Northern Future Forum: “How can governments deliver services better and more efficiently? This is one of the key questions governments all over the world are constantly dealing with. In recent years countries have had to cut back government spending at the same time as demand from citizens for more high quality service is increasing. Public institutions, just as companies, must adapt and develop over time. Rapid technological advancements and societal changes have forced the public sector to reform the way it operates and delivers services. The public sector needs to innovate to adapt and advance in the 21st century.
There are a number of reasons why public sector innovation matters (Potts and Kastelle 2010):
- The size of the public sector in terms of percentages of GDP makes public sectors large components of the macro economy in many countries. Public sector innovation can affect productivity growth by reducing costs of inputs, better organisation and increasing the value of outputs.
- The need for evolving policy to match evolving economies.
- The public sector sets the rules of the game for private sector innovation.
As pointed out there is clearly an imperative to innovate. However, public sector innovation can be difficult, as public services deal with complex problems that have contradictory and diverse demands, need to respond quickly, whilst being transparent and accountable. Public sector innovation has a part to play to grow future economies, but also to develop the solutions to the biggest challenges facing most western nations today. These problems won’t be solved without strong leadership from the public sector and governments of the future. These issues are (Pollitt 2013):
- Demographic change. The effects ageing of the general population will have on public services.
- Climate change.
- Economic trajectories, especially the effects of the current period of austerity.
- Technological developments.
- Public trust in government.
- The changing nature of politics, with declining party loyalty, personalisation of politics, new parties, more media coverage etc.
According to the publications of national governments, the OECD, World Bank and the big international management consultancies, these issues will have major long-term impacts and implications (Pollitt 2013).
The essence of this background paper is to look at how governments can use innovation to help grow the economies and solve some of the biggest challenges of this generation and determine what the essentials to make it happen are. Firstly, a difficult economic environment in many countries tends to constrain the capacity of governments to deliver quality public services. Fiscal pressures, demographic changes, and diverse public and private demands all challenge traditional approaches and call for a rethinking of the way governments operate. There is a growing recognition that the complexity of the challenges facing the public sector cannot be solved by public sector institutions working alone, and that innovative solutions to public challenges require improved internal collaboration, as well as the involvement of external stakeholders partnering with public sector organisations (OECD 2015 a).
Willingness to solve some of these problems is not enough. The system that most western countries have created is in many ways a barrier to innovation. For instance, the public sector can lack innovative leaders and champions (Bason 2010, European Commission 2013), the way money is allocated, and reward and incentive systems can often hinder innovative performance (Kohli and Mulgan 2010), there may be limited knowledge of how to apply innovation processes and methods (European Commission 2013), and departmental silos can create significant challenges to ‘joined up’ problem solving (Carstensen and Bason 2012, Queensland Public Service Commission 2009).
There is not an established definition of innovation in the public sector. However some common elements have emerged from national and international research projects. The OECD has identified the following characteristics of public sector innovation:
- Novelty: Innovations introduce new approaches, relative to the context where they are introduced.
- Implementation: Innovations must be implemented, not just an idea.
- Impact: Innovations aim to result in better public results including efficiency, effectiveness, and user or employee satisfaction.
Public sector innovation does not happen in a vacuum: problems need to be identified; ideas translated into projects which can be tested and then scaled up. For this to happen public sector organisations need to identify the processes and structures which can support and accelerate the innovation activity.
Figure 1. Key components for successful public sector innovation.
The barriers to public sector innovation are in many ways the key to its success. In this background paper four key components for public sector innovation success will be discussed and ways to change them from barriers to supporters of innovation. The framework and the policy levers can play a key role in enabling and sustaining the innovation process:
These levers are:
- Institutions. Innovation is likely to emerge from the interactions between different bodies.
- Human Resources. Create ability, motivate and give the right opportunities.
- Funding. Increase flexibility in allocating and managing financial resources.
- Regulations. Processes need to be shortened and made more efficient.
Realising the potential of innovation means understanding which factors are most effective in creating the conditions for innovation to flourish, and assessing their relative impact on the capacity and performance of public sector organisations….(More). PDF: Simpler, smarter and innovative public services