Ready or not? Taking innovation in the public sector seriously

Provocation 03: April 2007
Ready or not?
Taking innovation in the public sector seriously
By Geoff Mulgan

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Contents
Taking innovation in the public sector seriously


04
Public sector innovation means new ideas that work at
06
creating public value


So how does innovation happen in government?

07
Why is innovation frustrated? The good reasons and the bad
13
Six elements of an innovative public sector


18
Organising for innovation: exercising the innovation muscles
25
and cultivating hinterlands
Innovation from the inside out and outside in


28
Appendix A: Public sector innovation checklist


29
Appendix B: What’s known about public sector innovation
31
Appendix
C:
Bibliography

33
Endnotes

37
NESTA is the National Endowment for Science, Technology and the Arts. Our aim is to
transform the UK’s capacity for innovation. We invest in early stage companies, inform
innovation policy and encourage a culture that helps innovation to fl ourish.
NESTA’s Provocations are regular extended essays by leading thinkers that showcase
thought-provoking work on innovation. The views are those of the author and do not
necessarily represent those of NESTA. If you would like to comment on this Provocation please
e-mail research@nesta.org.uk

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Taking innovation in the public sector seriously
According to conventional wisdom,
educating, vaccinating vast populations
public organisations cannot innovate.
or implementing new methods like
Bureaucracies lack the competitive
intelligence-led policing or auctions for
spur that drives businesses to create
radio spectrum.
new products and services. Their rules
squeeze out anything creative or
Yet there are good reasons to doubt
original. Their staff are penalised for
the public sector’s ability to innovate.
mistakes but never rewarded for taking
Innovators usually succeed despite,
successful risks. So while business
not because of, dominant structures
develops new chips, iPods, airplanes
and systems. Too many good ideas
and wonder drugs, the slow and
are frustrated, fi led away or simply
stagnant public sector acts as a drag
forgotten. Public services remain poor at
on everyone else.
learning from better models – even on
their doorstep – and only a handful of
This account is commonplace. But it is at
governments have any roles, budgets or
odds with the history of innovation. Two
teams devoted to innovation in their main
of the most profound innovations of the
areas of activity: welfare, security, health or
last 50 years were the Internet and the
the environment.
World Wide Web. Both came out of public
organisations: DARPA in the fi rst place,
Indeed, despite the rhetorical lip service
CERN in the second.1 Looking further back,
paid to innovation, no government has
business was not particularly innovative
anything remotely comparable to the
for most of human history, at least until
armies of civil servants employed to count
the late 19th century. Instead, the most
things, to inspect and to monitor or, for
important innovations in communications,
that matter, to support technological
materials or energy came from wealthy
research and development (R&D).
patrons, governments or from the military.
The idea that businesses and markets are
Nor can any give coherent accounts of
powerhouses of innovation, or ‘innovation
how they innovate. What, for example,
machines’ to use William Baumol’s phrase,
is a reasonable proportion of public
is a very recent one.2
spending to devote to innovation? Is it
around 3-4 per cent, which is generally
Even today, the caricature of public
thought to be the right proportion for a
agencies as stagnant enemies of creativity
modern economy to invest in R&D, or the
is disproven by the innovation of
20-30 per cent that is more typical for
thousands of public servants around the
a biotechnology company? Under what
world who have discovered novel ways
conditions should support for innovation
of combating AIDS, promoting fi tness,
be stepped up – or scaled down? Should
4 Ready or not? Taking innovation in the public sector seriously

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innovation be the job of specialised units,
player, whether as provider, funder or
or should it be everyone’s job? What’s a
regulator, and they are all sectors in which
reasonable success rate to aim for in radical
innovation happens in very different ways
innovations: one in two, or one in ten?
from the dominant industries of the last
Should civil servants rely on politicians for
century.
new ideas – or vice versa?
Public innovation cannot be simply
Public innovation isn’t always a good
institutionalised or planned. But there are
thing – and a world in which civil servants
many things that governments can do to
experimented continuously with traffi c
improve the chances of new ideas creating
lights or taxes on pensions would be a
value for the public. They can do more to
nightmare. But the lack of seriousness
cultivate and scan the hinterlands from
about innovation is striking, and contrasts
which new ideas will come; they can recruit
starkly with the world of science and
proven innovators; they can deliberately
technology. There, both the public and
design and test promising new ideas; they
private sectors invest billions, and the
can provide markets for solutions and
diffi cult task of turning scientifi c insights
outcomes rather than inputs; and they can
into useful products was long ago taken
create protected spaces where radical ideas
away from lone inventors in garden sheds
can evolve.
and put at the heart of great corporations
and great public laboratories.3
Over the last 30 years, governments
have learned a lot about how to be more
It’s no wonder that the world’s public
effi cient, and about how to take customers
sectors are failing to innovate fast enough
more seriously. But now they need to
to cope with enormous challenges like
learn a new set of skills – how to innovate
an ageing population, climate change or
and serve the public, not only by being
migration. Yet there are some tentative
competent in the present, but also by
signs that this may be changing. Some of
being ready for the future.
the governments that are most competent
at delivery are increasingly turning their
attention to innovation.4
One pressure is rising public expectations.
In the 21st century economy, the biggest
sectors are no longer cars, steel, or even
IT. In most advanced economies much
the biggest sector is health. Education
accounts for 5-10 per cent of GDP. Care,
both for children and the elderly, is
growing fast and already constitutes some
5 per cent in a few economies.5 These are
all sectors in which government is a major
Ready or not? Taking innovation in the public sector seriously 5

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Public sector innovation means new ideas that work
at creating public value
In the public sector, as in other fi elds,
Some of the more prominent recent
innovation can mean many different
examples in the UK would include NHS
things. It can mean new ways of
Direct and Learndirect; Drug Courts and
organising things (like Public Private
Police Community Support Offi cers;
Partnerships), new ways of rewarding
online tax transactions and restorative
people (like performance-related
justice; cognitive behavioural therapy
pay) or new ways of communicating
for prisoners and Sure Start; Connexions
(like ministerial blogs). Distinctions
and criminal assets recovery; congestion
are sometimes made between policy
charges and Children’s Commissioners.
innovations, service innovations
and innovations in other fi elds like
Alongside new organisations and
democracy (e-voting, citizens’ juries)
programmes, the public sector has also
or international affairs (prepayments
innovated what Bart Nooteboom calls
for new vaccines or the International
new ‘scripts’.6 An example from the
Criminal Court). Some innovations
private sector was the rise of fast food
are so radical that they warrant being
retailing, which created a new script for
seen as systemic (like the creation of a
having a meal. Where the traditional
national health service, or the move to
restaurant script was: choose, be served,
a low carbon economy).
eat, then pay, the self-service/fast food
script is: choose, pay, carry food to table,
The simplest defi nition is that public
eat, clear up. New scripts are emerging
sector innovation is about new ideas
right across the public sector, in areas like
that work at creating public value. The
recycling, personalised learning in schools
ideas have to be at least in part new
and self-managed healthcare – and are
(rather than improvements); they have
likely to be critical to future productivity
to be taken up (rather than just being
gains in public services.
good ideas); and they have to be useful.
By this defi nition, innovation overlaps
with, but is different from, creativity and
entrepreneurship.
Seen through this lens, governments
and public agencies around the world
are constantly innovating new ways of
organising social security or healthcare,
online portals and smart cards, public
health programmes and imaginative
incentives to cut carbon emissions.
6 Ready or not? Taking innovation in the public sector seriously

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So how does innovation happen in government?
In the past, public innovation has
from China and India to Africa). Harold
been patchy, uncertain and slow. It
Wilson, who as Prime Minister oversaw
took more than a century after the
its creation, described it as his proudest
invention of the telephone before
achievement. In a survey in 2006 it
governments in countries like the
also scored the highest marks of any
UK started developing call centres to
UK higher education institution in
handle customer enquiries, to deal with
terms of student satisfaction.7 It has
concerns about health, or to provide
massively expanded participation in
general points of access to government
higher education through bringing in
(like New York’s 311 service).
new students; adult, not necessarily
pre-qualifi ed, part-time students. It has
made full use of new communications
Successful innovations: the Open
technologies as they came along, from
University and NHS Direct
satellites to the web, as well as new ways
But there have been exceptions
of using time, including summer schools,
– and some cases where public service
and almost every part of its model has
innovations evolved well ahead of the
subsequently been copied by the private
private sector. A good example was when
sector.
the UK’s Labour Government created a
radically new kind of university in the
Thirty years later, another government
late 1960s. Where all existing universities
introduced another radical innovation
were based in a physical place, this one
that was equally opposed by vested
would be virtual and would make full use
interests. This was a phone- and web-
of television and the telephone. Where all
based service which the public could
existing universities aimed to teach people
call on for diagnoses, even at 3am. NHS
who had just left school, this one would
Direct combined three existing elements
be open to people of any age.
in a new way: the telephone, nurses,
and computers with diagnostic software.
Most people in existing universities
Within a few years it was receiving many
scoffed at the idea. There would be no
millions of calls each year (two million
demand; it wouldn’t work; standards
people use the service each month) and
would be too low. Yet the Government
evaluations showed that its diagnoses
went ahead and today the Open
were as reliable as doctors meeting
University (OU) is the UK’s largest
patients face-to-face.
provider of higher education, and an
acknowledged world leader in distance
Both of these examples started off
education (dozens of OU-inspired
outside government. The OU was fi rst
organisations now operate globally,
fl oated in a speech by Michael Young
Ready or not? Taking innovation in the public sector seriously 7

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in 1958, then put into practice through
Some politicians can be very open. Faced
a small new organisation, the National
by the mass unemployment of the 1930s
Extension College, later taken up by the
Franklin Delano Roosevelt said that he
Labour Party and created as a new public
would try anything. “If it fails,” he said,
organisation in 1969. Healthline, the
“admit it frankly and try another. But
precursor to NHS Direct, was also set up
above all, try something.”
on a small scale (also by Michael Young)
in the 1980s with some help from BT.
Some political leaders are natural
Neither was inherently new; rather both
innovators: Jaime Lerner, the mayor of
were hybrids, combining existing things in
the Brazilian city of Curitiba in the 1970s
new ways. Both became part of the public
and early 1980s (and later state governor
sector but had to be built up outside
for Parana), is an outstanding example.
existing structures. Both, too, benefi ted
He completely refashioned his city’s
from good luck and powerful patrons,
transport system using dedicated lanes for
the minister Jennie Lee in the case of the
buses; rebuilt parks, libraries and learning
Open University, and the Chief Medical
and experimented with lateral solutions,
Offi cer, Sir Kenneth Calman, in the case of
such as paying slum children who brought
NHS Direct.
rubbish out of the slums with vouchers
for transport. He was also adept at what
In science there are well-established
he called ‘urban acupuncture’ using small
channels for taking ideas from basic
scale symbolic projects to unleash creative
research through prototypes to products.
energies.8
These are rarely as straightforward as they
seem, and more recent work on scientifi c
Antanas Mockus, the mayor of Bogota, is
innovation often emphasises the loops
a remarkable example from this decade.
and detours that happen along the way.
Mockus has used theatre and spectacle
In the public sector, however, the road
to get results. He sometimes wears a
from idea to reality is less predictable.
Superman costume, and hired over 400
mime artists to control traffi c by mocking
bad drivers and illegal pedestrians. He
Political innovators
launched a ‘Night for Women’ when the
All ideas at some point have to pass
city’s men were asked to stay at home and
through the two groups of gatekeepers
look after the children (and most did) and
who control power and money in
even asked the public to pay an extra 10
the public sector. The fi rst group are
per cent in voluntary taxes (again, to the
politicians. Politicians and political
surprise of many, 63,000 did).9
activists look for new ideas to gain an
edge over their rivals or to keep their
In Canada, the small state of
party in power. Once in power they
Saskatchewan was consistently innovative
then back them with laws or spending
thanks to a succession of creative leaders
programmes.
from the 1940s to the 1970s. Allan
Blakeney’s administration in the 1970s,
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for example, ran a series of demonstration
Commissioner in the Department of
projects on the risks faced by children,
Juvenile Justice in the 1980s, transformed
ranging from a comprehensive school
her department into a pioneer of new
health programme, prenatal nutrition and
ideas (and has subsequently refl ected
postnatal counselling.10 Some worked and
insightfully on her experiences).12
some didn’t, but they provided a wider
menu of experience and ideas and many
Here in the UK, few civil servants reach
were later taken up at national level.
the top as a reward for their innovations,
though there is a long history of
In the UK, Ken Livingstone stands out
innovative public servants, from Edwin
as a politician who has consistently
Chadwick to Geoffrey Holland, and some
championed innovations, pioneering
have continued to succeed as policy
radical models of equal opportunity,
entrepreneurs, usually from a few rungs
appropriate technology and social
down in the hierarchy. Sure Start was
inclusion in the 1980s, and congestion
originally developed by a Treasury offi cial,
charging and green urban development in
Norman Glass, and the Literacy Hour
the 2000s.
project by Michael Barber. Meanwhile
local government has thrown up a
Of course, political innovations are not
string of innovative leaders – like Barry
always desirable: Mao Zedong was an
Quirk in Lewisham, Howard Bernstein in
extraordinary innovator, but many of
Manchester or Bob Kerslake in Sheffi eld.
his ideas wreaked havoc. Few dictators
In countries like Singapore it’s common
have the patience to test and experiment
for offi cials to become well-known as
before imposing their will on everyone
innovators; Tan Chin Nam, for example,
else. But innovative political leaders who
has been a consistent innovator over
are willing to experiment help to make
several decades across many fi elds from
government vital and alive – energising
economic development and education to
the society around them.
the arts.
Alongside these relatively high profi le
Bureaucratic innovators
names, there are thousands of less visible
The other channel for innovations is
innovators. One of the few quantitative
the bureaucracy: offi cials can promote
studies of public innovation, by the
innovations a fair distance, without
Canadian academic Sanford Borins,
much involvement on the part of
suggested that most public innovations
politicians (and sometimes ‘innovation
are initiated by middle management or
by subterfuge’ can be a good way of
front line staff (he also suggested that
promoting disruptive innovations). The
most are internally driven rather than
controversial ‘broken windows’ policing
initiated in response to crisis or political
reforms of Bill Bratton, New York’s
pressure).13 The work of these everyday
Commissioner of Police, are a good recent
innovators tends to be hidden from
example.11 In the same city Ellen Schall,
view, except when awards push them
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to prominence (and many countries,
customer relationship management tools.
including the USA, South Africa, Denmark
For obvious reasons of self-interest,
and Brazil have introduced offi cial awards
business has also actively promoted
for public innovators).14
ideas like privatisation or Public Private
Partnerships.
The public sector hinterland
Universities were where Aaron Beck
All innovations must at some point
and his colleagues fi rst developed the
gain political or bureaucratic support.
cognitive behavioural therapy used
But they can get there through many
extensively in prisons and health services;
different routes. Together, these form the
while the radio spectrum auctions which
‘hinterland’ of the public sector – territory
have generated such wealth for some
at one remove from the formal structures
governments were developed by Ken
of accountability and control, where risks
Binmore and others working on game
and imagination are easier, and where the
theory.
future is most likely to take shape.
Civil society is a common source, from
Decentralised systems provide one set
the growth of social housing to the
of channels – laboratories for new ideas.
neighbourhood warden schemes in
In the UK, local government pioneered
the 1980s and 1990s that eventually
many of the ideas that took shape in the
persuaded the police to create a new
welfare state, as well as later innovations
category of Community Support Offi cer.15
in contracting out, choice-based lettings
or integrated children’s services. (Indeed,
A common complaint from voluntary
in one possible future the Department for
organisations, however, is that when they
Communities and Local Government (CLG)
develop successful innovations these are
would become a more deliberate channel
simply copied by government: not only
and champion for local innovations to the
are the originators not compensated, they
rest of Whitehall). In the USA, ‘welfare to
also risk being put out of business by
work’ ideas were taken from Minnesota
competition from much better fi nanced
and Massachusetts to Washington. In
public agencies. An example of a more
Canada, business service centres (and a
equal relationship was the Dundee
clutch of e-government innovations) were
Families Project set up in the 1990s to
pioneered in New Brunswick and then
work with families who had become
copied at the federal level. In Australia,
homeless, or risked becoming homeless,
compulsory seat belts were pioneered in
because of their antisocial behaviour. The
Victoria, and subsequently copied all over
project, set up as a partnership between
the world.
Dundee City Council and the children’s
charity NCH, proved unusually successful
Business has provided many of the
and, after some early diffi culties, is now
recent reforms around customer service,
being replicated more widely by NCH with
such as the use of contact centres and
encouragement from the Home Offi ce.
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