Governments deal with complex challenges in society that are often wicked in nature – that is, constantly changing and difficult to solve. The core work of the public sector thus requires a capacity to innovate. Yet, innovation in the public sector has tended to be poorly understood and weakly tied to government reforms. Its practice remains inconsistent and unreliable; it neither occurs systematically nor is it supported.

To address this, the OECD Observatory of Public Sector Innovation (OPSI) has put forward a Public Sector Innovation Facets model covering four types of innovation – mission-oriented, anticipatory, adaptive, and enhancement-oriented innovation. These different types of innovation are connected to core values of the public sector, including the ability to achieve goals, to continuously improve, to be responsive to citizens’ needs and to explore future risks and uncertainties. This report provides a systematic overview of the knowledge base on conceptual frameworks and approaches to public sector innovation. The findings of the research were validated in innovation facet-specific workshops with OECD member countries between December 2020 to May 2021. In these workshops, the drivers and barriers were discussed in addition to additional tools and methods generated by the participants. Close to one thousand experts participated in the workshops over the seven-month period.

The report argues that working with innovation in this format requires a portfolio approach. Otherwise, it is not possible to support different types of innovation simultaneously in line with strategic goals. Without structured and conscious support across a portfolio, public sector organisational practices can unbalance innovation efforts and result in bias toward the status quo. A portfolio approach to innovation – managing multiple activities, support structures, and investments – is a way to spread risk, mitigating the loss if one investment fails, as others might succeed. It is also a way to identify and analyse synergies among actions, evaluate results beyond single interventions and avoid lock-in to ineffective or unsuitable innovation strategies.

While innovation portfolio management is an emerging topic, and well-developed tools do not exist to help public sector organisations review innovation activities in a coherent way, the report provides an objective overview of the tools and methods currently in use and highlights the gaps for further development.

More investment is needed to develop public sector innovation portfolio approaches further, as understanding of public sector innovation in governments matures and the tools and methods applied become more sophisticated. Successful public sector innovation portfolio management is key to tackling ‘wicked’ problems (green transition, ageing, etc.) that require systemic action, anticipation and adaptation to change.

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