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The power of connections in an innovative public sector

This blog was authored by Alexander Metcalfe, Head of Public Sector Policy, ACCA

As the global body for professional accountants, connections matter a great deal to us and our many stakeholders. We believe wholeheartedly in the possibilities of connectivity, and since our foundation in 1904 ACCA has been a super connector.

We have always recognised the importance of joining up our network – to find solutions and to be innovative. Indeed, one of our values is innovation, which for us means creating new and unexpected possibilities, and providing innovative solutions for the future.

Part of our work is to connect with public sector organisations to define these innovative futures and understand better the challenges and opportunities ahead.

Our recent report Innovation in public finance demonstrates that public sector finance professionals are seeking a more radical future in order to address the complex challenges facing governments. Our report dispels the myth of the public sector’s image as a place where little or no innovation happens revealing levels of innovation are similar between the public and private sectors at 91% and 90% respectively.

4,436 ACCA members across 142 countries took part in the survey for this report, with online panel discussions with 89 members across 32 countries. The level of innovation was measured across three areas: people-based, data and technology, and process innovation, with the report aiming to investigate what kind of innovation is taking place in public finance, while also looking ahead to future challenges.

The respondents’ revealed a public sector that is innovating incrementally. But when asked what type of innovation is required to meet today’s complex challenges, finance professionals believe governments need to embrace more radical forms of innovation.

With considerable challenges facing the public sector – from budget reductions to talent shortages – our respondents said a more radical approach is needed in the future. Their clear message is that governments need to shift from the current dominance of incremental innovation to more radical reforms. The public sector is not opposed to change and innovation.

Our top three findings in the report also offer recommendations for change:

  1. Public finance professionals believe that governments need to shift from the current dominance of incremental innovation to more radical forms of innovation.

This means that policymakers and public sector leaders should share a vision and strategic direction, allowing staff to understand how the organisation can proactively address the complex challenges it faces.

  1. The finance function has a critical role to play in the wider public sector innovation process.

Public finance professionals should apply the concepts of integrated thinking and value creation through multiple forms of ‘capital’ to help in the construction and assessment of business cases for innovation. 

  1. It is through the power of connections that public finance functions will be able to realise fully the desired shift to more radical forms of innovation.

Public finance professionals should work with finance business partners to connect across the organisation and help shape a culture of innovation.

The report explains that there are three public sector specific challenges for radical innovation:

  • Maintaining a stable environment while innovating – bringing new idea to life can be disruptive, and this is a risk for public services that often serve the most disadvantaged in society;
  • First-mover disadvantage – where the public sector has the disadvantage of organisation-specific risk, combined with potential system-wide benefits;
  • And the challenge of diffusion and the need to spread innovation effectively – since innovation can often be context-specific and competitive forces do not comparably operate in the public sector to spur widespread adoption of successful innovations.

Unlike the private sector, moving to radical innovation for the public sector is a challenge in itself – stability has to be sustained. This is a double-bind for the public sector innovator. With the public sector, first-mover advantages do not apply, not just because of the lack of traditional market pressures, but also due to the need to manage risk while trying to scale-up innovation.

The report ends with an assertion that nurturing innovation is collaborative – which brings me back to the power of connections. Innovation is not just for entrepreneurs, the maverick or the ‘rule-breaker’. It takes team work to innovate, people with a diverse range of perspectives and skills who can meet the challenges of radical innovation.

This is the wider innovation ecosystem, the web of connections, skills, information, perspectives and insights, and where public finance professionals play a key role as enablers and supporters of change.

OPSI recently took part in ACCA’s conference ‘Creating value and driving sustainability, accountability and the digital agenda through public sector innovation’, at the European Court of Auditors in Luxembourg.