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Fostering Innovation in the Public Sector

image of Fostering Innovation in the Public Sector

Public sector innovation does not happen by itself: problems need to be identified, and ideas translated into projects that can be tested, implemented and shared. To do so, public sector organisations must identify the processes and structures that can support and accelerate innovation. This report looks at how governments can create an environment that fosters innovation. It discusses the role of government management in inhibiting or enabling innovation, and the role that specific functions such as human resources management and budgeting can play. It suggests ways to support innovation – including by managing information, data and knowledge – as well as strategies for managing risk. Drawing on country approaches compiled and analysed by the OECD Observatory of Public Sector Innovation, the report presents a framework for collecting and examining data on the ability of central government to foster public sector innovation.

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The role of the budget process in promoting public sector innovation

As OECD countries face continuing pressures to do more with less, public sector innovation increasingly offers a means of improving performance across government. Drawing on the OECD’s extensive research on budgeting reforms across member countries, alongside in-depth case studies, this chapter examines the impact of budget processes and particularly the role of central budget authorities (CBAs) in supporting public sector innovation. The chapter considers how strategic outcome goals, fiscal frameworks, spending reviews, financial incentives, flexibility and performance management can serve to support (or hinder) innovation. It considers what conditions need to be in place for fiscal austerity to give rise to innovative ways to reduce spending, and how funds and other incentives can be used to encourage innovation. It considers the balance between granting the flexibility line agencies need to pursue innovation and the need for fiscal accountability, and the role of performance management and evidence in finding that balance. It concludes with some measures that budget agencies should consider in order to sustain public sector innovation.

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