Supplement: A Review of the Literature

Supplement: Case Studies

2. Essential pre-conditions for innovation

Innovation in the public sector is driven by various factors outside and inside the organisation. The factors range from changes in government policy, stakeholder demands, and developments in technology to agencies and individuals seeing opportunities to improve the way they work. There will always be internal and external pressures on the public sector to innovate. The level of innovation is most likely to increase and be sustained if it is actively encouraged, recognised and rewarded by, and within, organisations. Pro-active executive leadership, a supportive culture, a focussed corporate strategy and investment in staff training and development are essential pre-conditions for innovation.

2.1 Leadership: culture, corporate strategy and human capital

Authority to innovate and a supportive culture are critical

Portfolio secretaries and agency heads have an important role in articulating the aspirations and strategic directions of the organisations they lead. Together with other leaders in the organisation they can ensure that appropriate attention and resources are directed to medium and longer-term issues where innovation is likely to be critical to success. As key advisers to ministers, they are well placed to anticipate government needs and new and emerging issues.

Innovation can only flourish and be sustained in the context of a culture that encourages, recognises and rewards new ideas and gives authority to translate those ideas into practice. The executive leadership team has primary responsibility for setting the philosophy and culture of an organisation and putting in place the policies and procedures to facilitate innovation. Experience shows that a leadership team that ‘walks the talk’ can be highly motivational; discrepancies between words and action are quickly discerned by staff. This action includes ensuring that a culture of trust, respect and good communication is embedded in an organisation.

Take carriage of innovative ideas

Leaders also have the role of ensuring the carriage of innovative ideas including, where appropriate, the formulation and acceptance of new policy proposals relevant to competing proposals, a delivery strategy and a performance management regime. This role often includes working across portfolios and jurisdictions to ensure that:

the broader policy implications are identified and understood; estimates of the costs and benefits are sound; and the financial and human resources that are secured are commensurate with the implementation challenges.

Accept, and learn from, mistakes

Where innovations do not reach their objectives or mistakes are made, it is crucial to learn from the experience in a positive way and avoid the ‘blame game’. Learning from mistakes is as important as celebrating success in reinforcing an innovation culture.

While an innovative idea can result from serendipitous events, embedding a systematic approach as an explicit and integral component of an organisation’s corporate strategy will drive the development and promulgation of appropriate policies and procedures, the allocation of necessary resources, the assessment of results and the dissemination of knowledge. An innovation strategy that is clearly articulated, readily understandable and relevant to all levels within an organisation is likely to have more impact in raising innovation performance than not having such a strategy. The appropriate innovation strategy will depend on the organisation. The possible strategy may on one hand tend towards approaches focussing on generating innovation inside the organisation or on the other hand, towards approaches focussing outside the organisation.[4] For some organisations, innovation policies are also supported by policies dealing with intellectual property.

Have a systematic approach

A key element of corporate strategy is the recruitment, retention, training and development of staff. Training and development opportunities which enhance innovation capacity within an organisation can be quite diverse as it encompasses a broad range of skills. An analysis of future skills needs against the existing skills base can identify where resources might be best directed. Initiatives can range from formal training to participation in networks and communities of practice through to on-the-job exposure and mentoring. Staff exchanges at the highest levels, including across jurisdictions and internationally, can be highly valuable.

Embedding a culture of innovation

In seeking to embed a culture of innovation and continuous improvement the Australian Taxation Office (ATO) has developed a business innovation strategy with the assistance of strong executive leadership and support, a recognised innovation expert, a Masters degree student and a number of bottom-up processes. This included organising an ‘Innovation Week’ with a wide range of activities throughout the organisation, including a video DVD, discussion boards, networks, team meetings and wikis.

2.2 Leadership: at all levels

Innovation can occur at all levels

A key function of Executive leadership teams is to facilitate intra and extra-organisational learning and to foster leadership and innovation at all levels within an organisation. This is because good leadership and innovation has top-down, horizontal and bottom-up dimensions. Achieving strategic alignment across an organisation, clarity around role boundaries, empowerment of staff to take initiatives, collaboration across work units and dissemination of corporate knowledge will enhance the innovation dynamic.

Successful innovation is likely to be enhanced by drawing on the knowledge and experience of staff closest to the work face who best understand their jobs and the opportunities for improvement. Incremental innovation, in particular, can readily be driven by bottom-up processes while dissemination of ideas can occur very effectively through horizontal as well as vertical networks. Technological innovations such as use of internal IT shared spaces and wikis are powerful means of generating and spreading knowledge.

The Australian Customs and Border Protection Service (Customs and Border Protection) detector dogs initiative and the Centrelink place based initiatives demonstrate that quite radical innovation can emerge from innovation champions and bottom-up processes as well being driven down through the formal leadership hierarchy. The challenge is for organisations to effectively encourage, capture, assess and implement such innovations.

An innovation champion

In 1992, John Vandeloo, National Breeding Manager for the Customs Detector Dog Unit, saw an opportunity to adopt a more scientific approach to the breeding and development of detector dogs and initiated discussions with the Royal Guide Dog Association (RGDA) and the University of Melbourne. Customs and Border Protection and RGDA funded a Postgraduate Studentship for a PhD student to undertake a research program based on the labrador breed. The PhD thesis was completed in mid-1996 and showed that a reliable and high quality supply of detector dogs could be produced through a selective breeding program and further enhanced by a suitable rearing environment. As a result, a full breeding program was initiated together with a puppy foster care scheme, now an internationally-recognised program. John Vandeloo, as the driving force behind this initiative, was awarded a Public Service Medal in 1998. [See Appendix A.1 for more detail.]

2.3 Knowing your business

Successful innovation requires a good understanding of the focus and core business of an organisation, the internal dynamics of the organisation and its external environment, including clients and other stakeholders. In the public sector, the core functions of an organisation are clearly established in Administrative Arrangements Orders, legislation and/or regulations, government policies and priorities and portfolio ministers’ agendas. Within that framework, organisations establish their strategic directions and determine how best to allocate the resources available to meet their objectives.

Understand the environment

The environment in which the public sector works is constantly changing and organisations need to be able to read, understand and respond to those changes. A clear understanding of government policies and aspirations, and a strong working relationship with ministers and their offices is of central importance.

High quality, comprehensive and timely advice is highly valued even when ministers may come to a different position. Ministers are open to new ideas to meet their objectives and suggestions for innovative ways of dealing with issues of interest or concern.[5] It is incumbent upon the public sector to enhance the skills and expertise on which such ministerial advice is built.

Capture the evidence

Collecting, analysing and distilling qualitative and quantitative data and information to provide a robust evidence base is critical. Part of this process is knowing and understanding other work in the field by other organisations, other governments, academics, think-tanks, industry and community groups. Formal and informal stakeholder consultation and engagement is fundamental to understanding the issues and dynamics around possible initiatives. This does not necessarily require large, dedicated structures to be put in place but rather developing a proactive, outward and forward looking culture (supported by internal processes to capture and disseminate corporate knowledge) and developing the necessary staff capabilities.

2.4 Focussing on the important

Certain changes may be expected of the public sector through the democratic process of changes of government, machinery of government changes, government responses to changing circumstances, international events and any number of factors outside public service control. The responses to many of these external factors will be influenced by public service analysis and advice, including in relation to policy development, program implementation, regulatory responses, service delivery or organisational changes. There is substantial scope, even need, for innovation in these circumstances. The challenge then is to identify, assess and implement innovations which are likely to represent the best return for the resources invested. This may often require looking beyond the confines of one portfolio to see whether joint initiatives with others can yield more effective results.

Making time to think

At the more prosaic level, and within the scope of government policy and priorities and available resources, departments and agencies have considerable scope for innovation at the organisational level. This can range from a commitment to continuous process and service improvement to more substantive innovations. The importance of organisational innovation, which often takes the form of adaptation or adoption of innovations undertaken elsewhere, including in the private sector, should not be overlooked.

Public sector leaders need to ensure that time and resources are set aside to deal with the important but not urgent issues where innovative approaches can have multi-dimensional benefits. While developed in a different context, Stephen Covey’s time management matrix can be a useful way of thinking about this issue.[6]

2.5 Organisational capability and agility

Build innovative capacity

Substantive innovation is unlikely to occur by chance and must be explicitly planned for, and resourced, at the organisational level. This involves building organisational capability to support innovation which may involve both direct costs (for example on training, equipment and information support systems) and opportunity costs (such as in making time available). Building organisational innovative capacity is broader than having a set of human resource development, information technology, policy development and program implementation strategies. It is about facilitating innovation pathways in a synergistic way to bring the broad capabilities of the organisation to bear on a need or opportunity. It is also about empowering and supporting the staff responsible to bring innovative solutions to fruition. This requires leadership, investment and commitment.

Radical or transformational innovation, in particular, require organisational flexibility and agility in being able to shift and obtain the necessary skills and resources to meet new or emerging needs and opportunities. There are well-established processes for doing this such as drawing on experienced staff, the establishment of taskforces, working groups, steering committees and networks utilising internal and external contributors. Thinking through appropriate governance arrangements consistent with the nature of the challenge and risks involved, to oversight pilots, trials or experimentation is time well spent.

A major challenge in developing adequate organisational agility is the need in most cases to maintain key business-as-usual functions and reset priorities within existing resources. Relatively few initiatives are deemed to be of such significance that total, new resourcing is provided and new resourcing normally only occurs after considerable investment in prior development work. Naturally, substantial reallocation of resources will have implications that need to be discussed with ministers and communicated to clients and key stakeholders to avoid mismatched expectations.

2.6 Incentives and rewards

Innovation will be encouraged if innovators and innovative initiatives are appropriately recognised and rewarded. As public servants are usually motivated by, and committed to, making a difference by way of better policies and programs, recognition and reward schemes need not involve monetary rewards. Indeed there are many examples of successful recognition and reward schemes that may simply involve workplace (for example informal recognition and celebration events) and organisational level acknowledgment (such as Secretaries’ awards). Service-wide awards include, for example Information Technology Awards and annual Prime Minister’s Awards for Excellence in Public Sector Management administered by the Institute of Public Administration Australia, Australia Day Medallions and awards under the Australian Honours System (including the Public Service Medal). There are also various international awards such as those sponsored by the Commonwealth Association for Public Administration and Management.

Recognise and disseminate innovation

Apart from the obvious motivational dimensions, recognition and award schemes are powerful mechanisms for maintaining a culture of innovation through peer recognition, disseminating knowledge of new initiatives and fostering adaptation, adoption or simply fresh thinking. For example the nomination and citation processes for the Prime Minister’s Awards for Public Sector Excellence gather and disseminate valuable information across the public service. It is therefore important that departments and agencies participate actively in such schemes. A reputation for innovation and excellence as demonstrated by awards can be an important factor in attracting and retaining high performing staff, thus creating a virtuous circle of innovation.

2.7 Key lessons

Continued innovation is vital for the public sector to meet the challenges and opportunities of the future. Innovation is most likely to emerge and be sustained if:

public sector leaders are committed to achieving a supportive culture where innovation is encouraged and lessons disseminated;
innovation is embedded in corporate strategy and adequately resourced;
staff have the requisite skills, training and development opportunities;
departments and agencies encourage internally-generated innovation and actively engage with citizens, clients and stakeholders to garner external ideas and innovations;
there is a deep understanding of core business, government policy and aspirations, the broader external environment and internal and external sources of data and information;
there are mechanisms in place to assess and respond to new and emerging issues;
departments and agencies build organisational capabilities and agility; and
innovation is appropriately recognised and rewarded.

[4]Eggers and Singh identify strategies that can encourage innovation in government such as ‘cultivate’, ‘replicate’, ‘partner’, ‘network’ and ‘open source’. See Egger, W.D, and Singh, S.K, The Public Innovator’s Playbook: Nurturing bold ideas in government , Deloitte Research, 2009.

[5]Behm, A, Bennington, L and Cummane, J, A value-creating model for effective policy services, Journal of Management Development, Vol.19, No 3, 2000, pp162–178.

[6] Covey, S.R., The 7 Habits of Highly Effective People, Free Press, 2004.

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