The Innovation Imperative

Four Practical Steps to Generate Innovation in Government

Jitinder Kohli examines ways that the leaders of federal agencies and departments can stretch tight budgets imaginatively and provocatively.

This column is adapted from an article originally published in the British magazine, Public Servant.

When the next Congress comes back after the holidays, one of its priorities is going to be coming up with a workable plan to reduce the federal budget deficit. But while the politicians haggle about the precise way in which in Washington should bring down deficits, what should the leaders at the departments and agencies in the Obama administration do? It seems pretty obvious that budgets will be much tighter over the next few years, which means the heads of these departments and agencies will need to find new, better, and cheaper ways to do things.

How? Well, the answer has to be innovation. Economists say that innovation drives more than 85 percent of productivity growth in the private sector. In the public sector, though, where productivity growth has been stagnant for a decade, innovation is much harder to come by. So what should public-sector leaders do to foster innovation?

The first stage of the innovation process is generating great ideas. Every organization needs a strong flow of promising ideas on how to do things better. Here are four techniques that we think Obama administration leaders should adopt to foster good ideas.

First, unleash the creative talents of staff across the public sector. Public-sector cultures discourage staff from sharing their thoughts on how things could be improved in their workplace. There is a sense that new ways of working have to come from the top down, with junior staff feeling their ideas are unwelcome. Reversing this cultural trend is essential.

One approach is to use Web 2.0 technology to seek staff ideas. The Transportation Security Administration, for example, boasts a website that allows staff to suggest new and better ways of doing things. All suggestions are visible and others can comment on them. Ideas can also be rated by other staff and those that receive high ratings are taken to a panel that works out what to implement.

A second priority is ensuring government departments dedicate a small amount of money to gathering and testing new ideas. In the private sector, venture capitalists are always looking to make small investments backing ideas that have a chance of being highly transformative. Even though each individual idea is more likely to fail than succeed, the portfolio overall will include some that will radically change the way markets work.

It’s clearly not possible for the public sector to divert significant funding to this experimentation, but investing 1 percent of departmental budgets in innovation funds is realistic. There should be seed-corn funding for ideas that are as yet unproven but potentially transformative. And the best ideas would get additional funding for scaling. This is precisely the approach that is being tried by the $650 million Investing in Innovation fund set up by the Department of Education as part of the Recovery Act.

Collaborating with outsiders to help solve problems is a third priority. Too often government feels it needs to have the answers to everything. But in reality there is no monopoly of wisdom in government. The federal government is already leading the way in putting data online so that outsiders can mine it and package it in ways that create social value.

Another innovative technique is for government to set out the issues it is seeking to tackle and seek practical ideas. Addressing child obesity is a critical issue of the Obama administration, which has put aside $60,000 in prize money for the best computer application that helps reduce it. During the competition, 95 applications were developed, working to increase parental awareness of how to manage obesity and also helping children learn the importance of a good diet and regular exercise. Many of them were put together at “camps” where developers donated their time over a weekend to help build applications. In return for nothing more than some refreshments and modest prize money, government was able to get creative input from many hundreds of people in solving a key social challenge of the day.

And finally, a fourth priority must be the dedicated resources needed to lead the process of innovation in departments. Innovation teams shouldn’t be charged with being the innovators because that just gives others an excuse to sit on their hands. Instead, they should be responsible for fostering a culture across the department and their partners of innovation, a culture where the creative juices of staff and outsiders are fostered to continually find new and better ways to do things.

Tighter budgets will heighten the need for better and new ways of doing things. But that does not mean that innovation will emerge automatically. Leaders across departments and agencies need to act to promote innovation. The right approach will differ across departments and each department’s leaders need to work out what is best for their context. But taking action should not be an optional extra. Indeed, without new ways of doing things, tighter budgets will lead to significant cuts in services.

Jitinder Kohli is a Senior Fellow at the Center for American Progress.

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Jitinder Kohli

Senior Fellow