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Decoding Latvia’s innovative capacity: Accelerating beyond cost-saving

In many countries, innovation became a buzz word following the emergence of New Public Management approaches, periods of austerity and a focus on cost savings as a way to control government spending.  In Latvia – as in many other OECD countries – innovation is often associated with the ability of government to “do more with less”. But innovation can achieve much more than this. Innovation, working in new and novel ways to improve impact, can help governments anticipate and prepare for the future, tackle problems that seem unsurmountable, and build resilience to present and future shocks.

The Government of Latvia is at an exciting juncture on this innovation journey. Thanks to the funding of by the European Union via the Technical Support Instrument, we have been supporting the Latvian Government to embed innovation into the very core of its working mechanisms. To begin this process, we’ve first taken stock of the current state of innovation in the Latvian Government, particularly analysing the drivers of innovation, enabling environment, capacity, and impact of innovative efforts through the lens of the OECD’s Innovative Capacity Framework. The findings of the assessment report, “Strengthening the Innovative Capacity of the Public Sector of Latvia“, launched on 10 October, provides the groundwork for the Latvian Government to develop an innovation strategy.

Zooming into Latvia’s innovative capacity

The assessment report triangulates insights from surveys of over 1,200 public servants, workshops with over 100 public servants and interviews with key executives and innovation leaders in Latvia. From this initial stocktake, we can see that while there are many drivers of innovation, the biggest challenges facing Latvia are in the areas of potential: creating an enabling environment where innovation is encouraged and expected, and capacity: equipping public servants with the resources, time and skills needed to innovate.

Heat map of Latvia’s innovative capacity. Source: OECD Observatory of Public Sector Innovation.

Drivers of innovation

(Purpose – what is driving the intent to innovate?)

The intrinsic motivation to innovate in Latvia is strong, even in the absence of explicit incentives to do so.

  • 91% of survey respondents cited individual satisfaction as an incentive to innovate – the desire to do better for citizens. Furthermore, coping with time and resource pressures has also prompted public servants to find innovative solutions.
  • 78% of respondents indicated increasing trust in government to be sometimes, often or always a driver of innovation. This aligns with the OECD Survey on Drivers of Trust in Public Institutions, which notes a statistically significant relationship between the perceived innovative nature of government and trust in government (particularly the responsiveness of government to adopting innovative ideas). This is a particularly urgent driver of innovation as the levels of trust in the Latvian Government are quite low (29.5%).

The enabling environment

(Potential – what determines whether innovative efforts are attempted?)

The operating environment is not conducive to doing things differently. Limited time, fear of failure and scrutiny, and difficulty understanding regulatory, budget, strategic and procurement frameworks can make the status quo a much easier option than pursuing improved alternatives.

Everyday work in public sector doesn’t allow for innovative thinking.

Interviewee from this project
  • The emphasis on cost savings and short-term efficiency gains make it difficult to make meaningful investments in testing and implementing innovative solutions.  The push for “doing more with less” is not accompanied by capacity support to try new things with longer-term and wider impact.
  • Clear and effective co-ordination of strategy agendas and complex challenges remains a challenge. The Chancellery’s new role as co-ordinators of key strategy agendas could help more horizontal management of key policy issues – engaging key actors across the public sector system and beyond to design and implementation of innovative and effective solutions.

Capacity, skills, and resources for innovation

(Capacity – What is needed to carry out innovative efforts and integrate them into everyday practices?)

Domestic investments in professional development, training and funding innovation have not yet been prioritised.

  • The Latvian Government established an Innovation Laboratory to support the use of design thinking in the public sector. This is an exciting development, and a key lever for supporting the diffusion and wider adoption of new approaches across government. However, it has been understaffed and just recently grew to a staff of four. Funding and training programmes for innovation have largely been dependant on external sources. Stable country-based funding for innovation with an establishment of a public sector innovation fund and / or domestic budgeting for innovative activities will help ensure the cohesion and continuity of innovation activities.
  • As pictured below, funding, skills gaps, and forums to engage citizens remain some of the most significant capacity gaps for innovation – these will demand deliberate investments in order to properly equip the public sector to innovate.  

Understanding impact

(Impact – How is the impact of innovative efforts understood and informing future practice?

Innovation is not a goal in and of itself – it’s the impact of innovation that really counts. In an environment where cost reduction and time savings are prioritised, evaluation and measurement can be key to finding opportunities for improved efficiency and more effective policies.

You need to be able to say something doesn’t work and terminate it.

Interviewee from this project
  • Latvia has a strong culture of measurement with heavy reliance on key performance indicators in strategy, planning and budget cycles, paired with a strong audit function. Furthermore, there is a strong culture of self-reflection and learning: 74% of public servants indicated that their workplaces systemically work to learn from mistakes. That said, some capacity gaps stand in the way of an effective evidence-based measurement system:
    • Public servants don’t always have the right skills and tools to get meaningful data to understand if their policies, services, strategies or innovations are working.
    • Evaluation and measurement happen at distinct moments in the policy cycle, rather than supporting real-time monitoring of performance.  This latter would allow for a more granular use of data to design and constantly evaluate the effectiveness of policies, services and innovations.

One area of promise for disseminating lessons learned is through Latvia’s innovation expert network, an open network which continues to provide a forum for skills building, sharing of lessons learned and providing a safe space to discuss opportunities and challenges related to innovation. This network can play a crucial role in spreading successful innovations and learning from the ones that didn’t go as planned.  

Where to next?

Latvia is at a turning point: with the Modernisation Plan and funding from the Recovery and Resilience Plan, there’s an influx of resources to kick-start this process, but continuity is key. Over the next year, we will be working closely with actors across the Latvian public sector (executives, technical staff, municipal public servants, the innovation network and innovation lab) to assist the government of Latvia in developing a public sector innovation strategy and concrete action/ implementation plan. We are excited to see how a dedicated public sector innovation strategy can help ensure the political and financial support required to drive this change. It’s an ambitious plan, but the potential for public sector innovation to transform government and the lives of citizens is a powerful reward.

For more information about OPSI’s work on innovative capacity, you can check out or work here, or contact us directly!

The report was funded by the European Union via the Technical Support Instrument, and implemented by the OECD, in cooperation with the European Commission.