Innovation and the Public Sector

Note: This is a recap of some of the points I made at an IOCN event. I’ve also added a few additional points.

What are public service’s unique conditions for innovation? What are the barriers?

We can probably see it more clearly when we compare public sector with the private sector.

Three things to compare:

• Incentive
• Accountability system
• Focus

Incentive

In the private sector, and maybe especially in large for-profit organizations, you can almost always use money, revenue or profit as leverage. Business people have a strong incentive to create profit.

A business is always in a mode of exploration, and in most cases it’s about exploring innovative ways to make more money.

In the public sector, although we also struggle for funding, but once funding is set in stone, we strive for spending it wisely, not making more out of it.

So the leverage public service has is completely different from that of the private sector. Public service is often in a mode of settlement, and in most cases it’s about settling what we already have.

In the movie Interstellar there’s a quote I really like, it says:

We used to look up and wonder at our place in the stars. Now we just look down and worry about our place in the dirt.

Interstellar (film)

I think that sums up the difference in a very very succinct way.

In terms of incentive, the public service’s unique challenge is the lack of incentive to explore, and its unique advantage is a relatively stable funding climate, which is actually not bad for innovation.

Accountability System

There are four major types of accountability systems common in organizations, and they’re differentiated by the level of control and where that control comes from.

They are: the bureaucratic accountability system; the legal accountability system; political accountability system; the professional accountability system.

Bureaucratic governance is based on established bureaucratic control. Legal governance is based on the rule of law. Political governance is based on political authority. Professional governance is based on established expertise.

In the private sector, the most common accountability systems are either bureaucratic – such as in large corporations – or professional, mostly in startups and high tech sectors.

Many notable private sector innovations come from organizations where expertise is highly respected, meaning that, at the very least, they sustain a partially professional accountability system, albeit mostly in a very local way.

By contrast, in the public sector we primarily have a bureaucratic system, and on top of that, we also have a political system.

In terms of accountability system, the public service’s unique challenge for innovation is perhaps the chronic lack of sufficient respect and support for expertise, while the unique advantage is its ability to use political or bureaucratic power to clear barriers for innovation.

Focus

Private sector often do more disruptive changes and shifts for both good and bad reasons; while public sector is often much less radical its change approach, again for both good and bad reasons.

Sometimes disruptive change helps an organization to change faster in order to create a radical focus towards a devoted new goal, even when the downside is really huge — the classic example in the private sector being firing people just to balance the financial sheet for the sake of the shareholders.

Imagine you’re running away from a bear who’s chasing you closely. You’re carrying two large backpacks, wearing a very heavy explorer raincoat, and holding your two kids with both of your arms.

So what do you do? Would you say, hey even though I definitely want to save my kids, I’m not gonna lose all those pricey stuff so I’ll just reshuffle how I carry my backpacks and raincoat.

Or would you just throw out your backpacks and heavy raincoat and focus on carrying your kids to safety?

It’s a lot easier for private sector to achieve that radical focus, while it can be a lot harder for public sector to do the same.

Nowadays both private and public sectors face three major instabilities:

• Unstable management
• Unstable team
• Unstable strategy

The difference is this: those instabilities are often opportunities in the private sector, while they are often barriers in the public sector.

The unique challenge for public service is that it can be extremely difficult to create a radical focus in an effective and efficient way, especially when we experience those instabilities.

And the unique advantage of public service is that, we actually have greater opportunity and capacity to take a people-centric approach by taking good care of the people and their growth.

Two Mindsets

To innovate and transform better, we need two mindsets: an infinite mindset, and an activist mindset.

We need the infinite mindset because both innovation and transformation are not the result of winning, but the result of constant learning, continuous experimenting and staying creative — it never ends, it’s an infinite journey full of innovative opportunities.

We need the activist mindset because we know top-down caretaking is not always enough, and because caretaking goes both ways, and sometimes we need to take care of the system from the bottom-up.

Maybe “bottom-up” is a bit overrated, because the way I see it, the middle management’s allies are not necessarily at the top, but probably at the bottom.

Change is more likely to happen from the middle to the bottom, it’s middle-down rather than top-down, and once the bottom and the middle are aligned, we can change from the middle-up, instead of bottom-up.

Middle management might be more powerful than we think, because middle management owns all the subcultures that separate the executives and the working-level, and that puts them in the best strategic position to nurture a movement and initiate change. The only barrier is incentive.

Leadership

There’s actually a fourth factor, which is leadership.

There’s this classic Harvard Business Review article called Leadership That Gets Results, where it talks about six different types of leadership styles:

• Coercive leadership (demand immediate compliance.)
• Authoritative leadership (mobilize people toward a vision.)
• Affiliative leadership (create emotional bonds and harmony.)
• Democratic leadership (build consensus through participation.)
• Pacesetting leadership (expect excellence and self-direction.)
• Coaching leadership (develop people for the future.)

What’s interesting is this: coercive, authoritative and pacesetting leadership styles are outcome-centric, while affiliative, democratic and coaching leadership styles are people-centric.

By its nature public service is well-positioned to take a people-centric approach to leadership, but somewhere along the way, we’re seduced by the glamours of the private sector mythologies and adopted an outcome-centric approach to leadership. Just because private sector is glamorous, doesn’t mean we have to deprioritize what makes public service great.

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