help an organization become more innovative.
As public sector organizations continue to struggle with tighter fiscal constraints, they
are seeking new alternatives to fully funding programs and implementing them. Public-private
sector partnerships give them the opportunity to innovate by using private sector resources and
networks. There are three conditions that should be met in order to have a successful partnership.
They include the following: the partnership should be a long-term relationship so that the
partnership can fully develop instead of being a one-time project. The private sector partner
should also recognize that the public sector organization has expertise in administering services
better than the private sector organization. Public sector organizations focus on services instead
of profitability. Finally, the partnership organizations should agree on the level of risk that will
be involved in establishing the relationship. This may include costs, political impacts, and
measures that may be used to evaluate the partnership as it develops (Forrer, Kee, Newcomer &
Boyer, 2010).

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Private sector vs. Public Sector Innovation


Innovation in the private sector is significantly different from the public sector.
Public sector innovation is seen as slow, ineffective, and insignificant. This is because it doesnt
compete directly for market share, and is driven by competing political interests (Potts, 2009).
The private sector is seen as greedy and produces new products and services that are too
expensive for the public sector to replicate. It is important to recognize that these two sectors do
have significant differences in how they choose to approach innovation. First, they differ in their
vision. The private sector uses innovation to increase profits and maximize shareholder value.
The public sector and nonprofit organizations often have a vision of helping provide services to
others. The private sector tends to be more willing to take risks and has the adequate staff and
financial resources to innovate (Hull & Lio, 2006). In contrast, the public sector lacks staff
experts on innovation, chooses to focus more on societal change, and often does not have the
extra finances to spend on developing new products and services.
Additionally, the private sector has a different audience compared to the public
sector. Corporations report directly to shareholders who are concerned about increasing company
profits. The public sector reports to citizens. The public sector also is effected by political
interests. Depending on the results of a policy issue, policy makers may lose power of a
legislative branch due to their decisions. Political failure is not always a risk that government is
willing to take (Potts, 2009). The public sector also struggles to add more to its workload. It is
not always excited at the possibility of innovation, mainly because it wonders how it can
complete the task when its workforce is already stretched too thin.

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Typically the private sector is viewed as a complementary partner to innovation.


Some private sector organizations innovate because they recognize that it makes them more
responsive to what is happening in the market. The public sector structure makes innovation a
somewhat unlikely match for this sector of the economy. Innovation requires risk taking,
creativity, and adaptability and bureaucracies just dont naturally do these things. They question
the need for innovation and sometimes see it as a threat to their old way of providing services to
constituents. If government agencies do choose to innovate, they do it only to maintain its
current system, not to help the organization promote new ideas for implementing services
(Fajans, 2006).
Innovation Implementation
Research suggests that there are important factors that public sector and nonprofit
organizations should keep in mind when deciding whether to innovate. An organizational culture
that promotes innovation and where employees feel comfortable taking risks needs to be
established. Board members of nonprofits and leadership of government agencies should set an
example for employees and also provide incentives for new and innovative ideas. Creativity is an
important component of creating a culture that encourages innovation. Creativity should include
expertise, motivation, and creative thinking. Management should provide questions and
discussion forums to encourage the sharing of ideas. Virtual teams can also be utilized by global
corporations that may have offices around the world. These teams can serve as a hub for the
sharing of ideas and interaction between employees (Hiennala, 2011).
A form of creativity management that can be used by organizations is a concept
called concept mapping. The goal of concept mapping is to help employees identify the

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characteristics of their work environment that help encourage creativity. It involves


brainstorming sessions, the rating and piling of characteristics that are identified through
brainstorming sessions and email surveys. The data is compiled into cluster maps that show the
average importance of the creativity characteristics. Through the mapping process, an
organization is able to identify what is most important to its employees when it comes to
creativity (Jaskyte, Byerly, Bryant & Koksarova, 2010). The organization can then implement
changes to the work environment based on the data that is has obtained.
Government doesnt typically use financial incentives, but it is a potential avenue to
encourage innovation. Kay proposes that the public sector use prizes and other reward incentives
to encourage innovation. Federal agencies such as NASA already use this concept. Prizes help
promote awareness and competition, and accelerate new research (Dalziel, 2007). Dedicated
funding for innovation should also be a priority. Although this may be a challenge for
organizations that already have financial difficulties, innovation projects may not be able to
succeed if they do not have the necessary funding. Finally, strategic planning can be used to help
provide an organization with direction. Agencies should examine where it is at with regard to
innovation and identify key characteristics that they can use to implement innovation processes
(Kohli, 2012).
Innovation awards can also be used as an incentive to encourage employees to
innovate on their own or participate in overall company innovation projects. The purpose should
be to recognize successful innovators and to encourage future efforts. Some positive effects are
that winners of the awards can serve as innovation heroes for other employees to look up to.
Or, innovation awards can help direct employees towards meeting overall company goals.

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Problematic issues can arise if employees win multiple innovation awards or the same group of
employees win most of the time, so special attention should be paid to how the awards program
is structured and that employees fully understand the guidelines (Rosenblatt, 2011). Individual
innovation is important, but groups can also be used to help research new ideas. With the support
of management, departments can establish achievement awards for those teams who reach these
goals. Because many government organizations still have limited budgets, cost saving ideas
should be welcomed. Cost saving ideas that are implemented may help provide other resources
that can be designated for innovation purposes (Borins, 2001).
Agencies can also use existing resources and organizational structures to help
establish innovation processes. Potts suggests an experimental method that is used to eliminate
innovation programs that dont have value and fund those who show promise. Each program
would be coded and assigned an elimination percentage. The experiments are conducted and
results are analyzed to help determine value (Potts, 2010). Researchers have also studied
government innovation in other countries to obtain ideas that may be helpful in the United States.
Gruen discusses the establishment of an Advocate for Government Innovation. This government
position would help provide resources and financing for innovative ideas, establish a reward
system, and also partner with local universities to host annual conferences and seminars on
innovation (2009).
Lean principles could also be used as part of an innovation process. Traditional lean
principles focus on eliminating unnecessary waste, which may contradict work environments
where traditional innovation processes require more resources, not less. However, there are some
commonalities between lean thinking and innovation that can be used. Lean thinking focuses on

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identifying relevant stakeholders to determine what they value. Innovation processes should also
involve many stakeholders to better understand their needs (Srinivasan, 2010). Both principles
also focus on organizational learning that can be conducted through employee training programs
and promoting a work environment that encourages creative thinking and ideas. The important
consideration is to make sure that lean principles are not the only method used as part of an
innovation process model. Too many lean principles may harm employee creativity. The lean
environment can make employees stressed because they must now meet new expectations in
addition to previous programs (Srinivasan, 2010). Special attention should be given to
incorporating some, not all, lean principles into an innovation model.
Potts suggests that a completely different innovation perspective should be taken into
account as the public sector is typically on the defensive side of innovation. Because the public
sector does not depend on capturing new business or profits like the private sector does, he
believes that the public sector needs to use a different type of model. The innovation model he
proposes is experimental elimination. In this method innovation programs are identified and
coded, a percentage is selected for elimination, the program is implemen ted and results are
analyzed. The programs that have value are kept (Potts, 2010). This method could help focus
time and resources on those programs that really innovate and other monies could be used for
other programs. This method will be discussed further in the methodology section of this paper.
Heracleous and Johnson examined two public sector organizations in Singapore to
discover if the private sector could learn from the public sector regarding innovation. The
National Library Board was able to transform many libraries into lifestyle libraries, which
consists of libraries that are in cafes, shopping malls, or self-sufficient libraries. The library used

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succession planning, executive coaching, leadership development, and a performance based


reward system for its employees to innovate (2008). Singapore Airlines focused on
differentiating itself through staff development and building stronger relationships with its
customers. It learned to embrace change rather than fearing it. These two organizations used
technology to increase its efficiency and differentiate themselves from competitors. They are
important to consider in developing an innovation model because they did not wait for a crisis to
innovate, rather they took the initiative before situations occurred.
Although research on this topic is limited, existing research and case studies will be
used to help formulate a new innovation process for the public sector and nonprofit
organizations. This literature review has served as a guide that will help factor in necessary
considerations as a process is developed. The challenge of a new process will be not only taking
these factors and theories into account, but also making the process easy to understand and
helpful for organizations that choose to use it. Although they may be in the same field, each
organization brings different strengths and weaknesses, especially in staff and financial
resources. It is the goal of this research paper to help encourage the public sector that innovation
needs to be a priority or their organization will be left behind. In todays economy, the business
world needs public sector innovation just as much as the private sector in order to survive.
Research Approach
This research paper reviewed scholarly, peer-reviewed literature regarding
innovation, public and nonprofit organizations. Case studies were used as well as existing
innovation theories and models to design an innovation model that can be used by public and
nonprofit organizations. This innovation model can be tailored to each organizations strengths

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and weaknesses and can be implemented by management and other senior-level staff members.
The literature review examined three main themes: historical perspectives on innovation, public
sector innovation vs. private sector innovation, and innovation implementation. Relevant terms
specific to types of innovation, and public administration theories are also defined.
Reliability and Validity
Qualitative research studies are sometimes criticized for being too subjective because
they often rely on personal interviews and individual case studies. The key is for this type of
research to be consistent and trustworthy. Researcher bias should be kept to a minimum as much
as possible. Reliability and validity are two important research terms that should be discussed as
part of any research project. Reliability refers to the trustworthiness of the procedures and data
generated. If the study were to be replicated by another researcher, similar results should occur.
Validity is defined as how well the research tools are used measure the topic that is under
investigation (Roberts, Priest & Traynor, 2006).
The individual sources that are discussed in this literature review are found to be valid
and reliable overall. Public sector innovation theories are consistent throughout the research that
was examined. Differences between public and private sector innovation were also found to be
from trustworthy and credible journal sources. Researchers were found to be innovation experts
and in one particular case, three different articles regarding public sector innovation were written
by the same author, which demonstrates credibility in the field. Case studies can be challenging
in terms of validity and reliability if they have small sample size or only focus on one or two
companies. If small numbers of cases are used, it could possibly be difficult to determine the

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reliability and validity because the research has not been replicated often. This researcher used
multiple case studies in order to try and avoid this potential issue.

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Methodology
Introduction
This paper uses a case study qualitative research approach. Case studies are a method that
can provide multiple levels of analysis, as they may contain different methods of data collection
such as interviews and surveys. Case studies may also help test existing theories and possibly
generate new ones (Eisenhart, 1989). In developing a new innovation process for nonprofit and
public organizations, examining recent case studies will help establish the criteria that should be
used in the new innovation process. Past research has focused on both qualitative and
quantitative methods, however case studies have been used to closer examine how an
organization uses innovation.
The purpose of this analysis was to explore public sector innovation case studies and
theories and use them to design a new model to be used by public and nonprofit organizations.
The following research question was addressed: What type of innovation model can be utilized
by public sector and nonprofit organizations?
This chapter will elucidate the methodology of this study and is presented in six sections
that include: (a) Research Design; (b) Procedures; (c) Data Collection; (d) Data Analysis; (e)
Reliability and Validity; and (f) Ethical Considerations.
Research Design
Case studies are frequently used in business research because they can provide
additional information that may not be obtained through traditional quantitative methods. They
can be valuable tools to help support existing models and theories and also help create new

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models (Zivkovic, 2012). Existing case studies on innovation from the public sector are used to
help accomplish this goal.
The research design was to specifically examine public sector case studies and use
them in coordination with a proposed innovation by elimination model as well as lean principle
theories on innovation to develop a new model. Multiple concepts were used because using one
or more case studies and additional research theories can help discover patterns and themes that
may not otherwise be discovered through using only one case study (Eisenhardt & Graebner,
2009). Because innovation is a popular and constantly changing topic, relatively current case
studies and theories were utilized to make sure current information was taken into account.
Procedures
In order to conduct a thorough analysis about public sector innovation and develop a
new process three case studies were selected. These case studies are from 2010 and were chosen
because they display characteristics and provide information that is necessary for developing a
new innovation model. Two of them use public sector organizations as the subject matter. These
case studies display an understanding of the challenges that public organizations face when
trying to innovate. The single private sector company was chosen because it uses lean
innovation, which is a component of the new model. While searching for case studies that fit the
desire innovation model that is to be created by this researcher, a unique innovation model was
discovered. Unfortunately, this public sector model has not been tried out on a public sector
organization, but this researcher believes that it provides a model that can be supplemented by
additional innovation theories and results from the selected case studies that are discussed in this
paper. After analysis of case studies for items that can serve as part of the new innovation model,

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these items were further researched and incorporated into the innovation by elimination proposal
that Jason Potts discusses in his research.
When using case studies to develop a new theory or model, there are important steps
that should be followed in order to obtain success. Although these steps are typically used by
researchers who are conducting their own case studies, this researcher believes it is still
applicable to this current research paper. There are six steps and they include: defining the
research question, selecting cases that are theoretically useful, using multiple data collection
methods, entering the research field, analyzing the data including using cross-case pattern
searches, shaping the hypothesis, comparing results with other existing literature on the topic.
(Eisenhardt, 1989).
It is also important to discuss the steps that are needed in developing a new
innovation process. The new innovation model does not incorporate all of these steps because
some do not apply, such as finding an angel investor and creating a venture company. However,
these steps reiterate the need for there to be a discussion of the right ideas and goals that the
organization would like to achieve. According to research Suhs case study on the Korean
Research Institution and Mobile Harbor, there are twelve steps in the innovation progress. They
include: identifying the need for the new product or service, performing research, creating and
testing of ideas, demonstrating the practicality of the new idea, seeking patents, testing the
viability of the new idea, finding an angel investor, raising venture capital, creating a venture
company, hiring talented people, raising large amounts of capital, and selling the venture
company (2010). Innovation processes do require a step by step process so that the project can be
implemented as effectively as possible.

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Finally, one of the main procedures of the new innovation model that is constructed
through this research study is the concept of reverse innovation. Reverse innovation is innovation
that is done in the opposite manner as traditional innovation. The steps include the following: the
origination of a new opportunity for elimination, the adoption of that elimination, and the
retention of that elimination (Potts, 2010). Reverse innovation has a reputation for being
relatively easy to implement, can be enacted by a group of people, and is traditionally used
mainly in the technology field (Chanqing, Kezheng & Fei, 2005). Although unconventional,
reverse innovation may help public organizations look at their current organizational structure in
a new way and help them realize how innovation can potentially be implemented through
existing programs and resources.
Data Collection
Two public sector innovation cases and one private sector case were chosen based on
their potential to help contribute to this researchers new innovation model. In addition, one
innovation theory proposal was chosen. One of the main principles for the new innovation model
is the Innovation by Elimination model that Jason Potts has proposed. Unfortunately, Mr. Potts
did not, to this researchers knowledge, conduct an actual test case using this model.
Nevertheless, the model that he proposes is important to consider because he provides a unique
theory that takes into account the unique challenges that the public sector faces. Innovation
requires a unique approach because it in itself is a unique concept. Innovation in the public sector
needs to use a method that reflects the fact that is it not the same as the private sector. Traditional
private sector innovation models alone will not be enough for the public sector.

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It is important to distinguish among the three case studies that were chosen by this
researcher, as they each bring distinct values and concepts to the new innovation model. The
Texoma case study discusses how a regional consortium successfully innovated on issues related
to economic development through integration, dialogue, and coordination efforts. The second
case study has more of an international and larger government sized focus, as it concentrates on
the Seoul Metropolitan government and its innovation efforts. The final case study focuses on
Rockwell Collins, a company that uses lean principles as part of its innovation process. This
researcher felt it was crucial to choose public sector case studies that focus on different types and
sizes of government agencies because this helps form a more diverse model. The private sector
case was chosen because some private sector models can be tailored to public sector
organizations. The private sector is more experienced in developing innovation models. The
intent of this new innovation model is for agencies of all types of organizations to be able to use
it and model it to their specifications.
Texoma Regional Consortium
The Texoma Regional Consortium was formed in 2006 and consists of various
organizations in the higher education, K-12 education, business, government and non-profit
fields. Thirteen counties from Texas and Oklahoma are represented through the consortium. The
Texoma region faces unique workforce challenges such as an older workforce, low-skilled
workers and other issues that rural communities face. The goal of the organization is to not only
create employment opportunities for its citizens, but also increase the skills of workers in the
area (Bland, Bruk, Dongshin & Lee, 2010).

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For this qualitative case study, the researchers spent time during 2007-2008 speaking
with members of this consortium through in-person interviews, media reports, and other
documents to gain insight as how and why this innovative organization is so successful.
Researchers also wanted to understand the relationship between governance and innovation.
They believe that the biggest obstacles to innovation in the public sector are: the failure to
communicate, balancing multiple interests, and the fact that typically no one seems to be in
charge of innovation processes (Bland et al, 2010). Three key findings were discovered through
this case study that are worth discussing. Integration is key to help ensure that participants are
given the same opportunity to share their ideas. This can be done through increasing
participation by making employees feel empowered, utilizing past relationships to build new
ones, and building a common identity.
Dialogue is another important concept. Social interaction is key when an organization is
trying to further develop its innovation process. The Texoma organization was able to hold
regular meetings and discussion groups to make folks feel included. They also released
comprehensive reports and held economic summits to help bridge the gap between public and
private sectors. Finally, coordination is important. Texoma was able to track innovation ideas
through its web site and was also able to institute steering committees to further work on
innovation projects (Bland et al, 2010).
Innovation by Elimination Method
One of the core theories used in this research paper to design a new innovation model
is the concept of innovation by elimination. Mr. Potts argues that public sector innovation is
different than private sector innovation because there is no similar measure of profitability. The

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public sector continues to grow at an alarming rate and the GDP is currently over 30% (2010).
New policies and measures have been piled on top of old policies instead of cutting old policies
that are obsolete and cost too much money. The public sector needs to have a better balance for
innovation. Because the public sector has some differences, it requires a unique innovation
approach. An experimental method of elimination would give the public sector the opportunity to
determine which programs are working and which are not. By eliminating innovation programs
that are not effective, other money could be targeted to those programs that do work (Potts,
2010).
Although somewhat controversial, this method has the potential to help transform the
public sector innovation process. The method has five steps and they include the following:
identify every program and code it, randomly select some percentage of the program for
elimination, implement the experiment, analyze the results, and if theres value, continue the
program (Potts, 2010). This program may require additional time and resources to conduct the
experiments, however the organization would be able to examine what programs work and which
do not.
The researcher also acknowledges some drawbacks to using the experimental method
that he proposes. Many public sector employees do not understand what the experimental
method is. The method is not very common in the social science field. Experimental methods can
also be hard and time consuming. Potts recommends at least a couple of years to test the
programs that go through the experimental elimination method (2010). Because this model has
not been tested on public sector organizations, this researcher believes this suggested time frame

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may not be enough, depending on the program and the type of organization that is administering
the program.
Seoul Metropolitan Government
This case study focuses on site visits, mail surveys, and interviews that were
conducted in 2008 at the Seoul Metropolitan Government. Creativity management was the focus
of the case study. It is defined as a management process that can be used to increase, evaluate
and propose new ideas that can be implemented in organizations (Berman & Chan-Gon, 2010).
The Seoul Metropolitan government adopted this method at its highest leadership level. The
main principles of creativity management include rewarding managers and employees who
submit innovative ideas, creativity management training programs, auditing of existing
programs, and the opportunity for citizens to submit their own ideas.
Researchers discovered that the Seoul Metropolitan Government received over 3,000
new ideas each month. They also held a two-day training course on creativity for its employees.
During the case study time frame, only 13% of ideas that were submitted were actually
implemented, 21% were old ideas that were already being used or were not selected previously,
and 66% were new ideas that were not chosen to be implemented (Berman & Chan-Gon, 2010).
This innovation model is seen to be effective because it adds new dimensions to the traditional
innovation process that governments use. The researchers argument is that this model could be
adapted and used in the American private sector. Future research could focus on a greater time
frame and more discussion as to why only 13% of ideas were implemented and how these ideas
impacted the cost structure.

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One large limitation to this study is that the innovation process was conducted on a
large scale. The Seoul Metropolitan government is larger than a lot of state government agencies
that are located in the United States. The Seoul Metropolitan government invested a lot of time
and effort into its organizational structure and the creative management model that is discussed
in this case study could potentially be hard to implement in a smaller public sector organization
that has a limited budget and limited number of employees (Berman & Chan-Gon, 2010).
Valuable insight from this study can be used in the new innovation model, however it is
important to recognize this limitation.
Rockwell Collins
Rockwell Collins is an international leader in aviation electronics. They are an
example of a company that has been successful in combining lean principles with innovation
processes. The companys organizational values include teamwork, integration, integrity,
customer focus, and leadership. The core of the companys innovation program is its people. The
company has organized its innovation program around the nature of the work. Rockwell
Scientific conducts basic research, the Advanced Technology Center focuses on applied
research, and the Rockwell Centers of Excellence focus on improving existing products
(Srinivasan, 2010).
Lean principles can also be achieved through making the strategy an integral part of
the organization. Rockwell Collins organizational structure consists of shared values, culture,
infrastructure, and rewards. People form the center of the model, as people help create company
value through their hard work and ideas. The leadership of Rockwell Collins is committed to
investing in R&D infrastructure by spending 18-20% of its sales to research and development

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(Srinivaran, 2010). This demonstrates the lean enterprise principle of securing leadership
commitments to supporting enterprise behaviors. The company also has made innovation a large
part of its strategy. The company encourages the five components of its structure to work
separately, yet together so that the companys strategy is based on these components. The
company has become successful at innovation because not only is its strategy part of the
companys policy, it also is part of the Rockwell Collins organizational culture.
To encourage a culture of innovation, Rockwell Collins employees are encouraged to
submit new ideas through the 10x program. This program encourages employees to submit
specific ideas to improve cost, size, or power requirements. Each accepted idea is funded with
$50,000 and the winning employee can focus their efforts on developing the product during the
next year. Rockwell Collins is a large company and has a substantial amount of resources so not
all organizations may be able to offer the prize money and resources, but the core principles that
the company has embraced when it comes to innovation are noteworthy and reinforce that people
and programs are crucial to having an effective innovation model.
Data Analysis
The intent of examining these three case studies and the elimination theory was to
help generate a new innovation model that can be used by public sector and nonprofit
organizations. The model includes themes from each one of these. The Texoma case principles
of integration, dialogue, and coordination are included. The experimental elimination method is
included, creativity management from the Seoul Metropolitan Government case, and some of the
lean principles of the Rockwell Collins case. These concepts and their applicability as well as the
new innovation model will be discussed further in the Results section of this paper.

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Reliability and Validity


In qualitative research studies the researcher is not usually completely objective in
their research. They may have prior bias going into the project or may develop unintended bias
as they develop their research and validity are two measures that can help determine if the
research investigates what it intends to, and whether the study can be replicated. There are
important factors to take into account as qualitative research is conducted. The researcher must
have credibility, the articles used should be peer-reviewed, a detailed literature review needs to
be provided, the methods used should reflect the research question, and the analysis should be
easy for the audience to comprehend (Farrelly, 2013).
For the purposes of this qualitative study these criteria have been met. For the three
case studies and one theory that was chosen, the authors of the journal articles are thought of as
experts in this field. Jason Potts has written multiple articles regarding the public sector and
innovation, which include topics such as innovation by elimination, the innovation deficit in
public services, and what is next in the field of public sector innovation research. All of these
articles are used in this paper. Mr. Potts is with the School of Economics, University of
Queensland, Australia.
For the Seoul Metropolitan Government Case study that is used, Mr. Berman is the chair
professor at National Chengchi University in the International Ph.D. Program. He is also the
author of Public Administration in East Asia: Mainland China, Japan, South Korea, and Taiwan.
His co-author Mr. Kim is the deputy mayor of the Seoul Metropolitan Government and has a
Ph.D. in Public Administration. All four authors of the Texoma case study article are with the
Virginia Polytechnic Institute and State University. Their research interests include public

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policy, innovation and governance. The author of the Rockwell Collins case study is at the
Massachusetts Institute of Technology.
The four journal articles that were discussed in this research paper were peerreviewed. They were published in journals such as the International Journal of Management,
Innovation: Management, Policy and Practice, Public Performance and Management Review,
and Innovation Journal. All four were also published in 2010, which was important to this
researcher, as innovation is a changing and current topic and information within the past few
years must be used so that the innovation model that is proposed in this paper reflects current
trends and topics. All four articles also provided literature reviews that included information on
the topic of private sector versus public sector innovation, as well as theories and other important
concepts. However, it would have been beneficial for these articles to include previous case
studies that were relevant to their own study so that data could be compared and contrasted.
The fourth criteria of using methods that best answer the research question was also
discussed in the case studies that were chosen for this qualitative analysis. The Seoul
Metropolitan Government case also used quantitative methods to obtain information from local
officials and employees, which brought additional perspective to the research. In all four cases
this researcher felt that the research questions were answered by using the case study. Finally,
overall the analyses that were provided were easy to comprehend. A reader with limited
background regarding public sector innovation should be able to understand the case studies.
Helpful background information regarding the company or organization that was chosen was
provided to the reader as well as information about innovation itself. Definitions of terms used in
this research were also defined earlier in this paper.

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In terms of the new innovation model that is outlined in this paper, this researcher feels
that the proposed model is reliable and valid according the definitions described above. The case
studies used provided helpful information to help answer the research question. The proposed
model could also be replicated for multiple public sector organizations. However, in order to
prove reliability more thoroughly, this study is only a proposed model, and this model does need
to be tested in multiple organizations.
Ethical Considerations
It was this researchers intent to design, implement, and discuss an ethical research
project. Case studies and other materials that were used in this qualitative study to develop a new
innovation model were properly cited and discussed. Although no human participants were
involved in this qualitative study, the authors interpretation of the research was screened for
unethical bias.

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Results
Introduction
The purpose of this qualitative analysis was to answer the research question: What type
of innovation model can be utilized by public sector and nonprofit organizations? The goal of the
research study was to examine existing public sector case studies by Berman and Chan-Gon
(2010), Bland, Bruk, Dongshin & Lee (2010), and Srinivasan (2010). In addition, the
experimental elimination theory by Potts (2010) was also examined to help provide additional
information to develop this model. The intent of this research paper was to design a new
innovation model that can be utilized by public sector and nonprofit organizations.
Summary
Suh describes innovation as a process in which research and ideas are converted into
new products or services. There are many steps in the innovation process that he goes into detail
describing, but the main steps that apply to this researchers new innovation model are:
identifying the need for a product or service, performing basic research, creating and testing
ideas, and testing the viability of the proposed idea (2010). Suh also states that innovation should
involve a funneling of ideas. The innovation process should start with having a lot of different
ideas and by the end of the process the best innovation ideas should remain. These two concepts
are important when considering the new proposed model. There can be variations or various
opinions regarding specific steps in the innovation process, but the general concept of converting
ideas into new products and services is the foundation for any innovation model.
In all three of the case studies that were examined in this paper there were common
themes of utilizing people such as management, employees, and the importance of programs that
provide goods or services. People are the backbone of any organization. Their hard work helps

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create value for the organization. Programs help provide structure for the development of ideas,
training for employees, organizational learning, as well as financial resources to innovate. Potts
experimental learning theory also provides information regarding program development, as he
suggests a model that provides structure for program evaluation. The heart of this innovation
model is to take these two concepts and expand them to develop an innovation model.
In putting together a model, this researcher examined what factors are common to
companies that are successful in establishing innovation processes in their organizations.
Research has shown that using an innovation model can help increase innovation. It requires risk
and time, which unfortunately, some companies are not willing to sacrifice. Those organizations
who do choose to innovate sometimes have a designated sponsor who helps make sure that there
are resources dedicated to innovation. Employees are also given separate time from their
everyday tasks to innovate. These companies also anticipate customer needs and promote a
culture of organizational learning. It is important for employees at all levels to be involved and
feel like they are contributing. Organizations also are willing to learn from mistakes and
recognize that too many steps in the innovation process can do more harm than good (Harper &
Becker, 2004). Not only should new ideas be received, the organization should also try and
figure out if there are ways to utilize old ideas in a new way.
Using Suhs innovation concept, the first step in developing a model is to identify the
need for new ideas. As previously discussed in this paper, the need for new ideas and
reformation of old ideas in the public sector has been identified. Reasons include fiscal
constraints, reforming the way in which services are administered to constituents, contributing to
the global economy, and improving the overall health of the public sector. In order to perform

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research, create and test new ideas, and testing the validity of the ideas, it is important to split the
model into two separate areas: people and programs. Each component has a subset of ideas that
involve the people or program and help the organization identify its innovation goals. These
goals may vary from organization to organization, but the main question that these organizations
should ask themselves is, What type of process can we use to innovate? or if an innovation
process already exists and is currently being used, the question then becomes, How can we
innovate better?
Before getting into the specifics of the model and its components, there are some key
questions that organizations should be willing to ask themselves. Questions should be answered
as honestly as possible so that a true commitment to innovation is demonstrated. The questions
are as follows:
1) Vision: What is our organizations vision when it comes to innovation? It is important
that goals are defined so that organization knows what it would like to achieve (Suh,
2010).
2) Leadership: Is our organizations leadership committed to innovation? Are they willing
to devote their own time and company resources to not only make sure the innovation
model is used, but also become the spokesperson for such ideas? (Kohli, 2010). Strong
leadership is important because research has shown that leaders who views their roles as
being change agents tend to have a higher probability of increased innovation in their
organizations (Fernandez, 2013).

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3) Culture: Is our organization willing to create an organizational culture that emphasizes


employee creativity and the sharing of ideas? Are we willing to also not only tolerate
failure, but also learn from our mistakes? (Harper & Becker, 2004)
4) Employees: Is our organization willing to offer incentives to our employees to encourage
innovation? Are we willing to help hire talented people who are innovators? (Browning
& Sanders, 2012) (Suh, 2010).
5) Evaluate: Is our organization willing to eliminate policies and programs that dont work?
An organization should be willing to look for processes that do not create value (Potts,
2010).
People and programs also work together to reach the end goal. They must work
together or this model will not be effective. For the first component of people, people refers to
employees and members of company leadership. People are the heart of any organization and
without them, the company would cease to exist. The components of the people portion are the
following: culture, creativity and communication. All of these components were taken from the
case studies that were analyzed in this research paper. These components also complement each
other and an organization can choose the amount of time and money that they wish to spend on
these components, based on their individual resources and needs. The most important
consideration is that they do all of these items in some form, in whatever scale makes sense for
their own organization.
Culture

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The first component under the People section of the innovation model is culture. Culture
refers to developing an organizational culture than encourages innovation. An organizational
climate often involves learning. It can involve internal sources of learning such as formal
training for employees, seminars and conferences that provide information about innovation and
the new innovation process. External sources include industry research, public-private
partnerships, and customer/constituent panels (Maden, 2012). In order to promote creativity and
communication, an organizations culture should be established first.
Currently the public sector does not do a good job of promoting a culture where
employees feel comfortable and confident in being creative. The environment is viewed as being
more distant and focused more on political accountability and election results than encouraging
employees to challenge themselves. It is up to management and members of leadership teams to
encourage an open culture that encourages direct participation and responsiveness. There should
be the freedom for employees to make mistakes and take risks (Van Duivenboden & Thaens,
2008). In order to do this, leadership should encourage knowledge sharing between different
departments, especially those departments that play a distinct role in innovation processes. These
include research and development, information technology, and marketing.
Employee empowerment is an important component of a strong organizational culture
that encourages innovation. Large organizations can have the potential for larger amounts of
innovative products and services, but they also have a limited capacity to really change because
of their organizational structure. Employee empowerment is a tool that can be used to help public
sector organizations ability to be efficient. Empowered employees seek to improve their
performance by working smarter. They can be the source of innovative ideas because they have

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first-hand knowledge of an organizations problems and understand where improvements in the


innovative process can be made (Fernandez, 2013).
In order to encourage empowerment, management should provide employees with
information regarding their goals and individual performances, offer incentives based on
performance, provide access to job-related skills, and grant discretion to change their individual
work preferences. One of the principles of lean enterprise thinking that the Rockwell Collins
case study emphasized was that emphasizing organizational learning is a concept that can be
translated into innovation through developing human capital through education, training and
knowledge management (Srinivasan, 2010). Rockwell Collins has been successful at
encouraging its employees to dedicate themselves to the organizations five shared values:
teamwork, innovation, integrity, customer focus and leadership. The management has also been
on the forefront of explaining changes in organizational innovation processes to its employees.
The company also recognizes that there may be multiple pathways to get to successful
innovation. The innovation model that is proposed in this paper takes this into account by giving
organizations the opportunity to do a variety of things in these three areas of People section
(Srinivasan, 2010).
Creativity
Creativity is a vital part of an organizations culture and helps contribute to the
innovation process. It focuses on developing new ideas and seeks to increase employee
participation, but does not require participation from all members. It has four components:
evaluation and awards for individual employees who propose new ideas, training programs to
educate staff, audit system that encourages discussion of new ideas, and an opportunity for

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citizens to contribute to the innovation process (Berman & Chan-Gon, 2010). The Seoul
Metropolitan Government used all four of these principles to help develop innovation. For the
awards, employees who submitted ideas were ranked and given $50, $100, or $300, depending
on the value of the idea.
For employee training, the Seoul Metropolitan Government conducted two day
training sessions for employees. This model described in this paper recommends the same
concept. Depending on the size and budget of the organization, outside speakers and training
may be provided from organizations that specialize in public sector and nonprofit innovation. If
time and resources are limited, the organization can also use an online learning system that
provides online training programs through videos and interactive software. Training regarding
the innovation website and idea submission process should also be covered during the training
session. Because innovation is constantly changing and government itself continues to change
depending on the economy and other budgetary factors, holding training sessions each year will
help ensure that employees and management leaders are kept informed about any new
developments. Leadership should also provide employees with updated information regarding
any company innovation models that are being used (Berman & Chan-Gon, 2010).
For the audit system and submission of citizen ideas portion of the Seoul
Metropolitan Government model, there is a three-step process that was used. The process was
overseen by the Creative Idea Review Committee that was composed of mid-level employees,
senior researchers, professors, innovation experts, from the private sector, and other officials as
needed. The committee meets and evaluates innovation ideas and votes either up or down. Ideas
that are selected to move forward are reviewed more in depth at monthly management meetings.

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After that step of the process, implementation can be made by management, if they are chosen
(Berman & Chan-Gon, 2010).
One of the biggest problems for public sector organizations who want to innovate is
that there isnt one person in charge of the innovation process. Leadership can help initiate the
process, but if there is not one person to help filter ideas, the innovation process could stall. This
model builds upon the Creative Idea Review Committee. An innovation board or innovation
advocate could not only oversee innovative ideas, but also help provide funding and resources
for research. They could help provide incentives, serve as a center for knowledge, and partner
with outside agencies as need to form collaborative ideas (Gruen, 2009). Smaller organizations
could use the Innovation Advocate, whereas larger ones would use an innovation board. The
innovation advocate would be selected by management and would need to be someone who has
strong leadership skills and an interest in innovation. The innovation board would consists of
management representatives, community business leaders, and employees from various select
departments. The board would meet once a month to evaluate potential ideas as well as existing
ones.
Communication
Communication is a vital component of this innovation model. Good communication
between employees and management, within departments, and with outside organizations is
important to encourage the development of new ideas. It also is important because if any
problems develop during the innovation process, they can be discussed through the
recommended communication process. Dialogue is important. The Texoma Regional
Consortium held annual economic summits to exchange ideas, held regular meetings, and

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produced an annual report that included strategies and the vision of the organization (Bland et.
al, 2010). The innovation board or advocate is part of this model will do all of the above to
ensure strong and effective communication.
Coordination is also a key component in the communication process. The
organization needs to be willing to be flexible in its structure as conditions change. Some
innovation ideas that are enacted by the Innovation board or advocate and company leadership
may require changes in the number and structure of individual departments. It may also require
extra efforts to make sure all departments that are involved in a particular project are aware of
potential developments and feel included in the innovation process (Bland et. al, 2010).
Innovation ideas that are submitted to the board/advocate and existing programs that are
examined through the experimental elimination method will also be tracked on the organizations
website to encourage communication and open data practices. All three of these aspects of
communication help emphasize the importance of management in being involved in the process
as well as potential problems that may occur if communication is not encouraged.
Experimental Elimination Method
The proposed innovation board or advocate would also use the Experimental Elimination
Method that Potts proposes. According to this method, a cost benefit analysis would be
conducted to determine the effectiveness of existing programs. The board or innovation advocate
would identify every program in the organization. Mr. Potts does not mention specific coding
suggestions in his research article, however depending on the size of the organization, these
could be coded depending on the subject matter. Next, a random percentage of the program
would be selected for elimination. An experiment would be conducted and results analyzed to

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determine the effectiveness of the program. If the program is deemed effective, the program
would continue. If not, the program would be eliminated (Potts, 2010).
The programs that were eliminated would potentially free up new resources that could be
used for new innovation projects. One of the criticisms of this method that Potts acknowledged is
that the process can be time consuming and political considerations would come into play.
Legislators who want their particular program to continue may try and influence the process. By
using an innovation board or advocate and also encouraging the public to weigh in on particular
ideas, this researcher believes that this source of potential bias could be lessened.
Discussion
This model helped answer the research question, What type of innovation model can be
utilized by public sector and nonprofit organizations? The model was developed using three
existing case studies and other research theories. These case studies included Texoma Regional
Consortium, Innovation by Elimination Theory, Seoul Metropolitan Government, and Rockwell
Collins. Each case study provided unique insights and concepts that were analyzed and included
in the model. The resulting model included two main components: people and programs. People
are important to the future of organizational innovation because they help develop new ideas.
Programs are important because they consist of different ideas that are provided by people such
as employees and management. Programs need to be evaluated on a consistent basis to determine
what value they are providing to the organization.
Under the people section of the model fall three important topics that an organization
needs to implement to encourage the spreading of ideas. Establishing an organizational culture

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INNOVATION PROCESSES FOR PUBLIC AND NONPROFIT ORGANIZATIONS

that encourages open innovation and free discussion of ideas should be enacted. This can be done
through a variety of ways, including education, training, the sharing of knowledge, and
empowering employees. Creativity can develop from an organizational climate that encourages
innovation. Management should provide opportunities for learning through training sessions and
online learning systems. Communication is also important. Organizations should provide
opportunities for employees to share ideas electronically on the innovation board website, by
participating in innovation employee meetings, and other events related to company innovation.
Programs are also important to the innovation model that is outline in this research
paper. Programs can be evaluated through the innovation board or advocate. These groups or
individuals have the opportunity to determine the effectiveness of submitted employee and
citizen ideas for innovation. The board consists of different representatives throughout the
company and through the experimental elimination method, they have the opportunity to help the
innovation process grow within the organization. The board should be in communication with
company leadership to determine if changes are needed or if the model is not adequately meeting
the companys innovation goals.
This innovation model provides public sector and nonprofit organizations with the
opportunity to learn more about innovation and provides them with the tools they can use to
implement an innovation process. Some organizations may already be innovating in some form,
but they may need some extra tools to take this process to the next level. This model is intended
to be realistic for these organizations. This researcher acknowledges that some of the suggestions
cost money and implementing suggestions such as an innovation board or advocate may take
time to establish. However, ideas such as employee training or website submission for employee

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INNOVATION PROCESSES FOR PUBLIC AND NONPROFIT ORGANIZATIONS

innovation ideas are ideas that can be more feasible. Government traditionally does not prefer to
start entirely new agencies or processes, and this model takes that into account. In the public
sector it might be better to adjust existing processes instead of creating a new system (Berman &
Chan-Gon 2010). For some organizations that choose to use this model, it may require
establishing an entirely new system and this model provides the structure to do just that.
Conclusion
This paper intended to provide an answer to the following research question, What type
of innovation model can be utilized by public sector and nonprofit organizations? Background
information regarding innovation, a review of existing literature on the topic and analysis of
existing case studies and theories, helped develop a new innovation model for the public sector.
The model includes the following stages and components: organizational culture, creativity, and
communications. All of these components work together to help submit new ideas to the
program section, which is composed of an innovation board or advocate that helps process newly
submitted innovation ideas.
This research paper contributes to the field of business as well as the public sector. The
business community can potentially benefit from new public-private partnerships that may be
used to encourage innovation. The business community can learn from public sector innovation
models and enhance their current innovation processes. Profits may increase and the overall
health of the economy may also improve. Public sector organizations can use this new
innovation model to help increase outreach to citizens as well as increasing the efficiency of the
agency. Public policy may also be affected by this model. Innovation in the public sector

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INNOVATION PROCESSES FOR PUBLIC AND NONPROFIT ORGANIZATIONS

requires new thinking, and current elected officials may need to re-evaluate current innovation
legislation to make sure it is doing what is needed to encourage innovation rather than harm it.
Not only does this research discuss previous case studies on this topic, it also creates a
new innovation model that can be used by public sector and nonprofit organizations. Most
current research on this topic has focused on why innovation in the public sector matters, but
there are not very many existing innovation models like the one that is suggested in this paper.
The model that is proposed can be used by various sizes and types of public organizations and
altered to fit the type of innovation that the organizations leadership wishes to develop and
enact. This model provides a practical tool that government agencies and nonprofit
organizations can use.
Future research can extend the model as conditions change and long-term studies of
multiple organizations that have used the model can be conducted to contribute further to the
business and government sector fields. There continues to be a knowledge gap on this topic and
future research can help continue to educate employees and management about the necessities of
innovation in the public sector. Part of why public sector agencies are hesitant to innovate is
because they do not understand the benefits of innovation. Future research can only help
decrease the existing knowledge gap.
Innovation will continue to be an important topic in todays business world. Public sector
organizations should recognize the need for innovation processes and model in their
organizations. They need to understand and comprehend that the drawbacks such as risk
aversion, lack of extra finances and resources, and the political factors that come into play when
government attempts to change itself, are not satisfactory anymore. Government needs to

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remember that if they are not willing to innovate, the public sector will continue to be outdated
and left behind. But, innovation in the public sector does not necessarily happen overnight. Time
and attention must be given so that innovation is done thoughtfully and by using models such as
the one that is proposed in this paper. The public sector will benefit as long as innovation is part
of its strategy.
Limitations and Recommendations
This research paper accomplished and successfully answered its research question of
providing public sector and nonprofit organizations with a new innovation model. However, as
with any research analysis, there are limitations to this study. First, the proposed model relies on
only a select few public sector case studies and theories. The case studies chosen were from
different authors and focused on different types of innovation theories, however the author
acknowledges that the selection of case studies that were used do not reflect all types of
innovation methods and studies that are currently being researched on this topic.
This paper also used a qualitative method instead of quantitative method. The
qualitative method allowed the researcher to focus on specific organizational case studies and
theories in order to further the proposed model. A quantitative study may have required more
time and resources to develop a survey and may not have provided enough details from
respondents. The case studies that were chosen for this study did use some quantitative methods
in conducting their research. The Seoul government case used qualitative interviews and
quantitative studies to obtain insight from government employees about innovation. Because
they used some quantitative methods, they were able to obtain a large amount of data in a

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INNOVATION PROCESSES FOR PUBLIC AND NONPROFIT ORGANIZATIONS

relatively short time frame of two years. Perhaps future research could use a mixed methods
approach to obtain a larger sample of data and obtain key insights from government employees.
Another limitation of this study is that data on this topic is somewhat scarce. The
literature review contained information on the relevant topics of innovation theories, private
sector vs. public sector, and innovation implementation, but the author acknowledges that more
information may be needed to further develop the model. that were used in the literature review
Researchers such as Luke, Verreynne & Kearins (2010), Potts & Kastelle (2010), specifically
mentioned that that more research is needed on the topic of public sector innovation. Innovation
is also a changing field as more new products and services are continually being developed every
day. This proposed model may need to be re-evaluated as economic climates and government
agencies change throughout time. Further research should use this proposed model over a longer
time span to identify key trends. This extended time frame would also potentially provide a
greater sense of validity and reliability.
As with any public sector organization, politics can certainly play a role. There are
competing interests and differing ideas about what innovation means and how it should be
implemented. Management may desire one thing to help them get further ahead, but it may not
be what is best for the organization as a whole. The key with this proposed model is that the
organization should try and remain as unbiased as possible. The organization must be willing to
examine its own organizational structure and culture and really be honest with itself and not cater
to special interests. The public sector has an opportunity to use innovation to not only become
more profitable, but also contribute to the overall global economy.

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Future research should continue to build upon this model so that it reflects these
limitations. As innovation continues to change, so should the conditions of the proposed model.
No innovation model is perfect and any limitations should be taken into account and further
research conducted. Innovation is a very important and current topic in both the private and
public sectors and further research needs to be conducted so that more new models can be
developed. The private sector has been using innovation models for years and has used
innovation to become very successful. Although it faces unique challenges that are different from
the private sector, the public sector must continue to attempt innovation methods so that it does
not miss out on an opportunity like this to grow.

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Steps in the Innovation Process

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Innovation Checklist for Public and Nonprofit Organizations

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Innovation Model for Public Sector and Nonprofit Organizations

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