dtt ps innovatorsplaybook 100409

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William D. Eggers andShalabh Kumar SinghDeloitte Research

Foreword byStephen GoldsmithHarvard Kennedy Schoolo Government

The PublicInnovators Playbook:

Nurturing boldideas in government


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About the Deloitte Member Firm Public Leadership Institute

The Deloitte Member Firm Public Leadership Institute, a part o Deloitte Touche

Tohmatsus (DTT) public sector industry group, identies, analyzes and explains

the major issues acing governments today. The ocus o the Institute is to help

public leaders tackle their most complex policy and management challenges.

Through the Institute, Deloitte member rm public sector industry practicesdeliver cutting edge thought-leadership, innovative solutions to issues acing

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realizes these objectives through three major programs:

Thoughtleadership.InconjunctionwithDeloitteResearch,apartof

Deloitte Services LLP in the United States, Institute sta and Fellows pro-duce provocative books, studies and commentaries on the most pressing

issues acing public leaders.

Publicleadersforums.TheInstituteregularlybringstogetherdistin-

guished current and ormer senior public ocials, management experts

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Academicpartnerships.TheInstituteworkscloselywiththeworldslead-

ing graduate schools o public policy and administration to co-sponsor

orums and co-produce books and studies.

About the Ash Institute or Democratic Governance and Innovation

TheRoyandLilaAshInstituteforDemocraticGovernanceandInnovation

advances excellence in governance and strengthens democratic institutions

worldwide. Through its research, publications, leadership training, global net-

work, and awards program developed in collaboration with a diverse, engaged

communityofscholarsandpractitioners-theAshInstitutefosterscreativeandeective government problem-solving and serves as a catalyst or addressing

many o the most pressing needs o the worlds citizens. The Ford Foundation is

afoundingdonoroftheInstitute.AdditionalinformationabouttheAshInstitute

isavailableatwww.ashinstitute.harvard.edu.Applicantsforthe2009Innovations

inAmericanGovernmentAwardsareencouragedtoapplyat

www.innovationsaward.harvard.edu.


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William D. Eggers andShalabh Kumar SinghDeloitte Research

Foreword by Stephen GoldsmithHarvard Kennedy School o Government

The PublicInnovators Playbook:

Nurturing boldideas in government


4/164

About Deloitte ResearchDeloitte Research, a part o Deloitte Services LP, identies, analyzes, and explains the major issues driving todays business

dynamics and shaping tomorrows global marketplace. From provocative points o view about strategy and organizationalchange to straight talk about economics, regulation and technology, Deloitte Research delivers innovative, practicalinsights companies can use to improve their bottom-line perormance. Operating through a network o dedicatedresearch proessionals, senior consulting practitioners o the various member rms o Deloitte Touche Tohmatsu,academics and technology specialists, Deloitte Research exhibits deep industry knowledge, unctional understanding, andcommitment to thought leadership. In boardrooms and business journals, Deloitte Research is known or bringing newperspective to real-world concerns.

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Copyright2009DeloitteDevelopmentLLC.Allrightsreserved.

Member oDeloitte Touche Tohmatsu

The Public Innovators Playbook: Nurturing Bold Ideas in Government

By William D. Eggers and Shalabh Kumar SinghDeloitte Research

Foreword by Stephen Goldsmith

ISBN0-9790611-1-3ISBN139780-9790611-1-0

Printed by Printcraters, Winnipeg, MB, CanadaCoverphotographbyAndrewMcGarry


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Creativity is thinking up new things.

Innovation is doing new things.

Theodore Levitt


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Contents

Foreword 2Introduction 5

Part I: The innovation processChapter1Theinnovationcycle 17Part II: The ive innovation strategiesChapter2Cultivate 33Chapter3Replicate 49

Chapter4Partner 63Chapter5Network 77Chapter6Opensource 95

Part III: The innovation organizationChapter7 Sustaininga cu ltureof innovat ion 113

AppendixFrequentlyaskedquestions 131Goodsourcesofinformationoninnovation 137Endnotes 141


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2


ForewordAsthisforewordisbeingwritten,governmentsaroundtheglobefaceunprec-

edented challenges. The global economic meltdown made an already challeng-

ing set o circumstances exponentially worse or government. Public ocials now

ace job, housing and revenue losses on top o the still daunting list o previousproblems, including rising health care costs, global warming, crumbling inra-

structure, terrorism, and immigration issues.

The greatest economic turmoil since the Great Depression will create the

perfectstormoffallingrevenuesandincreasingspendingforsocialwelfare.At

the same time, democratic governments are taking on a greater role in nancial

markets and other ailing industries.

The temptation will be or government to hunker down, to depend on estab-

lished approaches. This would be a big mistake.Now more than ever, government needs to embrace innovative approaches

to daunting problems. The reason is simple: existing practices will not suce.

To have any hope o success, governments must embrace innovation as a core

discipline, becoming adept at adopting new practices. Innovation must become

partofthepublicsectorDNA.

In this book, authors William D. Eggers and Shalabh Singh lay out a blueprint

or how to do this. The concrete insights they oer will prove invaluable to those

public ocials seeking to apply innovative solutions to unprecedented problems.Astheauthorspointout,innovationcananddoesoccurinthepublicsector.Too

oten, however, the public sector ails to actively promote innovationa short-

coming this book can help rectiy.

This book is co-published under the auspices o Deloittes Public Leadership

InstituteandtheAshInstituteforDemocraticGovernanceandInnovationat

HarvardsKennedySchoolofGovernment.TheAshInstitutewasestablishedin

1985amidstwidespreadconcernaboutcitizenapathyandlossoftrustinthe

government. On the occasion o the twentieth anniversary o the program, theAshInstitutesoughttorevisittheimpactofgovernmentinnovationsworldwide

and lessons learned. This book orms a part o that series.

TheAshInstitutehasbeenencouraginginnovationsinceitsinception.For

example,theInstitutesInnovationsinAmericanGovernmentAwardsProgram

hasreceivedmorethan25,000applicationsfromfederal,state,local,tribal,and

territorialgovernmentprogramsandhasgivenrecognitiontomorethan400

agenciesproving that creativity is indeed fourishing in the public sector. Few

government agencies, however, have earned a reputation or being serial in-


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3

novators; only a handul o them, or example, have been repeat winners o the

InnovationsAwardsProgram.

The goal o this book is to improve this track recordto help governments

become serial innovators. The book describes how public organizations candevelop and sustain a culture o innovation. It could not be more timely.

Arecurringthemeofthebookisthatgovernmentshavetobecomebetterat

leveraging the creativity o those closest to the problem, be they employees or

citizens. How can public leaders break the suocating grip o bureaucracy and

stimulate the innovation process? This book shows how through breakthrough

examples such as the Development Marketplace at the World Bank and the Idea

FactoryattheTransportationSecurityAdministration.

The innovation process, the authors emphasize, cannot remain a top-down,bureaucratic process, ar removed rom the concerns o citizens. Governments

need to draw upon all their sources o innovation employees, citizens, private

organizations, and other governments to produce regular and successul in-

novations.

InSeptember2007,theInnovationsAwardsProgramconferredawardstoits

twentieth class o winners. Many o these ground breaking innovations came not

rom agency heads or a public sector environment that encouraged innovation.

In many cases a committed group o employees championed these importantinnovations by setting out to make a dierence and overcoming all obstacles.

Government can make a dierence in the lives o citizens only by regaining

their trust. This book is an important companion or those government ocials

looking to help make government better at nurturing bold ideas and delivering

great results.

Stephen GoldsmithDaniel Paul Proessor o Government

DirectoroftheInnovationsinAmericanGovernmentProgram

Harvard Kennedy School


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IntroductionThis is a book about how the public sector can develop and

sustain a culture o innovation. Innovation is a discipline, just likestrategy, planning, or budgeting. Like these disciplines, sustained

innovation requires a methodical view o the innovation process,a view that links the mission to organizational structure, processes,and reward systems.

Government can and does innovate. Welare reorm and thedramatic reduction in crime in the United States since the mid-1990s are just two dramatic results o public sector innovation.The problem is that not enough public sector organizations ac-cord the innovation process the sort o thoughtul, sustained at-tention it merits. Typically, innovation in government happens inone o two ways. Either innovation intrudes itsel on a public sec-tor organization in response to a crisis, or some individual (orsmall group o individuals) champions a specic innovation. In

either instance, the benets o the innovation are limited. Oncethe crisis has passed or certain individuals responsible or the in-novation have moved on, the organization is let with no lastingcapacity or ongoing innovation.

This book describes, using real-world examples, how a publicsector organization can go rom a culture o innovation by acci-dent to one in which a sustained organizational commitment toinnovation is baked into the organizations DNA.

5


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Thisisnotaneasyjourney.Asthingsstand

today, ew public entities exhibit a widespread

organizational commitment to innovation. The

UnitedKingdomsNationalAuditOfce(NAO)has conducted one o the most comprehensive

studies on governments approach to innova-

tion. It ound that public agencies tend to

approach innovation as a one-o change,

using the big bang approach instead o

a series o new approaches that make up a

broaderprocess.TheNAOreportfoundthat

innovation is generally viewed as the respon-sibility o special innovation units, rather than

being a core value o the organization. Many

public agencies equated certain methods o

generating ideas, such as ormalized brain-

storming, as being central to innovation.

Few public agencies viewed innovation as a

systematic approach designed to take new

ideas and turn them into successul results.The dearth o government organizations

known or having a culture o innovation

stands in stark contrast to the private sector

where, as Tom Kelly writes in The Ten Faces o

Innovation, Plenty o companies in divergent

industries have distinguished themselves as

serial innovators.1 Kelly cites Google, Gil-

lette,andW.L.GoreandAssociatesasthreeexamples o such serial innovators. Government

can and does innovate, but there is indeed an

innovation gap that needs to be addressed.

In the words o Jessica McDonald, Deputy

Minister to the Premier and Cabinet Secre-

tary or British Columbia, Innovation experts

have told us that no public service has yet

succeeded in establishing a genuine culture

o innovation across the organization. That is

precisely what we are trying to achieve in the

BC Public Service. Our goal is to be an orga-

nization where being innovative is not justsomething we do but something we are.2

Innovation is a process, one that refects an

organizationsorientation.Anorganization

ocused internally will be mired in the past.

To create a culture with a sustained capac-

ity to innovate requires an external orienta-

tion, a willingness to draw on all sources

o innovative ideas employees, citizens,and other public or private organizations. It

requires an understanding o the innovation

process, and a commitment to strengthen

any weak link in the cycle o innovation,

rom idea to implementation to diusion.

In an era o rapid shits in technology,

consumer demands, and public sector chal-

lenges, a capacity or organizational innova-tion isnt a luxury it is an imperative. The

ability to innovate is the ability to adapt to

an altered environment, to learn, to evolve.

This handbook is organized around three

crucial aspects o the discipline o innovation:

TheInnovationProcess

TheFiveStrategiesofInnovation TheInnovationOrganization

The innovation process

Innovation can be thought o as having a

cycle with our phases: idea generation and

discovery, idea selection, idea implementation,

andideadiffusion(gure1).Itisinthelast


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7


Introduction

three phases that innovation oten gets derailed

in the public sector. Innovation is at times

considered synonymous with a new idea; how-

ever, until the idea delivers desirable results, itcannot be considered a successul innovation.

Chapter1describestheinnova-

tion process in detail and explores the

our stages o the innovation cycle:

Idea generation and discovery Numer-

ous organizations, policy entrepreneurs, and

opinion leaders regularly propose changes in

government based on their understanding o

the public sector environment. One result is

that governments have no dearth o ideas on

what they should or should not do. However,

idea generation has to be more systematic iit is to deliver valuable results. Many govern-

ment agencies have either ignored employ-

ees as a source o valuable ideas or have

not done a very good job bringing in ideas

and innovations rom outside. Excellence in

generating ideas requires dening shared

goals that, i met, would make a dierence

to the organization as a whole, looking at

Innovation cycle

Ideageneration

Innovation strategies

1. Cultivate

2. Replicate

3. Partner

4. Network

5. Open source

Figure 1: The innovationprocess

Organization structureSupport strategies to innovate

Ideaselection

Ideadiffusion

Ideaimplementation


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8


what other jurisdictions are doing right, and

connecting with customers to understandtheir expectations and unmet needs.

Idea selectionAfteryougenerateideas,

you need to select the best ones. How do you

decide which ideas are worth pursuing? This

question is crucial or government agencies,

which oten have a hard time deending new

ideas in the ace o multiple stakeholders

with the power to shoot them down. Open-ing up the evaluation process and using new

approaches to tap into the wisdom o the

crowds are critical to eective idea selection.

Implementation Once selected, an idea

still needs to be rened and executed. I good

ideas are not converted into new programs,

processes, or practices, people will stop

generating them. Some o the key actors tosuccessully implementing innovations include:

Givingemployeesandoutside

partners a stake in the results

Creatingcustomerfeedbackloops

Ensuringeffectivecommu-

nication between leadership

and the line organization

Incorporatingimplementationof

good ideas into strategic think-

ing at the managerial level

Clearlydeningamissionagainst

which progress can be assessed.Diusion The last stage in the

innovation cycle is to diuse the innova-

tion throughout the organization and

to aected stakeholders. The United

Kingdoms Technology Strategy Board,

which identies key technology areas

strategically important to the country,

uses several mechanisms to diuse innova-tions. For example, it has created close to two

dozen knowledge transer networks around

noteworthy innovations. These networks bring

together people rom academia, business,

nance, and technology. They work to gener-

ate innovations, acilitate knowledge exchange,

and inorm the government about issues that

advance or stall innovation, such as regulations.

The ve strategies or innovation

Serial innovation also requires strategies or

tapping into the creative wisdom o employees,

citizens, and external and internal partners

(gure2).Whileinnovationsingovernment

have come rom all these sources, most gov-ernments, and, to be air, many private sector

enterprises, do not have a consistent approach

to draw upon all o them to produce ideas

that can be executed to satisy citizen needs,

improve perormance, and reduce costs.

Weve identied ve strategies that can

encourage various sources o innovation,

and help governments maximize their abil-


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9


Introduction

ity to generate innovative approaches. These

range rom strategies ocused on generating

innovation inside the organization to externally

oriented strategies that seek out and leverage

promisingideasfromelsewhere(gure3).Here

is a brie introduction to the ve strategies:

1. Cultivate: Changing large government orga-

nizations is oten about engaging employees at

all levels with diverse sets o skills to generate

ideas and see them through to nal execution.

How can public sector agencies alter their inter-

nal environment to enhance idea generation?

What tools are available to motivate employees

to deliver their best? The U.S. Transportation

SecurityAdministrations(TSA)IdeaFac-

tory is one experiment in idea cultivation. In

April2007,theTSAlaunchedIdeaFactory,a

secure intranet site that allows employees to

submit ideas or improving agency operations

andprocesses.BytheendofJanuary2009,

employeeshadsubmitted7,837ideasand69,712comments.Ofthoseideas,about39

havebeenimplementedbytheTSA.TheTSA

Idea Factory is an example o one tool that

governments can use out o several options to

cultivateinnovationdiscussedinChapter2.

2. Replicate: Truly novel innovations are rare.

Rather than reinventing the wheel, it can oten

Governmentorganization

Externalpartners

Figure 2: Sources ofinnovation in government

Citizens

Participative andresponsive government

Collaborative,outcome-focused

government

Reinvented government

Partnered andnetworked government

Internalpartners

Employees


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10


be more eective to replicate and adapt an

existing innovation to a new context. We

borrowed and adapted several ideas rom other

states and cities during my tenure as gover-nor, explains ormer Pennsylvania Governor

Tom Ridge. It worked well because we could

see what worked elsewhere and why, and

then tailor and deploy those best practices

in a way that t our states unique needs

andcircumstances.Chapter3exploresthe

replicate strategy and suggests ways to adapt

appropriate innovations rom elsewhere.

3. Partner: In todays world, no organization

can specialize in all areas nor should they aspire

to do so. The need or both new resources

and new thinking drives growing interest in

partnering among government agencies, and

among government, private industry, universi-

ties, and nonprots. Partnerships let govern-ments test new ideas quickly. They also help

agencies overcome bureaucratic and nancial

constraints, allowing them to attack long-

standing problems with novel methods and

cutting edge technologies. When New York

City Mayor Michael Bloomberg wanted to

transorm the citys underperorming pub-

lic school system, he used partnerships tolaunch innovative pilot programs and sidestep

organizational log jams. Bloomberg used unds

rom private organizations to test ideas beore

spending public money on a citywide rollout,

a strategy that proved to be vital to its suc-

cess.Chapter4coversthepartnerstrategy.

4. Network: Asopposedtopartnerships,

which typically involve bilateral relationships,

networks typically involve myriad organizations.

The idea behind the network strategy is to

utilize the innovation assets o a diverse baseo organizations and individuals to discover,

develop, and implement ideas in and out o

organizational boundaries; better capture

customer response to services; and create

learning organizations. The Central Intelligence

Agency(CIA),forexample,fundsanonprot

organization, In-Q-Tel, to nd and deliver

technological solutions to the agency or awide variety o needs, including data mining,

strong encryption, and the ability to comb the

Web or valuable inormation. More and more

governments have been establishing inormal

global networks to tackle complex public sec-

tor challenges such as global warming.3 The

network strategy is addressed in Chapter 5.

5. Open source: In the private sector, there is

a shit away rom knowledge monopolies to

open source innovation models that encour-

age many people to collaborate voluntarily to

create solutions available or ree. Two main

actors have prompted this shit rom knowl-

edge monopolies to more inclusive models

o innovation: rapid globalization and allingtransaction costs, which make it both neces-

sary and easier to use collaborative models.

How can public sector agencies take advan-

tage o open source models to engage large

groups o people rom diverse disciplines in

buildingexible,customizedsolutions?Aspart

o an initiative to meet tough new educa-

tion attainment targets, the government o


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11


Introduction

Ontario has employed an open source strategy

with its E-Learning Ontario initiative. It builtan online repository o resources developed

by teachers that can be customized to local

needs and made this cache o inormation

available to teachers and students at no cost.

The open source strategy, still in its inancy in

thepublicsector,isdiscussedinChapter6.

Governments have long employed the

rst three o these strategies cultivationo ideas in-house, replication o successul

innovations rom elsewhere, and partner-

ships or innovation with other organiza-

tions. These strategies, however, have

oten allen short o expectations. High

ailure rates, slow diusion, and crisis-driven

change plague public sector innovation.

Asforthenetworkandopensourcestrate-gies, the public sector is just beginning to tap

these promising new approaches. The external

inuenceforinnovationssurveyedbytheNAO

report, or example, were limited to cross-agen-

cy work and contractors as a source o innova-

tions. Though there is growing adoption o

Web2.0technologyingovernmentwhich

uses interactive Web-based applications such

as blogs and wikis to co-create content with

the users many government entities are stillunaware o the power o these technologies.

Organizing or innovation

Chapter7,theconcludingchapter,looksat

how to structure an organization so as to cul-

tivate the discipline o innovation. Many public

sector organizations make sporadic eortsto encourage innovation, but ew implement

the ormal changes needed to spark transor-

mational change. Without altering traditional

roles, processes, and organizational structures,

innovation initiatives become mired in bureau-

cracy and ail to deliver undamental change.

Creating a culture o sustained innovation re-

quires creating an organizational structure con-ducive to generating innovations. Four aspects

o organizational structure are particularly rele-

vant rom an innovation perspective; leaders o

public sector agencies should ask themselves:

Whereareourorganizationalbound-

aries?Arecontractors,suppliers,and

nonprots a part o our extended

organization or considered outsiders?

Figure 3: The strategy continuum

Cultivate

Internal

orientation

External

orientation

Replicate Partner NetworkOpen

source


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Dowehavemechanismstoletideasfow in and out o the organization?

Dowehavethecapabilitiestoadopt

a particular strategy or innovation?

Istheorganizationalcultureintune

with the innovation mechanism?

Istheorganizationalstructurehi-

erarchical and opaque, or does

it oer meaning, fexibility, andnovelty to young entrants?

Some changes in organizational structures

and cultures are necessary to make opti-

mal use o innovation strategies. Emerging

organizational models, such as the networked

approach, require a bigger and more unda-

mental change. In this model, public sector

organizations may no longer own the servicesthey provide. Instead, they aggregate and

manage services provided by others, gather

ideas rom anywhere, and tap talent markets

farandwide.Agenciesthenuseinternalskills

to adapt these ideas to their specic needs.

The uture o public sector

innovation

The central idea o this book is to

show how to make innovation morethan an isolated project or special

program in the public sector. For in-

novation to take root, government

agencies will need to take an inte-

grated view o the innovation process,

rom idea generation, to selection, to

implementation and diusion. In ad-

dition, public agencies have to take anew look at strategies or ostering a culture

o innovation and building an organizational

structure that supports innovation. This entails

developing an organizational culture where

anyone can contribute ideas to help generate

breakthrough innovations. It means creating

organizational structures and systems that

are better and aster at leveraging the creativ-ity o those closest to the problem, whether

they are employees, partners, or citizens.

Governments cannot be complacent about

theirabilitytoinnovate.Astheexternal

environment changes at an increasingly rapid

pace, an organizations ability to innovate

becomesmorecrucial.Asthechallengesfacing

government become more important, clos-ing the innovation gap becomes imperative.

Using multiple innovation approaches helps

overcome weaknesses in the public sectors

innovation cycle, while the organizational

structure provides the bedrock or the innova-

tion process to work. We begin this discussion

inChapter1withtheinnovationprocess.


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13


Introduction

Innovation any new ideaby

denition will not be accepted

at rst. It takes repeated

attempts, endless demonstrations,

monotonous rehearsals beoreinnovation can be accepted and

internalized by an organization.

This requires courageous patience.Warren Bennis


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Part 1:The innovation process


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We started rom the premise that it is

possible to run an innovation programin much the same way we run a actory.

There are inputs; these go through

a series o transormative processes,

creating outputs.

Procter and Gamble CEO, A.G. Lafey


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TThe Public Innovators Playbook: Nurturing Bold Ideas in Government

The

innovationcycle

Contrary to the stereotype, many governments are adept at generatingideas. Public-private committees, citizen panels, and internal employeegroups all have been used to crank out proposals or improving public sec-

tor operations. Where governments oten founder is putting these propos-

als into practice. In recent years, several governments have launched high-

prole perormance reviews, where committees o public and private sector

executives reviewed government practices and suggested reorms. Some o

these initiatives delivered substantive benets, others aded rom view soon

ater the nal report was released. What was the dierence? Successul in-

novators had a plan or turning good proposals into concrete action.

Many governments ocus most o their time and resources on idea genera-

tion rather than implementation and diusion. It is analogous to the weekendgoler who spends hours at the driving range whacking drive ater drive. Once

out on the course, the long practice hours invariably pay o as our heros

long, straight drives impress his golng buddies. Once the scores are tallied,

however, he nds himsel dead last. Why? He lacks a short game. He orgets

that the object o the game is to get the ball in the hole and doesnt ocus

onthelittlestuff.Astheprosputit,Youdriveforshow,puttfordough.

Inshort,innovationisnotjustaboutgeneratinggoodideas.Agoodideais

only the rst step; organizations then need to implement the idea and pro-duce results. To do that, they need a clear roadmap or converting ideas into

eective solutions that earn the support o stakeholders. This process view o

innovation, the innovation cycle, typically consists o our stages: idea genera-

tion,ideaselection,ideaimplementation,andideadiffusion(gure1.1).

Successul innovators ocus on all stages o the innovation cycle. In a re-

cent Harvard Business Reviewarticle, proessors Morten T. Hansen and

Julian Birkinshaw argue, When managers target only the strongest links

in the innovation value chain heeding popular advice or bolstering acore capability in, say, idea generation or diusion they oten urther

debilitate the weakest parts o the value chain, compromising their inno-

vation capabilities urther.4 The process outlined in the rest o the chap-

ter can help build strong linkages throughout the innovation cycle.

1The innovation cycle

17


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18


Generation

There tends to be no shortage o ad-

vice in the public sector, with academics,

consultants, policy entrepreneurs, advo-cacy groups, and opinion leaders propos-

ing innumerable solutions to perceived

problems. Oten the proposed ideas con-

fict with one another based on ideologies,

vested interests, and political leanings.

Rather than letting occasional good ideas

rom the outside drive the innovation pro-

cess, governments should take control o theprocess by developing a system designed to

consistently address the unique challenges

publicagenciesface.Figure1.2refersto

ways in which the our sources o innova-

tion employees, internal partners, external

partners, and citizens can be engaged to

systematically generate and capture new ideas.

How many public sector employees get the

opportunity to walk up to their agency heads

with good ideas? Do organizations that supply

goods and services to government work as

partners to deliver integrated public services?

Is there a systematic way o in-sourcing ideasinto the public sector? Collaboration tools like

wikis and blogs make it easier to cross-pollinate

ideas among employees, partners, and citizens.

For instance, employees who were ormerly

separated by operational and organizational

silos can now exchange inormation in Web-

based open orums. Further, government

agencies can import best practices rom privatepartners to improve the eectiveness o citizen

innovation panels and discovery studios.

Systematic idea generation requires clearly

dening a problem the rst step in the in-

novation process and then seeking the best

possible solution. Gaining deep understanding

o customer needs, converting those needs

into clearly dened problems, and evaluating

Figure 1.1: The innovation process

Idea

generation Selection Conversion Diffusion

Create systemsto generate andmaintain the flowof good ideas

Filter good ideasby creating anefficient sortingprocess

Convert ideasinto products,services andpractices

Managestakeholders anddisseminate ideaswidely


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how developments in one area might aectother areas: these steps in idea generation help

ensure that the organization can lter ideas to

pursue the ones that best t customers needs.

The idea generation process should also

challenge long-held assumptions, with an eye

toward nding undamentally new ways o

doing things. Killing a ew sacred cows every

now and then is a great way to generate

someBHAGs(BigHairyAudaciousGoals).For a team or organization that seeks to

become good at idea generation, dening

a shared goal is important. It helps ocus at-

tention on what needs to be achieved. The

cultivate strategy plays a primary role here with

special ocus on engaging employees in discus-

sion orums. Technology can be an enabler o

this process through wikis and blogs. Shared

The

innovationcycle

19

Figure 1.2: Tools and techniques for generating and sourcing innovative ideas

Build proprietary networks Buy innovations from best-in-

class providers Use partners as knowledge

brokers

Source ideas from partners Employ idea scouts

Create skunk works andintrapreneurs

Use tools for collaboration(wikis, blogs)

Exchange employees Establish performance review

commissions Break down silos

Extend external networks Create discovery studios Search out innovations from

citizen-innovators

Engage citizen-customers Encourage open knowledge

sharing

Internal partners(other government

agencies)

Citizens

Employees(public employees)

External partners

(contractors,nonprofits, othergovernments)


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20


goals help ocus thinking on the kinds o ideas

that would be embraced and make a dierence

to the organization as a whole. They also create

commitment to the team eort by identiying

how individual work relates to the shared ob-

jectives. Dening these shared objectives helps

build understanding across the organization,

as does identiying customers and their needs.

There can also be an outside-in perspec-

tive on idea generation: the organization can

look at what other jurisdictions are doing

right, what their partners are telling them, and

connect with customers to understand their

expectations and unmet needs. One example

is the recent innovation exchange program

between the city o London and New York

City. London oers its expertise in dealing

with issues like congestion pricing and climate

change. New York City will share its experience

inimprovingaccesstoservicesthrough311and other technology initiatives. In the words

o New York City Mayor Michael R. Bloomberg,

New York and London have a special relation-

ship as two o the worlds greatest cities: we

not only compete with one another, we learn

rom each other. No matter where in the world

youre mayor, the goals are always the same:

clean streets; strong schools; thriving busi-nesses; and, most important, sae neighbor-

hoods.5Asapartoftheprogram,thecities

will exchange employees to spread ideas and

strategies. Exchange programs or employees

provide an excellent way o ensuring they

are not trapped in stovepipes that block the

generation o new ideas. It is also useul in

rening ideas by determining the applicability

and easibility o an idea in a new context.

Outside-industry benchmarking can urther

help to unearth business innovations that can

be applied to a public sector context. When

Vodaone launched an initiative called Project

Wow! to improve its retail stores, call centers,

and customer service in general, it looked

outside the telecommunications industry

or innovative solutions. This benchmark-

ing project helped Vodaone identiy best

practices they could adapt to better serve

theircustomers,fromDellComputersB2B

technology service site to Ritz Carltons

world-class approach to customer service. The

best practices were then mapped to Voda-

ones particular needs. The result was a set

o innovations not seen beore in the mobile

phone industry, such as a mobile squad or VIP

customers and radically redesigned stores.6

Solving some problems requires input rommultiple disciplines. Dening the problem,

then engaging citizens and businesses to sug-

gest solutions can be an eective approach.

One example is the research cluster ormed

byAustraliasCommonwealthScienticand

Industrial Research Organisation (CSIRO) to take

a multidisciplinary approach (demographic,

liestyle, and neuroscience studies) or solv-ingtheproblemofAlzheimersdisease.

One nal point: avoid rejecting ideas too

quickly. Ideas need time to develop; premature

rejection o ideas will hamper the idea genera-

tionprocess.Anideahastobenurturedto

explore its ull potential beore it is subjected

to rigorous risk assessment and other orms o

evaluation. Brainstorming sessions need to be


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acilitated so that group dynamics

aggressive individuals or a coterie shooting

down good ideas beore they have been su-

ciently explored do not come in the way

o the idea generation process. Employees

and managers should not eel pressured to

censor or water down their ideas. The rigor-

ous assessment process should be relegated

to the next stage, when ideas are selected or

urther development and implementation.

Selection

How does an organization decide which

ideas are worth pursuing? How do you select

ideas that are big, bold, and transormative,

while also being easible and workable? These

questions are particularly important to public

sector agencies, which oten have a hard

time deending new ideas against multiplestakeholders who might say no. Budget

constraints also limit the number or nature o

ideas governments can pursue. Selecting a ew

ideas out o multiple options, thereore, re-

quires an ecient, transparent, and integrated

approach where a wide range o people are

actively involved in the selection process, and

the solutions selected are aligned back to thebusiness needs o the organization. This is why

the In-House R&D Network at the Bureau o

Motor Equipment o New York City Department

o Sanitation allows worksite committees o

mechanics to adopt proposals and implement

changes within the scope o their operations.

In hierarchical systems, ideas can die ast.

When only a single person or committee at the

top o an agency decides which ideas move

orward, many ideas may never get anywhere.

To give good ideas a air chance, a more open

and less hierarchical process is needed.

The World Banks Development Market-

place is one such successul process. The idea

is simple: people with good ideas are looking

to attract unds, and people with unds are

looking or good ideas. Compared with a cen-

tralized decision-making process, this market

oers a much more ecient way to move

good ideas into the pipeline.7 To develop new

strategies to alleviate poverty, the Bank brought

together121employeeteamswithideastosell

with prospective buyers senior executives

rom the World Bank and private organiza-

tions, and respected leaders rom the non-

protsector.Inasingleday,11ideasreceived

fundingfromatotalbudgetof$3million.

One o the ideas, which received an initial$265,000grant,resultedintheGlobalAlli-

ance or Vaccines and Immunization, which

promotes vaccination or the most damag-

ing diseases in tropical countries. The task

that the alliance set itsel is to help reduce

by two-thirds the number o children in poor

countries who die beore they reach age

ve.AccordingtoWorldHealthOrganiza-tionestimates,theallianceprevented2.9

milliondeathsbetween2000and2007and

protected36.8millionchildrenwithbasicvac-

cines.8 One o the lessons rom the Develop-

ment Marketplace has been that organiza-

tions do not need to spend billions o dollars

to make worthwhile contributions; smaller

amounts may go a long way toward making

The

innovationcycle

21


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22


an impact on seemingly intractable problems.Anothernovelapproachtoselectingwhich

projects move orward was developed by

Washington DC Chie Technology Ocer (CTO)

VivekKundra.In2008helaunchedOCTO(Of-

ce o the CTO) Labs, which takes a portolio

management approach to und worthwhile

projects and kill projects unlikely to deliver. Each

o the citys IT projects is treated as a stock

that employees can buy and sell. Projects areevaluated on the basis o management team,

customer satisaction, and how likely they are

to nish on time and within budget. Similar to

well-perorming stocks in a portolio manage-

ment company, promising projects get more

investment. Projects unlikely to meet their goals

are shut down. Kundra hopes that with this

approach, the aggregated wisdom o employ-

Figure 1.3: Tools and techniques for idea selection

Define mutual benefits and goals Gain funds and mitigate risks Create metrics Use the tacit knowledge of

partners

Employ skunk works Create employee prediction

markets Use tacit knowledge of

employees Create selection criteria and

metrics

Engage users Predict ideas worth pursuing Create discovery studios to focus

on key customer needs Use democratic processes such as

online opinion rating tools

Create dispute settlementmechanisms

Create feedback mechanisms


agencies)

Citizens


External partners(contractors,

nonprofits, othergovernments)


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ees working in the trenches will increase the

likelihood o unding ideas that actually work.

With OCTO, Kundra also aims to change

the risk-averse culture in government. I

think controlled risk is very healthy, says

Kundra. Thats why I created OCTO Labs.

The idea was that we would throw hun-

dreds o ideas on the wall and even i ve o

them survive, they will be transormative.9

Anotherseriousconcerninselectingideasis

that public agencies oten have to compromise

among multiple objectives in deciding what

solutions to pursue. Several questions need to

be answered in this regard: Given risks, how do

we ensure sucient payo on our investment?

How do we capture the impact o every dollar

spent? How do we know which alternative to

select? Too oten these questions are consid-

ered too dicult to answer in the public sector

context. One way to address this issue is tocreate metrics to help select the best pros-

pects rom a portolio o ideas. The Ministry

o Health and Long-Term Care in the province

o Ontario, Canada, has done this to assess

trade-os between competing investments.

The ministry has used the experience o private

rms to develop a portolio management ap-

proach designed to link innovative investmentproposals to public health priorities, peror-

mance measures, and risk actors. The tools

the province is developing will help it decide,

or example, Is investing in prevention better

than investing in productivity improvement

initiatives, such as electronic patient records?

Other strategies or improving the idea

selectionprocessareshowningure1.3.

Implementation

Once selected, an idea still needs to be

unded, developed, and executed. I ideas

are not converted into services, practices,

and programs, they may stop fowing in.

I they are not properly executed, they can

attract widespread criticism and perhaps

even lead to public embarrassment. Strate-

gies or making sure innovations are well

executedareoutlinedingure1.4.

One issue governments oten ace in imple-

mentation is to incentivize a change in the be-

havior o their employees and partners toward

an outcome-ocused approach to implementa-

tion rather than mere compliance with statutes.

Gainsharing (rewarding employees or improv-

ing perormance and reducing costs) and share-

in-savings (having partners share project costs,

risks, and rewards) are two innovative mecha-nisms that have worked well previously to

incentivize the proper execution o ideas. The

share-in-savings model is typically used when

the end results can be easily measured, with

the benet o lowered upront spending by

the public agency. It provides incentives to the

partners to ensure that the promised benets

materialize at a cost less than the quoted price.Governments oten perorm services where

outcomes are dicult to measure and clear

results are hard to dene. Further, unex-

pected changes and developments can impact

projects in any number o ways. Dynamic

organizations remain fexible in the ace o

uncertainty, making course corrections in

implementing innovations when needed.

The

innovationcycle

23


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24


Agoodexampleoftheimportanceofafexible approach is the Florida School Year

2000Initiative,aschool-reformprogramthat

provided teachers a handheld device to record

inormation on students that could be retrieved

later or assessment and reporting. The pro-

gram design oered fexibility and eciency.

For example, teachers can spend up to a week

getting the records together to prepare student

progress reports. The new technology reducedthis time substantially.10 However, the initia-

tive ran into problems early on: the idea was

dependent on emerging Wi-Fi technology that

had just become aordable but had unique

limitations in the context o Florida schools.

Because Florida schools oten double up as

hurricane shelters, their walls are made o high-

strength concrete, which were impenetrable by

Figure 1.4: Tools and techniques for idea implementation

Create a learning organization Utilize full range of public-

private partnership models Partner with best-in-class

providers

Form channel partnerships Acquire culture

Align incentives Accept failures Train employees to create

competencies Adapt innovations to local

context

Pool resources acrossorganizations

Create new delivery mechanisms Create one-stop portals to a

myriad of services Build open database Create flexibility in use

Create feedback loops Build on past success


agencies)

Citizens





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the wireless technology. Instead o locking the

contractors and the technology company into

a dispute, the project team decided to move

to a wired network. They shited to handheld

devices that had high inormation storage

capacity and could dock with the network at

the end o the day to transer inormation. By

making this mid-course correction to overcome

technological limitations, the project remained

on budget and was considered successul.

Failure to take into account new inorma-

tion is not the only problem governments acein implementing innovative ideas. Multiple

sign-os and complex administrative struc-

tures obscure accountability, create delays,

and make it dicult to recognize and reward

those leading the innovation eort. This

may, in turn, result in the loss o experienced

employees to other organizations where they

may eel better appreciated or their eorts.

Getting better at implementing innova-

tive ideas means understanding better how

thechangeeffortworks(seeTable1.1).11

Eorts to measure progress need to

take into account the completely dierent

way a change program works rom every-

day operations. Some suggested measures

o innovation perormance include:

Listeningtothecommunitytoget

their eedback on new ideas

Analyzingthenumberanddepth

o pilot projects or new ser-vice or process development

Monitoringandreportingthenum-

ber o projects meeting objectives.

These measures o perormance ultimately

have to fow rom the mission o the organiza-

tion, and unless the mission changes to ac-

commodate these measures, innovations in the

public sector environment will founder. I the

The

innovationcycle

25

How the public sector oten thinks

and acts

How change actually works

Detail-oriented planning with locked-in execution Focus on outcomes what is the real objective?

Requirements gathering ocused on what existsDene and commit to the principles o the newdesign

Strict adherence to dened requirements Flexibility to adapt to changed circumstances

Inability to change course Incentives or leading and supporting change

Postmortems o project ailures Detect and correct errors as they occur

Diusion o accountability and responsibility Clear accountability and responsibility supported withcommensurate resources and decision making powers

Table 1.1: The public sector change paradox


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26


mission is complicated, riddled with confict-

ing goals, and dicult to make operational,

innovative perormance will be compromised.

Dening the organizational mission is oten

a leadership issue; it requires a resh look

at the role o the public sector agency and

strong political will to change it. For instance,

dissolution o a public service or institution o

ull-scale privatization is not a simple manage-

ment issue that can be dealt with by middle

managers.AstheThatchergovernmentinthe

UnitedKingdomdemonstratedinthe1980s,it

generally takes a very clear mandate rom the

public and a strong leader to overcome vested

interests. The Thatcher government was able

to overcome stakeholder interests to privatize

many state-owned enterprises and unctions

such as steel, telecommunications, gas, electric-

ity, and even water. But eective leadership

is also likely to be needed or less sweeping

ideas, including those generated at rontline

sta or middle-manager level. This means

that the role o leadership is not merely to

think or strategize but also to implement.

Leaders help transmit an idea generated by

an individual or a small group to the entire

organization. They also build a coalition or

change. Many rontline employees alreadyknow what needs to change, even i they are

not sure o the steps in the process o change.

For example, Steve Kelman, who led the

initiative to reorm the U.S. ederal govern-

ments procurement system, estimates that

around18percentoftheemployeeswere

active advocates o the reorm even beore its

launch. Pressure rom the top did not create

these change advocates; it merely helped them

to come out into the open. These employees

in turn infuenced a second group to sup-

port the initiative and their ranks swelled to

around40percentsoonaftertheinitiative

was launched.12 This brings us to the last

stage in the innovation liecycle: diusion.

Diusion

Diusion is oten considered the same as

replication. There are, however, important

dierences between the two. Replication, the

topicofchapter3,isastrategyusedbypublic

agencies to identiy and adopt innovations

spawned elsewhere. Diusion reers to spread-

ing an innovation throughout an organization

or organizations, oten with a push rom above

or with the help o external agents. Successul

diusion requires solving at least three chal-

lenges: gaining support rom all stakeholders

(especially top leadership and citizens); breaking

down organizational silos; and overcom-

ing organizational reluctance to change.

Gaining buy-in or an innovation in the

public sector is much harder than it is in

the private sector because governments are

responsible to multiple stakeholders. Its notjust a matter o getting citizens to accept an

innovation.Agovernmentagencyalsoneeds

to win over employees, unions, and political

parties.Figure1.5providesseveralapproaches

governments can use to diuse innovation.

Gaining support rom the political leadership

and other employees can be a critical actor in

diusing the idea through the organization.


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One way to encourage diusion is to create abuzz around successul innovations. The Flori-

da Department o Children and Families, which

provides various child and community care

services, including licensing acilities, slashed

customerwaittimesby45minutes,shrunk

turnover,andsaved$11millionannually.After

their eorts earned them several awards, word

spread ast, and soon other state and ederal

agencies were copying their eorts. This iswhat Ken Miller, the ounder o the Change

andInnovationAgency,armthathelps

organizations radically improve perormance,

has termed guerilla warare or innovation.13

Programs with proven track records tend

to meet less resistance than untried ideas.

Thereore, publicizing a programs success in

one unit can help to diuse it to other parts

The

innovationcycle

27

Figure 1.5: Tools and techniques for diffusing innovation

Create a learning organization Benefit from transborder

networks established by privatesector companies

Manage risks Offer awards and recognition Exchange employees Create communities of practice Collaborate to spread innovations

Provide financial sustainability toefforts that benefit citizens

Generate interest in users andparticipants

Harness social networks

Manage stakeholders Create network of public

agencies


agencies)

Citizens





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28


o the organization. Once the word is out,

the innovation will be adopted more easily by

the entire organization and possibly by other

organizations. You can position programs as

successul by sharing the news o employee

appreciation or by highlighting outside awards.

Third-party validation can have a power-

ul impact on the acceptance o new ideas.

For example, many programs that win the

KennedySchoolsInnovationinAmerican

Governmentaward,awardedannuallyto10

projects that set a standard or excellence,

are replicated nationally and internationally.

Organizational silos can be another barrier to

diusing innovation in public agencies. Govern-

ment employees tend to work within strict

organizational boundaries and make indepen-

dent decisions about which ideas get adopted.

Encouraging employees to work in other or-

ganizations that have implemented innovative

ideas can help them learn how to deploy those

ideas in their own organization. Private sector

organizations that deliver solutions in a variety

o contexts also can serve as agents to diuse

innovations. They can help ideas traverse

organizational hurdles, and even transer in-

novative practices rom one country to another.

Finally, diusion o innovation oten must

overcome apathy among citizens and political

leaders. Publicizing evidence o success is criti-

cal to building aith among citizens and political

leaders that public money is not being wasted.

The emergence o Web-based social networks

also may help agencies ease the introduction

o innovative processes, particularly when they

require changes in customer behavior. Public

agencies have struggled with marketing these

changes in the past. Many e-governance initia-

tives lacked uptake as citizens continued to

conduct government transactions in person or

via telephone. This meant that some o the sav-

ings expected rom online service delivery did

not materialize. In the uture, using social net-

works to build support and understanding o

new initiatives may lead to aster acceptance.

What is now proved,was once only imagined.

William Blake


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Chapter in a box

Innovation is not just about generating good ideas thats only the rst step. Organizations also

must select the best ideas, implement them, produce results, and then diuse them.

Idea generation: Clearly dening the problem and seeking the best possible solution is the rst

step in the innovation process. Ideas may be generated internally; agencies also should examine

and perhaps adopt innovations developed in other organizations. One example is the recent in-

novation exchange program between the city o London and New York City. London oers its

expertise in dealing with issues like congestion pricing and climate change while New York City

sharesitsexperienceinimprovingaccesstoservicesthrough311andothertechnologyinitiatives.

Selection: Whichinnovations are worth pursuing? This question is particularly important to public

sector organizations, which have a hard time deending new ideas and ace multiple stakehold-

ers who might say no. The World Bank created an innovative process to give good ideas a air

chance: the Development Marketplace. The Bank set up a bazaar in its atrium, with booths

allottedto121teams,eachwithanideatopropose.ApanelofseniorexecutivesfromtheWorld

Bank,privateorganizations,andthenonprotsectorevaluatedtheproposals.Inasingleday,11

ideasreceivedfundingfromatotalbudgetof$3million.

Implementation: Onceselected, an idea must be unded, developed, and executed. Incentive

mechanisms such as gainsharing and share-in-savings contracts can help; however, many govern-

ment programs lack predictable end results. Dealing with uncertainties and unexpected events

requiresexibilityandwillingnesstomakemid-coursecorrections.TheFloridaSchoolYear2000

Initiative, a school-reorm program that provided teachers handheld devices to record student

inormation, worked because ocials modied the technology used by the program ater they

encountered unexpected problems. Successul implementation also requires eective leadership

that denes the mission o the organization and builds a coalition or change.

Diusion:Thelast stage in the innovation cycle reers to the spread o an innovation through-

out an organization or rom one organization to another. This requires gaining support rom all

stakeholders, breaking down organizational silos, and overcoming apathy toward innovations.

One way to encourage diusion is to create a buzz around successul innovations. The Florida

Department o Children and Families, which provides various child and community care services,

slashedcustomerwaittimesby45minutes,reducedturnover,andsaved$11millionannually.

Afterthedepartmentseffortsearnedseveralawards,wordspreadfast,andsoonotherstateand

ederal agencies copied its eorts.

The

innovationcycle

29


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Part 2:The ve innovation

strategies


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TThe Public Innovators Playbook: Nurturing Bold Ideas in Government

There is no established theoretical ramework or cultivating innova-

tion no immutable laws that, when applied, will start good ideas roll-

ing o an assembly line. But successul organizations create an atmosphere

that welcomes suggestions and adopts them when appropriate.

Forinstance,SouthwestAirlinesemployeesspent10hoursaweekforsix

months brainstorming changes in the companys aircrat operations. Those

meetings, which included members o the airlines in-fight, ground, main-

tenance,anddispatchoperations,generated109ideasforhigh-impact

changes.Acriticalpartofthisprocesswastappingintothediverse,even

i imperect, knowledge base o each employee. One director rom the

schedule-planning division successully challenged assumptions held by the

maintenanceanddispatchpersonnelfor30years.14 Three ideas developed

through these meetings triggered extensive operational adjustments, one o

which allowed Southwest to reduce the number o aircrat swaps when

mechanical ailures require one aircrat to be substituted or another.

In the public sector, relatively ew organizations encourage change. Instead,

stories o successul government innovations oten prole determined individu-

als overcoming ormidable odds. Rigid rules and processes, oten developed to

control corruption and nepotism, constrain innovation. Evidence collected by the

NAOreportcitedearlieristelling:governmentorganizationstendtoaccumu-

late innovations. They generally know what needs to change, but they wait

or alterations in ministerial or policy priorities or eciency drives beore they

implementthosechanges.Mostinnovations(around50percent)aretriggered

byseniorandmiddlemanagers,followedbyministers(around20percent).

33

Cultivate

Cultivate2Cultivate

Internal

orientation

External

orientation

Replicate Partner NetworkOpensource

Primary sourceof innovation:employees


40/164

34


Frontline employees tend to play a very small

partininnovations(around8percent),ac-

cording to the report.15 They oten do not

know what constitutes a good suggestion,

let alone how to lead an initiative to improveperormance. This picture is in sharp contrast

to most innovative private sector organiza-

tions, which have eschewed hierarchy and

created ormal structures designed to capture

inormation and eedback rom employees.

But it is possible to cultivate an environ-

ment in public agencies that more consis-

tently sparks moments o creativity the

brilliant idea, the novel principle, the solu-

tion to a long-standing problem, or the

argument that nally debunks old prejudices

anddogmas.Hereshow(gure2.1):

Tap into the diverse tacit knowledge

in the eld

Tacit knowledge which exists within the

minds o employees, is born o sheer experi-ence. It is the know-how gained by prac-

tice and deliberate study, the wisdom and

judgment derived rom daily exposure to

an environment over time. It is the kind o

knowledgethatmakesa30-yeargovern-

ment employee an expert at navigating

Byzantine public sector personnel rules.

Tacit knowledge can generate innova-

tion. But how do you capture that knowl-

edge and convert it into practices that

not only help organizations perorm bet-

ter but also deliver more valuable service?

Developemerging ideasthrough safe

havens

Tap into tacitknowledge

Driveorganizational

change

Enablers

Create safe havens

Employ prediction

markets

Use tools forcollaboration

Motivators

Establish two-waycommunication

Give ownership of ideas

Align incentives

Accept failures

Figure 2.1: Cultivate strategy: benefits and approaches

Engage

d

employees

Engaged

em

ployees

Engaged

employees


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This question has attracted the attention

o the best minds in the business world.

Companies now promote cross-unctional

excellence, an approach that requires tap-

ping into the divergent perspectives oemployees rom dierent unctions and

disciplines to challenge established mind-sets,

open up the organization to new think-

ing, and generate high-impact solutions.

Frontline employees oten know more about

customer needs and have better ideas about

how to improve perormance than their bosses.

However, they oten need help understanding

the needs o the entire organization, explain-

ing how their ideas address those needs, and

determining how to implement change.

Engage employees at all levels

Three questions need to be an-

swered when considering how to en-

gage employees to innovate.

How do employees know what a good

suggestion is? Tesco, the largest supermarket

chain in the United Kingdom, has dened the

criteria in simple terms: better or customers,

simpler or sta, and cheaper or Tesco. Man-

agement communicates these principles to all

employees.Eachyear,thetop2,000executives

spend a week on the shop foor at the check-

out counter or in a warehouse stacking shelves.

They get eedback rom colleagues and cus-

tomers, collate all the inormation, and send it

to the relevant division heads.16 The program,

called Tesco Week in Store Together (TWIST), is

making a real dierence in serving customers

better by bringing the senior management and

store-levelemployeestogether.AccordingtoSir

Terry Leahy, Tescos chie executive, TWIST will

mean that every senior manager has worked

or a week in store, served our customers,

and listened to what they and their colleagueshave to say. That is experience you cant get

in a training room or on a quick store visit.17

Who decides which ideas are worth

ollowing up, and who takes charge o

implementing changes? The In-House R&D

Network at the Bureau o Motor Equipment

o the New York City Department o Sanita-

tion allows worksite committees o mechanics

to adopt proposals and implement changes

within the scope o their operations, with the

agreement o the acility manager. Bureau

analysts help work out the business case or

each project. I the proposal demands greater

resources than the operation can provide, or i

it requires coordination with other government

agencies, the bureaus leaders are enlisted.

For even bigger projects, the bureau seeks

approval through the citys budget process.18

Anumberofinnovationsbytheworkershave

been patented, such as a device that shuts

down the engine to protect it rom burnout

when the oil in a truck drops too low.19

Are rontline employees ready to create

the required change? When the U.S. Depart-

ment o the Interior began a new approach to

land management known as cooperative con-

servation, it engaged its rontline employees

in establishing partnerships to create holistic

solutions by combining local understanding

with scientic knowledge. For example, to

prevent the endangered short-tailed alba-

35

Cultivate


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36


trosses rom getting caught on the shermens

hooksinthewatersoffAlaska,localgroups

in partnership with scientists came up with

several solutions: one o them was to weight

the shing lines to sink the hooks below thesurace, where they wouldnt snag the birds.

Thedepartments4CsTeam,whichwas

ormed to identiy barriers to and best practices

or the new initiative, realized that implement-

ing cooperative conservation required not only

technical skills but also managerial capabilities.

It urther concluded that teams composed o

people rom diverse proessional backgrounds

and with varied competencies tend to out-

perorm teams o experts who all have the

same knowledge and skill sets. For example,

the program needed people who could create

a work environment that encourages creative

thinking, who could persuade others and build

consensus, and who would keep up-to-date

on key national and international trends. To

nd such people, the department changed

its hiring criteria. It also redesigned its train-

ing programs to create the new competen-

cies. To strike a balance between fexibility

and accountability, it is currently analyzing

exactly how employees can be creative and

still meet certain basic policy objectives.

Employ prediction markets

Prediction markets work like stock markets:

people make bets on the likely outcome. For ex-

ample, in the Hollywood Stock Exchange, people

use play money to bet on which lms will win

Oscars in the top eight categories, or how much

a lm will make in sales.20

Research shows that prediction market ore-

casts routinely outperorm opinion polls or

expert opinions. That has been the case, or

example, with Iowa Electronic Market, which

uses real money to predict election results inthe United States and elsewhere.21 Private

rms are developing innovative ways to use

this principle, creating prediction markets

where employees can bet on uture events,

such as sales orecasts and project end date.

Organizations use this kind o independent

mechanism to aggregate diverse insights rom

their employees. They can then construct a real-

istic picture o their own operation. For example,

Eli Lilly has created an internal market that allows

employees to predict which drugs will make it

through to the next phase o clinical trials. This

gives the company leadership a good sense o

which products to put its resources behind.22

Siemens allows employees to bet on projects

they think will nish on time, which helps direct

managerial attention to critical projects. Hewlett

Packard employs the same mechanism to predict

monthly sales o printers more accurately than

the marketing team does with its own processes.

Prediction markets could be employed in the

public sector to track a number o variables,

such as infation, unemployment, and the likely

impact o changes in interest rates on economic

activity. Or they could be used internally to

identiy projects likely to overshoot time and

cost estimates. However, to do so, govern-

ments will have to liberalize gambling laws that

currently restrict the use o prediction markets.

Governments are not likely to nd the predic-

tion market tool useul or internal projects.


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Use tools or collaboration

Web2.0ischangingthewaygovernments

do their business. It makes collaboration

possible in innovative ways through blogs,

wikis, tags, and peer-to-peer networking.Blogs or web logs let people share inorma-

tion and knowledge and allow inormal net-

works to operate within an organization. These

are online diaries o posts and comments

that establish a channel o communication

and promote ree discussion o issues within

the organization. Blogs can be updated easily

at virtually no cost. They also give manage-

ment an eective way to convey inormation

to employees, answer questions, build logs

o projects, and provide other updates.

Wikis are used to organize and update blogs,

buttheirusesextendbeyondthat.Awikiisan

online tool that allows users to create and edit

pages o inormation, with the changes appear-

ing on the site almost as soon as contributors

make them. To control abuse, some systems

require users to authenticate their identities

beforemakingchanges.Anexampleofthe

use o a wiki in government is Intellipedia,

developedbytheCIA,whichletsemployees

across a number o security agencies engage in

open discussions on topics o concern to them.

Typically, a wiki has no structured hierarchy,

whether in regard to the names on an organi-

zational chart or the way inormation might be

structured within the site, and no ormal con-

trol systems or organizing or editing content.

These are considered to be the main advan-

tages o a wiki: they give it speed and fexibility.

In addition to wikis, organizations may

also use peer-to-peer networking sites (which

allow users to share les and data through

high-speed connections) or real time col-

laboration. One o the best-known examples

o this technology is the music-sharing serviceNapster, which music publishers sued suc-

cessully or copyright inringement.

The U.S. military is experimenting with

peer-to-peer networking to allow troops

on the ground to interact and collaborate

instantaneously, without being bogged down

by organizational and technical protocols and

hierarchies.23 During operations in both Kosovo

andAfghanistan,disparatecomputersystems

blocked eective communication between the

Army,Navy,andAirForce.Peer-to-peersystems

can ease communication among soldiers on

the ground and between U.S. troops and al-

lied troops, bypassing the obstacles raised by

incompatible systems or security protocols.

The most important contribution these col-

laboration tools make is that they separate

the idea o chain o command rom chain o

inormation, according to James Cartwright,

vice chairman o the Joint Chies o Sta.24

Tap inormal networks

Recent research shows that inormal chan-

nels are more ecient conduits or inormation

and ideas than ormal channels dened by the

organizational structure. The methodology and

process o social network analysis is a good ex-

ample o a new means o igniting organization-

allearning.AsnotedbyexpertsDr.RobCross

o the University o Virginia and Valdis Krebs,

management consultant, social network analy-

37

Cultivate


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38


sis o an organization or communitys inormal

networks can provide new insights or leaders

trying to understand how organizations work.

Dr. Cross has argued that social net-

work analysis can be a valuable analyticaltool or exposing and analyzing networks

that exist within an agency or community.

Social network analysis can help to an-

swer important questions, including:

Howdoesinformationow

across networks?

Arecertainpeopleoverlycentralto

managing work and inormation fows? Aresomepeoplelooselycon-

nected and underused?

Aretheredivisivesubgroups?

Isthenetworkslevelofcon-

nection sucient?

Consider the need or interagency coopera-

tion or national security. The ability to create

and maintain a personal network is crucial

to enhancing collaboration and transcend-

ing the bureaucracy that has historically

blockedinterorganizationalcooperation.As

such, security agencies could greatly enhance

their sel-awareness, and ll an important

inormation gap, by using social network

analysis to increase their understanding

o actual processes and workfows.

Dr. Crosss social network analysis tool also

reveals the most important players in an agency

or communities inormal networks, including

those who acilitate and impede collabora-

tion. This kind o analysis has the potential

to be a baseline study rom which to assess

progress on collaboration. It also could ll a key

knowledge gap by giving an accurate portrayal

o the agencys current level o connectivity and

integration. Finally, the analysis can identiy key

niche experts who have abilities that may be

very specic to certain areas o the network.Productive peripheral positions can be created

or these individuals, along with individualized

career paths that t their specialized skill set.

Tapping into the wisdom o employees

requires new mechanisms that separate

responsibility and perormance rom job

title and position in the hierarchy. However,

organizations need to supplement these e-orts with incentive mechanisms that nurture

change by breaking the perception that

innovations are high-risk, low-gain aairs.

Drive organizational change

Creating an innovative organization does

not always require large-scale changes that

turn the organization upside down. Some-

times it merely requires guring out the levers

or change. Like the trim tab that turns the

rudder, changing the direction o a huge

ship, these levers o an organization acili-

tate change without a major upheaval.

Small changes can sometimes create big

results. Using blogs and wikis, creating predic-

tion markets, and allowing employees to

implement their own ideas: these are small

changes to create big results. It does not

stop there, however. Creating an innovative

organization requires addressing issues that

infuence behavior. For instance, when em-

ployees are asked to share their views openly,


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are managers ready to get honest eedback

that shows what is wrong? Or will they get

embroiled in a blame game, trying to corner

the employee into thinking that she is wrong?

Take a systems view

For a ship to turn let, its rudder has to turn

right. For the rudder to turn right, the trim tab

(like a tiny rudder, which helps turn the rudder

around.)25hastogoleft.Acaptainknowing

the way the whole system works together

preventstheshipfromgoingoff-course.A

systemic view allows an understanding othe interrelationship between key variables

and how changing a variable aects the

entire system. Human systems are, o course,

innitely more complex than rudders.26

Systems infuence behavior. I you create

a system where employees generate a lot o

good ideas but ail to put in place measures

to acknowledge and implement these ideas,

it will ultimately create a negative response

that brings the entire system back into bal-

ance. In this case, the idea generation process

will slow to a crawl. The harder you push

the system to generate ideas, the greater the

resistance because more good ideas accumu-

late and employees get the signal that their

ideasarenotbeingheard.Addressingthis

systemic problem requires building credibility

by tracking the conversion rate o good ideas

into meaningul innovations and converting

more and more good ideas into practice.

Align incentives

Governments need to provide incentives or

risk taking and create mechanisms or calculat-

ing risk, so that the ear o ailure does not

trumpthedesiretocreatenewinitiatives.Any

innovation carries risks; in general, the bigger

the change, the higher the risk (see inset onTypes o Risk). Public scrutiny and media cyni-

cism make it dangerous or public employees to

launch any sort o new initiative except the kind

thatisvirtuallyguaranteedtosucceed.Afterall,

no public manager wants to drink her morn-

ing glass o orange juice reading a headline in

12-pointtypedescribingherlatestscrew-up.27

Many governments provide nancialrewards (bonuses and perormance pay) and

oer awards and recognition to innovators.28

Gainsharing, or sharing the nancial benets o

perormance improvement and cost reduc-

tion with employees, is one example o this.

The U.S. ederal government has developed

rules and programs meant to recognize the

value o contributions that employees make

to the government. However, those o us

with government experience, notes Patrick J.

Keogh, know that award programs tend to

be reactive rather than proactive.29 Keogh,

aonetimeemployeeatVicePresidentAl

Gores National Perormance Review, cites an

interesting personal example to show that

these programs are not as well publicized or

utilized as they should be. While working at the

GeneralServicesAdministration(GSA),Keogh

was approached by an investment banker with

a proposal that would save the government

$25million.Keoghrealizedthathewouldneed

the support o six or seven key people within

the government or the initiative to succeed.

39

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dtt ps innovatorsplaybook 100409

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