How INNOVATION Can Help You
Do MORE with FEWER RESOURCES
BY WILLIAM D. EGGERS AND SHALABH KUMAR SINGH
he current budget crises faced by all levels of government today are as urgent and provocative a call
as any for government innovation. Governments
have had to quickly develop immediate fixes, but over the
medium and long term, innovation will be required for
more sustainable solutions.
T
ing innovation — and often not the most important component. It is necessary to develop strategies for each phase
of the innovation lifecyle: idea generation, idea selection,
idea conversion, and idea diffusion. It is in the last three
stages that innovation often goes off the rail in the public
sector.
Innovation will be the key to doing more with fewer
The U.S. Transportation Security Administration’s Idea
resources. With most states and local governments expectFactory demonstrates the importance of a systemic
ing large budget shortfalls in 2010, they will need to find
approach to innovation. The Idea Factory is a secure
new and more efficient ways to deliver better value for taxintranet site that allows employees to submit ideas for
payers’ money.Government regulators will need to be much
improving agency operations and processes. By the end of
more cognizant of what is going on in the marketplace so
January 2009, employees had submitted 7,837 ideas and
they can react to trends that imperil taxpayers, and find
69,712 comments, of which 39 had been implemented.The
ways to share information to minimize
program was successful because
reaction times. Government leaders
Government can and does employees’ ideas were acknowledged
will need to look at mission redunand implemented, creating a positive
dancies across all agencies.
innovate. But attention to inno- environment for submitting more
Governments will need to find ways
to cut costs by doing things in different ways — using technologies to
rethink how governments are organized and deliver services. Today, however, few public-sector organizations
display a systemic commitment to
innovation. When change happens, it
tends to be either in response to a crisis or because an individual champions a specific cause.
vation tends to be piecemeal,
short-term, and narrow —
focused almost exclusively on
trying to figure out a way to
generate more good ideas,
address a crisis, or leave a
legacy around a specific policy
position.
Government can and does innovate.
But attention to innovation tends to be
piecemeal, short-term, and narrow — focused almost exclusively on trying to figure out a way to generate more good
ideas, address a crisis, or leave a legacy around a specific
policy position. Public-sector organizations will need to
move from a culture of “innovation by accident” to one in
which innovation is part of the organization’s DNA. To do
that, they need to take a methodical view of the innovation
process and create a roadmap for converting ideas into
effective solutions that earn the support of stakeholders.
ideas.
Response to the Idea Factory has
sparked widespread interest in the idea
as a method for breaking through organizational barriers to innovation. The
site is an excellent example of how to
create a positive environment for innovative ideas.
The guiding principle for any initiative to generate innovations is to understand that ultimately, you will get only
as many useful ideas as you have the
ability to implement. A purely linear view of the Idea
Factory process would suggest that because employees submitted so many good ideas, all those ideas would therefore
translate into multiple initiatives. However, a systems view
would suggest that so many good ideas were submitted
because these ideas were acknowledged, implemented,
and diffused,creating a positive environment for submitting
more ideas.
INNOVATION IS A PROCESS
STEP 1: CREATE A PROACTIVE
IDEATION PROCESS
Approach innovation as a process, not a one-time event.
Developing good ideas is only one component of generat-
Rather than letting occasional good ideas drive the innovation process, governments should take control of the
December 2009 | Government Finance Review
15
Exhibit 1:The Innovation Process
Idea Generation
Selection
Implementation
Diffusion
Create systems
Filter good ideas
Convert ideas
Manage
to generate and
by creating an
into products,
stakeholders
maintain the flow
efficient sorting
services, and
and disseminate
of good ideas
process
practices
ideas widely
process by developing a system designed to consistently
address the unique challenges public agencies face.
Creating a consistent system for generating and discovering
good ideas is a critical step in the innovation process.There
are several ways organizations can accomplish this.
Uncover and Apply What Works. The best way to avoid
reinventing the wheel is to make sure that when someone
else invents something,you get the news and,ideally,a copy
of the plans. Governments need some kind of structured
way of discovering and tracking innovations and best practices. The oldest program of this kind is the Texas
Keep it Simple. Complexity adds little in the way of
Performance Review, created in 1992.
value and creates confusion. Tesco, the
It has saved the state billions of dollargest supermarket chain in the United
The best way to avoid reinvent- lars over the years by searching far
Kingdom, has defined the criteria for
ing the wheel is to make sure and wide for innovations that can be
innovative ideas in simple terms: better
that when someone else applied to Texas government.
for customers, simpler for staff, and
cheaper for Tesco. Management comSource Ideas from Far and
invents something, you get the
municates these principles to all
Wide. Many companies are creating
news and, ideally, a copy of the
employees. Frontline employees often
sophisticated networks to collect
plans.
know more about customer needs and
ideas from outside the organization
have better ideas about how to improve
and to share skills, knowledge, and
performance than their bosses.
physical assets to shape these ideas.
However, they need help understanding
In the public sector, the Department
the needs of the entire organization and explaining how
of Homeland Security (DHS) uses a similar model to solictheir ideas address those needs.
it ideas from private and public agencies. Using grant
money, the DHS Science and Technology Directorate develSimplicity also aids implementation. Complicated guideops formal relationships with academia, think tanks, state
lines are subject to interpretation by people in the field or
and local governments, other public agencies, and private
to circumvention altogether. Err on the side of simplicity
organizations to test emerging technologies and create prowhen defining expectations and developing processes to
totypes.This new strategy explicitly recognizes that it’s a big
monitor and deliver on those expectations.
16 Government Finance Review | December 2009
world out there. Most solutions already exist — somewhere
— and most problems are eminently solvable if you ask the
right person.
STEP 2: SELECT PROMISING IDEAS
After you generate ideas,you need to select the best ones.
How do you decide which ideas are worth pursuing? This
question is crucial for public-sector agencies, which often
have a hard time defending new ideas against multiple
stakeholders with the power to shoot them down.
Run the Numbers. Thanks to advances in data analytics, organizations can transform the terabytes of raw data
they collect into useful information for fact-based decision
making.This can be a powerful tool for accepting (or rejecting) ideas and defending new approaches. The Ministry of
Health and Long-Term Care in the province of Ontario,
Canada, has done this to assess trade-offs between competing investments. The ministry has used the experience of
private firms to develop a portfolio management approach
designed to link innovative investment proposals to public
health priorities, performance measures, and risk factors.
The tools the province is developing will help it decide, for
example, if investing in prevention in health care is better
than investing in productivity improvement initiatives such
as electronic patient records.
Adopt a Portfolio Management Approach. A novel
approach to selecting which projects should be moved forward and which shouldn’t — before too much money is
sunk into them — was developed by Vivek Kundra, now the
chief information officer of the U.S. federal government,
when he was the District of Columbia’s chief technology
officer. In 2008, Kundra launched the Office of the Chief
Technology Officer Labs, which takes a portfolio management approach to funding worthwhile projects and eliminating projects that are unlikely to deliver. All employees,
including those not on the project, are invited to evaluate a
list of projects,indicating how likely each one is to finish on
time and within budget. Promising projects receive additional investment,while those that are unlikely to meet their
goals are targeted for fixing or eventually shut down if not
salvageable. This approach uses the aggregated wisdom of
employees working in the trenches to increase the likeli-
hood that the organization funds the projects that are most
likely to work.
Create Partnerships to Mitigate Risks. Even the best
ideas need to be tested for viability. Partnerships can provide the funds needed to create test projects that prove the
value of innovative ideas. Just as important, they can help
agencies work around bureaucracy that can snuff out new
approaches. For instance, when New York City wanted to
transform the city’s underperforming public school system,
it used partnerships to launch innovative pilot programs
and sidestep organizational logjams. One example is the
Empowerment Schools program, in which schools sign performance agreements committing them to high levels of
student achievement.
STEP 3: IMPLEMENT THE INNOVATION
Once selected, an idea still needs to be funded, developed, and executed. One issue governments often face in
implementation is creating incentives that will lead employees and partners to change their behaviors, guiding them
toward an outcome-focused approach to implementation
December 2009 | Government Finance Review
17
rather than mere compliance with statutes. Getting better at
implementing innovative ideas means better understanding
how the change effort works.
Define Requirements Clearly. Project requirements
need to be clearly defined,more so if the implementation is
to be carried out by an external agency. Innovative programs are likely to be more complicated than regular projects and, therefore, more susceptible to flawed implementation if the requirements are not clearly defined.
Be Flexible. While it is important to have clearly defined
requirements, strictly adhering to defined requirements in
the face of uncertainty and changed circumstances can be
a recipe for failure.A good example of the importance of a
flexible approach is the Florida School Year 2000 Initiative,a
school-reform program that provided teachers with a handheld device to record student information, allowing it be
retrieved later for assessment and reporting. The initiative
ran into problems early on: The idea was dependent on
emerging Wi-Fi technology that had just become affordable
but had unique limitations in the context of Florida schools.
Because Florida schools often double as hurricane shelters,
their walls are made of high-strength concrete, which the
wireless signal couldn’t penetrate. Instead of locking the
contractors and the technology company into a dispute,the
project team shifted to handheld devices that had high
information storage capacity and could dock with the network at the end of the day to transfer information. By making this mid-course correction to overcome technological
limitations, the project remained on budget and was considered successful.
Align Incentives. Any innovation carries risks; in general,the bigger the change,the higher the risk.Cultural change
is not likely to happen if employees who “risk” innovation
see no positive impact on their careers. Many government
agencies have the same kinds of award and bonus programs found in the private sector. Managers do not use
them widely, however, and employees often have no idea
how they are likely to be measured and rewarded if they
make suggestions that improve operations. The key is to
use these incentives proactively to reward employees who
create savings.
Accept Failures. Innovation is about experimentation.
Experiments often fail. A can’t-afford-to-fail environment is
not conducive to making ambitious decisions or investments. It also seldom results in a high-performance organization. Innovative organizations invite employees to dare to
create a straw man that others can criticize, so that they can
“fail often to succeed sooner,” as one successful private-sector firm often urged its staff.The idea is to fail quickly if you
have to, learn from the experience, and move on to the next
big idea.
STEP 4: DIFFUSE INNOVATIONS
THROUGHOUT THE ORGANIZATION
Diffusion refers to spreading an innovation throughout an
organization or organizations, often with a push from above
or with the help of external agents. Successful diffusion
requires solving at least three challenges: gaining support
from all stakeholders (especially top leadership and citizens); breaking down organizational silos; and overcoming
organizational reluctance to change.
Publicize Success. Gaining buy-in for an innovation in
the public sector is much harder than it is in the private sector because governments are responsible to multiple stakeholders. Programs with proven track records tend to meet
less resistance than untried ideas. Therefore, publicizing a
18 Government Finance Review | December 2009
program’s success in one unit can help diffuse it to other
parts of 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 successful by sharing the news of employee appreciation or by highlighting outside awards. Third-party validation can have a powerful effect on the acceptance of new
ideas. For example, many programs that win the Harvard
Kennedy School Innovation in American Government
award, awarded annually to 10 projects that set a standard
for excellence, are replicated nationally and internationally.
Break Silos. Without an informal platform in place to
help agencies and governments share information and collaborate in real time, organizations are not able to tap their
peers’ knowledge and learn from one another’s experience.
For years, the U.S. intelligence community struggled with
similar issues of integrating intelligence collection and
expertise spread across 16 agencies. To better integrate the
network, they created Intellipedia, a collaborative workspace where intelligence officials engage in spirited debate
and freely contribute content to reports. Now, more than
100,000 members of the national intelligence community
are transforming the way intelligence reports get developed
through Intellipedia. Such a collaborative platform could
also generate some important lessons in networked governance, which can help in dealing with issues such as the
H1N1 flu pandemic that require a similarly agile and robust
intergovernmental response.
come out into the open. These employees in turn influenced a second group to support the initiative, and their
ranks swelled to around 40 percent soon after the initiative
was launched.
Engage the Public in Two-Way Conversation.
Innovation often has to overcome apathy among citizens
and political leaders. Engaging citizens early on and publicizing evidence of success is critical to building faith
among citizens and political leaders that public money is
Build a Coalition for Change. Leaders help transmit an
not being wasted. The emergence of Web-based social
idea generated by an individual or a small group to the
networks can help agencies ease the introduction of
entire organization. They also build a
innovative processes, particularly
coalition for change. Many frontline
While it is important to have when they require changes in
employees already know what needs to
customer behavior. Public agencies
change, even if they are not sure of the
clearly defined requirements,
have struggled with marketing
steps in the process of change. For
strictly adhering to defined these changes in the past. Many
example,Steve Kelman,who led the inirequirements in the face of e-governance initiatives lacked uptake
tiative to reform the U.S. federal government’s procurement system, estimates
uncertainty and changed cir- as citizens continued to conduct
government transactions in person or
that around 18 percent of the employcumstances can be a recipe for via telephone. This meant that some
ees were active advocates of the reform
failure.
of the savings expected from online
even before its launch. Pressure from
service delivery did not materialize.
the top did not create these change
Using social networks to build support
advocates; it merely helped them to
December 2009 | Government Finance Review
19
and understanding of new initiatives
might lead to faster acceptance.
CONCLUSION
Governments will need to find
ways to cut costs by doing
things in different ways — using
technologies to rethink how
governments are organized and
deliver services.
Successfully addressing today’s
daunting challenges requires governments to become better at innovating. Government agencies need to
realize that just like strategy, planning, or budgeting, innovation is a
discipline. And like these disciplines,
for innovation to take root, there needs to be an integrated
approach to the innovation process — from idea generation to diffusion. Sustained innovation also requires a
methodical view of the innovation process,a view that links
the mission to organizational structure, processes, and
reward systems. The guiding principle for any initiative
to generate innovations is to understand that ultimately
you will get only as many useful ideas as you have the
ability to implement. Leaders need to demonstrate their
20 Government Finance Review | December 2009
support for employee initiatives and
create a positive environment for innovative ideas.
This is a historic opportunity for governments to put a strong governance
program in place by using innovative
management and technology practices. Laying the foundations of an
innovative government now can
enhance the capacity of government to
create greater value in the long term. ❙
WILLIAM D. EGGERS is the global director of Deloitte’s public-sec-
tor research program. His new book is If We Can Put a Man on the
Moon: Getting Big Things Done in Government (Harvard Business
Press, 2009). SHALABH KUMAR SINGH is a manager in Deloitte
Research and coauthor (with William Eggers) of The Public
Innovator’s Playbook: Nurturing Bold Ideas in Government (Deloitte
Research, 2009).