What makes for a good innovation strategy?

It can be hard to make strategy something that is actionable and that leads to real change. Strategy comes up against how things actually work, and can often be the loser (Culture eats strategy for breakfast[1], right?)

Indeed, at our last meeting of National Contact Points (our liaison points with national governments), one of the questions put forward by a country was about how to develop an actionable innovation strategy, one that would support a vibrant innovation culture and combine top-down and bottom-up approaches and thinking. As part of our work supporting countries in ensuring that their public sector innovation efforts achieve real results and help public services meet real needs, we thought it would be worth a look at what goes into a good innovation strategy.

Why strategy matters (for innovation)

I don’t want to shock anyone, but I’d like to share a little secret: innovation is actually quite difficult. Doing things that haven’t been done before is, all other things being equal, harder than not doing new things. Change is hard enough when it’s just ourselves as an individual, but it’s even more so when you’re part of an organisation and a broader system and trying to introduce things new to the context. Innovation involves learning, changing habits, and going against established practices, processes, structures, and patterns. And in a public sector environment, there are particular factors that can make innovation especially tricky (if you don’t believe me, then I suggest you ask any nearby public servant about risk appetite in government).

Of course, there are times when innovation is definitely easier. Some of those times are when explicit permission is given, and support made available, for something different to be tried. Other times are when it’s clear that existing strategies and options are no longer working or have become unsatisfactory (e.g. a crisis or when outcomes are noticeably falling behind what is expected and new approaches are either unavoidable or accepted as required).

In short, innovation is generally difficult, and not innovating is generally less difficult. Thus, we often see more attempts at innovation when the environment makes it easier, than when innovation is not sought or decisively needed. Not innovating (easier) > innovating (more difficult).

If we accept that, in general, more innovation is needed in the public sector (because existing strategies and approaches are not satisfactorily delivering upon needs and expectations), then what can be done to help change this equation? How do we help enable more people and organisations to undertake innovative activity in a situation of innovation being asked for and encouraged, and not just when things are falling apart and innovation is the one of the few options left?

Well, one option is to look at strategic support for innovation. Is innovation actually given explicit support in the priorities and planning of the team/organisation? An innovation strategy (or a more general strategy that incorporates innovation) is about helping innovative activity and the associated experimentation and learning occur before it’s absolutely necessary, so that innovation can be more deliberate and more purposeful process, and not an ad hoc, reactive one.

If strategy matters, then what needs to be considered?

Strategies involving innovation or focussing on innovation are not new. In 2017, for instance, we published a blog collecting some of the innovation strategies that included some element on public sector innovation from around the world, generally at a national level. But given public sector innovation has only garnered more attention since then (e.g. with the release of the OECD Declaration on Public Sector Innovation) we think it’s worth revisiting.

The below are some of the things that we at OPSI have identified (through conversations with our National Contact Points, through case studies and through observations) as useful considerations. They are not hard and fast rules, rather more things or trade-offs that a strategy may need to give attention to. This list is by no means an exhaustive or conclusive, but we hope it is a useful start to capturing some of the things that will determine whether a strategy for (or including) public sector innovation is effective and meaningful.

• Ownership: who ‘owns’ innovation? Strategies are unlikely to get far unless there is an area that has carriage of the agenda in the organisation. Yet, innovation is also transversal – it is something that anyone and everyone can have input into, as it’s impossible to predict where and when a new idea (or the need for one) may arise. How does the strategy ensure that there is someone to drive the agenda (senior leadership, if not the head of the organisation), but also broad-based ownership as appropriate for something that relates to common vision and work of the organisation? For instance, some organisations have created Chief Innovation Officers, in others innovation labs or hubs have acted to help steward the innovation efforts.
• Narrative: it is important to not only identify the ‘why’ of innovation – why do things need to change, why is this an opportunity rather than/as well as a threat, why the agency wants to engage with innovation – but also to ensure that this ‘why’ is resonant with staff. It’s very easy to say “the world is changing, so we have to change” but the argument for change needs to address the heart as well as the head if it’s really going to act as a mobilising force. You are asking people to change what they do, so it’s important that they believe in the case for change.
• Language: should you use the word innovation? Often there are debates about whether the word innovation is overused or has lost resonance. In many ways, the word ‘innovation’ is not the most important thing – the core need is contextualising the concept to the organisation, its environment and its needs, and having a shared (and preferably explicit) understanding. Yet, at the same time, a vocabulary of innovation is important, because this language is an enabling technology for taking lessons across disconnected contexts. Someone who works in accounting may not care what is happening in knowledge management – what does it have to do with them? – but they may care about something innovative that is being done, because the innovation lens makes it easier for them to see the possible lessons to their context. The language of innovation is about how to share and communicate experiences and insights across teams, contexts and sectors that may otherwise not have anything to learn from each other.
• Funding/resourcing: business-as-usual is always resourced, because they are the accepted decisions about how things are done. Yet if new things are going to be tried and experimented with, there will also need to be resources. Innovation involves experimentation, learning and uncertainty. It requires building up or developing capabilities, trying things that might not work, and trying lots of things, some of which may appear frivolous or unsuited to the context. It requires resources – maybe not a lot of resources (sometimes a lot of things can be tried quite cheaply), but it does require some resources. And if a strategy is seeking to change how an organisation engages with innovation, then it will need to involve an actual commitment of resources or be seen as empty words that will lose out in any fight with “but this is how we do things”.
• Ecosystem development: doing things in new ways often requires different types of partners (who can bring new skills or capabilities), new types of partnerships (to allow different ways of working together), and working with existing partners in different ways (reflecting new understandings or priorities). However, an organisation is unlikely to be able to access new partnerships unless it has already cultivated the relationships (and the associated trust). For instance, if you want to procure something you’ve never procured before, and do not know the available suppliers, what you should be looking for, or how to reach them, then you are unlikely to have a lot of success. Yet the role of ‘developing’ the ecosystem of partners and suppliers is often not appreciated or recognised, and is something that is left to individual parts of the organisation to do, rather than being part of a coordinated approach.
• Portfolio approach: It can be risky for an organisation to presume it knows how things are going to play out. We live in an unpredictable world and so a responsible organisation must prepare for unpredictability. One way of doing this is to ensure that the innovation portfolio than an organisation is involved with is mixed, with support and encouragement for different types of innovative projects and processes. OPSI has been working with different jursidictions to better understand what goes into effective innovation portfolio management and will continue to share those lessons.
• Dependence on individuals: because innovation is difficult, and involves going against the status quo, innovation in the public sector has often relied upon exceptional individuals or individuals being prepared to do exceptional things or external forces (crises/windows of opportunity/political heat) or some combination of these (for a more detailed look at this, see OPSI’s work looking at the innovation systems of Canada and Brazil). Therefore, the major dependency of innovation efforts has generally been on key people. Innovation is unlikely to ever become embedded as a core capability or function, then, unless it is integrated in a deeper fashion (e.g. into the structures, processes and strategic and resource planning of the organisation). Many of these elements are still fairly vulnerable to changes in leadership (political or positional). In addition, for every good leader, there is a an equal risk of a ‘bad’ leader and/or someone who is not supportive of allowing a more decentralised or empowered view of innovation across an organisation.
• Trailblazing/pathfinding role (who sets precedent): a common issue when undertaking innovative activity in an organisation is that you will often soon clash with existing processes and procedures, because you are trying to do something that has not been done before. Innovators can often suffer significant transaction and friction costs navigating approvals and exceptions, even before they get to do the innovative thing. This trailblazing/pathfinding role, the job of setting precedent, however is rarely recognised explicitly – it is often just seen as part of the natural cost of trying to do something different, even though other parts of the organisation may benefit from it or build on the precedent once it has been set. Yet if this is not recognised, then it is setting a default that this hard work will go unrecognised, and thus the lessons or implications may be missed. This is a role that innovation labs often do, but it can foreseeably be played by any part of an organisation. If innovation is to be embedded, this role should be recognised or at least appreciated in some form, otherwise there will be ongoing learning costs for those trying new things but with limited ability for other areas of the organisation to leverage those investments.
• Long-tail (the distance between the vanguard and the baggage train): how do you keep an organisation together when some parts are learning or experimenting much more than others? For an organisation to maintain coherence/a common sense of being an organisation, leadership will often have a challenge in moderating or managing the rate of change for the agency as a whole. Once some bits start to build capability, confidence and appetite/vision, it can be easy for them to run ahead, which can be problematic when there are other areas focussing on existing priorities. It is easy in such a situation for different parts of the organisation to view each other with a degree of scepticism, jealousy, suspicion or bewilderment, as their different day-to-day experiences give them different interpretations of what’s important or necessary.
• Evolutionary/revolutionary: innovation does not arise out of nowhere. It builds on what has gone before (both good and bad) and it is rare that there is an organisation that has not engaged with innovation in some way, even if it has been small. It can be important for a strategy to build on the past, rather than advocating a complete shift, as this can be more easily seen and integrated as a continuing journey, rather than a completely new one which may feel alienating to those who thought the organisation was doing well. At other times, however, it may be important to stress that there is indeed a significant break from the past, because of the need for change – for instance when there has been an institutional failure or a big shift in the organisation’s mission or underlying purpose.
• Demonstrating results: there is often a tension between short-term wins and longer-term ambitions when it comes to innovation. The unstated theory of change is often “if we deliver Y, then we’ll get to do X and Z later”, with the thinking being that the appetite for change will grow once results have been shown, but quite often Y stays as the thing being done because the room for change only goes so far. However, demonstrated outcomes are clearly a big part of gaining broader engagement from others, as well as ensuring executive buy-in, advocacy and support. Therefore, any demand for, or focus on, demonstrating ‘quick wins’ should be careful to ensure that these are explicitly linked to longer term processes and work programmes.
• Change/innovation fatigue: it seems to often be the case that those who are most likely to complain of, or be concerned with, change and change fatigue are those who are further removed from the intent behind the change processes going on (or at least who feel removed from it). If change always seems to be happening to you, rather than with you, then it’s probably no surprise if you’re going to get tired of it or think that it. This suggests a focus on ‘co’ is pretty important (co-discovery, co-design, co-creation, etc.) if support for momentum is going to maintain momentum over time.
• Counterweights for innovation: the public sector has many things that act as a force against innovation (e.g. risk aversion, lack of competition, accountability processes), but does not really have many ‘counterweights’ that reliably act as a force for innovation. There are some that can play this role if deliberate attention is given, however, include planning, structures and processes. If something can be made explicit in planning regarding capital investment outlook/workforce planning/systems then, this can help build some inertia/momentum for innovation within the organisation. Structures (e.g. innovation teams/labs/positional responsibilities for innovation elements) can also help, by providing capabilities that can help articulate where innovation is or could be needed and why. There is still, though, often a lack of ‘heavier’ counterweights, or things that bring their own structural pull for innovation just through their existence. We are only beginning to appreciate what such counterweights might be, but some examples might include a public sector R&D budget as is done in many private firms, or established mechanisms of challenge by which citizens, service users or public servants can raise concerns with existing practices that may be stopping them from doing something of value. Organisations may want to consider what forces for innovation they may be able to marshal and that the strategy can empower or draw attention to, to balance out the inertia within the organisation for established practices, investment pathways and default assumptions.
• How to know if its making a difference: the easiest way to know if a strategy is doing what is intended is to have clear ambitions. If the strategy is to ‘improve the innovation culture’ or ‘better using innovation to achieve organisational aims’ then it may be difficult to assess or objectively know if things are improving as desired. If, on the other hand, the ambition is to ‘draw on innovation to deliver services that are recognised by service users as reliable, trustworthy and responsive’ then it will be easier to translate ambitions into a benchmark that can be assessed. The vaguer or more abstract the ambition, the more difficult it will be to know whether it is being achieved, and the weaker the case for why innovation is needed to reach it. If innovation is to be of value – to avoid change for the sake of change – then it is important to have a clear sense of what is being reached for. In instances where that is about more radical change (and therefore hard to articulate or envision, because if you can anticipate it then it is unlikely to be significantly different), then the stated ambition may need to be about the extent of the break from the current state. Measurement of innovation is complex; clear ambitions can make it easier to recognise whether progress is being made, and can provide some of the ‘pull’ factor for ensuring innovative activity occurs.
• Time horizons: A strategy serves little purpose if it is not intended to stay the same for more than the very short term – if you keep changing what you are aiming for, it’s not a (good) strategy, as it does not help guide long-term decisions and investments. Yet a long term strategy in a context of high uncertainty is a fool’s game, as it may be overtaken by events and changed circumstances. One approach that can be used is to consider different horizons (e.g. the 3 Horizons approach) which can help articulate near, medium and long-term considerations, without having to rewrite the strategy every time something changes.

OECD Declaration on Public Sector Innovation

In 2019, 41 countries adhered to the OECD Declaration on Public Sector Innovation. This Declaration is not a strategy in itself, rather a collection of principles based on international lessons and experiences. For instance, it notes countries commitment to actions under five headings:

1. Embrace and enhance innovation within the public sector
2. Encourage and equip all public servants to innovate
3. Cultivate new partnerships and involve different voices
4. Support exploration, iteration and testing
5. Diffuse lessons and share practices.

The Declaration contains a number of elements that we think are relevant to a national and organisational context, and that if adapted to a specific setting should hopefully entail addressing many or all of the things listed above. Nonetheless, discussions with public servants from different countries suggest that it’s useful to have the checklist of some of the things that could be considered in developing a strategy for/including innovation.

What does your strategy look like?

To help us learn, and more importantly, to help public sector organisations around the world, we are seeking to build up a collection of public sector innovation strategies (e.g. see this one from the Victorian Government in Australia). If your (public sector) organisation has an innovation strategy, or a strategy with a significant focus on innovation/trying to spur innovative activity, why not share it with us and the world? We will then share these through OPSI and, over time, build more structured guidance about what works (and when) in helping ensure strategy documents can help make innovation easier and more deliberate, and that they lead to real results.

We’re also keen to gather any hints, tips or more formal guidance that might exist about putting together an effective innovation strategy/agenda. If you have some, or know of any, we’d love to hear from you.

Help us work out what works when it comes to strategy and innovation

None of these elements are set in stone. This is an area where organisations are still learning, so we’re seeking your advice, experience or input about what you think works when it comes to helping strategy be a useful tool for innovation. Please let us know your thoughts in the comments below, by email, or on Twitter. We will follow-up with a post about the examples and input we receive.

[1] Peter Drucker (allegedly/apocraphally) https://www.forbes.com/sites/andrewcave/2017/11/09/culture-eats-strategy-for-breakfast-so-whats-for-lunch/#22acdfc7e0fc