Reclaiming the Co-creation Process from the Public Sector

Public sector innovation is a necessity, if we are to reduce public spending and address changing demographics. The public sector is lagging behind the private sector in transforming ideas into innovation, which made me question whether we are pursuing the wrong approach. This is not to say that I am questioning the abilities of people working in the public sector, but merely provoking a dialogue with the reader. You are all invited to join in!

News headlines are often based on statements made by politicians about the need for public sector innovation if we are to reduce public spending, improve public services and/or transform our welfare societies to address changing demographics. The same media also publish articles and reports highlighting that the public sector is lagging behind the private sector in terms of transforming ideas into innovations. This apparent divide in the mindset towards innovation between the public and the private sectors raises the question of whether we are pursuing the wrong path. Are we right to assume that a sector subject to the influence of politicians and thus popular opinion, can foster a culture that is truly innovative?

I do not question the abilities of the people working in the public sector; I want only to spark debate among the readers of InnovationManagement about what we might expect if the current innovation context remains unchanged, or what could or should be expected were the innovation context to change.

Innovation leadership lacks vision and clear objectives

I attended a recent conference on user-driven innovation in the public sector; a cross-border initiative of the Nordic countries. The conference agenda revolved around showcasing of success stories from Denmark, Sweden and Norway.

One takeaway from the conference was that in spite of presenting a success story, the innovation objective of the project was still unclear based on the presentations formulated to meet some political objective. How can creative, enthusiastic people – read public sector employees – sustain their enthusiasm and creativity levels if the innovation objective is primarily serving a political aim? Let me be more specific.

During the current financial crisis many countries experienced massive layoffs and spiralling unemployment rates. This made it political suicide publicly to pursue, sponsor and implement innovations (e.g. new processes) aimed at reducing public sector employment. Contrast this with the fact that the same countries are experiencing dramatic shifts in their demographics, and within the next decade at most, this will radically reduce the size of the total workforce threatening the public fiscal budget and tax revenues. This gloomy situation requires political attention today, if the transition period as people leave the job market, is to be smooth and gradual from a society perspective.

From a societal perspective only the addressing long-term challenges makes sense as an innovation objective, whereas the cyclical hiccups are likely to be resolved through market forces as the global economy picks up. The shift in demographics is a perfect platform for a visionary politician to launch a programme of reform for the public sector; however, if budget allocations are based upon popular opinion, which changes as the news media changes focus, the cyclical issues are likely to receive proportionally larger funding than the latter, which will be difficult to promote political momentum.

Innovation management within a culture of ‘no mistakes allowed’

One hallmark of most Danish public sector institutions is the commitment to a culture of no mistakes allowed, nulfejlskultur in Danish, which essentially wipes out the incentives for civil servants to experiment. During a conference held in 2008, this culture is seen as one of the four barriers to public sector innovation in a conference, the other three being knowledge management and dissemination, lack of cross-sector collaboration, and lack of competencies.

Readers of InnovationManagement will know that innovation involves experimentation and making mistakes. The trick is demonstrate rapid learning from these mistakes. If a ‘no mistakes allowed’ culture predominates, then there can be no experimentation without putting one’s career at risk. And if knowledge management and dissemination or lack thereof is a barrier to innovation within the sector, how can mistakes be turned into learning, and then value?

When ideas management begins to resemble budgeting

The writer has participated in an innovation management process in a public sector institution, aimed originally at collecting and qualifying ideas from all parts of the organisation, but which developed into a study on how to instil trust and create transparency about the organization of a new ideas management process designed to reduce the internal politics governing departments that perceived ideas management as being similar to the annual budgeting process. The root cause of this lies usually in the way that most public institutions are organised into ministries, departments and institutions, each responsible for only a small part of the puzzle, but publicly liable for the finished puzzle. The second barrier identified above, of lack of cross sector collaboration.

If the ideas management process lacks transparency and trust, it can hardly be expected that the innovation management process will be embraced and used? Most companies have mechanisms for proposing new ideas and seeing their progression to maturity; however this does not apply to most of the public sector. Studies show that people are motivated by intrinsic factors, such as seeing one’s ideas taken up and developed. If the innovation management process is fragmented and lacks transparency, then it cannot be expected that ideas will flow within the sector: they are more likely to be buried or spun off as a private sector company.

For example, was talking to the CEO of a UK-based consultancy firm which assists public healthcare administrators collect and patent ideas conceived on healthcare premises. The biggest problem for this company is the lack of incentive for healthcare personnel to present their ideas to the administration rather than developing them externally – and selling them back to the healthcare system.

Taking control of the user-driven innovation process

In Denmark, and most Nordic countries, public sector innovation is frequently based on user-driven innovation projects. The object often is the beneficiary of the public services, e.g. the elderly. If the four barriers to public sector innovation are so strong and so difficult to break down in the near term, could a reversal of the user-driven innovation project be the solution? Should we be trying to apply anthropological methodologies to understanding how the sector works, and presenting our insights as the basis for public sector innovation? Should we be trying to take charge of the co-creation process, but from a civic perspective? Tell me what you think!

By Frode Lundsten, Contributing Editor, Denmark

About the author

Frode has more than 20 years of experience in helping companies to sustain or revitalize their growth. He has worked both in national and international contexts of business development and change management, where strategy implementation and applied innovation management has been the focus. Frode also has experience from publishing and media industry, both as a publisher and a columnist. Frode holds a MBA degree from Henley Management College, UK, where his dissertation focused on the adoption of open innovation in Danish companies. Frode is also founder and partner of Strategy2Tactics.dk.

  • Max Rolfstam

    I think the public sector has always been innovative. Internet, digital switches, civil air industry, semi-conductors, power distribution technology are examples of technologies and areas developed as responses to public demand. And this is just a short list. The risk aversion should be seen in two ways. It is general a good thing. We don’t want public servants to waste tax-payers money. And we would like our doctors to know what they are doing when we receive public health care. 2. Risk aversion is a legacy from the neo-liberal times of the 80′ and 90′s that are slowly being replaced by a “Keynesian” approach where public stimulation of innovation, for instance through public procurement of innovation is a central component. Denmark has traditionally not been good at creating real innovation through collaboration between public sector and private firms. But this is also changing very fast. I think you just attended the wrong conferences.

  • http://www.mind-lab.dk/en Christian Bason

    Thanks for your interesting reflections Frode on public sector innovation and its future perspectives. From my vantage point as head of MindLab, a public sector innovation unit within three major government departments, and as the author of several books on leading public sector innovation, I don’t think the picture is quite as gloomy as you paint it here. I want to address three themes that you touch, and where I think governments around the world are showing that there is a different way.

    First, the current budgetary crisis in many Western countries is catalysing a much higher emphasis on innovation within government than I have seen for at least a decade. It may be that the public mood is cyclical, but decision makers at both political and administrative level seem to be acutely aware that more radical innovation is indeed necessary. An obvious example is the British coalition government, who is slashing budgets while launching a number of innovative initiatives under the heading of the Big Society, attempting to unleash new productive partnerships and relations between public organisations, private firms and civil society.

    Second, and in continuation of this, government organisations are in fact capable of thinking also in terms of long-term strategy. An example is the Danish tax administration which has pursued a comprehensive strategy over the last 5-6 years, focusing on reaping efficiency benefits via massive digitization while underpinning citizen’s tax compliance through a customer-oriented approach, helping citizens doing the right thing rather than (only) looking for errors.

    Third, I agree that doing ethnography within public service organisations, which you propose, can be helpful in identifying the change potential and what is considered valuable also from an employee-perspective. At MindLab we are increasingly balancing the ‘outside-in’ view of citizen-centric research with the ‘insider’ understanding of what can trigger real transformation within and across agencies. It is maintaining that delicate balance, while orchestrating the innovation process, that the potential for a more modern and responsive public sector can be realised. Maybe that is what it means to ‘take charge of the co-creation process’.

  • http://www.strategy2tactics.dk Frode Lundsten

    Max, Christian

    Thanks for your replies and comments. I agree to your points that one can find very good examples within the Public sector of successful innovations, but I have a sense and a feeling that the potential is much higher. In dialogue with public sector clients, I often get the feeling that “if they were only let free…”

    But I also believe that the Private sector can do “it’s part.” Too often do we let opportunities pass on, just because we believe red tape will kill the project or that it is too difficult to partner up with the Puublic sector. The large pool of unused EU funds is a statemony of this. Compared to the other EU member states Denmark is not always presenting sufficient projects to claim our part of the EU budgets.

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  • Sven-Eric Hargeskog

    Dear Frode, THank you for raising the issue!

    Yes, I agree – the public sector is applying the wrong approach in “transforming ideas into innovation”! In many governments more than 90 % of the “transformation” is based on push techniques, i.e. initiatives and decisions taken by “experts” with no knowledge on “actual needs”. There is a major lack of “innovation agents”, with an overarching view and scope for public sector interests.

    Also, too much trust is put in the market intelligence of firms, supposed to develop and offer solutions to the customers. Let’s suppose the company conducts a market survey, and receives relevant information of the actual needs (which is not to be taken for granted). Then starts the “downscaling” and adjustment to the actual situation. Several compromises will follow, as a consequence of this adjustment, e.g. “do we have the resources”, “how much will it cost – can we afford”, and other similar questions raised. Also, the final question will always be: “do we need to go all the way – what do our competitors do”. As a result of this, the user requirements/needs will not comply with the outcome.

    In this I have left out the fact that there is a major risk that the “market intelligence” has not defined the real, actual need, that may not even be possible for the users to articulate. The underlying needs are not obvious, and the available possibilities (the user fantasy) are not easily captured.

    If public sector is to succeed in transforming ideas into innovation, the approach must be needs driven, not user driven!

    By the way, Max, rightly, public procurement for innovation may be one important and efficient tool, however, not the only one…

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