Start-up governments?

By: Rainer Kattel and Erkki Karo (Ragnar Nurkse School of Innovation and Governance, Tallinn University of Technology)

(This article was orginally published online on January 4,  2016 by The Institute for New Economic Thinking.)

For most economists and indeed for social scientists in general such a question induces shudders as already asking this seems wrong – aren’t governments more prone to failures than markets, and aren’t governments supposed to provide basic and stable institutions for markets to function?

There is, however, a growing interest in what is called public sector innovation both in academia and perhaps even more so among policy makers, for a number of reasons. First, innovation has become a panacea in many policy arenas: it is supposed to deliver not only economic growth but also better health and social care, more efficient energy systems, etc. In essence, the entirety of public sector activities is looked at through the lenses of innovation: innovations can take place in government daily functions (e.g., secure electronic signatures for contracts, adoption of new policy or service delivery processes) and innovations in markets can be supported through government policies (e.g., support for SMEs in hiring engineers that leads to innovations by these SMEs). Second, these lenses become even sharper during times of austerity – what could sound more appealing during a budget squeeze than “increasing productivity,” or delivering “more with less” in the public sector? Third, Mariana Mazzucato, Fred Block, and others have shown that governments have been hugely important over the last half a century if not longer in paving the way (via funding, regulating, and procuring) for most fundamental innovations of our times (such as the internet). In our own country, Estonia, bureaucrats are building a government start-up-like service, called e-residency, which is available to everybody globally and tries to make national borders and nationality-based public services a thing of the past. Thus, to ask whether bureaucracies can innovate is not so far-fetched; on the contrary, it seems highly pertinent that we understand how bureaucracies innovate.

So, what makes bureaucracies innovative? Most existing research on this specific question focuses either on the individual level (public entrepreneurship) or institutional level (innovation systems, social innovations) seeking either psychological/individual or cultural, regulatory, or similar determinants of innovation. Yet, private sector innovation studies largely concentrate on firms as the locus of innovation: organizations are the environments where individual and institutional determinants combine in complex ways and lead to different innovations.

In our recent paper, supported by an INET grant, we try to re-invigorate organizational-level analysis on what makes bureaucracies innovative. We show that this question can be tackled in two different ways that provide us with a unique view of innovative bureaucracies as highly diverse and dynamic organizational environments. First, what kinds of organizations are innovative in the public sector (organizational view)? And second, what do these organizations do (functional view)?

Organizational view

Perhaps surprisingly it is not public administration that has provided the most interesting answers to the question of what kinds of organizations innovate in the public sector but rather evolutionary economists. The answers evolutionary economists have provided fall, roughly speaking, into two streams.

First, a number of evolutionary economists have shown that expert bureaucracies have been highly successful in delivering industrial development and economic growth. This research originated from groundbreaking works on the rise of East Asia (by Chalmers Johnson, Peter Evans, Robert Wade, and others) and sees at the center of innovative bureaucracies politically relatively central yet autonomous agencies manned with specialists and engineers, functioning as a meritocracy, while also having good feedback-links with business actors. Such agencies – like the famed MITI in Japan or numerous US military agencies in post-WWII era – were both powerful and smart enough to direct the industrial investments and technology efforts of private or semi-private organizations (firms, universities), designing and using a variety of policy instruments from technology transfer to preferential interest rates to procurement of innovative solutions.

Second, relatively recent stream of arguments focuses on peripheral, agile, and smaller agencies (like SITRA in Finland; see research by Dan Breznitz). These agencies experiment with new policy ideas rather than invest into private enterprises. In short, they try to understand how governments need to change within and how they can support innovation in markets given the uncertainties characterizing new and emerging technologies (such as biotech, artificial intelligence, etc.) and given the increasing financialization and dominance of global production and innovation networks that seem to challenge the feasibility of any national or regional policy efforts. Today we see that emerging innovation labs, or i-labs, take a similar position within many public sectors across the world. Mindlab in Denmark and Nesta in the UK are examples of i-labs consciously operating under different rules than typical civil service organizations: these are small organizations with low funding levels and diverse sources of funding, and they are typically engaged in short term projects and relatively removed from political leadership. The idea is simple: create spaces within the public sector to experiment and take risks (see here for our recent study of i-labs). We call them experimental organizations.

The debate on the role of the state in innovation often gets stuck trying to find the definitive answer and policy prescription to the question: should we still stick to modernizing meritocracies, or move radically towards experimental, start-up like governments?

Interestingly, Max Weber, father of public administration research, described both types of organizations a century ago and crucially saw in their interplay or complementarity one of the key sources of rejuvenation and change within the public sector. Weber described experimental organizations as charismatic organizations based on the values and personality of its leaders; these are organizations that develop their own rules, principles, mores, and values. We call these Weber Type I organizations. Weber, famously, also described expert organizations, or classic bureaucracies; in his view, such hierarchical merit-based organizations that function based on clear rules (laws and regulations) and hire people according to their skill levels (often through an exam system) delivered very well efficiency and effectiveness both in private and public sectors. We call these Weber Type II organizations.

A somewhat closer look at the history of innovative bureaucracies shows that, especially since the early days of the 19^th century, many such organizations had a intriguingly similar development path, particularly in Continental Europe. If we look, for instance, at such diverse organizations as the ones in charge of developing railways (e.g., Verein Deutscher Eisenbahnverwaltungen) or banking systems (e.g., Reichsbank in Germany), publicly supported cartels, and industry associations in most Continental European countries, we see a similar pattern. First, these organizations are born out of private initiatives and typically had industry needs at their core (seeking to ensure Schumpeterian monopoly rents from innovations) and hired professional experts from newly minted technical universities or the public sector. Second, in time many of the functions these organizations performed and the way they organized these functions became socialized and institutionalized into ministerial departments and public sector practices in general (or, as in the case of cartels, became effectively outlawed). That is, these organizations and functions became more public in nature and moved into more central positions in governance systems and thus became more hierarchical.

In essence we can argue that the history of innovative public sector organizations starts from a Weber Type I organization that is dynamic, innovates often in policies and regulations, and resides outside of typical government operations, and then moves then to a Weber Type II organization that is professional, and centrally governed with substantial funding and policy means. The cycle starts anew as new techno-economic opportunities and socio-economic needs and issues emerge that demand experimental solutions from the public sector (i.e., Uber and the likes are experimenting with new standards for transportation that may in turn become the basis of public transportation systems in smart cities of the future). Of course, the socio-economic and technical changes also change the fundamentals of expertise and meritocracy: if “classic” Weberian expert bureaucrats (in type II organizations) of the post-WWII era needed generic social and managerial skills (in languages, law, accounting, or planning), a “modern” Weberian Type II bureaucrat is increasingly expected to at least understand coding, change management, design etc.

These are, clearly, ideal-typical organizations; in real life there is a more granular morphology of such organizations, as shown by Henry Mintzberg. However, the Weberian dichotomy helps us to see the big picture, namely that policy and strategic experimentation and implementation may require different organizational dynamics and routines. Successful polities require flexible structures of governance where experimentation and drive for efficiency are of equal importance.

Functional view

What should then these Weber Type I and II organizations do? What is the function of innovative bureaucracies? Again, looking at the history of how governments have grown into innovation actors, we can differentiate at least six types of public sector innovation functions (changing technological needs and demands of the future can make some of these functions obsolete or complement them by others). These can be performed by either Weber Type I or II organizations, but in most cases we can witness a shift from Weber Type I organizations to Weber Type II as specific functions tend to emerge through economic or political pressures for change (often first as private initiatives that get copied or socialized by the state). These functions are:

1. Public investment into science, technology, and innovation: both in the form of basic and applied research, this type of public sector innovation function is perhaps best exemplified by the iPhone: as Mazzucato has shown, the iPhone “houses” at least 13 key technologies developed with public money. In most countries we see both Weber Type II organizations (ministries) and Weber Type I organizations (DARPA-type agencies) carrying out this function.
2. Public procurement of innovations: many of the solutions in the iPhone came to fruition also with government setting clear demands on new technologies and products being developed, as shown by the works of Linda Weiss and others. Again both Weber Type II organizations (ministries) and Weber Type I organizations (new procurement agencies combing the demand of different policy domains to test and design different procurements processes) may carry out such function.
3. Economic institutional innovations: these are new institutional solutions that aim to change the economic rules of the game, e.g., the invention of the central bank that played a huge role in Germany’s rise in late 19^th century, as argued by Piero Sraffa. Most would consider central banks as still more independent and different from traditional Weber Type II organizations (ministries of finance) but still rather “traditional” in their roles, especially as they are being pressured to reinvent themselves (in Weber Type I style) to tackle the increasing complexity of global financialization and the emergence of alternative currencies and technologies (blockchain, crowd-funding) that seek to provide alternatives to traditional public sector authority-based financial systems.
4. Political institutional innovations: these are new institutional solutions that aim to change the political rules of the game. Alexis de Tocqueville admired more than 150 years ago how small New England townships were functioning well without central administration. He called this an innovative solution in comparison to French centralized administration. Also, today governments are constantly seeking to find a balance between more centralized/meritocratic political institutions (from judiciary to parliaments) and experimenting with more co-productive/participatory systems for legislation (i.e., constitution drafting in Iceland, different approaches to regulate drones, self-driving cars), budgeting (participatory budgeting) etc.
5. Public service innovations: these are efforts to significantly change the way a service such as education or health is delivered. On the one hand, most countries try to maintain public trust in and legitimacy of classic Weber Type II organizations and to squeeze maximum efficiencies while new ICT-based solutions and services are being developed by other public sector organizations, often i-labs, or by start-ups that could also lead the way for socialization (or copying) of the developed service models. In this sense, public services are in many countries also an important “market” for private innovations. For instance, in most Western economies, public spending constitutes about 30-50% of GDP.
6. Public sector organizational innovation: these are efforts to create Weber Type I experimental organizations (such as the i-labs today) in order to answer specific new policy challenges. Indeed, ever since Weber, the smartest governments have maintained a healthy self-criticism of their own knowledge and capacities and left “slack” in government for learning and experimentation.

Thus, we have what seems a very important duality for understanding innovating bureaucracies: first, Weber Type I organizations based on the charisma and ideas of extraordinary individuals, and second, Weber Type II organizations based on expert knowledge and the authority of political backing. Both types can be beneficial for different policy goals. Weber Type I organizations are often good at experimenting in the small scale and coming up with new ideas and solutions, but they often need Weber Type II organizations to deliver these ideas and solutions on the scale of societal demand. In sum, either type can deliver different public sector innovation functions and play a role in enabling private sector innovations. Dynamic and innovative societies do not necessarily have to substitute traditional expert bureaucracies with experimental organizations. Instead, they need to complement expert bureaucracies with experimental organizations while constantly modernizing the skills and policy intelligence of expert bureaucracies.

 

Stability and innovation: a balancing act

By: Wouter van Acker (PhD candidate, KU Leuven)

This blog is about how many of us want an innovative public sector that doesn’t get stuck in the past but which rides the waves of modernization. As we become more accustomed to digital and mobile services, we expect the public sector to change as well. So, we need and we want our government to change.

However…we also need and want public service provision to be stable, reliable and predictable. Constant changes in tax systems, health care provisions and the way we educate our kids can also be problematic and frustrating.

These two requests, stability and innovation, seem to be contradictory. But a predictable, innovative government is not necessarily a paradox in terms. In order to reconcile these goals, we need one thing: sustainable innovation. Sustainable innovations are those that can stand the test of time and provide reliable, state of the art services to citizens, without the uncertainty of whether next year will be completely different.

So how do we get there?

As anyone who has ever been involved in innovative projects will know, many factors can influence the sustainability of innovations. One of the most important factors according to our research is knowledge management.

As part of our research for the LIPSE project, we studied 246 awarded innovations throughout Europe and asked the participants what had happened to these innovations since their initial implementation. While we expected many to have failed since then, interestingly, only 22 of the organizations answered that the innovation had been terminated. Of these cases, the most often cited reason for why innovations were dropped was personnel turnover.

We know from past research that in order to get innovations to see the light of day, we need champions. Innovation champions are people in the organization who believe in the idea and will fight to see it implemented. However, this is apparently not where their role ends. What we have found in our research is that many innovations are abandoned when this champion leaves the organizations. When an innovation is abandoned simply because one person decides to leave the team, department or organization then the project has failed.

Organizations that innovate successfully and sustainably are those that have developed systems for sharing knowledge among the staff and for redistributing responsibilities when there is staff turnover. One way of doing this is by documenting the lessons learned from each project or communicating them during post-project meetings. This helps ensure the stability of innovations.

It is also important to identify and support the innovation champions. Personnel turnover can of course be disruptive and this is especially important in the case of innovations, which need additional effort to stay off the ground. Innovation champions, who are typically people that are constantly looking for new opportunities and challenges, should be supported so that they maintain the motivation to innovate.

Other best practices of the organizations we interviewed were 1) making sure that lessons learned were passed on to new employees and b) encouraging these new employees to contact their predecessors and ask questions from them. This might add some work but if an organization wants to achieve that stable, modern, reliable and innovative public sector citizens are asking for, it might just be one of the most important practices to adopt.

Source of image: http://www.corporatelearningnetwork.com/management-leadership/articles/human-resource-management-practices-in-the-u-s-and/

Innovation Units in Executive Government (part I)

By Krista Timeus (Hertie School of Governance)

As governments become increasingly interested in developing innovation strategies, the idea of setting up innovation units, innovation teams, or innovation labs has become increasingly popular.

What are the advantages of these innovation units? My colleague Mila Gascó and I spent a couple of months looking at these innovation units in the municipality of Barcelona. We came to the following conclusions about their advantages:

Innovation units seem to be particularly capable of creating their internal “culture of innovation” within the lager environment of their organization. This means, for example, having a staff that is more willing to take some risks and is more willing to adapt new ways of organizing their work than the “regular” staff.

This team has the benefit of being able to take on innovation as a main task, whereas other people in the “regular” policy areas would see it as an additional task. For them, innovation then becomes an additional burden on an already full schedule. Several of the people we interviewed believe that innovation is only a trend in public management and they are not willing to drop important tasks in order to “invest efforts in becoming more innovative.” Fair point. This “regular” staff report that not only do they not identify with the innovation task, but that they are often busy enough with their ongoing work (especially in times of austerity limiting new hires) and cannot dedicate more time to innovation projects. The innovation unit, on the other hand, does have the time and motivation to do so.

The innovation units also appear to grant the innovation efforts some legitimacy within the administration, and most importantly, it brings a stream of appropriated funds specifically earmarked for innovation projects. This indicates political support. The appointed “directors of innovation” are seen as having authority and some financial autonomy, and are thus able to champion projects and initiatives that might otherwise be dismissed without a leader to steer them through the administrative process.

Finally, innovation units simply seem like a practical solution to the problem of creating new innovation capacity in the public administration. When compared to approaches such as improving collaboration or gradually introducing a discourse of innovation into the administration, creating innovation units is a relatively quick fix since it achieves the goal of focusing on innovation now and deferring to the future the challenging long-term task of changing the larger administrative culture to become more innovative.

For all these advantages, innovation units also have some drawbacks. I will cover these in the next post. In the meantime, I would like to hear from you. What is your opinion about the benefits and disadvantages of innovation units in government?

*This post is based on a conference paper presented at the EGPA annual conference 2015 and co-authored with Mila Gascó (ESADE Business School).

Image source: Leo Cullum. October 24, 2005. The New Yorker.

Word Class Workshop on Co-production of public services: design and innovation

By Dr. Sophie Flemig (University of Edinburgh Business School)

Co-production has become a new buzzword for policy-makers and public management scholars alike. In simple (if not simplistic) terms, co-production stands for the involvement, either voluntary or automatic, of service users in the provision and production of public services. From our own research experience as PhD Candidates and Research Fellows, we – that is Katharine Aulton, Yida Zhu and Sophie Flemig – knew all too well that important academic insights rarely reach practitioners. Therefore, we were thrilled that the Business School was offering us the opportunity to bring academics, practitioners and policy makers together for a workshop in the World Class Workshop series.

With the guidance and advice of Stephen Osborne, we organised a one-day event that involved a mixture of international and “home turf” Business School speakers who engaged – and co-produced the event – with an audience of policy-makers, public service managers, practitioners and academics

Prof. Taco Brandsen (Radboud University Nijmegen) and Prof. Stephen Osborne (UEBS) opened the event with two keynote speeches that provided a framework for the following paper presentations. Taco shared some thought provoking points that were widely discussed throughout the day: When is coproduction creating public value, and when does it destroy it? Despite popular belief, Taco also cautioned that co-production was not a short-term money saving tool. Rather, successful co-production appears to be more time and resource intensive.

Stephen Osborne reacted to the tensions in the co-production debate by presenting his model of a public service dominant logic of co-production. He suggested that co-production is inherent in the delivery of public services – therefore, the real question is not whether we want or need co-production but how we use it effectively to provide the best public services we can.

This stirred some lively debate amongst our audience, prompting questions how the insights of co-production scholarship could be best presented to local councillors and public service managers, who were concerned about tightening public budgets. A key theme in our debates was whether the policy motivation for co-production initiatives was not after all driven by cost-saving motives.

Our keynote speakers were followed by presentations from Dr Johan Quist (Karlstads University) and UEBS PhD Candidate Katharine Aulton. Johan’s presentation centred on understanding the citizen sphere beyond the sporadic interaction points with public service providers, while Katharine reported on learning to co-produce and learning from co-production in health and social services – one strand of findings from her doctoral research on co-production and the design of service systems.

In the afternoon, Dr Trui Steen (KU Leuven) presented her findings on why citizens choose to actively co-produce and what factors constitute drivers of, and barriers to, citizen engagement. Dr Sophie Flemig (UEBS) cast a human rights perspective on co-production with users who do not possess full legal mental capacity. She pointed out that future legislation should learn from current challenges in co-production to bring mental health standards en par with UN commitments.

Our practitioner discussant Julie Christie, a dementia care team leader in East Dunbartonshire and PhD candidate at the University of Stirling, brought all these diverse lines of argument together and reflected on how we can translate good research into best practice. Her presentation was followed by a group discussion session that produced a multitude of insights, learning experiences, and questions for future research.

The event was rounded off by Prof. Victor Bekkers (Erasmus University Rotterdam), who summarised the findings of the FP7 research project “Learning from Innovation in Public Services” (LIPSE, www.lipse.org). Based on insights from five European countries, Victor demonstrated a matrix of citizen engagement in co-production and the state support they (don’t) receive.

As a learning experience, the World Class Workshop was an invaluable experience: We not only learned important lessons about communicating with practitioners and policy-makers, and how to provide them with the evidence they need to improve public services through co-production; Susan Keating and Charis Wilson also helped us learn the ropes of how to organise an academic workshop.

The result was greeted with overwhelmingly positive feedback and we are excited to keep the discussion going now that the event is over. Video blogs from our speakers together with their presentation slides are at http://www.business-school.ed.ac.uk/co-production-public-services/.  We are also keen to hear from you via Twitter, where you can find live tweets from the day at #PublicCoPro. Join the debate and share your thoughts and questions on co-production in public services!

Observations from research in Slovakia

By Matus Grega (PhD Candidate, Matej Bel University, Slovakia)

A personal note on administrative culture in Slovakia: While doing research for the LIPSE project, which sponsors this blog, I had the pleasure of visiting many public officers in Slovakia to interview them about how their institution is applying quality management instruments. Going into this, I must admit, I was prejudiced by the idea that public organizations are full of tired bureaucrats, who have limited incentives to go the extra mile to be helpful to citizens and are generally uninterested about the outcomes of their organization’s work.

After visiting more than 10 public organizations (county and city offices, high schools, ministry departments, etc.) I found out, that my opinion about “bureaucrats” was not accurate and that their reality is little bit different, namely, more optimistic. People working in these public organizations can have great ideas about how to improve quality and efficiency. They know which areas are ready for improvements and what needs to be done sooner or later to increase the efficiency and effectiveness of their organization in the long run. The biggest issue they are facing is limited support from their supervisors.

Mostly, the people I talked to were officers in the middle level in the hierarchy of their organization. What I found during my interviews is that there are some barriers to innovation in quality improvements that have much to do with the incentives of top managers and the political leadership. The effect of disinterest at the top level in countries where hierarchies in the public administration are still very rigid is that bottom-up innovation is stymied.

Specifically, I found that many mid-level managers have a fear of failure or of damaging their reputation because their leaders have not created a culture of openness and trust in management. There are also entrenched interests at the very top of the hierarchy, where improvements to quality and improved efficiency and effectiveness can limit the room for corruption. And finally, that there are no incentives for challenging the limitations of the system. Of course, these are just some impressions from my interviews, but they hint at some of the main obstacles to innovation in the Slovakian public administration. Nonetheless, I can say I was happy to meet many individuals who do strive for improvement and are pushing for it. Leaders who actually want to see improvement in this system should start by finding ways for these motivated mid-level managers and their peers to have more support and encouragement in making small changes.

How to empower co-creation: participatory budgeting

By Maria Svidronova* (Matej Bel University, Banska Bystrica, Slovakia)

In my previous post I pointed out that active citizenship in Slovakia is still rather at a toddler stage; citizens are still not used to taking part in expressing their ideas on policymaking after the communism era. Yet, the third sector has developed quite well and its voice can be heard behind many social causes and helping to solve many issues including delivering public services in alternative ways. But at the end of the day, it seems that it is always the same NGOs who are working very similar causes in the Slovakian third sector (especially considering that Slovakia is a small country with a population of less than 5.5 million). The question we are interested in now is how can we invite more citizens into the public domain? How can we support citizens in co-creation? And how can we especially involve citizens typically marginalized from society?

A good impulse for co-creation might be participatory budgeting, a mechanism through which the population decides on the destination of all or part of the available public resources at the local level. Participatory budgeting has been one of the most successful participatory instruments of the past 20 years. It was introduced for the first time in Porto Alegre in Brazil in 1989. This method of public funding management came after Brazil’s experience with many years of military dictatorship, which caused a dramatic decrease in trust in government. Budgetary spending was associated with widespread money-wasting and corruption. The starting point for participatory budgeting was a discussion on the previous budget implementation and the priorities for the next financial plan. The key part of these meetings was electing delegates from 16 neighbourhoods in Porto Alegre for district plenary assemblies where the proposals submitted by the representatives of each neighbourhood were evaluated. Proposals with the highest evaluation were implemented as projects by citizens themselves.

Participatory budgeting model (source: http://www.pbchicago.org/uploads/1/3/5/3/13535542/8004078_orig.jpg)

Nowadays, participatory budgeting is becoming more and more popular in Europe as well. It is being introduced by local governments in many countries, such as the UK, France, Germany, Italy and Spain. Participatory budgeting is now estimated to be used in thousands of locations worldwide. These include large cities (Seville), individual city districts (e.g. in London, Paris, Berlin, Rome), medium-sized towns, and small municipalities. Many of them prepare their own models of participatory budgeting adapted to the local conditions.

Participation gives local authorities the possibility to gain useful knowledge about the community’s needs so they can make informed and more accurate decisions. Participatory budgeting allows the residents of a municipality, city district, village or housing estate to participate in planning local public spending. The authorities hand over a part of the budget to citizens who decide by themselves how to allocate the money. To do this, they identify the most urgent spending needs, make their own proposals and take a bigger role in controlling public spending.

Participatory budgeting can also be seen as a tool for increasing the trust in public institutions and for increasing customer (citizen) satisfaction. In Slovakia, the first city that implemented participatory budgeting in 2011 was the capital, Bratislava. It was followed in 2013 by the town of Ruzomberok and the latest town to adopt it is Banská Bystrica in 2014 (is the slow uptake also shows how long it takes for the concept of participation to diffuse here). In all cases, thematic communities for funding were established, e.g. culture, community life and active citizenship, youth, greenery in town, sport and health. These are all from the fields of public services, i.e. all projects involve citizens as co-creators of public services.

The size of municipalities that implemented participatory budgeting varies from 27,000 to 420,000 inhabitants in Slovakia. But taking into account citizen involvement in comparison to the size of the municipality, the results vary. The citizen involvement is less than 1 per cent. For example, in Banska Bystrica there were 382 voting participants, which is only half a per cent from total town population. In Bratislava it was almost 8.5% of participating citizens.

The amount of money allocated for participatory budgeting is between 0.01% – 0.27% of the municipal budget. While the budgeting impact seems little, even 0.01% of the total municipal budget has a significant symbolic impact; the process has brought more minority and low-income people, as well as young people, who usually are not interested in politics, into the democratic process.

Of course these are rather mild results for the implementing period of participatory budgeting in Slovakia but our analysis has shown that participatory budgeting enables better allocation of public sources according to citizens’ actual needs. It enables citizens to vote for projects that provide necessary public services and also treats them as important members of democracy. On the whole, participatory budgeting can be seen as an innovative tool for the effective management of public service provision following the trend of public co-creation.

What do you think about participatory budgeting? Can it really impulse co-creation? What other tools can help improve co-creation?

*Dr. Maria Svidronova is affiliated to the department of Public Economics and Regional Deparment, Matej Bel University. With her colleagues (prof. Juraj Nemec and prof. Beata Mikusova Merickova) she participated in the research on co-creation and social innovation in Project Learning from Innovation in Public Sector Environments (more at www.lipse.org).

Indicators for Public Sector Innovations: Is there a silver bullet?

By Piret Tõnurist, Rainer Kattel and Veiko Lember (Ragnar Nurkse School of Innovation and Governance, Tallinn University of Technology in Estonia)

As innovations in the public sector become more important both in public sector reform and academic discussions, also attempts to understand and measure the effects of these innovations are increasing. However, as with other public sector phenomena, the measurement attempts for public sector innovations are riddled with difficulties, both conceptual (what to measure) and technical (how to measure). For example, can changes in citizen’s trust towards public sector be linked to particular innovations? And if so, how? Or how should one use social media as a source of understanding the effects of innovations?

In this blog we take a look at existing practical attempts to develop indicators for public sector innovations. This is based on our research (preliminary results are found in a LIPSE working paper). This is, to our knowledge, the first attempt to comprehensively gather information about various international efforts. We only considered such exercises where actual indicators were developed and used at least once. We map five such exercises through extensive desk research and 13 interviews with surveyed project members. The projects were as following:

• MEPIN (Measuring Public Innovation in the Nordic Countries).
• European Public Sector Innovation Scoreboard (EPSIS).
• Australian Public Sector Innovation Indicators Project (APSII).
• NESTA, (United Kingdom) sponsored London School of Economics Public Policy Group (LSEPPG) public sector innovation index.
• Korean Government Innovation Index.

Based on our research and interviews with key members from all five projects, we can draw the following conclusions.

• Motivations behind creating indicators. The overarching idea behind creating new indicators for public sector innovations is strongly associated with justifying and legitimizing public sector activities. Within the wider context of political demand, the current attempts tend to also reflect individual preferences of sponsoring organizations. For example, EPSIS was designed in cooperation with various EC directorates and thus ended up measuring both innovation in public sector as well as innovation through public sector (i.e. how public sector influences innovation in private sector), whereas other attempts focused more on innovation within public sector. The nature of political demand also had other important consequences on how the measurement efforts evolved. At the same time, political demand has been rather inconsistent as in most cases it is not known if and how the measurement attempts will be prolonged.

• Theoretical discussions and ideas behind indicators. In all cases key people involved with developing indicators were economists by background and readily admitted that business innovations were an important theoretical vantage point. However, they also all admitted that the public sector has unique logics that are often difficult to separate from each other and, consequently, also to measure. Significantly, all projects realized that they would have needed substantial input from public administration and governance scholarship only after the empirical exercises. In addition, important difficulties were discovered in applying the existing private sector innovation measurement methodologies into the realm of public sector.

• Irrelevance of performance measurement. Performance measurement practices have played almost no role at all in developing public sector innovation indicators. While they have been one of the most studied issues in recent public management debates and could provide ample ideas for linking performance measurement with innovation. This seems to be strongly related to missing public administration and management competencies in all projects.

• Who uses indicators and how? Predicted use of indicators varies quite significantly from in-house management tools to country-to-country comparison and benchmarking. However, it is important to note here that all the interviewed stakeholders were very aware of the limitations of the measurement attempts, which is why we can also see a rather different mix of actual use of the measurement results.

• Future evaluations of indicators. No projects have been formally evaluated; it is also not certain that any of the projects will be repeated in the future (EPSIS, slightly altered, seems to be most certain to be repeated) or developed into a working tool for other organizations (OECD work on updating Oslo manual will utilize some of the work done in MEPIN and EPSIS). This seems to stem from difficulties both on the technical side (availability, comparability of data) but also practicality (in most cases the results do not tell much to managers, politicians or citizens and it is expensive to gather new forms of indicators).

Our research shows that while public sector innovations are difficult to measure, policy makers should encourage measurement attempts that utilize public administration scholarship on performance measurement and other similar approaches; equally important is to utilize new sources of data (social media, big data) and experiment with emerging evaluation practices and tools such as randomized control trials, living labs etc. However, as our research shows, key in successful use of such tools is to have rather complex evaluation frameworks that include political issues such as trust in public sector, and do not rely solely on few quantitative indicators.

There is no silver bullet in measuring public sector innovations.

http://online-behavior.com

How to empower co-creation: good NGOs that co-create with citizens

By Maria Svidronova* (Matej Bel University, Banska Bystrica, Slovakia)

This is going to be a bit personal. A) I am big fan of social innovations and co-creation is one of the best social innovations in my opinion. B) I consider myself to be a civic activist. I run my own non-governmental organization. I know quite few other NGOs in Slovakia and I dare say, a lot of co-creation happens at this level of society. But mostly, c) I am also a university teacher and a researcher so I am not going to write anything like “Yeah, the research from LIPSE—the research project sponsoring this project­—has confirmed what I have always thought!” and be more factual with my thoughts.

As has already been discussed in this blog, co-creation happens when citizens are invited to initiate and design public projects or services with governments and public organizations to solve problems facing them. But what if citizens are not used to participate in such projects? What if they are not used to participate at all? I am talking about the case of Slovakia, where historical state and governance traditions influence the process of co-creation a lot. The dominance of the Communist Party’s political power over all subsystems of public administration did not support involving citizens in policymaking for a long time. After the end of the communist era in 1989 and the onset of independence in 1993, third sector started to bloom in Slovakia. This opened up the opportunity for citizens to group and express their opinions on public affairs.

During the last year we spent quite a lot of time investigating co-creation initiatives in Slovakia and one of the conclusions is that social innovations in public services provision are often initiated by third sector organizations, mostly civic associations (five out of ten cases studies observed in our research). Even in cases where the idea came from citizens (e.g. students of architecture who wanted to improve housing for Roma citizens), the support of NGOs is there: one NGO provided know-how on how to work with this particular group (it took nearly a year to earn the trust of Roma citizens and started cooperation on housing building). Another NGO provided know-how on microcredit financing system and helped to implement it in the project.

On the other hand, the risk is that demonopolization of public services and alternative service arrangements with NGOs as service producer is perceived by the public officers as a threat (conclusion based on organization’s experience from negotiating with authorized government representative for civil society). This puts NGOs in an unfavourable light form the governments’ point of view. But co-creation should not be seen as a ‘total solution’ replacing existing services. Instead we should consider co-creation initiatives as alternatives for existing public services or as additional services to the existing public services.

The LIPSE research project was an impulse to start investigating more co-creation initiatives in our conditions and it only confirmed the fact already stated: NGOs are key players in social innovations. Mostly we identified co-creations in the sector of environment and green tourism but also in the social and community development. Our research in the Banska Bystrica region has shown that the NGOs bring social innovations into society even without realising it (only a few of the NGOs were fully aware of the potential of co-creation and they try to implement it in each of their projects). By initiating the co-creation initiatives they also invite citizens to participate which they do more willingly than when asked to participate by governments (46% of Slovaks trust in NGOs, but only 17% trusts in governments, according to an agency research in 2014). Indeed, it is a good NGO that co-creates as it seems that in Slovakia this can be the way for wider spreading of the co-creation and citizens’ participation.

In a future entry I will focus on citizens’ direct participation and discuss a tool of participatory budgeting that could empower co-creation from this perspective.

*Dr. Maria Svidronova is affiliated to the department of Public Economics and Regional Deparment, Matej Bel University. With her colleagues (prof. Juraj Nemec and prof. Beata Mikusova Merickova) she participated in the research on co-creation and social innovation in Project Learning from Innovation in Public Sector Environments (more at http://www.lipse.org).

LIPSE research goes Hollywood: Part II on Risk and Social Innovation

By Sophie Flemig (University of Edinburgh)

Risk is a social construct, in other words, it is formed by the way that we talk about it and evaluate it in our communities. Therefore, the discussion must include everyone: law-makers, public service professionals, service users, and the communities in which they are based. We call this “risk governance” rather than “risk management”.

Such risk governance frameworks can be flexible. Sometimes, social innovations are relatively straightforward and simple. Think of the extension of a bus service for the elderly to include new stops. In this case, technical risk management may well be sufficient – the variables are more or less known and the service has already been tried and tested. Other social innovations are more complex and require an equally sophisticated risk governance approach that involves a wide number of stakeholders. For example, we worked with a conservation charity whose projects involved species preservation but also issues of ecological balance and the interests of the local community. Their approach to risk took into account these multiple layers and competing interests, so they widened the discussion to all those who were potentially affected by their conservation plans.

We also found that such complex risk governance frameworks are often quite expensive – they require dedicated staff for communication, community engagement, and media relations, on top of the managerial staff already involved in more traditional risk management. Often, it is small to medium-size organisations that are at the forefront of social innovation, yet they are also the most ill-equipped in terms of dedicating resources to risk governance.

These findings let us to conclude that regulatory frameworks and professional governance bodies need to reinforce social innovation efforts by including a more sophisticated expectation how risk should be managed. This also includes non-governmental funders of social innovation projects, who can be very risk averse because they see their reputation at stake.

Moreover, policy makers should support specifically small public service organisations, for example by facilitating collaborative social innovation projects that involve several organisations. For this purpose, policy makers need to facilitate a common approach to risk and assure that no individual public service organisation can end as a scapegoat in a “blame game” scenario.

One way of doing just this would be for national bodies at an organisational level to make decisions on risk governance. Just like the medical research councils assess the risks of medical research centrally rather than leaving procedures to individual drug companies or healthcare organisations, we might see specific risk governance bodies in environmental protection, mental health and other public service fields.

Going back to the comparison to that Hollywood movie I referred to in my last post, “Along Came Polly”, after over a year of hard research work, we are now the first research project to provide empirical data that backs up Ben Stiller’s decisions in Along Came Polly: If you want a fulfilled life (and innovation-driven public services), you need Polly (and accept risk as a necessary part of life and invite it in). If you will, our LIPSE Work Package 4 is the Jennifer Aniston of research findings – clearly, it is worth a closer read.

The rise of innovation labs in the public sector (part 2)

By Piret Tõnurist, Rainer Kattel, Veiko Lember (Ragnar Nurkse School of Innovation and Governance, Tallinn University of Technology in Estonia)

In our last post we mentioned a few reasons for why innovation labs are emerging in the public sector. Despite the fact that i-labs are increasingly popular in the public sector, there is almost no systematic academic overview of these organizations. In what we think is a first comprehensive attempt to map and analyze such labs globally, we identified and analyzed 35 such organizations (full study is available here).

On the whole, innovation labs both in the private and public sector are very heterogeneous – in terms of their activities, scale and organizational structures – making them difficult to map and analyze. Thus, we decided to base the research on a two-step approach: first, a comprehensive survey was carried out directed at the management followed by an extensive in-depth interview with the same managing figures of i-lab. The survey is based on long-term and large scale research into public sector organizations in Europe: the COBRA research project. Based on proven structure and logic, the COBRA questionnaire addressed the autonomy of agencies towards their political and administrative principals on different dimensions. The questionnaire also helps to sheds light on the way agencies are controlled by their principals and what kind of internal management tools the agencies use. This helps us to compare i-labs to other (semi-)autonomous public sector organizations. However, due to the specific nature of i-labs, the questionnaire had to be significantly updated to fit our purposes of the research. The survey was followed by an in-depth interview in which we more specifically covered the reasons behind the creation of the lab, team characteristics and main tools, network partners, activities and goals, outcomes and steering and control. The research design was tested prior to use with the representative from Mindlab, Denmark.

Based on prior reports by Nesta, IBM, Parsons “Gov Innovation Labs Constellation 1.0” and web-based searches, we identified 35 i-labs inside or directly funded by the public sector; 11 i-labs responded to our survey.

Our key findings:

• I-labs are rather unique organizations and diverse in their mission, expected to act as change agents within public sector and enjoy large autonomy in setting their targets and working methods.
• I-labs are typically structurally separated from the rest of the public sector and expected to be able to attract external funding as well as “sell” their ideas and solutions within the public sector.
• I-labs tend be small structures, specializing on quick experimentations and usually lack the capabilities and authority to significantly influence up-scaling of new solutions or processes.
• The main capabilities of i-labs are their ability to jump-start or show case user-driven service re-design projects. Interestingly, IT capabilities do not appear as prominent characteristics of the studied i-labs.

In sum: i-labs, although prominent in many modern public management strategies, are yet far from becoming truly organic parts of the public sector. This is paradoxically both their weakness and their strength. I-labs conform rather well to a type of organization Max Weber called charismatic organizations: new units that coalesce around idiosyncratic values and rules, with its own belief systems and working patterns. For Weber, such organizations were often in conflict with existing organizational patterns. In his early work, Schumpeter also believed that it is precisely such charismatic new organizations that bring forth disruptive changes in society and lead to emergence of new values embodied in new firms (and other new organizations, such as new political parties, artistic movements, etc;).

I-labs in the public sector are then perhaps to be understood as organized attempts to respond to ICT technological revolution taking place in societies at large. In this sense, we can understand i-labs as spaces of experimentation in a longer process of learning and adapting to ICT driven world.