Executive Summary

This is a review of the academic literature on public sector innovation augmented by a range of technical reports, working papers, and government publications that identify insights and examples useful to preparing the Australian National Audit Office’s (ANAO’s) Better Practice Guide (BPG) entitled Innovation in the Public Sector: Enabling Better Performance, Driving New Directions.

The ANAO’s BPG, and the work that underpins it, are part of a wider, whole-of-government initiative to encourage a greater emphasis on, and degree of support for, innovation in the Australian Public Service. Two key components of this initiative that complement the ANAO’s work are the project on public sector innovation carried out by the Management Advisory Committee (MAC) and the major initiative entitled Reform of Australian Government Administration. In general terms, the ANAO’s work has focused on enhancing public sector innovation within the constraints of the existing legislative framework and managerial practices whilst the MAC work and the Reform of Australian Government Administration initiative focus on recommended changes to this legislative framework.

The main emphasis is upon summarising published material that addresses public sector innovation concerns directly. There is a far more extensive literature on general aspects of innovation. Whilst aspects of this general literature are relevant to public sector innovation, aside from a brief discussion on lessons for risk-taking, such insights have been drawn upon as background material when drafting the ANAO’s Better Practice Guide and are not covered in this document. The more general lessons derived from private sector experience are addressed in the complementary work on public sector innovation carried out by the Management Advisory Committee.

The main findings and conclusions from this literature review are as follows:

Academic inquiry into public sector innovation is a new and growing field. Just over half (51.5%) of the 167 academic journal articles examining public sector innovation tracked by the extensive Thomson-Reuters database of academic journal publications in the period 1971–2008 were published in the three years: 2006–2008. The growth in the volume of the non-academic literature produced by governments and non-government organisations, although harder to track numerically with the same rigour, also appears to exhibit the characteristics of an emerging field. This recent rise in interest is not dissimilar from that exhibited by the more general literature on innovation (24% of the 1971–2008 output has been published in the 2006–08 timeframe).
The recent emergence of this field means that well established ‘quality assurance’ mechanisms have yet to be applied, namely: systematic and peer-reviewed assessments of collated evidence (i.e. ‘meta studies’); comparative peer-reviewed analysis of different case studies and their implications etc. Consequently, given the formative stage of this literature it is necessary to draw conclusions on the basis of what tend to be anecdotal and unsystematic observations that fall in the lower levels of the ‘hierarchy of evidence’ used (ideally) to support government decision-making.
In general terms, the existing literature focuses on promoting a more ‘self-conscious’ recognition of the importance of innovation in a public sector setting. In so doing, it seeks to-redress a perceived imbalance in the emphasis placed on innovation in the private sector vis-à-vis innovation in the public sector. This imbalance has arisen partly as a result of the growing prominence of the ‘innovation studies’ literature relating to the private sector. Another reason for this imbalance emerging has been the ethos that the public sector is neither equipped to be, or should seek to become, innovative.
The contemporary public sector management agenda that has been emerging since the early years of the new Century seeks to challenge this ethos that the public sector is neither equipped to be, or should seek to become innovative. This emerging management agenda reflects a shared perception between academic commentators, influential thinkers in civil society and also by senior government officials that:

(a) the public sector has in fact a long and distinguished history of innovating that pre-dates that of the private sector — and is still active today;

(b) this feature of the public sector needs to be recognised and promoted to the general community;

(c) public sector innovation requires a more explicit use of experiments and mechanisms to evaluate competing options;

(d) public sector innovation also needs to be supported both as an over-arching objective and as a pervasive operational consideration within the machinery of government; and

(e) as in the private sector, the necessary appetite for risk stems from articulating the relationship between risks and potential rewards, and commonly involves strategies in which a spectrum of activities are pursued within this risk–reward relationship (from low risk–lower reward through to higher risk–higher reward options).
The government of the United Kingdom stands out in the high profile that it has given to public sector innovation. This emphasis includes the provision of substantial ‘risk-taking’ funding to facilitate partnership-based innovations in public service delivery (particularly those innovations that aim to increase the efficiency and effectiveness of public service delivery).
Although the verifiable evidence is ambiguous, the fact that a marked increase in academic interest in public sector innovation (as reflected in increases in publication numbers) broadly coincides with an increased practice-led focus on public sector innovation within government suggests that practice has driven theory. This is also the case for private sector innovation — where corporations drive cutting-edge work and academics then subsequently capture and disseminate the less confidential aspects of this understanding more widely.

The emergent state of the literature indicates that there is currently insufficient practical guidance available for use within governments to match these aspirations. This reflects the early stage in the development of the literature.
It is clear that other major Organisation for Economic Co-Operation and Development (OECD) governments are seeking to move rapidly ahead with putting into place comprehensive ‘innovation friendly’ policy stances. This means that Australia’s efforts align well with this general trend in public policy — generating the possibility for productive exchanges of information, insights and ideas at an inter-governmental level. In such a context, it is particularly important to be able to clearly articulate the nature and extent of any differences between the Australian Public Service and other nations’ public services in order to be able to filter and interpret the relevance of overseas approaches in an Australian context (particularly as regards the specifics of Australia’s Federal arrangements).

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