3. What is known about public sector innovation?

This chapter explores what is known about public sector innovation, and why a shift in governments’ approach towards innovation is necessary. It looks at the characteristics of innovation and examines its implications in the government context. The chapter also assesses current knowledge on innovation and evaluates how it might inform the development of a model for public sector innovation systems. It concludes by analysing which forms of support best ensure consistent and reliable innovation in the context of a changing environment.

    

The previous chapters demonstrated the need and desire for greater innovation in the Public Service of Canada. However, the historical journey also demonstrates that this knowledge is not, in and of itself, sufficient. Wanting and asking for innovation are not the same as ensuring that innovation occurs to the extent expected or required. Innovation and the practices that support it clearly pose a number of challenges. What approaches, then, play a significant role in promoting innovation and is there a theory of change for successful public sector innovation?

This chapter investigates the current state of innovation and its practice in the Public Service of Canada. While the focus of this investigation is Canada’s innovation efforts, many of the relevant issues are either reflective of broader trends and pressures, or relate to the underlying nature of public sector innovation as a process. Therefore, this chapter takes a step back from the immediate Canadian context, to gain insights into the key issues, which can then be brought to bear on the Canadian setting.

Accordingly, this chapter examines the following questions:

  • Why is innovation growing in importance for government? What are the underlying factors and why do these likely require a more systematic approach?

  • What is known about the nature and characteristics of public sector innovation and what are the implications of that knowledge for governments trying to raise their level of innovation?

Understanding innovation’s increasing role as a core resource in government

The previous chapter outlined the history of innovation in Canada – a history of talking about and trying to foster innovation – and described the broad consensus on some of the drivers for innovation. However, what is really driving the increased focus on innovation? Why is it important and why might the existing practice of governments (in Canada and elsewhere) be insufficient?

Why is innovation important?

In essence, the case for why innovation is important is that in a changing environment, what worked once cannot be assumed to continue doing so (or to work as well), and thus new responses will often be required.

This is because a changing context often requires a changed response, one that might involve some degree of innovation. As new knowledge is developed and new technologies emerge, the range of things that might be possible, what could be done, changes. These new possibilities, in turn, shift the perception and the calculation of benefits from existing possibilities and previous choices.

Innovation in one section of society or one part of the world may alter people’s expectations of what they want or need. For instance, the introduction of online services changes the perception of non-online processes (e.g. “why can I not just do this online?”). As new approaches are tried in other parts of the economy, those working with or in government are likely to change their understanding of how government could, and therefore should, work.

Similarly, innovations of the past may not continue to function adequately once conditions have changed. Therefore, in a changing environment continuing innovation is often required in order to respond effectively. Innovation, then, is necessary for governments to remain relevant, appropriate and effective.

What is different now?

Given the necessity of innovation for effective government, it should come as no surprise that governments have always innovated to some extent. Innovation in government is itself not new, either in terms of policy, services or the operations of government. All government services have been an innovation at some point – whether in the form of policing, health services or welfare systems. Governments continue to innovate today, for example, by delivering biometric systems or developing new ways of interacting with citizens (OECD, 2018).

It is clear from the history explored in the previous chapter that the Public Service of Canada has also innovated and is likely to continue to do so. Why then is it necessary for any further attention to be paid to this issue?

One answer is that while innovation has always happened, it has rarely been a consistent process. Innovation, in general, has happened sporadically. Governments have generally shied away from changing too much or too quickly. Often, innovation is a response to acute pressures, such as crises or external drivers; in other cases, it happens more gradually and incrementally. It has not been a consistent feature.

The occasional nature of public sector innovation has traditionally been an asset – a feature rather than a bug. Stability, predictability, trustworthiness, accountability and due diligence are perceived as core values for bureaucratic models of government (OECD, 2017a, p. 33). People do not look to government for surprises, and politicians do not expect the Public Service to deliver the unexpected. They want to have confidence that the civil service is careful and considered, and that core government services, activities and frameworks are going to remain relatively consistent.

When, or if, a crisis arises, exceptions are made (or demanded) permitting quick action or a new approach. When a political mandate for change is granted, the machinery of government is expected to quickly adjust and to deliver. However, these windows of opportunity for innovation are often expected to be brief and come to an end, so as to ensure a return to the normality of stability and routine.

While this approach has generally functioned over time, the question for governments is whether this model of operation is still sufficient. Is it suited to a world that is experiencing significant (possibly exponential) change – change that may be rapid, drastic and radical in form? More specifically, is the current paradigm sufficient to deliver the outcomes people are looking for? A trend of declining confidence in national governments around the world seems to indicate that it is not (OECD, 2017b, p. 215).

A changing context for governments: Stability to flux

As previously noted, the public sector is contending with a state of volatility, uncertainty, complexity and ambiguity (VUCA). The public sector operates in a highly interconnected world, which means that events in one area can rapidly impact other areas, often in unpredictable ways. Social media has vastly accelerated the flow of information and the rate at which an issue can become the focus of attention – and thus a potential political concern – even if only momentarily. The consumerisation/democratisation of technology (as demonstrated by the ubiquity of smartphones and the creation of global participative digital platforms) means that individuals now have access to capabilities that were once only in the reach of large organisations, thereby accelerating the rate of possible change. This VUCA state is one of effective flux, where change may occur quickly and the scope and degree of the directional shift of potential change can be large.

It is likely that the rate of change will accelerate further, with even greater resulting impacts. New technologies offer the potential for new and faster self-sustaining waves of change. For instance, machine learning introduces the potential of non-human “thinking”, and algorithm-driven systems create situations that do not require (or are not limited by) human intervention or decision-making. Distributed technologies such as Blockchain offer the possibility to accelerate and magnify the existing marginalisation and elimination of intermediaries facilitated by the Internet. Globally interconnected systems and platforms allow for changes to be rolled out almost instantaneously across the world. All of these examples offer the potential for change to happen even faster, with fewer mediators or arbiters to arrest the process, while the transaction costs involved in introducing change are decreasing. The gap between an idea and its realisation at a global scale has, perhaps, never been smaller.

All of these changes potentially impact the range of what government can deliver and citizens’ expectations of government. In the face of such change, governments will need to spur innovation in order to achieve societal goals and impacts (e.g. tackling disease or combatting climate change). However, sometimes governments will need to push back against change in order to guard core values of society that are at risk from technologically led disruption (e.g. managing or mitigating structural economic adjustment). Greater change will lead to more innovation, requiring governments to become increasingly agile and operate in new and sometimes very different ways.

The condition of flux that comes from shifting between relatively low and relatively high rates of change in the operating environment for governments has a number of potential ramifications. It implies that individual governments need to consider their relationship with innovation on a number of fronts. This includes thinking about government:

  • As an entity – how can government remains functional in terms of how it operates?

  • As a policy maker – how can government remain effective in its core responsibilities?

  • As a decision maker – how can government remain able and recognised as an authority?

  • As a democratic body – how can government deliver for and be accountable to citizens?

  • In terms of risk and uncertainty – how can government make the right investments or hedge for different possibilities?

  • In terms of practice – how can government make innovation a core competency?

The functioning of government in an environment of high change

In an environment where change is happening slowly or where there is only minimal innovation, it is likely that an effective and well-performing government department will know:

  • its mission and associated priorities

  • the key stakeholders and their general views about relevant issues

  • which capabilities are needed and what processes and strategies are effective in meeting its mission

  • what issues are on the horizon

  • which key issues and timings will affect any long-term planning and investments.

However, in an environment of high change and potentially transformative innovation, this is less likely to hold true. For instance:

  • The mission may need to be reframed or readjusted. For example, if the incidence of fires in a city decreases as new technologies and materials reduce associated risks, then the mission of firefighters will need to change (Donaldson, 2018).

  • The relevant stakeholders may change. For instance, decentralised renewable energy technologies such as solar and battery storage can increase the range of stakeholders from a relatively small number of energy companies to potentially millions of households.

  • Knowledge about what works and the associated capabilities needed to deliver those strategies can become uncertain. For example, a police response to cyber-crime will require very different capacities compared to more traditional forms of criminal activity.

  • New issues can arise quickly and from unexpected quarters. For instance, the arrival of ridesharing was unexpected for many transport groups and policy makers.

  • Long-term planning can become problematic as certainty is reduced. For example, climate change may significantly complicate infrastructure planning.

Table 3.1 explores further the potential differences between environments with lower and higher rates of change and innovation. While these differences will not always necessitate increased public sector innovation, public sector organisations will need to adopt, adapt, and engage with new technologies, new thinking, new ways of working and new relationships over time, if they are to remain functional. It is likely that innovation will form part of this process.

… the environment that most individuals and organizations confront today is not what it was at the recent turn of the century; it is even radically dissimilar from what it was, say, 25, 50 or 100 years ago – market conditions were consistent; assumptions would remain valid for years; decisions would not have to be revisited for some time. (Serrat, 2012, p. 4)

Table 3.1. Differences between low and high rates of change for public sector agencies

Factor

Environment or context with a lower rate of change and innovation

Environment or context with a higher rate of change and innovation

Stakeholders/

Actors

Relevant actors and stakeholders are likely to be known or understood

The capabilities, motivations and intentions of actors are likely to be relatively understood

New players are likely to emerge, probably with different skills, attributes and motivations

The interests of existing actors are likely to change (potentially towards maintaining position and/or harnessing opportunity), or the dominant discourse will likely shift away from the previously understood and expected positions

Relationships between and with stakeholders are more likely to fluctuate and operate with a degree of flux as the context changes and interests shift

Knowledge

Relevant knowledge (or gaps in that knowledge) is likely to be known and appreciated

New knowledge is likely to appear from unexpected or unfamiliar sources

Existing knowledge may be challenged, discredited or attacked

New knowledge may be rejected or devalued

Organisational expertise/

Proficiency

Organisations are likely to have established and understood expertise, capability and proficiency in areas of relevance to their function

Skills and capability needs for the organisation are generally well understood, and reflected in recruitment, management practices and training and development

Existing capabilities and expertise may quickly become insufficient for the issues or challenges at hand

New expertise and new capabilities are likely to be needed and developed, sometimes in tension with existing expectations, interests, traditions and values of the organisation

Skills needs can be difficult to articulate and existing training or development practices may focus more on previous skill areas that are more easily identified and catered to

Emergent issues

Likely problem areas, while not predictable, are more often than not unsurprising

Many issues arise slowly over time that (or if a crisis) can be responded to with a combination of existing strategies and the application of more resources

Weak signals can transform into consequential trends quickly and unexpectedly

Problems come from surprising and previously unrelated areas

Issues may often be most effectively engaged with when they are still emergent; however issues at this stage may not yet be seen as a political issue or viewed as serious/worthy of scarce attention/resources

Planning

Plans and the underlying assumptions are generally in line with reality

Resource allocation can be (roughly) predicted and planned for

Assumptions underlying long-term plans often do not hold true

Greater flexibility and adjustment is needed as feedback

Understanding of what works

There is a shared consensus around what strategies, tools, approaches and interventions are likely to be effective under particular sets of circumstances

Existing strategies can become less effective as the environment changes

Alternate approaches (new or previously tried or rejected) may promise greater effectiveness

Greater experimentation with new approaches may occur to identify strategies more effective/appropriate to a new setting

Infrastructure/

Investment

Understood capability needs, priorities and preferred interventions can be used to identify and match infrastructure and investment needs

Longer-term investments can become difficult as certainty about the future decreases

A portfolio approach that invests in multiple bets may be more appropriate and/or lots of small investments in differing options until the most promising options are identified

Decision-making/

Organisational priorities

Decision-making processes and organisational priorities are understood and relatively stable

Decision-makers share the same information and are aware of the main issues

Core operations are unsurprising and associated responsibilities can be delegated

Organisational priorities can be subject to quick changes

Decision makers may not share, be aware or familiar with all of the relevant information or issues

Novel functions, issues or challenges may require a significant amount of decision-making attention, while core functions may need to adjust or change

Responsibility

Responsibility for particular issues and functions is demarcated

Responsibility can often blur across reporting lines, organisations and sectors

Leadership

Organisations may often have consistent leadership for long stretches of time

When leadership change does occur, new leaders are often selected from within the organisation or from one with a similar mission/function.

New or different qualities may be expected leaders

Traditional career paths may not be indicative or predictive of where future leaders will be sourced from.

Government effectiveness in an environment of great change

Governments also need to pay attention to how innovations affect others, as well as their own operations. For example, technology can make old production methods and those skilled in them redundant. Over time, innovation changes the economy, changes society and affects citizens in myriad ways: some of these are positive; some are less so.

Innovation therefore affects the context for policy making. In particular, it affects which rules and regulations are relevant, and which broad framework conditions are necessary for society and the economy. As the economy evolves, the appropriate policy settings will also change.

In an evolving economy, a static (or scaled) structure of policy and services will become increasingly dysfunctional or inappropriate. It will be adapted to an economic world that, by increment, no longer exists. Economic evolution thus renders extant policy settings increasingly dysfunctional. […] an evolving economy requires policy innovation and not just the increased efficiency or scaling-up of existing policy. (Potts 2009, p. 37)

As Potts (2009, p. 42) argues with his version of the “Red Queen hypothesis”,1 public policy has to be continually innovative just to remain in the same place – in other words, policy settings need to continually evolve in order to have the same effect. For instance, ride-sharing has forced a change in the regulations around taxi industries; the rise of drones challenges existing air-space laws; and autonomous vehicles raise questions around liability, road safety and planning settings. An evolving economy, brought about by accelerating technological change, requires the public sector to “run” in order to stay in the same place. This suggests that innovation is a prerequisite for governments if they wish to remain effective.

Decision making in an environment of considerable change

Governments are not neutral players in any society or economy. As well as policy makers, they are also rule makers, standards setters, investors, arbitrators and mediators, partners and service providers, crisis managers and risk managers, amongst other things. Moreover, governments are expected to know enough to be sound decision makers for each of these myriad roles.

In an environment with a low rate of change, it is easier to understand and appreciate the nature of the change occurring, to assess its implications and to respond accordingly. In an environment with a high rate of change, it is much harder to appreciate the intricacies, issues and possible implications and interactions. For example, developments in artificial intelligence, augmented reality, biotechnology and additive manufacturing all promise large-scale change, though how that change will play out is highly uncertain. Furthermore, while each of these changes will have a significant individual impact, they will also interact and intersect with each other, producing further aggregate effects.

If governments, then, are to make appropriate decisions – as regulators, as catalysts for and aids to industry development, as investors and procurers, as both mediators between winners and losers, and as overseers of structural adjustment – they need to have, or be able to rely on, a working understanding of the changes that are taking place. While governments may have the authority to act, the legitimacy and effectiveness of any action will depend on the perception that those decisions and actions are backed by competence.

The nature of many of these changes, however, means that governments cannot simply become knowledgeable or familiar with them as and when required. Any technologies that are evolving rapidly involve a host of possible issues, nuances and possible points for intervention. Onlookers will not be able to fully appreciate or grasp these aspects, as the learning (in the form of tacit knowledge) comes only from being involved and from getting their “hands dirty”. Many of the relevant decisions will be based upon knowing the players and the issues, understanding the background and being aware of the potential scenarios that could play out.

If governments are to make decisions about these things, about new technologies, new business models, new ways of working and interacting, they therefore cannot be spectators. They need to be involved, in some form, in the practice of innovation. Many governments may not want to be at the “cutting edge” due to the costs and risks (real and perceived) involved, but nor can they realistically be late or reluctant adopters if they wish to be successful decision makers in their various capacities.

This also suggests, then, that sophistication in the practice of public sector innovation is a prerequisite for governments.

Expectations of government in an environment of significant change

In a slow-changing environment, expectations are also likely to stay relatively static. However, a high rate of change provides opportunities to revisit long-standing practices and assumptions. New technologies, new operating models and new practices allow for new types of understanding, new ways of working, new ways of relating and interacting, and new forms of collaboration.

For instance, in a world where information about nearly any topic can be accessed almost instantly through a smartphone, a requirement to access information in person becomes burdensome, whereas previously it may have been normal. The ability of a multinational company to offer highly tailored services drawing on a person’s own information, may mean that users have less patience with a taxation system that requires laborious data entry and expects them to respond to questions they have already answered. What is known to be possible will shape and change expectations of what government should be. The needs and wants of citizens will adjust rapidly in a world where what is possible is also changing quickly.

Change can thus provoke questions from those working in government, as well as citizens and observers, about how things are being done. It provides an opportunity to ask, “Why isn’t this done differently, now that we know there are other, possibly better, alternatives?”

Once the question is asked, there is, arguably, a democratic responsibility to try and do better, to undertake innovation in order to achieve the best outcomes and results for citizens – results that are both possible and feasible.

This too, then, suggests that public sector innovation is not simply a “nice to have”, but rather a prerequisite for governments.

Government and the risk of a mismatch in the rates of change

Each of these different factors – whether government is sufficiently functional, effective, knowledgeable and responsive – point to risks that might arise from government not being sufficiently innovative. Whenever there is a mismatch between the rate and direction of change outside government (e.g. in science, industry, society or other governments) and the rate and direction of change inside government, there is potential for the following risks:

  • Government investing more to achieve less – for instance, the efficiency of past practices will decrease as older systems fail to keep pace with more innovative (cheaper and/or better) systems used elsewhere. An example of this is operating a postal service in a digital age, where it can become more expensive and yet delivers less (at least against established performance measures).

  • Expectations being unmet or misaligned – if government operates in ways that increasingly diverge from what citizens can experience or achieve elsewhere, and is not seen to be able to fulfil what are assumed to be reasonable expectations, there will be a decline in trust/faith in the institution. For example, if people start to ask themselves why government cannot offer the easy online portals for transactions and services that are offered by many companies, they might lose faith in its ability to remain relevant to their lives.

  • Insufficient absorptive capacity/investment readiness – government’s ability to effectively “buy-in” or contract-out for solutions will become limited if it loses its sophistication as a customer, by lacking sufficient understanding of the possibilities on offer. For example, the potential of artificial intelligence cannot be understood overnight unless government already has experience in the field, established relevant networks and activity to keep up to date with emergent practice.

  • Reactivity rather than adaptation – reacting to problems once they are fully developed, rather than engaging with them when they are still nascent, is usually more resource intensive and complex. For example, responding to a shift to autonomous vehicles after they arrive is likely to be harder than helping to evolve policy settings as the technology develops and lessons are learnt about the implications.

Again, all these risks suggest that public sector innovation is important for the operation, effectiveness, relevance, appropriateness and value of government.

Innovation as a core competency

Innovation is often characterised as a means to an end, as something to be accomplished in order to get to something else. It is seen as a possible option, rather than as a core competency.

In an environment of low change this view intuitively makes sense. Problems require a response and innovation can be one of a number of options to choose from when selecting that response. Pursuing innovation with its attendant potential for disruption, destabilisation of existing relationships, devaluing of previous investments and unpredictability will often not be the preferred option. Why risk changing more than is needed and introducing new issues? If something goes wrong, then the cost (and blame) is likely to be greater than the promised benefit. A low-change environment may lean towards a preference for incremental, gradual adjustments and optimisation, over abrupt or significantly novel changes.

In an environment of rapid change, however, innovation can take on greater importance. Take, for example, finance, human resources, procurement, strategy and other elements that have become core corporate functions for any effective government organisation. None of these functions deliver value in and of themselves; they are all instrumental functions. It is unlikely, however, that any effective, sustained and meaningful results or impacts will be achieved without them. In an environment of rapid change, where predictability is reduced and existing activities are likely to become (gradually or abruptly) less suited to the operating environment, innovation may also need to be viewed as a core function of equal importance.

In a rapidly changing environment, the need for innovation (e.g. in order to respond to technological change, changed service expectations or to a political issue) may strike anywhere across a system, and in multiple places at the same time. Therefore, anywhere (and everywhere) might need to engage in innovation.

In such an environment, the ability to predict what will work and what will be effective (by drawing on established knowledge) also declines over time. There is thus a need to increase the range of potential options that could be applied. Where there is growing uncertainty, an organisation must spread its bets across multiple possibilities if it hopes to obtain a result.

In short, in a rapidly changing environment the perception of innovation can shift from something considered to be useful under certain circumstances, to a core function that should always be considered, even it if is not used or selected as the option to pursue.

When the latter is the case, innovation becomes a part of everyone’s job, even if not everyone is expected to be an innovation expert – a situation that is similar to the current perception of human resources, procurement, financial management and so on. Everyone needs to be able and ready to engage with innovation, even if the time and place cannot be predicted. And as with other corporate functions, innovation will also need to be guided and supported to ensure maximum impact. Those undertaking innovation will need to be able to access expertise to help them make the most of the process.

The need for a systemic approach to public sector innovation

It can be said then that the following factors affect the operating environment of government:

  • Changing functions – in an environment of change, governments must also change how they operate.

  • Running to stay in place – in an evolving economy, governments have to change policy settings just to maintain the same outcomes.

  • No room for spectators – in order to remain effective, governments must have experiential knowledge of innovation; they cannot wait for answers to be given to them.

  • More is expected – many politicians, citizens and public servants want and expect things to change.

  • Risk of a mismatch – a government that does not innovate is one that is at risk of always being behind, always reacting yet forever disappointing.

  • Innovation as a core competency – the need for innovation can strike anywhere. Therefore, everyone must be ready to play a part.

Taken together, these factors suggest that innovation needs to move from a sporadic activity, to one that one should be done consistently and reliably. Innovation needs to be seen not as a serendipitous occurrence, but as a dependable resource that can be drawn upon.

One simple real-world test of this proposition is to consider how many areas of government can be described as truly contemporary, truly appropriate to their setting, and thus delivering a level of results that meets or exceeds expectations? How many parts of government can be considered as being truly aware of all of the issues, effectively using available technology and processes, and not just responding to the environment but helping to shape it? If this does not describe a government’s activities overall, then it suggests that innovation is happening at a rate below that which is needed.

A partial explanation of this state of affairs is that while innovation is (and has been) occurring within governments, it is generally a by-product of existing processes and ways of operating, rather than a focus in its own right. Innovation within the public sector has rarely been a deliberate focus of government, except in very specific areas, and thus its occurrence has, generally, been ad hoc.

If innovation is already possible and is already happening, but not to the level necessary or expected in a high change environment, it is likely that something else is needed. If innovation is happening some of the time, but not enough of the time, this suggests that there are systemic factors at play. In such cases, something is limiting the level of innovation in government, despite the need for more innovation. What is it?

In order to answer this question, it is necessary to focus explicitly on the innovation system – the actors, actions, ambitions and interactions that shape and affect innovation performance. Relying on innovation occurring as a by-product is insufficient, as is relying on crises or other external catalysts to drive innovation. If government needs innovation to be a dependable resource, and have innovation as a consistent, systematic and reliable activity, then it needs to understand the system that produces innovation. It needs to understand the drivers, the actors and the factors that shape when and how innovation occurs.

In short, if a government wants to influence how and when innovation successfully occurs in government, then it will need to understand its public sector innovation system.

Understanding public sector innovation

To understand public sector innovation at a system level, it is first necessary to understand the nature of public sector innovation. What is public sector innovation really? How, if at all, is it different from innovation occurring in the private sector? What are the features of public sector innovation that might affect it at a system level? The following discussion seeks to outline the relevant characteristics of innovation.

Defining public sector innovation

As noted in Chapter 1, innovation refers to ideas being applied in new settings or in new ways in order to achieve impact. This question of “new” means that innovation is inherently an ambiguous concept, because what is new will change between contexts and adopting something otherwise “old” in a different context can still make it novel. What was once innovative can soon become routine or even old-fashioned, and what is innovative in one organisation may not be for another. Despite this intrinsic haziness to the word, the OECD (2017a: 23) suggests three characteristics of public sector innovation:

  • Novelty: innovations introduce new approaches in a defined context

  • Implementation: innovations must be implemented, not just an idea

  • Impact: innovations aim at better public results including efficiency, effectiveness and user or employee satisfaction.

This definition distinguishes innovation from creativity (coming up with new ideas) and invention (the creation of new things that may not be used).

However, because innovation can only be understood in context, the precise definition will vary between settings. While these high-level characteristics will likely be of relevance to innovation no matter where it happens, the exact understanding of what is innovative should be tailored to the situation in which it occurs. What is innovative for one person, team, organisation, system or country may not be innovative for another.

Box 3.1. “What we’re talking about when we talk about innovation”

The Impact and Innovation Unit used the following definition of innovation in their 2016-17 Annual Report:

“Too often innovation is understood to simply mean doing something new, interesting, or novel. Used in this way, the term can lose its meaning.

The Hub takes a specific view of what innovation is to guide its work. In our context, innovation means applying new insights, resources, technologies, or approaches that can be demonstrated to improve outcomes for the public compared to conventional ways of doing things. Demonstrating the effectiveness of an innovation requires, where possible, using rigorous evaluation and structured experimental methods to generate evidence of impact.

In the coming year, the Hub will be working with government departments along with external partners to promote a shared view and approach on public sector innovation and experimentation” (Privy Council Office, 2017).

The significance of this for any consideration of a system is that any innovation system will also be contextual. If what is innovative depends on the context, then what is included within an innovation system will also depend on the context. What a public sector innovation system includes, or how it looks, will differ between country contexts.

Defining what public sector innovation is not

A core element of innovation is the notion of “discontinuous change”, or change that is not in line with what has gone before (Osborne and Brown, 2013: 3). This inherently means that innovation is not the same as continuous improvement or incremental change.

It is a quite different task, for example, to support staff in developing their existing skills than to tell them that these skills have been made redundant and that they need to re-train to retain their post (if it has not been made redundant too, of course). The distinctive nature, and challenges, of innovation, as opposed to service development or change (such as the management of risk, uncertainty and failure), become lost in such sophistry. (Osborne and Brown, 2013: 3)

Continuous improvement is, of course, often an important activity. It is a key approach to making efficiency gains and an important means of transforming things that were innovative into established and efficient practices. But it is not the same thing as innovation. Therefore, if innovation is not about incremental change, it will often be in competition with incremental change.

Innovation is also not inherently good. Innovation may be necessary, but that does not mean that any and every specific innovation will be worthy or beneficial (Osborne and Brown, 2013). Innovation therefore may sometimes be in conflict with current values and priorities, and it may benefit particular interests that are not in alignment with the collective (or even individual) good.

These aspects of innovation (or what innovation is not) are important when taking a system-wide view, because they imply that the system must actually incorporate and allow for tension and potential divergence in order for innovation to emerge. However, they also suggest that innovation should not be left to its own devices when it does emerge, as the innovation process does not guarantee that the innovation that arises is that which is needed or wanted. Innovation must therefore be managed.

Public sector innovation is about uncertainty and learning

As innovation represents discontinuous change, it is associated with a high degree of uncertainty. Innovation fundamentally involves taking actions that lack a defined or guaranteed outcome. By definition, it involves the possibility of the unexpected. If something can be perfectly predicted, then it is not innovative.

This characteristic means that innovation is inherently about learning – about engaging with and reducing uncertainty, and building a better understanding of the relationship between things. The OECD (2016) has outlined many of the issues related to learning and innovation, including the importance of single-loop learning (learning what is) and double-loop learning (learning about what underlies what is).

While this may initially seem obvious, learning is not a straightforward process, and involves people changing what they know to be true – something that is not always easy or welcomed. Supporting public sector innovation requires supporting learning in its different forms. It must also involve a degree of “unlearning” and ensuring that new truths do not become entrenched. From a system perspective, this is important because it points to another inherent tension – ensuring that the different types of learning that come with innovation are supported and that the results are spread and shared, but avoiding the emergence of a new unquestioned orthodoxy that inhibits future innovation.

Differences from private sector innovation

Public sector innovation is not the same as private sector innovation. The public sector operates in a different environment with different operating forces. Most notably, the public sector lacks the private sector’s generally overriding driver of profit, and in its place, operates with a far more contested and nuanced driver in the form of politics. This creates an environment that requires different approaches to innovation.

The skills to innovate and encourage innovation in others associated with leadership in the public sector are distinct from private sector ones. The scope of the environment, the complexity of the relations and the histories of the organizations suggest a culture that is far from clear and unitary, and hence a mode of leadership formed much more on consensus and longer-term perspectives. (Hall and Holt, 2008: 25)

The public sector is there to deliver on the priorities of the government of the day (although these are sometimes balanced against longer term considerations such as core institutions and values). However, this is not a technocratic activity of implementation, but an inherently political activity of navigating different options, different possibilities and different sets of power relations.

When considering innovation in the public sector, we need to think about the public sector factors that may be particularly important. One of them is the importance of engaging with politics. Innovation is not just a matter for technical experts or administrators; engagement with politics is essential to making any major innovation work. That engagement will almost certainly identify multiple and competing objectives, and it also offers a process to allow these to be tested and weighed up. The other key public sector factor concerns the role and values of public service: having impartial, professional, consistent and stable management, notwithstanding the need to be innovative. (Podger 2015: 122)

The political aspect of the public sector – its responsibility to the government – manifests most starkly when it comes to the question of risk. Innovation, as an inherently uncertain process, is one that involves the risk of negative consequences being realised, whether predicted or not. For any public sector organisation, these consequences might concern a wide range of eventualities (Osborne and Brown, 2005), including potential impacts on the health and safety of citizens, unintended consequences that draw political attention or an outcome that is not sufficiently successful to be feasible even if “works”. Innovation, as an uncertain event, can result in surprises, and as such is uniquely placed to disturb the relationship between a public service and a government’s political leadership. Risk aversion is therefore a common feature of many public sector environments.

From a system perspective, this indicates that the appetite for public sector innovation will always be subject to potential fluctuation depending upon political shifts.

Importance of surrounding ideologies and paradigms

The political nature of public sector innovation means that it is not value-neutral or isolated from the political choices and forces that shape the public sector. The dominant paradigms of the time will naturally affect or influence any proposed innovation as well as its chances of adoption. For example, New Public Management (NPM) was a dominant philosophy in a number of countries and helped shape how innovation unfolded.

Notably, NPM favours innovations that support the decentralization, privatization and contracting-out of services; promotes competition between public providers and private firms/not-for-profit organizations; develops consumerism; and separates political and administrative decision making from service production. (Windrum, 2008a: 15)

The different paradigms are important to recognise as they will likely act as filters for any innovation that is attempted, and may well limit the range of the possible, regardless of what may be otherwise conceptually or technologically feasible.

If one cares about minimizing misgovernment rather than maximizing good government, one will be disinclined to grant officials discretion. (Kelman, 2008: 38)

Different paradigms will also likely encourage or support different types of innovation, and place emphasis on different actors and different relationships, which will in turn affect the performance and evolution of the innovation system.

Different forms of innovation

Public sector innovation can come in different shapes. Windrum (2008a: 8) provides a taxonomy of six different types of innovation:

  • Service – the introduction of a new service or an improvement to an existing service

  • Service delivery – new or altered ways of interacting with clients in the supplying of services

  • Administrative and organisational – changes to structures and routines

  • Conceptual – the development of new world views that challenge existing assumptions

  • Policy – changes to the thinking or intent behind a policy paradigm

  • Systemic – new or improved ways of how the public sector operates in a foundational way.

Any individual innovation may straddle one or more of these categories.

This variety in the forms that innovation can take is significant because it helps to illustrate the range of different capabilities and knowledge that may be of relevance to the innovation process. Innovative service design will often be different, and involve different people, skills and capabilities than policy innovation. Different forms of innovation will also likely involve different considerations and potentially require different types of support.

From a system perspective, this highlights the point that will likely be multiple sub-systems and ecosystems of relevance to different functions of the system.

Different degrees of innovation

Innovation can also vary in the magnitude and scope of its impact. For instance, innovation can range from the radical to the incremental (Freeman, 1982). Here, incremental innovation does not refer to incremental/continuous improvement, as it still involves the introduction of significant novelty and, thus, requires a different set of tools and management.

Radical innovation, which implies significant disruption and change to existing patterns of activity and relations, will necessitate different approaches (and responses) than more incremental innovation, which is unlikely to significantly challenge the status quo. It is likely that the capacity of any system to tolerate incremental innovation will far extend far beyond its capacity to tolerate radical innovation.

There are other possible additional categorisations of degrees of innovation (e.g. see Miles, 2013); however, the main point is that innovation can range in the degree of change that it entails. The different degrees of innovation will involve different responses, strategies and different ways of inculcation.

Innovation and time

A core characteristic of innovation is the importance of time. Time influences whether any innovation is seen as a success or failure (Dodgson, Gann and Satter, 2005). One innovation may initially appear to be quite successful, only for the progress of time to reveal that the innovation either did not work, or that it was not actually related to the observed impact. Another innovation may be perceived initially as small and relatively inconsequential, but later be praised for its wide-ranging and cascading impacts. Time may change how an innovation is seen in terms of the form it takes (a service innovation may become seen as a conceptual innovation in time) or the degree of radicalness (e.g. moving from something incremental to something truly radical).

The importance of time for public sector innovation means that any snapshot of innovation will inevitably mislead. Innovation needs to be seen in context, including that of time. From a system perspective, innovation must be assessed contemporaneously and reflected upon over longer timeframes.

Different waves of innovation

For if public sector innovation endures, and it clearly does, it still does not stay the same (Borins, 2014).

Innovation is the practice of doing what has not been done before (in a specific context). The innovation process, therefore, also changes, as previous innovations reveal new possibilities (and sometimes remove old ones). For instance, open innovation involves different supporting infrastructure, tools and relationships than are necessary for innovation primarily led from within an organisation. Innovation is a dynamic process, as the results of prior innovations will sometimes alter how innovation occurs in the future. New technology allows for new waves of innovation that will favour different techniques, relationships, infrastructure, and underlying logics and notions of value.

The implication of this is that there is no set pattern that can be used to support innovation, either at an organisational or a systemic level. How innovation is done and, thus, how it is supported or engaged with, will change over time, and require continual attention, investment and thinking in order to remain relevant and useful to the context of the time.

Different speeds of innovation

The process of innovation is also dependent upon the intersection of time, uncertainty and the different degrees, forms and waves of innovation. How fast innovation can be attempted depends upon the combination of all of these. If a situation is well understood and there is broad agreement about what is needed, it is more likely that the innovation process will proceed quickly. Where there is a high degree of uncertainty, no consensus or clear mandates for significant innovation, or where there are significant possible consequences, it is likely that a more deliberate and slower approach to innovation will need to be taken.

In such circumstances, the focus may be on harvesting insights and learning through the innovation process, rather than rapid action, in order to avoid unwanted inflection points – thresholds beyond which there is no return. Sometimes “slow” innovation will be needed, before gaining the requisite acceptance and support needed to proceed effectively.

The relationship between speed and uncertainty is therefore highly contingent. It may, for example, be highly advantageous to speed up the innovation process when it is routinized and outcomes are relatively well specified. Speed may be disadvantageous when the innovation is disruptive to existing ways of doing things and warrants extensive reflection and learning. An overemphasis on speed would also rest uneasily when the consequences of mistakes are high, as in the design of aircraft or nuclear power plant. (Dodgson, Gann and Satter, 2005: 22)

Differing parts of the system will need to engage with innovation at different speeds, depending on the level of uncertainty faced combined with the pressure for innovation to occur.

This question of speed adds another consideration to the innovation process. From a system perspective, it raises the question of how different speeds of innovation can be supported concurrently.

Top-down and bottom-up innovation

Innovation can be driven from the top (i.e. it can be mandated and directed) or it can emerge as a bottom-up process (e.g. from front-line staff).

The origin of the idea can greatly affect the path that it will take. An idea that comes from a newly elected government with a clear mission will likely fare very differently to an idea that comes from a public servant in an agency trying to consolidate previous change efforts.

Borins (2014) has found that a significant amount of public sector innovation is bottom-up. However, given the challenges of innovating in the public sector environment, this implies that it is important to consider the motivations of those that might contribute to the innovation process. The role of managers and leaders is, thus, particularly important, as they will have a significant impact on the appetite for trying something new (Kelman, 2008).

If innovative ideas can come from anywhere in an organization, rather than a senior elite, then organizations will be most innovative if they stimulate innovation throughout (Borins 2006: 27).

The source of innovation therefore affects how it is engaged with, how it might need to be supported and the path that the innovation might take. The same ideas can play out very differently in an innovation system depending upon where they originate.

Different purposes for innovation

The distinction between bottom-up and top-down innovation also helps to draw attention to the different purposes that innovation may have.

Politicians or agency heads are associated with innovations in response to crises. Middle managers and frontline staff tend to initiate innovations together and are more likely to be the initiators when there is a problem than when there is a crisis. (Borins, 2014)

Within the public sector proper, innovation can be seen as generally problem-driven (e.g. Windrum, 2008b), even if that problem is an issue identified at the working level (Borins, 2014), a crisis or a political imperative (although not strictly a “problem”, a political priority certainly requires a response and action on the part of the civil service).

However, innovation can also be “mission led”, directed towards a particular aim or set of goals. This form of innovation may be instigated to solve specific problems, it might be exploratory in character or it may be more aspirational.

Missions and problems both share the advantage of reducing the uncertainty around the innovation process, by providing a means to assess innovative initiatives and their results (i.e. did it do what was needed). They also represent a tangible driver for innovation (e.g. an acceptance that things need to change) in opposition to the inertia within the system that will likely support the status quo (OECD, 2016). More exploratory innovation can struggle with these criteria, as its potential value or support from incumbent interests may not be immediately apparent.

Of course, public sector innovation is not solely a matter for those in public service – increasingly other actors can contribute to the process, either directly or indirectly. In these instances, other drivers may be of more relevance, such as public value, commercial opportunity or other interests.

The reasons for undertaking innovation will thus differ, and these different purposes will affect the nature and conduct of the respective innovation processes.

Different pathways for public sector innovation

Just as innovation may be undertaken for a number of different purposes, it can also follow different pathways, some of which may be better suited to particular types of problems or purposes/aims. Some authors (Bessant, Hughes and Richards, 2010) have proposed a range of models for the different pathways available to innovation:

  • R&D led – “Ideas are developed by specialists, refined, developed and launched.”

  • High involvement – “All employees are engaged in the process of incremental problem solving.”

  • Network – “Ideas are developed, adapted and adopted through networks.”

  • Radical/discontinuous – “A group is given the license to think the unthinkable and develop ideas on the edges or apart from the mainstream.”

  • Entrepreneur driven – “Ideas are developed on a small scale inside or outside an organisation.”

  • Recombinant – “An idea is adapted and adopted from one setting into another.”

  • User led – “Users innovate themselves through co-production with professionals or by using voice or choice.”

Other authors (Eggers and Singh, 2009) have suggested an alternative set of pathways:

  • Cultivate – best suited for engaging employees

  • Replicate – best suited for adapting an existing innovation to a new context

  • Partner – aimed at developing partnerships to leverage different environments, resources and competencies

  • Network – utilises the innovation strengths of a range of individuals and organisations

  • Open source – uses open source approaches to engage an even larger range of potential participants and contributors.

A possible addition to both of these sets of pathways would be “positive deviance”, which refers to finding and replicating or scaling examples of innovative adaption already happening, but not commonly, within a system (Pascale, Sternin and Sternin, 2016).

These different pathways have different uses or strengths, and different enabling patterns. Accordingly, different types of innovation will be required for different types of issues, problems, opportunities or missions, and the selection of the most appropriate pathway will depend on the available assets and investments and relationships. An innovation system will likely be more effective if it draws upon and supports multiple approaches.

Public sector innovation as a process rather than an event

Given the previous considerations, it is clear that innovation does not occur in isolation or on command. Similarly, innovation does not come out of nowhere; rather it depends on a range of conditions, capabilities and supporting factors.

Governmental innovation emerges from a months- or years-long developmental process, a process that accommodates many players and interests. (Bardach, 2008: 113)

Relevant factors might include prior knowledge and learning, infrastructure, previous investment, existing relationships and networks, and previous experience with innovation. When looking at the innovation process, or the ability to consistently and reliably generate a stream of innovations, a concerted innovation approach by an individual organisation may require considerable sustained investment.

In our experience, it can take an organization three to five years to build the kinds of skills, tools, management processes, metrics, values, and IT systems that are required to support ongoing, across-the-board innovation. (Skarzynski and Gibson, 2008: 16)

In addition, innovation as a process of learning does not necessarily happen quickly. The introduction of a new innovation does not lead to immediate comprehension, nor does it guarantee that it will integrate or fit with existing routines, or that it will be used in the right way, be defended or explained well, or achieve what was expected.

… innovation is a process that has to be gone through. Staff have to leave old beliefs behind and learn new ones. An innovation cannot simply be “plugged in” from elsewhere. Each team or organization has to make its own innovation journey. (Osborne and Brown, 2005: 197)

Innovation, then, is an individual and organisational process, a journey rather than an event. This is also true for a civil service as a whole, as illustrated by Chapter 2 and the historical innovation journey of the Public Service of Canada.

The implication of this from a system perspective is that there will be different rates of learning, and thus different experiences of the same developments. An innovation system will involve many different actors at varied stages of the innovation journey.

Public sector innovation is fundamentally complex

Public sector innovation is irreducibly complex. The associated dimensions of innovation explored here represent some, but by no means all, of the relevant factors that make public sector innovation fundamentally difficult and uncertain.

A successful public sector innovation process depends on an evolving interplay of interpersonal, organizational, political, social, and economic factors. What is more, it grows out of a history of previous successful, and unsuccessful, efforts. (Borins, 2014)

This is not to say that public sector innovation cannot be supported; rather it is to suggest that there are no easy answers or ready-made solutions. Innovation is not something that can simply be commanded or directed, and then expected to occur.

But making innovation a priority is not the same thing as making it happen. All too often, innovation becomes nothing more than a buzz-word or a bumper sticker – the management theme du jour – that receives a lot of reverential rhetoric in company meetings, corporate ad campaigns, and annual reports. (Skarzynski and Gibson, 2008: 4)

An innovation system that results in innovation as a dependable resource cannot then be wished into being. It requires careful thought, ongoing engagement, and observation and reflection to build an understanding of how it operates.

Summary and implications for a system perspective

In summary, public sector innovation consists of a wide range of characteristics that have a bearing on how it can be engaged with and supported or encouraged.

  1. 1. What it is: innovation involves novelty, implementation and impact, but what is and is not innovation is essentially contextual. Innovation systems, then, will also be contextual and will vary between different country contexts.

  2. 2. What it is not: as innovation involves discontinuous change, this means that it is not a process of continuous improvement, and thus cannot be expected to just happen naturally. Neither is innovation an inherently good thing. Innovation, therefore, cannot be left to its own devices. It requires active management.

  3. 3. Innovation is about uncertainty and learning. There are different forms of learning, and each can be supported in different ways. An innovation system must involve spreading the resulting insights, but prevent them from becoming established orthodoxy that limits future innovation. It must balance learning and unlearning.

  4. 4. It is different to private sector innovation. Public sector innovation has different constraints and issues, including politics, the lack of a unitary driver for innovation such as profit, and the existence of a different risk environment. Innovation may be strongly desired and then suddenly pulled back from. There will be a fluctuating appetite for innovation in the public sector, which is likely much sharper than that in the private sector.

  5. 5. Innovation is influenced by surrounding ideologies and paradigms. Public sector innovation should not be perceived as value neutral or a technocratic exercise. These ideologies and paradigms will shape the nature of the system and the expected roles and capabilities of its actors. What is wanted from a system will depend on the dominant views and beliefs of the time.

  6. 6. There are different forms of innovation. These range from a new service to an entirely different way of understanding issues and engaging with citizens. Different forms will make different contributions and may require different types of support and involve different parts of the system.

  7. 7. There are varying degrees of innovation. Innovation can range from the incremental (but still involve discontinuous change) to the radical. From a systems perspective, different degrees will necessitate different responses.

  8. 8. Innovation can only be judged over time. Success or otherwise can only be understood over time, through learning and observation. Consideration of the workings and performance of an innovation system must therefore consider the immediate (what is working now) and the longer term (the impact over time). Time will change the view of performance.

  9. 9. Innovation occurs in different waves. The practice of innovation and what it involves will change as new techniques, insights and technologies become possible. An innovation system may need to be flexible to move between or maintain multiple waves of innovation.

  10. 10. There are different speeds of innovation. When the field of uncertainty is reduced (e.g. there is clear agreement that something different is needed quickly), innovation might occur more rapidly. In other circumstances, the innovation process may need to unfold more slowly, before committing to steps that may not be reversible. An innovation system will need to be able to maintain different speeds of innovation simultaneously.

  11. 11. Innovation can be bottom-up or top-down. Innovation will involve different considerations depending on where it comes from, but the significance of bottom-up innovation is that important ideas can come from anywhere. Whether they will is dependent upon the environment and the signals from leadership. The progress of an idea through an innovation system will be shaped by its origins. Where an idea comes from matters as much as what the idea is.

  12. 12. Innovation has different purposes. Public sector innovation is usually problem led, and sometimes mission led. Both of these approaches provide a basis for innovation to counter any biases to not innovate. An innovation system will involve undertaking different types of innovation for differing purposes. These different purposes will affect what the innovation process involves.

  13. 13. Public sector innovation can occur through a number of different pathways. There is no one approach for generating innovation – each approach will have different uses, and will require differing forms of support or investment. Different approaches will offer different strengths and require different support. An innovation system will likely involve and benefit from a range of different approaches.

  14. 14. Innovation is a process rather than an event. Public sector innovation does not come out of nowhere; it builds on the past. Developing an effective and reliable public sector innovation process will likely take considerable and sustained time and investment. An innovation system will encompass many different actors at different stages in the innovation journey. There will thus be different rates of learning across the system.

  15. 15. Public sector innovation is fundamentally complex. There are no easy answers, no “set and forget” approaches. It requires constant engagement and movement to remain appropriate to the changing context.

In short, public sector innovation is not a straightforward exercise. Other than demonstrating that innovation is challenging what are the takeaways from these varied nuances and characteristics of public sector innovation? Furthermore, what are the consequences for a systems perspective? Table 2 identifies four main implications.

Table 3.2. Implications of the nature of public sector innovation for a systems perspective

Innovation involves ongoing discovery

Innovation is varied and multi-layered

Innovation requires intervention

Innovation will be interpreted differently depending on the past, the present and the possible futures

1. Innovation is contextual

6. Differing forms of innovation will make differing contributions

2. Innovation requires active management

5. The dominant views and beliefs of the time will shape the system

3. Innovation involves balancing learning and unlearning

7. Different degrees of innovation will necessitate different responses

11. Where an idea comes from matters as much as what the idea is

8. Time will change the view of the performance of the innovation system

4. There is a fluctuating appetite for innovation

9. Different waves of innovation will need to be maintained or moved between

13. Different approaches will offer different strengths and require different support

15. There are no easy answers

10. Differing speeds of innovation need to be maintained simultaneously

14. Different rates of learning will occur across the system

12. Different purposes will affect what the innovation process involves

  • Innovation involves ongoing discovery: No one single “innovation system” will be appropriate or suitable for all contexts. New insights and lessons from the innovation process will (or should) shape what is desired of the system and the understanding of what is possible. This in turn will change the destination. There is therefore no one recipe or solution for an innovation system. Rather, it is an ongoing journey.

  • Innovation is varied and multi-layered: There is no one single type of innovation. Innovation varies in its form, degree, patterns, speed and purposes. An innovation system will therefore involve multiple streams of innovation, and will thus require diversity of efforts, actors and structures.

  • Innovation requires intervention: While innovation frequently arises from structural or circumstantial factors (e.g. a crisis or a particular problem), an innovation system will require deliberate intervention and oversight. Intervention is required whether this involves ensuring that the innovation meets wider goals than just solving an immediate problem, ensuring that the ideas of some actors are not unduly prioritised, ensuring that the requisite capabilities are available or integrating lessons from across a distributed system. An innovation system cannot be relied upon to deliver what is needed in the absence of oversight.

  • Innovation will be interpreted differently depending on the past, the present and the possible futures imagined: How innovation is viewed will change over time, either because the practice of innovation will have evolved, because more has been learned about the impact or success of an innovation, or because values, beliefs and ideologies will change. Any assessment or thinking about an innovation system should therefore consider the past, the present and different possible futures.

Public sector innovation is therefore necessary, but must be undertaken in a more consistent and reliable fashion, and requires a systematic approach. That systematic approach must involve ongoing learning, a nuanced approach that caters to the varied nature of innovation, oversight and intervention, and a concurrent short-term and longer-term perspective.

Understanding and shaping public sector innovation systems

Existing discussion of the characteristics of public sector innovation mostly draws or builds on what has been learnt at an individual or organisational lens. But as Bourgon (2008) points out, it is possible to think about the individual capacity of public servants, organisational capacity and collective capacity. If innovation is only considered from an individual or organisational perspective, it will not result in a systemic approach that a government can rely upon to be sufficiently consistent and reliable to meet the increasing pressures for transformation. There needs to be a focus on the innovation system, and this focus needs to provide some way of making the inherent complexity of public sector innovation manageable.

However, most of the existing guidance, both in the private sector and the public sector, is developed for or relevant to an individual or organisational perspective.

There is, however, some existing thinking about innovation systems. The main premise of innovation systems literature is that it is impossible to evaluate a component of the innovation system without seeing how it fits with other structural elements and the innovation process as a whole. In effect, the approach examines (also institution driven) capabilities and their fit and effect on innovative performance within these systems (Lundvall et al., 2011).

At the same time, innovation systems analysis is conceptually very heterogeneous (see Gault, 2007; Soete, Verspagen and Ter Weel, 2010). There are different approaches to innovation systems, including national innovation systems, both broad and narrow (Edquist, 1997; Lundvall, 1992; Nelson, 1993), regional innovation systems (Cooke, Heidenreich and Braczyk, 2004), sectoral innovation systems (Dolata, 2009; Malerba, 2005) and technological innovation systems (Carlsson and Stankiewicz, 1991; Hekkert et al., 2007; Johnson and Jacobsson, 2001). Many researchers do not consider these different perspectives as either-or approaches to innovation systems, but rather view them as interlinked and embedded systems of innovation (Markard and Truffer, 2008).

Each approach examines different levels of the system. For example, actors in the technological innovation systems (TIS) approach can be both individuals and organisations (research institutes, public bodies, etc.) or networks of actors such as value chains (Bergek et al., 2008). In essence, the TIS perspective is primarily a meso-level approach with structures and functions on the technology system level (Kukk, Moors and Hekkert, 2015: 47; Markard, Suter and Ingold, 2015: 82; see further argument in Hekkert et al., 2007). This is seen as more empirically “manageable” compared to national, regional or sectoral systems of innovation that operate primarily at the macro level.

These models though are all based on the private sector. As discussed previously, public sector innovation is different: it has different drivers, different actors, and different constraints. Are there any public sector models of innovation systems?

Some countries have previously taken a holistic view of public sector innovation at the national government level. These include Australia (Australian Government, 2010) and the United Kingdom (NAO, 2009). The Australian research also included cross-country analysis of different public sector innovation (Scott-Kemmis, 2010), which considered and proposed a public service strategy for innovation performance. Other national governments (e.g. Denmark) have also undertaken significant work on fostering or supporting innovation in their civil services.

However, overall there does not yet appear to be a consistent model for considering, understanding and driving innovation across a civil service.

Without such a model, there is a real risk that the efforts of any individual public service will be somewhat piecemeal, responding to symptoms in turn, rather than addressing root causes and harnessing underlying drivers. Without a model, it is likely that entrenched issues will continue, that existing tensions will remain, and that progress will be limited and subject to relapse.

In conclusion, despite two decades of structural reforms and performance management, innovation has not generally become the hallmark of public sector behaviour. Better training for public managers in leadership and problem-solving skills have assisted in encouraging innovation, but the structural impediments have remained. While some agencies have undoubtedly engaged in innovation and have spent considerable efforts implementing mandated reforms within the organizational processes, it has not proved possible to mandate public sector innovative behaviour beyond niche process areas (e.g. the adoption of IT-enabled customer services). Indeed, the culture of the public service in almost every nation tends to be risk averse and procedural, owing to administrative requirements for accountability, procedural fairness and predictability. (Head, 2013: 153-154)

Three primary concerns for innovation

Innovation, as discussed, can take many forms, may be undertaken for many different purposes and can range from the incremental to the radical or disruptive. However, there is no suitable model in the existing practice and literature designed to make the complexity of innovation more manageable and accessible for public sector innovation systems. The challenge is that not every innovation can be treated individually from a systemic view, but having one overly simplified conception of innovation would lead to overlooking significant differences. Something in between is required.

Building on what has been examined so far and drawing on the experience of the OECD’s Observatory of Public Sector Innovation, this section suggests three core public sector innovation concerns. These concerns differentiate between different aspects of innovation that have bearing on how innovation can or should be supported:

  • Delivering on today This relates to innovation taking place to meet key priorities and that government has the ability to innovate in order to reach its goals. Such innovation will usually be incremental in nature and exploit current knowledge resources. However, in some cases it will be transformational with a view to responding to more ambitious agendas.

  • Delivering for tomorrow This refers to exploration and engagement with emergent issues and technologies that will shape future priorities, future commitments and future responses. It will likely involve more radical forms of innovation that will be harder to embed in existing structures.

  • Ensuring innovation readiness – This means ensuring the necessary absorptive capacity across the Public Service to engage with new ideas, new methods and new ways of working and delivering. Innovation is not a capability or capacity that can be turned on and off at will, and it is likely that innovation readiness can only be achieved if nurtured and considered explicitly. Furthermore, innovation needs supporting structures to allow it to happen. One way to illustrate the importance of this is to substitute procurement for innovation: effective procurement cannot occur if the necessary systems are not in place, or if those involved have no experience or knowledge of the items or services being procured or procurement processes. While not everyone needs to be a procurement expert, most actors need to be familiar with and accept procurement as a core function of the public sector. Likewise, effective innovation cannot exist in a vacuum – familiarity, experience, knowledge and processes need to be present for it to function as a reliable resource.

These aspects, by no means set in stone, are intended to illustrate that an effective public sector will need to consider and support different streams of innovation activity at the same time.

However, while these three lenses may be helpful for clarifying why and how different types of innovation are needed, and the different factors that might come into play for each, they provide more of a functional perspective than a systemic one. They demonstrate that governments will need a diversified approach when it comes to innovation, but they still do not address the underlying question: what can be done to more consistently and reliably generate, implement and scale innovation in response to the varied needs of government?

Reaching a model for public sector innovation systems

This chapter has demonstrated that in a period of increased change, governments need to engage with innovation in a more sophisticated fashion than has generally been the case. Governments need innovation to be a consistent and reliable part of their arsenal as they pursue better outcomes and respond to changing expectations. Governments need a systematic and systemic approach to innovation.

It has also been shown, however, that innovation is inherently complex, varied and cannot be supported through any one single approach. There are no easy answers or ready-made solutions. The ongoing attention and myriad efforts of various governments, including the Government of Canada, illustrates this point – if someone had mastered it, it is likely that others would have followed.

The challenge of supporting public sector innovation at a system level is further exacerbated by the lack of existing relevant guidance, with most resources aimed at individual practitioners or viewed through an individual organisation lens. Most of the existing innovation system models are derived from private sector practice, which cannot be assumed to be relevant or appropriate for the differences inherent in the public sector context.

If governments are to avoid piecemeal responses that address symptomatic issues, then a model is needed to support innovation.

However, out of what is known, it is only possible to identify three different priority areas for government: delivering on today, delivering for tomorrow and ensuring innovation readiness. These perspectives will not be enough, however, to help governments drive and support public sector innovation. Existing knowledge is not sufficient to develop the required model.

In order to help identify a model that can render the complexity of a systemic approach to public sector innovation more manageable, it is necessary to learn more.

The next chapter seeks to do this by exploring the experience of innovation in the Public Service of Canada.

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