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09/05

INNOVATION IN PUBLIC SERVICES

Literature Review

Introduction

This literature review was undertaken as part of the Innovation in Public Services
Project. This project is funded by the Local Government Association (LGA); the
Improvement and Development Agency (IDeA); and the National School of
Government (formerly the Centre for Management and Policy Studies). The
project seeks to develop a process by which the lessons from innovation to date
could be applied to four or five particular policy commitments. The aim is to both
support delivery in those particular areas and develop a broader approach to
innovation across public services.

According to Mulgan and Albury (2003), whilst a substantial body of research has
emerged in the past four decades on innovation in the private sector, a significant
knowledge gap exists with regard to innovation within the public sector, where
quality research on the subject is rather limited. The aim of this paper is to provide
an overview of innovation in relation to the public sector, drawing on UK,
European and American empirical and theoretical reports (1999 to current). In
addition, it presents illustrative examples of public sector innovation, either UK-
based or international, with a national or local focus. The paper is divided into
two parts.

Part I discusses the following:

why innovation within public services and policy is important;

the key concepts in understanding what innovation is, especially in view of
the complexity of the subject;
the main trends in public sector innovation;
the methods, mechanisms and contexts that have been known to foster
innovation in the public sector;
the main barriers to innovation; and
the lessons that the public sector can learn from the private sector with
regard to successful innovation.

Part II presents in detail five examples of public sector innovation, each

highlighting a different focus, methods and mechanisms of implementation,
success factors and lessons for innovation in public services. In particular, it
presents examples of:

innovations involving changes in characteristics and design of service

products and production processes, e.g. NHS Direct;
delivery innovation, e.g. Liverpool Congestion Charge;
administrative and organisational innovation, e.g. NYPD Reform;
conceptual innovation, e.g. Sure Start and London Congestion Charge.

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 PART I

Theoretical Overview of Public Sector Innovation

1. Why innovate in the Public Sector?

The study and practice of innovation have traditionally been associated with the
private sector, where the impetus to successfully innovate or apply new
innovations generated in a given industry is significant, since effective innovation
equates to organisational survival and strength. The primary motivators to
innovate for commercial firms are to maintain or increase profits and thus to
survive in a highly competitive global economy. There is powerful incentive then
for private enterprises to innovate to cut costs, improve market share, and create
better value or quality products and services.

In contrast, innovation in public service organisations has not historically featured

as a critical determinant of survival, no doubt due to the fact that, compared to
the private sector, these operate under a very different set of pressures, interests,
restrictions, and demands (see section 6). In general, the public sector is
acknowledged as being a far more complex open system than the private sector.
As such, innovation has not characteristically been given high priority in public
services (Bhatta, 2003). To date, incentive to innovate for public sector
organisations and their employees has been low and the risk associated with
innovation high. It is thus not surprising that innovation in this sector has not had
a high profile.

Even so, government and public services can and do innovate in order to develop
new solutions to old problems; more effectively use resources and meet needs;
and refine strategies and tactics. It is just, as Mulgan and Albury (2003) explain,
that innovation in the public sector is typically seen as “an optional extra or an
added burden” (p.5), rather than as a core activity that is both necessary and of
significant value, albeit a different type of value to that sought by the private
sector. So the first question to address in this paper is why is it important for the
public sector to engage in innovation?

Donahue (2005) points out the obvious, but perhaps overlooked, truth that, since
public organisations touch the interests of so many and are often entrusted with
socially important tasks, innovation in this sector is crucial. Since such innovation
enables new needs to be met, and old needs to be met more effectively, it can
result in far greater value than the gains achieved in analogous improvements in
corporate environments. Conversely, he suggests that failure to innovate or
distorted innovation in public services entails a correspondingly large surrender of
potential benefit for the public.

That said, in the last twenty years there has been a growing realisation among
policy makers that the public sector should learn how to innovate, if it were to
respond adequately to a rapidly changing environment and citizen’s/business
expectations. A variety of drivers lie behind the current push for public sector
innovation, among which most prominent is the need to provide prompt,

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improved and personalised public services to citizens. In other words, the public
sector has recognised that it needs to cater more effectively to public needs and
expectations by building public services around citizen’s requirements, as opposed
to make them fit its own organisation and structure. As Mulgan and Albury
(2003) stress the structures, practices, cultures and organisational modes of
operation of the British public sector were formed at a time when the population
was relatively homogenous, stratified by class and typically consisted of
conventional households. In contrast, British society in the 21st Century is highly
diverse, shows multiple stratification and entails a wide variety of living
arrangements.

Against this backdrop, the “one-size-fits-all” approach that informed the

establishment of government and public services in the UK, is outdated with
respect to the current needs of the British public. Furthermore, the last two
decades have seen the growth of the importance of the customer as a result of,
inter alia, altered and rising customer expectations in both private and public
sector. This development, although its origins lie in the private sector who first
embraced the principles of Total Quality Management (TQM), started in due
course to affect public sector attitudes and responses, culminating in the quest for
quality government (Karmack, 2003). Moreover, with the advent of 24/7 services
provided by the private sector through ICTs, expectations of the public have
changed even more.

In the same vein, concerted efforts have been made to improve the delivery and
outcomes of public services. Although some key public service areas manifest
considerable progress, e.g. enhanced educational attainment, crime reduction,
etc., there are others for which there is great scope for improvement, e.g.
people/communities at risk of poverty and social exclusion, digital divide, etc.
There is a strong belief among policy makers that, in order to address problems
which in the past have proved intractable in these areas, innovative approaches to
policy, practice, provision and delivery are required.

Another key factor has been the drive to contain costs and improve efficiency
both in the provision of public services and in the way the public sector operates.
This has been even more pronounced in view of increasingly tighter
budgetary/fiscal constraints. As Mulgan and Albury (2003) point out, cost of
public services tends to rise faster than the rest of the economy because of lack of
competition in the public sector and because gains in labour efficiency lag behind
gains in capital efficiency. As a result, in order to avoid public service costs
increasing ahead of the economy, innovation to increase efficiency must occur.
Alternatively, to address the pressure to contain costs governments have tried to
cut direct costs (mainly by reducing the wage bill) and restructuring the work and
operations of the public sector.

It would be wrong to regard the above factors as operating independently and/or

with no reference to the wider context within which the public sector has been
working in recent years. For example, linked to these developments has been the
prevalence, over the last twenty years, of the New Public Management (NPM) and
the reforms it has brought about in public administrations across the world. NPM,
in turn, can itself associated with the global Government Reform Movement of

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the 1980s (Stage I) and 1990s (Stage II) (Kamarck, 2003). In Stage I, the primary
emphasis was on economic liberalization, deregulation and privatization of
previously state-owned industries. Stage II has been characterized by a focus on
administrative reform of core state functions and the building of appropriate state
capacity, e.g. by ensuring that public servants have the requisite skills for today’s
environment. In other words, states have been focusing less on privatisation and
more on cutting down some of their bureaucracies and on modernising
government with a view to making it more efficient and responsive to customer
needs. The wide use of ICTs in this pursuit, though not itself new in public
administration, has also been closely associated with these developments.

Finally, one factor that is increasingly present in policy and practice innovation is
the desire on the part of policy makers to capitalise on the full potential of ICTs, in
terms of both efficiency gains and improved service provision and delivery.
Although the current focus on e-Government (“Government on the Web”) and
on-line public services appears novel, it is worth noting that the use of ICTs in and
by Government is not a particularly new phenomenon. ICTs have been used by
Government since the 1950s to cover a wide spectrum of relationships: internally
and in government-citizen (G2C), government-business (G2B) and government-
government (G2G) relationships1. However, since the 1990s what is new in the
state’s approach towards e-Government is the strong belief among policy makers
(and not only) that Internet and web-based technologies can transform the
relationship between the state and the citizen/society, especially in view of the
emergence of the “new” economy and information society. In general, the use
of ICTs has been long presented in policy and practitioner circles as having the
potential, through the organisational re-engineering it requires, to bring about a
transformation of public service delivery and the citizen experience of using those
services. Most recently, the potential of the internet and related digital
technologies to transform service delivery has become a central focus for
policymakers (McLoughlin et al, 2004).

At present, e-Government is the broad term used to describe electronic/on-line

public service provision aimed at enhancing their delivery by making them
temporally and spatially more accessible to citizens – so-called ‘24x7 e-
Government’ (Kraemer and King, 2003). The core idea driving current
developments is an image of the electronically-mediated delivery of more
integrated (“joined-up”) services as part of “holistic government”. Such
electronically-enabled delivery of public services is seen, not only as a means of
transforming the experience of the citizen, but also the nature of professional and
occupational, inter-organisational and intra-organisational relationships in public
services, and as a basis for re-casting the relationship between the public and
private sectors and, increasingly, the voluntary sector.

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The focus of ICT use against a given governmental bureaucratic structure has changed over time.
1950s were characterised by the use of defence technologies. 1960s and 1970s saw the introduction of
huge mainframe computers which carried out large-scale repetitive tasks. In late 1970s and 1980s the
use of large databases and networks of personal computers (PCs) became the dominant paradigm.

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In view of the above discussion, and building on the framework put forward by
Mulgan and Albury (2003), the box below summarises the key factors driving
public sector innovation.

Why Innovate

To respond more effectively to altered public needs and rising expectations

[“one-size-fits-all” approach outdated]

To contain costs and increase efficiency, esp. in view of tight budgetary

constraints

To improve delivery and outcomes of public services, including addressing

areas where past policies have made little progress

To capitalise on the full potential of ICTs

2. What is innovation?

Defining innovation for the purposes of this project has proved

It is not possible here to describe the major theoretical frameworks that can be
used in understanding innovation in the context of the public sector, rather
readers with a particular interest in this are directed to the in-depth and rich
working paper produced by Publin2 (March 2004), a research project funded
under the EU Fifth Framework Programme for Research, Technological
Development and Demonstration on Improving the Human Research Potential and
the Socio-Economic Knowledge Base. Instead, it is simply noted that
understanding innovation in the public sector can be supported through drawing
upon five main theoretical frameworks, including innovation theory,
organisational theory, studies of public policy, theories of learning, and New
Public Management.

2.1 Definition(s) of innovation

According to Mulgan and Albury (2003) “Successful innovation is the creation and
implementation of new processes, products, services and methods of delivery
which result in significant improvements in outcomes efficiency, effectiveness or
quality”.

Mulgan and Albury’s definition appears straight forward and clear in its meaning,
but as with most definitions of innovation masks the actual complexity of this
subject area. Leadbeater (2003) observed that “The process of innovation is
lengthy, interactive and social; many people with different talents, skills and

2
http://www.step.no/publin/

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resources have to come together”. Four decades of studying innovation in the
private sector and almost twenty years of interest in innovation in the public
sector has shown that innovation is a multi-faceted phenomenon that emerges in
the context of numerous intervening variables, with no simple universal formula
existing that can be applied to ensure successful innovation (Borins, 2001). Whilst
this part of the report focuses on providing a brief introduction to key concepts in
understanding what innovation is, the complexity of innovation will most clearly
emerge from the final three sections which point to the wide array of factors and
the relationships between variables salient to innovation.

2.2 Types of Innovation

Various categorisations of innovation have been put forward by the existing

literature. A common typology applicable to both private sector and public
sectors differentiates between three types of innovation (Baker, 2002), i.e.
Process; Product/Service; and Strategy/Business Concept innovation. In our
reading, we have come across two other types of innovation relating to the
delivery of public services and the wider system interaction. Innovations in the
area of strategy/policy refer to new missions, objectives, strategies and rationales
that signify a departure from current reality. Service/Product innovation results in
changes in the features and design of services/products, while delivery innovation
involves new or altered ways of delivering services or otherwise interacting with
clients. Process innovation itself came to prominence as a result of the quality and
continuous improvement movements and refers to the way new internal
procedures, policies and organisational forms may be required for supporting
innovation. Finally, innovation in system interaction new or improved ways of
interacting with other actors and knowledge bases, changes in governance

The box below summarises the five main types of innovation that relate the
provision and delivery of public services.

Types of Innovation

Strategy/Policy, e.g. new missions, objectives, strategies and rationales

Service/Product, e.g. changes in features and design of services/products

Delivery, e.g. new or altered ways of delivering services or otherwise

interacting with clients

Process, e.g. new internal procedures, policies and organisational forms

System interaction, e.g. new or improved ways of interacting with other

actors and knowledge bases, changes in governance

2.3 Levels of Innovation

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Another way of conceptualising innovation relates to its different levels which, in
turn, reflect its varying degrees of impact. The most commonly accepted
categorisation in this regard ranges from incremental, to radical to transformative
innovation. As Mulgan and Albury (2003) explain innovation can be seen:

Incremental: here one can Innovations that represent minor changes to

existing services or processes. The majority of innovations are incremental
in nature, those that do not attract headlines and rarely change how
organisations are structured or inter and intra organisational relations.
However incremental innovations are critical to the pursuit of
improvements in the public sector, because they contribute small but
continuous improvements in services, supporting the tailoring of services to
individual and local needs and supporting value-for-money.

Radical: Less frequent are innovations that either involve the development
of new services or the introduction of fundamentally new ways of doing
things in terms of organisational processes or service delivery. Whilst such
radical innovations do not alter the overall dynamics of a sector, they can
bring about a significant improvement in performance for the innovating
organisation and alter the expectations of service users.

Transformative/Systemic: Most rare are transformative innovations that give

rise to new workforce structures and new types of organisation, transform
entire sectors, and dramatically change relationships between
organisations. Typically such innovations take decades to have their full
effect, requiring fundamental changes in organisational, social and cultural
arrangements.

Levels of Innovation (I) [Mulgan and Albury, 2003]

Incremental, i.e. minor changes to existing services/processes

Radical, i.e. new services or ways of “doing things” in relation to

the process or service delivery

Transformative/Systemic, i.e. new workforce structures,

organisational types, and inter-organisational relationships

In addition, in considering the impact of innovations some authors (more often

writing about the private sector as opposed to the public sector) distinguish
between “sustaining” and “discontinuous” (or “disruptive”) innovations
(Christensen and Lærgreid, 2001). Sustaining innovations are those that move an
organisation along an established performance trajectory by introducing improved
performance compared to existing services, systems or products. Sustaining
innovations can be incremental or radical. Discontinuous or disruptive innovations
are those that cannot be used by customers in mainstream markets. They define a
new performance trajectory by introducing new dimensions of performance
compared to existing innovations. Disruptive innovations either create new

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markets by bringing new features to non-consumers or offer more convenience or
lower prices to customers at the lower end of an existing market.

Levels of Innovation (II) [Christensen and Lærgreid, 2001]

Sustaining, i.e. organisations move on an established trajectory by

improving performance of existing services/systems

Discontinuous/Disruptive, i.e. new performance trajectory by introducing

new performance dimensions, new services and processes, etc.

3. Trends in Public Sector Innovation

Here we outline the main trends in public sector innovation that we have come
across in the literature review. For example, the organisational and operational
structure of the public sector has been one area where new arrangements have
been introduced as a response to a variety of developments such as the drive to
greater control and diversification of output (as opposed to measuring
inputs/processes); the move towards greater specialisation in the provision of
“individualised” services to citizens; the demands for improved accountability and
transparency, etc. (OECD, 2004a). The ensuing changes in the way government is
structured and operates take many forms, ranging from altering the size of the
cabinet and the number of government departments to creating bodies at arm’s
length from core ministries and setting up independent regulatory agencies (IRAs).
This increased focus on “agencification” and creation of regulatory bodies3 has
been accompanied by a shift in the distribution of power and managerial
autonomy from core ministries towards these new entities. In view of the
plethora of different configurations that have emerged, there is not commonly
agreed classification of such bodies, but they all seem to come under the OECD’s
rubric of “distributed governance”.

The Box below presents the main trends to date in public sector innovation:

Trends of Public Sector Innovation

Organisational Structure, e.g. agencification, “distributed Governance”

Partnerships, e.g. PPPs, regional/local, voluntary sector involvement

Horizontal Integration, e.g. breaking down departmental “silos” and

fostering cross-departmental co-operation and co-ordination

3
According to OECD estimates, in 2004 such arm’s length bodies in central government accounted for
between 5-& and 75% of public expenditure and employment in many of OECD countries.

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 Good Fiscal Management, e.g. budget reform, containment of deficits

Performance-based management and budgeting, e.g. top down/systems

vs. bottom up/ad hoc approach

Public Service Revitalization, e.g. building/strengthening capacity at

national/regional/local levels

Devolution and Decentralization, e.g. devolution of powers from central to

regional/local government and other agencies

Service Improvement, e.g. provision of “personalised”, client-centred

services

Systems and Process Improvements, e.g. streamlining business processes,

developing customer-centric systems

Regulatory Change, e.g. focus on deregulation and simplification, shift

from enforcement towards voluntary compliance

Use of IT for both front and back office operations, e.g. providing on-line,
“e-enabled” services, investing in customer relationship management and
service-oriented architecture technology

Overall, one could argue that the following patterns of public sector innovation
have emerged and are prevalent across public administrations:

Emergent patterns of Innovation

Provision of client-centred services, e.g. one-stop shops, seamless provision,

etc.

Delivery of services through partnerships, e.g. local /regional partnerships,

PPPs, etc.

New Public Management, e.g. introduction of private sector business

practices; focus on measuring performance, market testing, etc.

Openness to experimentation, e.g.

4. Methods and Mechanisms for Fostering Successful Innovations

4.1 Innovation Process

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Mulgan and Albury (2003) propose a framework to help understand how to foster
innovation. Their framework identifies four key elements that are integral to the
innovation process (see Box below)

Innovation Process [Mulgan and Albury, 2003]

Generating possibilities, i.e. how ideas for innovation are stimulated and
supported.
Incubating and prototyping, i.e. the mechanisms that are used to develop
ideas and manage associated risks.
Replicating and scaling up, i.e. the promotion of effective and timely
diffusion of successful innovation.
Analysing and learning, i.e. evaluation of what works with a view to
promoting continuous learning and improvement in public services.
Although critical, it is the most neglected element in the innovation
process.

The diagram below by Mulgan and Albury depicts the process of innovation,
which clearly illustrates the non-linear nature of innovation, whilst stressing that
the simplicity of the representation does not capture the complexity and
serendipity of the innovation process in the real world.

Incubating &
Prototyping

Generating Replication
Possibilities & Scaling
Up

Analysing
& Learning

Below is a table that summarises Mulgan and Albury’s (2003) key findings
concerning factors that contribute to the innovation process in the public
sector, arranged under the main elements they identified as central to the
innovation process.

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 Table 1: Factors that foster innovation within the public sector
Elements in the Factor that will foster
Innovation innovation
Process
1. Manifestos and political
commitments
2. Intensive attention to the
views of users, frontline staff
and middle managers
3. Diversity of staff
Generating Exploiting difference
Possibilities
4. Constant scanning
horizons and margins
Explanation
Typically radical or systematic innovation (e.g. the creation of the NHS) is driven by
Ministers, with manifestos and political commitments providing a broad framework
that encourages the flow of new ideas. However, public sector organisations
should not simply depend upon politics as the primary driver of innovation, as
significantly incremental innovation that promotes continual improvement in public
services is mainly generated internally.
Research indicates that half of all innovations is initiated by front line staff, middle
managers and users. Thus it is vital for organisations to have robust processes for
listening to what users, front-line and middle management staff say with regard to
ways of working, services and how to improvement performance.
and Organisations that have a pool of staff that are diverse in terms of background and
ways of thinking, for example coming from contrasting disciplinary and
professional perspectives, are more likely to be innovative. “Innovative thinking and
action can flourish in conditions of heterogeneity and even constructive conflict”
(Benington and Hartley, 1999)
of Systematic scanning of other organisations, other sectors, other countries, new
technologies, research findings, and inspection and audit, can contribute
significantly to identifying promising ideas. Possibilities for innovation are
generated when individuals and organisations observe and reflect on what others
are doing. Furthermore change is often originated on the margins of society and
from alternative nations, for example hospices pioneered new ways of looking
after the terminally ill, whilst the UK’s welfare to Work programme was adapted
from he policies of the US and Scandinavia.
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 5. Developing the capacity for Various formal creative techniques have been developed to support the generation
creative thinking of the unexpected by suspending our reliance on normal judgement, linear and
rational thinking and ‘proven’ knowledge. Methods include fiction, role playing,
imagined words, systematic inventive thinking (Goldenberg, 2003). More
commonly employed in the private sector, and found to be less effective in cultures
associated with traditional hierarchical organisations, some governments such as
Denmark and Singapore have used the techniques effectively
Generating 6. Working backwards from It has been found that when organisations work backwards from hoped for
Possibilities outcome goals outcomes, rather than forwards from existing policies, practices and institutions, a
(continued) greater variety of potential options are conceived.
7. Creating space Delivery pressures of day-to-day work demands typically crowd out the time for
thinking about innovations that could actually address the pressures we work
under. Time, physical and organisational space for considering innovation is
important. However, the establishment of formal ‘innovation units’ have been
found in both the public and private sector to marginalise innovation, by
separating it rather than mainstreaming it and inadvertently there is the tendency
to bureaucratise and so smother the innovative process.
8. Breaking the rules Although a significant management challenge, developing a nonconformist
organisational rule-breaking culture can provide an environment that allows
innovation to flourish. For example, the UK Education Act 2002 allows schools to
apply to have a rule suspended if they can show a justifiable case that by
suspending the rule they can improve results in some way.
9. Competition Within the private sector competition with other firms is a key driver of innovation,
and although typically less salient to the public sector environment, competitive
objectives can nonetheless effectively generate innovative thinking.

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Incubating, 10. Probability Rules Organisational selection rules can provide useful guidelines to aid decisions
Prototyping and concerning which ideas merit further exploration and support. This may seem
Managing Risks juxtaposed to the informality assumed to be a part of innovation, but to promote
innovation, in traditionally non-innovative sectors and organisations effective
innovation does need to be supported. Perhaps only 1 in 100 ideas for innovation
have the potential for successful realisation, and often innovative ideas are
threatened by bureaucratic procedures, opposition from those with a vested
interest, and premature criticism. Therefore selection rules which look at the
probability for success of an innovation can help safeguard against good realistic
opportunities being lost. At the most basic level an organisation should consider (i)
is the innovation likely to succeed (compare with other examples, and check that
the problem to be addressed by the innovation has been clearly formulated); (ii) is
there a clear plan for how to develop the innovative idea?; and (iii) are the
potential benefits of the innovation at least of equal weight to the costs of
developing and implementing the innovation?
11. Risk Management Whilst in the private sector innovations entail economic and employment
consequences, in the public sector the risks of innovation are potentially far more
significant for society as a whole and individuals, for example care services have
responsibility for vulnerable old people and children, hospitals are responsible for
addressing life threatening and life determining conditions, and the quality of
education provided by schools impacts on individual’s long-term life chances. As
such the public sector requires high quality risk management and safe spaces (see
below) in which to test innovative processes and services. Furthermore, given that
risks can never be eliminated, to achieve high levels of successful innovation in the
public sector, a culture of tolerance for ‘honourable’ failure must emerge.

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12. Innovation Champions Whilst it has already been stressed that the successful fruition of an innovative idea
requires that many people come together throughout the innovation journey,
nonetheless innovation “champions” can be critical at the stage at which an idea is
turned into a viable prototype for testing. Innovation champions are those
individuals who are willing to invest resources and organisational capacity for
designing, implementing and evaluating an innovation.

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 13. Safe spaces: Pilots, Various methods can be used to provide “safe spaces” for testing innovations and
Incubating, Pathfinders, Controlled managing their risks within defined parameters, including Pilots, Pathfinders,
Prototyping and Experimentation and “Zones” Controlled Experimentation and “Zones”. In the last twenty years in the UK pilots
Managing Risks have increasingly been used to test new ideas and policy proposals, e.g. electronic
(continued) curfews for offenders. A problem for piloting that is specific to the public sector is
the issue of universality of application both in terms of fairness (trialling
internationally better new services “disadvantages” those not included in the pilot)
and legislation. However, a review of UK pilot schemes demonstrates their value
under appropriate circumstances, including effective time-scales, where a clear link
can be made between action and results; a readiness to respond to pilot results,
including sufficient funds to scale-up; and sufficiently defined models of
replication. Nevertheless, there are also limits to pilots which has prompted an
increased use of “pathfinders”, e.g. the New Deal model was initially implemented
in a small number of areas which allowed for quick learning about potential
difficulties ahead of wider national implementation. Employment, Education and
Health Action Zones have been trialled in the UK, where the “zone” is deliberately
designed to suspend some of the rules that normally constrain local agencies and
managers. Whilst again heralded as providing a safe space for developing and
testing innovative ways of working and delivering services, a criticism has been
made that the timescales for development were too short and that insufficient
monitoring meant that promising ideas for innovation could not be identified.
Least common of the safe space methods is the controlled experimentation
approach, where a set of formally controlled experiments are run to test and
compare different approaches. Controlled experiments are most often selected
when there is little or no evidence about the best way forward to address a
problem, where a service area is suffering overall from poor performance, or when
problems appear intractable from current or past policies.

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14. Incubators Incubators for innovation provide advice and general support, finance and freedom
from external pressure and rules. Incubators are more common in the private
sector than in the public sector, where they provide seed capital, business advice,
technology and infrastructure support and space in return for a high share of
profits. However, as is probably becoming clear the public sector and governments
internationally are, as they intensify their focus on how to successfully innovate,
increasingly employing methods to promote innovation that have previously been
the remit of the commercial world. The Singapore government, for example,
created an incubator called “Enterprise Challenge” which provides funding and
support for ideas that will create new value or improvements in the delivery of
public services. Interestingly, the Enterprise Challenge invites public involvement
and entrepreneurialism in government affairs by being open to any individual
organisation.
15. Modelling The cost of developing working prototypes of innovation can be significant,
therefore modelling methods may be more appropriate in some scenarios. The
Performance and Innovation Unit report “Adding it up: Improving Analysis and
Modelling in Central Government (January 2000) sets out how modelling can be
used to test promising ideas at low cost.
16. Funding for early For innovations to be progressed from ideas to prototypes they require financial
development support. Specific innovation funds and R&D budgets are more commonly being
used as a mechanism in the public sector to address funding for early
development. A series of UK funds have been established to support innovation,
including the Invest-to-Save-Budget, and the Departmental Challenge Fund
initiatives
17. Involving end-users Regardless of the method opted for in testing and developing innovative ideas, end
user involvement in the design and development of prototypes significantly
increases the likelihood of identifying and remedying weaknesses and problems of
innovation implementation

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Replicating and 18. Incentives for Individuals Monetary reward is a less powerful motivator for innovation in the public sector
Scaling Up and Teams than it is in the private sector. Instead, recognition particularly by peers has been
found to be of more importance. Pride in contributing to the creation of public
value is the most powerful motivator to innovate in the public sector, therefore
recognition is essential
19. Incentives for Although direct monetary rewards to individuals is not effective in the public
Organisations sector, additional funding for organisations for successfully introducing, adopting
or adapting innovations does increase motivation as this provides extra facilities
and opportunities for staff and users
20. Scale and Innovative Innovation originates in all sizes of organisations, but there is significant difference
Capability between the nature of sectors that foster high levels of incremental innovation and
those that foster high levels of radical or transformative innovation. Incremental
innovation tends to occur in sectors where a multitude of relatively small
Replicating and organisations compete in a cost-pressurised environment for customers or users
Scaling Up who have access to standardised comparative information. In contrast high degrees
(continued) of radical innovation and systemic/transformative innovation occur in sectors which
comprise an oligopoly – a small number of large organisations with a periphery of
many small-scale providers and suppliers.
21. Beware ‘best practice’ It is true that one size rarely fits all - public expectations are now that services will
be tailored to personal and local needs; and innovation occurs in highly
differentiated organisational and local contexts. Furthermore, caution should be
exercised about the universilisation of ‘best’ practice’ because standardisation
reduces the ability of services and systems to innovate in order to meet future
unforeseen and unforeseeable circumstances
22. Change management Key skills and competencies in scaling up and spreading innovation mirror those of
more general change management

17
Analysing and 23. Metrics for success
Learning
24. Real-time learning
25. Peer and user involvement Networks of peers play a critical role in learning from and supporting continuous
26. Double-loop learning
27. Requisite variety
Source: Mulgan and Albury (2003)
Clear and transparent measurement systems and yardsticks for assessing the
success of innovations are critical to evaluating what works and creating cultures of
learning. Specific measures need to be set in the areas of improvements in
outcomes; service responsiveness to individuals and localities; and reductions in
costs against outputs and increases in productivity.
Real time learning through formative and summative evaluation is extremely
important in order to avoid producing findings in a timescale that is not responsive
to immediate delivery or political pressures (often a failing of innovations with
medium or long-term outcome goals).
improvement. Equally user involvement adds significant value in developing and
implementing successful innovations.
Processes and mechanisms need to be in place to analyse, evaluate and learn about
innovation more generally in order to support understanding of innovation across
the public sector. Effective knowledge management systems are crucial.
Nonaka (1995) describes how the internal diversity in skills and experiences of
employees must match the variety and complexity of the environment in order to
meet challenges posed by the myriad of contingencies.
18
4.2 Innovation Building Blocks

Borins (2001) undertook the largest empirical study of innovation in the public
sector to date that also provides a cross-cultural perspective on innovation,
surveying over 300 government innovation programmes around the world. These
government reformers have been recognized for their achievements either by the
Innovations in American Government Programme, or the Commonwealth
Association for Public Administration and Management International Innovations
Award Programme. Borins’s research is significant in that he has been able to
provide an evidence-based analysis of what makes successful innovations in the
public sector. Of the 300 programmes covered by his study, five shared primary
characteristics emerged as the key building blocks and tools for change of
successful innovation, these are outlined below:-

A systems approach: This refers to the practice of understanding,

developing and implementing one’s innovation in the wider inter-
connected context of other organisations, activities and concerns. The
overarching building block of “systems approach” as conceived by Borins
encapsulates three practices employed by the successful innovation
programmes studied. These include: (i) conducting a systemic analysis of
how the problem in question interacts with other issues and programmes;
(ii) fostering inter-organisational co-ordination in designing and
implementing the innovation; and (iii) focusing on integrated, multi-faceted
services that address the whole person, rather than opting for a
compartmentalization of the individual’s needs, whereby the innovation is
targeted only at a single issue at a time.

Use of new information technology: Effectively harnessing new technology

provides a catalyst for innovation programmes in providing improved public
services and can significantly impact on the effectiveness of service delivery
and organisational operations. New technologies provide new
opportunities for transforming the manner in which agencies conduct their
business.

Process improvement: This refers to innovations designed to make public

sector processes faster, friendlier and more accessible. Innovations here
often involve applications of the Pareto rule, which states that 20% of
cases are responsible for 80% of workload and vice versa. As such,
examples of process improvement include the development of new
processes: (i) to distinguish the minority of complicated cases from the
majority which are straightforward; (ii) to make a distinction between high
and low value users; and (iii) to establish voluntary compliance and
alternative dispute resolution. The latter starts with recognising that
judicial processes are expensive and time-consuming, so methods to
streamline or circumvent them are preferable.

Involvement of private and/or voluntary sectors: The use of the private

and/or voluntary sectors to achieve public purposes, inter alia, entails: (i)
opening up the public sector to private sector competition; (ii) developing

19
 partnerships that involve private sector delivery; and (iii) involving
volunteers and voluntary sector organisations in services and user
engagement.

Empowerment of communities, users/citizens and staff: Successful

innovations are those that consult with communities and citizens with
regard to improving public services and policy making, listening to their
views and inviting them to play a role in implementation programmes.
Furthermore, supporting staff empowerment by showing greater
organisational tolerance for risk taking and encouraging front-line staff to
take the initiative for change and develop ownership of new programmes,
strengthens and promotes innovation in the public sector.

The following box summarises Borins’s five building blocks, with illustrative
examples of how each of them has been used in public policy both in the UK and
overseas. These examples will be presented and elaborated further in the second
part of this report.

Building Blocks of Innovation [Borins, 2001]

A Systems Approach, e.g. Sure Start (UK)

Use of ICT, e.g. NYPD (US)

Process Improvement, e.g. NHS Direct (UK)

Involvement of Private/Voluntary Sector, e.g. Congestion Charge (UK)

Empowerment of Users/Staff, e.g. Thomas Bennett College (UK)

4.3 Enablers to Innovation

Based on his unique study of innovators in the public sector and a review of
literature about innovative private sector organisations, Osbourne and Plastrik’s
(2000) fieldbook for government re-inventors, and Light’s (1998) work on
innovative non-profits and small public sector organisations, Borins provides the
following prescriptions about supporting innovation in public sector
organisations:-

An innovative culture must be supported from the top: Support from the
top of an organisation is critical for innovation to thrive in that
environment and to emerge at all levels. Specifically, support can take the
form of developing organisational priorities to guide innovation,
recognition for innovators, granting the latitude for experimentation to
take place, and protection for innovators from central agency constraints.

Increase the rewards for innovative individuals and teams: Rewarding

developers of successful innovations is important in encouraging

20
 innovation to be engaged in. Rewards may be financial or recognition-
based, which ever is opted for the message that innovators efforts are
valued should be clearly communicated.

Resource for innovation: Borins’s study found that the obstacle that
innovators overcome least frequently is inadequate resources – starkly
showing that without the necessary resources innovation cannot occur. To
address this pressing problem, financial management reforms should be
considered to create the possibility of enhanced internal funding for
innovation within all agencies. Alternatively or in addition, central
innovation funds within the public sector to support innovative ideas is
required. The Invest-to-Save Budget is a good example of such central
funds.

Ensure diversity of staff in terms of background: Innovation depends on the

ability to see things differently; therefore, differences in the backgrounds
and perspectives of an organisation’s members are likely to foster
innovation.

Learn about innovation by looking at what is being done externally:

Innovative organisations are effective at looking to learn from the external
environment, through benchmarking, professional networks, etc.

Innovation is everyone’s responsibility: Organisations that wish to foster

innovation must encourage and draw upon the innovativeness that exists
at all staff levels.

Scope for experimentation in essential for innovation: Organisations that

seek to learn from their successes and failures and support their
employees’ endeavours through lowering the cost to staff of “honourable”
failures, will promote successful innovation. Creating “safe” places for
testing ideas such as pilots, pathfinders and “Zones” is an effective way of
facilitating experimentation. Examples here would include the New Deal
and ONE pilots as well as the Education, Employment and Health Action
Zones.

Innovation requires evaluation: There is also a need for robust evaluation of

innovative policies and programmes for which appropriate metrics and
approaches must be developed. One key aim here is to promote as much
as possible both real-time and double-loop learning, so that the main
lessons drawn from a particular innovation are fed back to and inform
policy and practice in an effective and timely way.

To the above, one should add a number of other factors that we gleaned from
the existing literature as being crucial in fostering innovation:

Attention to views of all relevant stakeholders: Evidence consistently shows

that front-line staff and middle managers are the most frequent initiators
of public management innovations. Yet despite this, evidence also
indicates that these are also likely to exhibit greatest resistance to change,

21
thus hindering innovation. Clearly, as Borins points out, this pegs the
question of how public sector organizations can be made more supportive
of such innovations internally.

Involvement of end-users at all stages: It is important to ensure that the

views of end-users are taken into account when developing and
implementing an innovation. For example, such involvement in the design,
development and validation of prototypes contributes to the early
identification and remedy of faults. Equally, careful attention to user
requirements at an early stage can also facilitate the easier acceptance and
diffusion of innovation.

Innovation Champions: Although innovation is contingent not only on

individuals but also on a much wider range of factors such as
organizational design, structures, cultures, working practices, etc.,
evidence does suggest that some individuals are more adept at
introducing and supporting innovation (Howell et al, 2005). Innovation
champions are usually individuals who view their role broadly and have a
good of the issues that affect their organisation; can convey belief in and
enthusiasm about the proposed innovation; have extensive strategic and
relational knowledge and are able to enlist the support and involvement of
key stakeholders; use both internal and external to scout for ideas as well
as formal and informal selling channels; and see new ideas as opportunities
and not as threats. It is also important to differentiate between innovation
champions and units. Evidence suggests that although having innovation
champions promoting and driving innovation is a key success factor,
setting up separate innovation units is not conducive to greater and
diffused innovation. Rather, both managers and staff tend in this case to
expect the innovation unit to come up with, develop and implement
innovation as a distinct activity from their own tasks and responsibilities.

Ensuring full range of requisite skills is available, e.g. change and risk
management skills. It is important to ensure that the relevant
staff/managers have the necessary skills at each stage of the innovation
cycle (Ling, 2002). For example, at the first stage of generating ideas there
is a need for enhancing one’s understanding of customers and suppliers
using a variety of both applied science, modelling and “what if” scenario
building as well as learning through listening and partnership working.
When one manages innovation, the skills range required is rather different,
in that one should provide leadership and vision, develop reflexive
practitioners, build innovative clusters and networks, expand one’s
understanding of organisational culture, structure and dynamics, use
systems theory to analyse complex changes, etc. Project planning and risk
management skills are also crucial at this stage. At the stage where
innovation is being diffused and lessons drawn and adopted, the skills
required included diplomacy and persuasion, communication and
marketing (including social marketing), creating conditions for incentivising
uptake of successful innovation and assessment and evaluation to identify
and measure success.

22
 Learning to accept and manage risk: Public sector has been historically
averse to risk taking (NAO, 2000). Yet one key element in the innovation
process is the need to accept and manage risk by creating greater
tolerance for risk taking and empowering staff to take initiative and think
creatively, even if this results in some cases in “honourable failures”
(Mulgan and Albury, 2003).

The box below summarises the key enablers to public sector innovation, as listed
in the available literature:

Enablers to Innovation

Support from the top, e.g. innovative culture

External outlook,e.g. learning from other innovators through

benchmarking, networking, scanning of external environment

Attention to views of ALL stakeholders, including users, staff and middle

managers

Involvement of end-users at all stages, e.g. in the design and development

of prototypes for early identification and remedy of faults

Scope for experimentation, e.g. learning from “honourable” failures,

creating “safe” places for testing, etc.

Innovation Champions, not Units

Adequate resourcing, e.g. Central Innovation Fund

Encouraging staff to innovate, e.g. allowing freedom/space to innovate

and think creatively, rewarding innovation, etc.

Ensuring diversity of staff, e.g. in terms of background, perspectives, etc.

Ensuring full range of requisite skills is available, e.g. change and risk
management skills

Learning to accept and manage risk

Evaluation, e.g. developing appropriate metrics, promoting real-time and

double-loop learning, etc.

5. Barriers to Innovation

23
There are a number of key barriers to innovation that are particularly prevalent in
the public sector. These have been identified by Mulgan and Albury (2003) as
amounting to:

Delivery pressures and administrative burdens: In general, within the public

sector the majority of service managers and professionals have little time to
dedicate to thinking about doing things differently or innovations in
delivery service that might be more time and cost effective. Rather, the
overwhelming proportion of their time is spent responding to the day-to-
day pressures of running their organisations, delivering services and
reporting to senior management, agencies and inspectorates.

Short-term budgets and planning horizons: Often the inability to think

outside of day-to-day pressures on how things could be improved is
exacerbated by short-term budgets and planning horizons. When faced
with a requirement o for example, 2 or 3% efficiency gains a year, the
need to innovate is seen as less necessary and more as an “optional extra”,
given the time scale than being faced with a call to produce 20% efficiency
gains over five years.

Poor rewards and incentives to innovate: Whilst governments across the

world have sought to strengthen incentives in the private sector for
innovativeness, e.g. through trademark protection, employee share option
schemes, and the corporate tax regime, including R&D tax credits, an active
incentives drive for innovation has yet to be established in the public
sector. Rather, the tradition of higher penalties for failed innovations than
rewards for successful ones remains within the civil service. Furthermore,
the basic people management systems, for example the core competencies
for recruitment, development and performance assessment within public
and civil services, do not sufficiently recognise or value innovativeness.

Culture of risk aversion: Within the public sector there is an obligation to

provide acceptable standards in key services, maintain continuity for the
public, and account to tax payers through local authorities and Parliament.
These primary concerns of accountability, standards and continuity induce
a culture of risk aversion which impedes and blocks innovation. Whilst
existing services may only function at an “acceptable” level, as opposed to
demonstrating high efficiency and performance, they nonetheless will
receive less critical attention from the media, parliament, National Audit
Office and Public Accounts Committee, than a new programme that has
the potential to offer far greater value. In addition, high risk, high reward
innovations are usually treated the same as low risk, low reward projects.
The former may, however, mean extremely public failure for those
involved, which itself acts as a disincentive for public service workers to
engage in such innovations.

Poor skills in active risk or change management: It is suggested that there

are three necessary conditions for innovation to flourish – opportunity,
motivation and skills. Within the public sector it is often the case that,
whilst opportunity and motivation may be present, there is a relative

24
 paucity of skills in change and risk management. Such relative dearth of
requisite skills can, in turn, severely hinder and potentially terminally
threaten the innovation process.

Reluctance to close down failing programmes or organisations: Although

private sector companies typically need to innovate in order to survive, it is
extremely unlikely that public sector organisations will cease to exist as a
consequence of not being innovative. Paradoxically, within public services
higher standards are set for new programmes than for old ones, and
historically established failing functions are rarely closed down. In contrast,
innovations that have shown problems at the testing stage will be
abandoned, although perseverance with the new service or process may
still result in high value benefits.

Technologies available but constraining cultural or organisational

arrangements: Innovation emerges in the context of technological and
organisational factors, with systematic innovation requiring that
organisations align their culture, systems, management methods and
processes. Within the public sector innovation is often impeded or
thwarted because there is a resistance or failure to embed innovation
within the organisational fabric.

Mulgan and Albury’s list of key barriers to innovation focuses largely on the
characteristics of the public sector which inhibit innovative thinking, which implies
to some degree that the public sector is an infertile ground for innovation.
However, more constructively, Borins (2001) observes that thinking innovatively
and designing an innovative programme is really only the beginning of the
journey, and suggests that actually developing a culture of innovation in the
public sector is about achieving and learning from successful cases of
implementation of innovations. On this basis, and drawing upon his unique study
(2001) which surveyed over 300 government reformers4 around the world, Borins
provides empirical findings about obstacles that are met in implementing
innovations in the public sector. Crucially, he also presents the lessons one can
draw from such innovations concerning tactics for overcoming obstacles and
recommendations when planning an implementation programme.

Specifically, Borins’s study found that reported obstacles to implementing

innovations could be divided into three main classes:

Barriers that arise from within the bureaucracy/organisation: These were

identified as hostile or sceptical attitudes; turf fights; difficulty in co-
ordinating organisations; logistical problems; difficulty in maintaining the
enthusiasm of programme staff; difficulty in introducing new technology;
union opposition; middle management resistance; and public sector
opposition to entrepreneurial action.

4
These have been recognized for their achievements either by the Innovations in American Government
Programme, or the Commonwealth Association for Public Administration and Management International
Innovations Award Programme

25
 Obstacles that arise primarily in the political environment: These include
inadequate funding /resources; legislative or regulatory constraints; and
political opposition.

Barriers that exist in the external environment: These were cited by survey
respondents to comprise: public doubts about the effectiveness of
programmes; difficulty in reaching the programme’s target group;
opposition by those affected in the private sector, including entities that
would experience increased competition; and general public opposition or
scepticism.

Interestingly, Borins’s study found that by far the largest number of obstacles
arose within the public sector that is within the internal organisational and
bureaucratic context. Borins suggests that this reflects the tendency for the
innovation programmes to change existing operating procedures, power
structures and dynamics, and occupational patterns. He notes that many instances
of obstructive attitudes were cited, particularly with regard to occupational
groups, which underscores the sensitive nature of introducing innovations that
alter the working practices and, as importantly, the power dynamics and relations
for a given professional group.

The box below summarises the main barriers to public sector innovation that have
been identified to date:

Barriers to innovation

Delivery pressures and administrative burdens

Short-term budgets and planning horizons

Union and middle management opposition

Inadequate funding/resources

Poor rewards and incentives to innovate

Risk-averse culture

Poor skills in change and risk management

Reluctance to stop failing programmes

Lack of alignment of technological, cultural, organisational aspects

Legislative or regulatory constraints

Turf fights

Co-ordination difficulties

26
From the above discussion a number of issues emerge in relation to public sector
innovation which are presented in the following box

Issues related to Public Sector Innovation

potential incompatibility of values, e.g. private sector/NPM vs. public sector

and volunteer values; public interest vs. fiscal /political concerns; citizens vs.
customers/clients

limits on innovation, e.g. lack of incentives; systemic barriers; capacity; lack

of opportunities to experiment; aversion to risk taking

questions of cultural receptivity, e.g. citizen focus vs. system focus vs.
procedure focus

concern over higher-order tasks, balancing efficiency and the public

interest; global and local issues; preserving purpose of the public service;
sharing policy capability

questions around fairness, equity and access, e.g. digital divide

questions about accountability, e.g. public understanding of multiple

accountabilities; transparency; performance measurement

Empirical research has highlighted various ways of overcoming such barriers with
varying degrees of success. For example, as stated, Borins’s US and
Commonwealth survey of 300 commended government reformers, also
investigated how these successful innovation programmes sought to overcome
the obstacles experienced. Borins identified three main classes of tactical
approaches, with responses including:

Persuasion: Showing the benefits of an innovation; establishing

demonstration projects; and social marketing.

Accommodation: Consulting with affected parties; co-opting affected

parties by engaging them in the governance of the innovation; training
those whose work would be affected; compensating losers; and ensuring
the programme was culturally and linguistically sensitive.

Others: This category includes a variety of responses such as (i) finding

additional resources; (ii) resolving logistical problems; (iii) persevering and
exerting continuous effort; (iv) gaining political support and building
alliances; (v) having a clear vision and focusing on the most important
aspects of the innovation; modifying technology; (vi) changing legislation

27
 or regulations; (vii) providing recognition for programme participants or
supporters; and (viii) the least employed tactic, i.e. changing the manager
responsible for the programme implementation (reported only 8 times out
of a survey of 300 Programmes).

Significantly, the most commonly used approaches to overcoming obstacles were

those of persuasion and accommodation combined, as opposed to the total
number of responses that were classed as ‘other’. The study clearly shows that
these successful innovators took objections seriously and sought to address
concerns in a systematic way. To this end, they either attempted to change the
minds of programme opponents and sceptics, or engage those who were
disaffected in the actual design and implementation process in order to make
them more comfortable with the innovation in question. Overwhelmingly the
change agents employed consensus building tactics as opposed to strong-arm
methods to support the successful implementation of the innovation programmes.

The box below lists the main approaches adopted by successful government
reformers.

Fostering Innovation [Borins, 2001]

Persuasion, e.g. showing the benefits of an innovation; establishing

demonstration projects; and social marketing

Accommodation, e.g. consulting with affected parties; co-opting affected

parties by engaging them in governance of innovation; training those
whose work would be affected; compensating losers; ensuring programme
is culturally and linguistically sensitive.

Finding additional resources

Resolving logistical problems

Gaining political support and building alliances

Having a clear vision and focusing on most important aspects of the

innovation

Modifying technology

Changing legislation or regulations

Providing recognition for programme participants or supporters

Borins also specifically asked the successful public sector innovators to indicate
what the most important lessons were that they had learnt in implementing their
programmes that they would recommend to would be innovators. The Box below
lists the responses given within the context of this study.

28
Lessons for public sector innovators

Make the project exciting for staff

Promote the programme and ensure positive media coverage
Make sure that the programme objectives reflect and are in line with the
organisation’s aims and objectives
The project manager who is the primary change agent should be task-
oriented
Involve stakeholders as far as possible throughout the innovation stages
Establish and maintain effective communication with all programme
participants
Secure support from senior management
Have a clear mission and end goal
Allow staff the freedom to innovate and tolerate mistakes
Have a small implementation team who hold the decision-making power
Think strategically and consider the wider implications of the programme
Have a champion who feels ownership for the programme
Be dedicated and persistent as innovation programmes are not easy
Well managed documentation is tedious but essential
Develop adequate control mechanisms and support governance structures
with agreements
Solicit regular feedback from programme participants and demonstrate
early ongoing success
Implement quickly to avoid losing focus and momentum
Learn from mistakes as they occur and do not be afraid to change plans
based on new information or in response to a changing environment
Learn from other innovators
Ensure that you have the necessary resources

6. Lessons from the Private Sector

Innovation has traditionally been the domain of the private sector, with public
sector interest in and drive to innovate being low key in contrast. Given the longer
history and greater proliferation of innovation in the commercial world compared
to public sector organisations, it makes sense to ask what lessons can be learnt
from the private sector for the public policy and service arena. Ling (2002)
specifically explores this theme, providing useful insights and warnings about
transferring ideas and practices from the private sector. Ling first highlights that it
is important to recognize the different constraints that innovators face in the
commercial environment, by referring to the three key differences between the
public and private sectors as identified by Hood and Rothstein (2000), which are:

Primary Unit: Within the private sector the primary unit within which
innovation is assessed is the enterprise or cost centre, whilst in the public
sector the primary unit is more likely to be a complex open system such as
urban renewal or criminal justice.

29
 Value: In the private sector the ultimate driver of innovation is shareholder
value, which is an extremely straightforward objective to define when
compared to the public sectors’ primary value objective which is to satisfy
‘public interests’.

Legislation: Whilst private enterprises have an obligation to operate in

accordance with the law, legal constraints on public organisations and
bodies (for example concerning freedom of information and natural justice)
impose greater limits on the way that they can innovate.

Given the circumstances under which the public sector must innovate, which are
apparent from the differences outlined, Ling suggests that it is not surprising that
within public services and policy-making fields innovation and its management is
seen as more problematic than in the private sector. Therefore, Ling argues that
the innovation activities of the private sector cannot simply be transferred to the
public sector; however, lessons can still be learnt for and applied to the public
sector.

In considering the key elements of the innovation process in the private sector,
Ling in fact identifies three elements that mirror three of the four specified by
Mulgan and Albury (2003) with regard to the public sector. Table 2 lists Ling’s
three elements, and the corresponding elements as proposed by Mulgan and
Albury.

Table 2: Elements of the innovation process – Private vs. Public Sector

Private Sector - Ling (2002) Public Sector – Mulgan and Albury (2003)
Generating ideas and finding new Generating possibilities
market places
Managing innovation Incubating and Prototyping (mechanisms
to develop and manage innovations)
Diffusion of successful innovation Replicating and Scaling-up (i.e. diffusion)

In discussing the activities and techniques employed by private sector

organisations to successfully innovate, Ling draws out possible learning points for
the public sector. These are summarised in Table 3, according to the three
elements of the innovation process as detailed by Ling.

Table 3: Innovation-focused activities found in the private sector that may be of

relevance to public sector innovators
Element in the Innovation Focused
Innovation Process Activities
Science based R&D
Using experiences of lead
customers
Generating Ideas
Examples
“Ideas factories”, innovation
centres, laboratory
experimentation
Identifying early adopters
and using their expertise as
a source of innovative
thinking

30
 Using experiences of
suppliers
“What if” experimentation
Learning through
partnerships and innovation
clusters
Identifying new market
places
Personal skills
Managing Organisational culture
Innovation
Leadership
Collaboration
Theoretical understanding
of complex change
processes
Testing
Communication
Providing resources at the
Diffusion right time and place to
support innovation
Overcoming resistance
Identifying success
Disseminating evidence of
success
Managing risks
31
Using suppliers as a source
of innovative thinking
Modelling, scenario
thinking, systems theory,
simulations, whole systems
events
Partnership and team
working, creating
innovation clusters such as
the “Cambridge
phenomenon”
Understanding the
consumption chain in order
to identify new market
opportunities and better
ways to meet customers’
needs
Reflexive practitioner
capable of evaluating their
practice and open to new
practices
Understanding shared myths
in order to change the
dominant narratives in an
organisation
Sharing visions and
enthusing
Team working, diplomacy,
openness
Systems theory
Experimental, focus groups,
trials
Knowledge management,
communication skills
Project planning
Diplomacy, persuasion,
authority
Evaluation
Marketing and
communication
Risk assessment and
management
Interestingly, Ling refers to most of the private sector innovation “activities”
identified in the table above, also as “skills and competencies” and in fact
diagrammatically maps these out according to “stages” of the innovation cycle.

Ling’s concluding thoughts on lessons that can be learnt from the private sector
are outlined below. It should be noted, however, that in helping one understand
how innovation occurs, they tend to concur with the main conclusions of Mulgan
and Albury (2003) and Borins (2001):

Successful innovation demands a variety of competencies at all stages of

the innovation cycle. Each competency requires space and time, but in
addition with these specialisations there is the need to coordinate – this is
provided by the product line in the private sector, whilst public services
must identify the most appropriate source of co-ordination for innovation
in their domain, possibly the equivalent would be the policy objective.

A single successful innovation does not indicate that all the right processes
have been put in place, as such attempts to replicate based on shallow
learning run the risk of failure.

Innovation in the private sector relies on heavy investment in

understanding customer’s needs and suppliers’ experiences. In the public
sector there appears to be the risk that innovation is driven more by
process than by public needs.

Whilst marketing own success (PR) and copying the success of others (for
profit) is highly rewarded and thus common in the private sector, public
sector dissemination of innovation needs to be more effectively managed
to ensure that lessons are learnt and more widely disseminated.

The Box below outlines the main lessons from the private sector that can be of
use to public sector innovators.

Lessons from the Private Sector [Ling, 2002]

Different skillsets required at each stage of innovation cycle

Single successful innovation does not indicate all right processes are in
place

Heavy investment in understanding customer’s needs and suppliers

experiences

Effective publicity/dissemination of innovation

32
 PART II

Examples of Innovation in Public Service Delivery

Part II presents the results of a review of existing literature - predominantly

evaluations and government think-pieces - on innovative public services. It focuses
on providing examples from the past where innovative ideas have been
introduced successfully and attempts to identify the mechanisms of delivery and
lessons to be learnt. As such it is to be read in conjunction with the theoretical
part of the literature review which explores general ideas and principles.

The Publin project,5 funded by the European Union’s 5th Framework Programme,
identifies four types of innovation:
innovations involving changes in characteristics and design of service
products and production processes;
delivery innovation;
administrative and organisational innovation; and
conceptual innovation.

The examples of innovation presented in this section are grouped under these
headings. Guiding questions for their examination are:
methods and mechanisms of implementation;
reasons for their success; and
lessons for innovation in public services in general.

The examples presented focus on national and local initiatives from the UK.
Where relevant and instructive, examples from the private sector and abroad are
also illustrated.

1. Innovation involving Changes in Characteristics and Design of Service

Products and Production Processes

This type of innovation involves the development, use and adaptation of relevant
technologies. The introduction of the NHS Direct service is a classic example for a
service innovation that relies on the use of modern technologies: the telephone
and the computer. The Box below describes the innovative features of NHS Direct
and the lessons that can be learnt for other public sector innovations.

5
The Publin project carries out research on innovation in the public sector, paying particular attention to
“the wider social context in which the institutions are embedded, including the interaction with and
dependencies of innovation in private, market-based organisations, and the structure of incentives for
these institutions to innovate.” The project runs until the end of 2006 when it will present its findings.
http://www.step.no/publin/presentation.html

33
NHS Direct

NHS Direct is a national nurse-led telephone and Internet-based helpline available

to the public 24 hours a day, seven days a week. It was established in March 1998
with the help of two pilot projects. By 2000, the service had been extended to
cover the whole of England and Wales. NHS Direct is currently the world’s largest
provider of telephone healthcare advice and, as Green (2004) points out, “has
been hailed almost universally as a shining example of innovative thinking in
relation to the organisation of healthcare delivery”.

What methods and mechanisms were used?

Several evaluations of NHS Direct have been carried out (Munro et al, 1998, 2001;
NAO, 2002) These evaluations attest that the introduction of NHS Direct was
highly successful, both as regards set-up and user satisfaction. Some key
contributors to the successful introduction of the service appear to have been:

The combination of central guidance from the Department of Health with

flexibility locally to adapt the scheme to local circumstances. According to
the NAO (2002), this was crucial to the successful timely implementation of
the service.

Stakeholder consultations: A wide range of stakeholders (GPs, voluntary

organisations representing potential groups of users) was consulted during
the development of NHS Direct. Many sites have worked hard to build up
appropriate links and to consult with key local stakeholders, building
strong relationships with their local communities.

Integration of NHS Direct with local health care providers and other NHS
services, such as emergency services and NHS walk-in centres.

Use of advanced technology - a computerised decision support system -

assists nurses in advising callers on the appropriate course of action to
take.

Why does it work?

The 2002 evaluation of NHS Direct by the National Audit Office gives some
pointers as to the reasons why the service was implemented successfully:

NHS Direct is tapping into a service gap (24 hour access to health care) that
it was able to combine with a government modernisation agenda that
aimed to improve access to services. This ensured ministerial support and,
as the NAO reports, a concern with how to implement NHS Direct rather
than whether to do so.

Fast and easy communication between project managers and local

implementers enabled lessons to be taken forward quickly as the projects

34
 progressed. This was despite the tight schedule for implementation which
meant that there was no formal way for lessons from previous ways to be
passed on.

Lessons for innovation in public services

Using “windows of opportunity” where government policy preferences

coincide with sectoral reform initiatives or proposals.

Enabling efficient communication between programme / project managers

and those implementing innovative services helps to share experience and
lessons.

Developing new services to reflect user needs and lifestyles ensures user
satisfaction.

2. Delivery Innovation

Delivery innovations involve new or altered ways of solving tasks, delivering

services or otherwise interacting with clients for the purpose of supplying specific
services. The customer-orientated approach adopted by Liverpool City Council is
an example of innovation in service delivery (see Box below)

35
Liverpool City Council’s “Customer first” approach

Within the framework of the local public service agreements (LPSAs), Liverpool
City Council has made a determined effort to focus away from bureaucratic
processes and to concentrate on how the Council performs as a business. This has
involved a greater customer-orientation, where the Council believes it can learn
from the private sector.

What methods and mechanisms were used?

Managerial changes: creation of “Team Liverpool”, a team of 30

individuals who are the driving force for delivering customer contact and
change agendas. This team is also placing strong emphasis on streamlining
business processes. Team Liverpool is also helping to meet a number of
LPSA targets.

Changes in service orientation: focus services towards customer

convenience rather than what is convenient for the council. For instance, a
new and faster payment system has been introduced.

Joined-up working: Liverpool CC works closely with both private

organisations and government departments to provide better services and
reduce costs. For instance, the Council has set up a database that can be
accessed by both its own staff and the Department for Work and Pensions
to access relevant information about a customer. This initiative is designed
to assist in the development of a more efficient service, especially in cases
where people’s circumstances have changed. For instance, recently
unemployed customers will be able to receive increased housing benefit
payments more rapidly as the database will help to identify them much
earlier. Liverpool CC is also working closely with Barclays Bank to provide
basic bank accounts to the Community which reduces the Council’s costs
of administering and issuing cheques. Finally, Liverpool CC also works with
British Telecom in order to set up a call centre that is open 24 hours a day,
seven days a week throughout the year enabling customers to contact the
council at their convenience.

Lessons for successful innovation in public services

A dedicated (cross-departmental or cross-services) team can support can

provide the HR backup necessary for implementing innovations.

The adoption of private sector principles (such as customer focus and cost-
awareness) can foster a spirit of innovation.

Linking up with other providers can support the innovation agenda.

36
While the LPSA seems to have successfully provided a framework for innovating
public service delivery in Liverpool, the evaluation of the LPSA pilots suggests that
the scheme poses a number of challenges to innovation. These mainly relate to
the nature of the relationship between the central and the local level of
governance.

The freedoms and flexibilities at the disposal of local authorities were not
clearly defined, or challenging for local authorities to fully understand (in
part because they found themselves to be unaware of the freedoms they
were already having). On occasion, local authorities felt that they required
freedoms that would have required legislative changes. Only a small
number of freedoms granted were viewed by local authorities as having
helped significantly (Sullivan et al. 2005).

Local authorities surveyed regarded the lack of a mechanism (i.e. legislative

change) or a refusal on the side of government departments to change
policy as barriers to the granting of the freedoms and flexibilities they saw
as necessary for the innovations envisaged under the PSA.

Local authorities felt that government departments were not sufficiently

willing to take into account local circumstances that might affect the
achievability of a target. It was felt that a “one-size-fits-all” approach was
adopted by central government which did not recognise the unique
contribution to the delivery of improved outcomes that could be made at
local level.

Overall, the evaluation of the LPSAs found that the development and
application of LPSAs was informed by the prevailing perceptions of the
nature of central-local relations and mediated by the pre-existing
relationship of the local authority service area and the relevant central
government department. The tone and quality of those pre-existing
relationships influenced the conduct of the engagement in the LPSA.

Local authorities submitting proposals for joined-up LPSAs (i.e. where

cross-cutting targets were set affecting various government departments)
reportedly anticipated difficulties in meeting a national target because it is
not reflected in the priorities of the government department mainly
responsible. It was often difficult to find a person to take responsibility for
a cross-cutting proposal. The number of people that needed to be
consulted over cross-cutting issues also posed difficulties.

The evaluation of the LPSA pilots also identifies cultural difficulties in the
implementation of the pilot LPSAs. These reportedly arise from the fact
that it is unusual for departments to deal with individual authorities on a
one to one basis.

3. Administrative and Organisational Innovations

This type of innovation involves new or altered ways of organising activities within
a supplier organisation. A by now classic example of administrative and

37
organisational innovation in the public sector is the reform in the 1990s of the
New York Police Department which significantly contributed to reducing crime in
the city (see Box below).

38
New York City police reforms in the 1990s

Throughout the 1970s and 1980s, street crime in New York had risen
continuously to levels far exceeding those in other capitals in the developed world.
This trend was reversed sharply in the course of the 1990s when Mayor Rudolph
Giuliani, elected in 1994 due to public concerns about crime and safety, initiated a
comprehensive reform of the New York police service. As a result of these
reforms, serious crime in New York has dropped by 70 per cent in the last 15
years (McMahon, 2005). Because of its success, the reform of the New York
Police Department is now seen as an example for dealing with crime in Britain and
elsewhere.

What methods and mechanisms were used to implement the reform of the
NYPD?

The reform of the NYPD initiated by Giuliani and famously implemented by the
then Commissioner of Police, Bill Bratton, were innovative because they changed
both the style of policing in New York and the way the NYPD was organised.
Arguably, Bratton was appointed as Police Commissioner by Giuliani because of
his firm belief that the police could reduce crime (Smith and Bretton, 2002).

At the heart of the changes to the style of policing in New York in the 1990s lay
the “Broken Windows” theory. Giuliani and Bretton cracked down on the “quality
of life” social nuisances and “victimless crimes” such as fare dodging and graffiti
spraying that may be the seedbeds of more serious offences. The idea was that
focusing on these crimes creates a virtuous circle whereby public spaces are re-
claimed by the “well-behaved”.

In addition to this “philosophical” change, Giuliani and Bretton introduced a

number of substantive changes to the NYPD.

At the core of Bretton’s reform agenda was using technology to improve efforts
to fight crime. Shortly after coming to power, he introduced a new system of
management called Computerised Statistics (Compstat), a sophisticated computer
program that compiles crime statistics, which measures not only outcomes but
allowed managing for improved outcomes by delivering daily and weekly figures
on crime trends that were used to measure the success of precinct and city-wide
policing. The up-to-date and accurate information provided by Compstat was
used as the basis for discussing crime control strategies with precinct
commanders. The information provided by Compstat was used to improve
planning, coordination, evaluation, and accountability. Compstat was thus a
crucial mechanism for linking the development of new policies with effective
tactics to control crime.

Further, Bretton made changes to the internal organisation of the NYPD. He

started a regular series of meetings with commanders to discuss crime statistics
and to encourage innovative responses. From these strategy sessions came the
"zero tolerance" approach to law enforcement, the use of civil remedies to fight

39
crime, and the reorganization of the NYPD to give greater authority to the
precincts so that they could respond quicker to crime problems in their area.
Precinct commanders were directly accountable to top executives for increases in
crime in their neighbourhoods.

Bratton made a number of personnel changes, and he promoted those who

obtained crime reductions while forcing out those who were resistant to change.
Mayor Rudolph Guiliani supported these measures, and the crime reductions were
highly publicized and garnered tremendous public support.

Why did it work?

In his study on the Giuliani Reforms, Silverman (1999) argues that the dynamic
interaction of specific strategic, organizational, and managerial changes redefined
the approach to policing, transforming the department from a reactive to a
proactive force (Silverman, 1999).

As Silverman explains, previous police reforms failed because City Leaders

did not support the process. In Giuliani, NYC had a political leader who
supported the police reform which contributed to the success. In addition,
public support was gained with the help of publication.

Mayor Giuliani and the media seized on zero tolerance policing as the
primary cause of the crime decline in New York, but Silverman points out,
much of the credit for the decline might be a result of the Compstat
meetings and the reorganization of the NYPD.

Thus, according to Silverman (1999) the adoption of technological advances and

the implementation of modern management principles and strong leadership
transformed a huge, slow-moving bureaucracy into a lively, quick-acting
organization.

Lessons for successful innovation in public services

Political support for innovations is important for their success.

Making use of modern technologies to provide up-to-date information can
improve performance and thus contribute to the success of the innovation.
Adoption of modern management techniques such as accountability and
rewarding success empowers people to work towards the new goals.
Strong leadership is essential to initiate and see through innovative
reforms.
Decentralisation of provision brings services closer to the citizens and
enables a faster reaction to changes on the ground.

4. Conceptual innovation
Conceptual innovations are innovations that introduce new missions, worldviews,
objectives, strategies and rationales.

40
4.1 Sure Start Programme

The Sure Start Programme, described in the Box below, can be characterised as
such a conceptual innovation as it introduced new services for young children that
bring together all relevant agencies in a locality.

41
The Sure Start Programme

Sure Start is a cross-cutting programme for the unified delivery of childcare, early
education and health and family support. It emerged out of the 1997
comprehensive spending review, and first local programmes were set up in 1998.
Sure Start aims to improve the health and well-being of families and young
children under four, particularly those who are disadvantaged, so that children
have greater opportunity to flourish when they got to school. According to Glass
(1999), its introduction was based on the view that current provision of services
appeared, in many cases, to be failing those in greatest need and that there was
evidence that comprehensive early years' programmes could make a difference to
children's lives.

What methods and mechanisms are used to implement Sure Start?

The introduction of the programme was preceded by a programme of research,

consultations and expert workshops to determine the extent of the problem and
the best approaches of addressing it. Out of these activities came a set of
principles that were to guide the implementation of the programme and highlight
its innovative character: according to Glass (1999), Sure Start local programmes
represented a new way of doing things, both in the development of the policy
and in its delivery. These innovative methods and mechanisms with which the
programme was implemented include:

Multifaceted targets: target a number of factors, not just, for example,

education or health or "parenting". This meant the management of the
Programme was shared between government departments and that
implementation on the ground was to be a joint effort between the main
statutory agencies - health, education and social services.

Locally driven: based on consultation and involvement of parents and local

communities. Local people not from government departments were
actively involved in designing the Sure Start local programmes

Persistent funding: last long enough to make a real difference.

Involvement of service users: the programme involves parents as well as

children. Parents are actively encouraged to participate in the running of a
Sure Start programme on the ground.

Why does it work?

The national evaluation of the Sure Start programme has highlighted a number of
factors that have made the implementation of Sure Start a success on the ground
(Tunstill et al, 2005):

Programme managers are crucial to the development and maintenance of

partnership working. Insightful and enthusiastic managers can take

42
 strategic action to maximise implementation progress for their respective
programmes.

Joined up working is much easier to achieve in programmes that have pre-

existing relationships with pro-active local agencies.

Committed, resourceful staff from a range of agencies, both statutory and

voluntary, who were equally enthusiastic about the Sure Start way of
working as the communities with whom they were working.

What challenges were faced?

While the innovative elements of the Programme – in particular the multi-agency

approach - were much appreciated at the local level (Myers et al, 2004), Tunstill et
al. also found that the innovative elements of the Programme posed a number of
challenges to implementers. These were, in particular:

Joined up and partnership working is challenging and time-consuming

Working in multi-disciplinary teams is challenging and new to many

professionals

Working in areas where many other initiatives overlap exacerbates the

issues around collaborative working

Lessons for successful innovation in public services

Involvement of service users in the design and management of public

services can increase a sense of ownership and ensure activities are tailored
to the needs of the locality.

Flexibility in the delivery of services on the ground facilitates the adoption

of creative solution.

Joint-up working between different agencies and / or government

departments means that comprehensive services cutting across artificial
administrative boundaries are created.

The national evaluation of Sure Start, upon examining local programmes (Allnock
et al, 2005), has found that Sure Start has succeeded in introducing new services
locally. For instance, some programmes have eschewed the centre-based drop-in
approach and use home visiting as the main gateway to all their services. In this
context, the home visitor acts as the key link between parents and the Sure Start
local partnership. Home visitors provides information about and access to all the
services on offer in the area.

For instance, one local Sure Start programme, in addition to providing funding to
Homestart for volunteers to work with Sure Start families, has implemented a
‘Community Workers’ scheme where workers are based in a geographically

43
strategic way to facilitate accessibility of services by families living across the
patch. Community workers will provide preventative help and support to families,
with the aim to provide comprehensive coordinated and innovative services
offering early intervention to children and their families (Allnock et al, 2005).

4.2 London Congestion Charge

A different example for conceptual innovation in public services is the London

Congestion charge, outlined in the Box below. This is a classic conceptual
innovation as it takes the not-so-new concept of toll roads and uses it in the
context of traffic management in a major capital.

44
London Congestion Charge
The London Congestion Charge was introduced in 2003 in order to reduce traffic
congestion in central London. This was part of a wider transport strategy which
aimed at creating “a world class transport system that enhances business
efficiency, supports greater economic prosperity and improves the quality of life
for every resident and visitor to London.”6 Cars entering a defined zone in inner
London are liable to pay a £5 charge per day. While the introduction of road
charging in general is not an innovative concept, the application of the principle in
a city and the amount of the daily charge are progressive. Moreover, the
congestion charge is widely deemed to be successful, with traffic in central
London decreased by 15%, congestion reduced by 30% and emission reduced by
12%.7

What methods and mechanisms are used to?

Integration of the scheme into a wider transport strategy ensuring it

contributes to several of its strategic goals.

Supplementing the charging scheme with improved public transport

provision: heavy investment into more buses to provide people with
alternatives to car transport in central London.

Modern technology is used to run the scheme:

o CCTV-style cameras with automatic licence plate recognition
software are used to monitor cars entering the congestion charging
zone.
o technologies such as SMS, the Internet, the telephone, pay points in
shops can be used to pay the charge.

Implementation happens with the help of partners from the private sector
making use of their IT expertise.

Why does it work?

Arguably, the success of the congestion charge was due to two main factors:

A strong political leader keen on introducing reforms was elected after the
re-instatement of a pan-London government with powers over transport.
Ken Livingstone had included the introduction of a congestion charge in
his election manifesto.

A clear legislative framework which gave the mayor of London and the
GLA autonomy over public transport in London. More specifically, the 1999

6
http://www.tfl.gov.uk/tfl/cclondon/cc_resolving_problems.shtml
7
London Congestion Charge Environmental Success
http://www.conocophillips.co.uk/stations/autogas/Latest_News/London_Congestion_Charge_Environme
ntal_Success.htm

45
 Greater London Authority Act gave a future mayor the power to introduce
a form of congestion charge without requiring the consent of the
Transport Secretary.

Lessons for successful innovation in public services

A clear legislative framework helps the introduction of innovative policies.

5. Conclusions

In Part II of this report we have presented five examples for innovations in public
services: NHS Direct, Liverpool City Council’s “customer first” approach, the
reforms of the New York City police department in the 1990s, the Sure Start
Programme and the London congestion charge.

These examples have in common that they were all introduced successfully
(though some relating programmes or policies faced challenges): both service
deliverers and service users felt that the frameworks created, approaches chosen
and results achieved benefited them and their community.

During the review of these examples it has not been possible in every instance to
provide a comprehensive set of reasons for why the innovation was successful. It
is clear that these assessments are subject to interpretation and an individual’s
subjective view of how the world works. More specifically, however, it is due to a
lack of in-depth analysis providing a “structure and agency” based analysis of
innovation processes in the public sector.

Nevertheless, from the examples presented above it is possible to draw some

general conclusions and lessons as to why they were successful:

The ability to spot gaps in service provision or modes of delivery is essential

for public service innovation.

This must be combined with an ability to act, that is, either a clear
legislative framework or a programme design which empowers actors to
be creative in implementing a policy. This also means making use of the
right political circumstances when they present themselves.

A political leader with a reform agenda will spearhead innovation.

Support from political leaders or superiors is essential for the successful

introduction of innovative policies, services or ideas.

Genuine cross-departmental or cross-service collaboration facilitates the

introduction of innovative services, especially when combined with
effective communication between all levels of

46
Engagement with service users on the ground – be it at the local or sub-
local level – in order to tailor service provision to their needs has been
shown to be effective for the introduction of innovative services.

New technologies can both spark innovations and support their successful
implementation.

47
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50