On creating the conditions for innovation

It’s a recurring theme, that of thinking about the journey to radical innovation in the public sector. It’s one thing to say that innovation occurs within your organisation yet the real challenge is in how to shift systems in more effective directions. System-changing innovations provide significant boosts to public value and, as David Albury recognises, offer a range of returns including productivity growth. 

Yet the rewards for any individual unit or organisation seeking to innovate – such as a school or hospital – are much lower. Indeed there is likely to be significant risk associated with any innovation, making it more rational to focus on either mitigating risk to point of preventing the innovation in the first place, or adopting ideas developed by others. Being first mover is often seen as a bigger risk, even though failure to account for context when adopting an innovation is just as challenging.

As a result of these issues a range of tools and methods have developed as a response to the need for governments to provide stable and predictable environments and de-risk innovation. These include the following:

  • regulatory sandboxes, legal frameworks within which innovators can trial new products, services and business models without some of the usual rules applying. 
  • user-centered design approaches that seek to design services with the citizens who are likely to receive those services. This is opposite of more traditional ‘top down’ initiatives in which the government determines what services look like and how they are delivered. 
  • new approaches to commissioning in uncertainty – when the commissioner cannot have perfect market knowledge – include models such as GovTech Catalyst in the UK. The approach enables R&D investment in early stage ideas through a staged process of investment, support and exploration. The CivTech version developed by the Scottish Government drives innovation across the public sector; its director, Alexander Holt, states the core function is “to help people buy what they don’t know exists”.
  • social and government innovation labs are multi-disciplinary groups developing, testing, prototyping, refining interventions to tackle complex societal challenges. The emerging practice of experimentation and prototyping in the public sector is an attempt to find what works on a small scale and reduce risk, before scaling the idea across the sector.
  • the role philanthropic organisations, such as the Gates Foundation or Bloomberg Philanthropy, can play in strengthening public sector innovation “simply by providing risk capital to fund activities with risk profiles that wouldn’t be politically acceptable to the wider public”. 

These are just some of the mechanisms through which those trying to innovate in the public sector are also experimenting with the means of doing so. This wider public sector innovation ecosystem is fundamentally about how to distribute and account for risk and reward. Public entrepreneurs and those convening across systems are at the heart of such efforts.

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