Building Capacity for Public Sector Innovation Daniel Gerson Project Manager, Public Employment and Management Public Governance and Territorial Development Directorate, OECD 20 November 2014 World Association of Public Employment Services Paris

Why public sector innovation? Public Sector Innovation means better solutions: effective, efficient, inclusive, sustainable PSI is needed today more than ever: slow growth, fragile public finances, high unemployment, low trust The stakes are high: loss of legitimacy and trust Innovation exists in pockets but is inconsistent across government Public Sector Innovation means better solutions: More effective approaches to solving today’s most pressing policy and service delivery challenges. More efficiency and better value for money in an increasingly difficult fiscal environment, More inclusive approaches that bring diverse voices into each phase of the policy development cycle to produce more responsive solutions, More sustainable solutions that are designed to last by experimenting, testing, and adapting to unique circumstances and changing conditions. Public Sector Innovation is needed today more than ever: Complex persistent social, economic and environmental problems Combined with a more connected, informed, diverse and demanding population In a context of fiscal austerity and increased scrutiny of public spending It is clear that new approaches, ideas and solutions are required. And to drive to these, governments need to think and act differently. The stakes are high: failure to innovate can mean loss of legitimacy and trust At the OECD we know that citizen trust in their public institutions is one of the most important indicators of a well functioning society. Governments who fail to innovate risk being perceived as unable to keep up with the changing needs and expectations of citizens. On the other hand, by reversing this perception, governments, civil servants and the citizens they serve can rebuild trust based on effective and efficient service delivery and a smarter use of public finances. Innovation exists in pockets but is inconsistent across government and not fully exploited The 150+ cases collected so far in the OPSI and the exciting innovations shared over the last two days at this conference prove that innovation happens in government at every level, in every policy sphere, and in every area of activity: Examples: The City Library of Vantaa, Finland, has used co-design methods to significantly increased both customer satisfaction and the social impact that libraries have for community well-being. Caen, France has developed innovative flat sharing for its senior citizens to reduce their isolation and improve the city’s rental occupancy in central locations. Canada used innovative crowd-sourcing techniques to empower organizations and individual Canadians to bring forward ideas about how to harness the power of social finance to improve social and economic outcomes for Canadians. Chile’s ChileAtiende provides integrated “one stop shop” service through a network of over 190 offices across the whole country, a national call center and a digital platform (web and social networks) through which citizens can access multiple services and benefits without having to contact multiple government offices. The question we are now faced with is how we can develop our public sector organisations and institutions in a way that encourages, supports and sustains successful and effective innovation as a core value and activity.

OECD Observatory of Public Sector Innovation This is the homepage of the opsi platform. It shows its main functionalities. Innovation database Library for innovation literature Space for collaboration that is still under development The best way to get to know it is to explore it yourself. (either click the link and go online or use the other walkthrough powerpoint I will send to you http://www.oecd.org/governance/observatory-public-sector-innovation/

Innovations in the OPSI Finland Participatory design technique and prototyping in hospitals Australia: SEDIF Investment fund for social enterprises UK: Social impact bonds in the justice sector Structure Mexico Enhancing budget transparency Program Funding Canada Open Policy Development Open government UK: The Work Program payment-by-results scheme for employment services Australia: Speechbubble Online engagement platform to design services with users Iceland Policing and social media Italy Mobile service counters for social security services Netherlands: P-direct Shared service centre for HR This is just a small tasting menu of innovation that might interest you. In total there are over 150 innovations from over 20 countries. Belgium Rationalising office space in federal government Denmark: Borger.dk Personalised one stop shop Human Resource Korea Single system to manage service complaints Canada: ICT-based training tools for overseas immigration officers Service delivery

How can governments sustain innovation? By taking a proactive and systemic approach to building innovative capacity across the public sector, focusing on: the people involved the information they are using the ways in which they are working together the rules and processes which govern their work For all these reasons, we know that it’s now time for OECD governments to take proactive steps to increase their capacity to innovate within their own organizations and to support innovation that builds public value within their broader societies. The Innovative Imperative is a call to action focused on four interrelated organisational factors that we have identified as having the potential to drive successful public sector innovation, or, conversely, to block it. These factors are: The people involved: civil servants are at the core of public sector organisations and any discussion of public sector innovation needs to begin with the people who are responsible to make it a success. The information they are using: data, information and knowledge fuel innovation. To innovate we need to think more innovatively about integrating new information and learning from it. The ways in which they work together: innovation does not happen in a vacuum, but at the cross-points of organisational and sectorial boundaries. The rules and processes which govern their work: the rules, regulations, processes and procedures which are intended to ensure sound stewardship and accountability have the potential to inadvertently limit organisations’ innovative potential.

Incentivizing staff and building a culture of innovation Ability I can do it Skills (hard and soft) Knowledge Opportunity I am allowed to do it Work design Organisation Motivation I want to do it Intrinsic Extrinsic HRM, management and leadership issues are central to enabling innovation in the public sector. Research and experience shows that innovations come from staff at all levels, from the political right down to those charged with front-line service delivery. Furthermore, innovators don’t innovate in a vacuum, but inside an organisational culture that may support or hinder innovation. Ability: technical skills + thinking and creativity (curiousity: asking right questions more than answers, associative thinking, experimenting) + social and communication (networking, observing, listening, learning) Motivation: intrinsic more important - perceived meaningfulness of work + level of responsibility taken for outcomes + results achieved. Opportunity: resources (not too many), autonomy (process, timeline, not goal), teams, flexibility, engagement. They link together.

Social Communications Competence Activity & Implementation Competence Will new leadership needs require new leadership competencies? Social Communications Competence Activity & Implementation Competence Transfor-mational Leadership Shaping thinking patterns & inspiring staff Ethical Leadership Promoting & setting the example for value orientation Healthy Leadership Shaping working conditions & promoting engagement, empowerment, resilience Authentic Leadership Displaying & inspiring loyalty and integrity

Examples: Data, information and knowledge fuel innovation Share information to spread ideas and practices, maintain pressure for performance, and to develop new cross-cutting solutions Leverage new ways of gathering data Bridge internal (performance) and external (user) information needs Integrate new data into existing processes and learning from it to adapt to changing environments. Examples: Challenge.gov, United States The challenge and prize program at the General Services Administration (GSA) provides an online platform, strategic consulting, training and best practices that enable federal agencies to manage and run public prize and crowdsourcing contests. Citizen solvers, individuals and companies, from around the world can contribute expertise and drive innovation by entering and providing solutions to the federal government’s mission-centric problems. Student Update Facebook and Twitter accounts, Australia  The department of Human Services’ Media Section began monitoring social media mentions of the department several years ago, in the same way it monitors mentions in traditional media. This monitoring led to the recognition that the interactive nature of social media provided the opportunity for the department to join in conversations – providing requested information and correcting misinformation. The department began participating in conversations on social media where it observed that it could add value. The launch of the Student Update Facebook and Twitter accounts allowed the department to take that one step further.

Setting up effective institutional arrangements to support innovation Institutional arrangements, such as agency mandate and level of autonomy, can impact innovation capacity. Collaboration and coordination frameworks might be needed to manage interactions. Accountability for delivery may require specific consideration. The institutional arrangement of a public sector may have an impact on innovative capacity. Here we could explore the range of institutional arrangements such as mandates and innovation units and governance approaches for innovation (e.g. Australia, MindLab in Denmark).. It’s also important to consider institutional arrangements required to deliver change – are these the same as those required to spark creative thinking? E.g. Aus cabinet implementation unit We can also look at collaboration and coordination frameworks to support management across ministries given that effective collaboration appears to be a key success factor in many innovations. Research may explore: The range of institutional arrangements used to spur innovation design and delivery, such as the existence of innovation labs and/or implementation units. Arrangements to involve various actors and end-users within and outside governments throughout the innovation life-cycle

Processes and rules should help, not hinder Rules and processes may have unintended effect that limit organisations’ capacity to innovate Altering regulations can change incentives & ability to innovate. Misunderstanding of rules may lead to unnecessary risk aversion; removing limits is not always enough; limits can be self-imposed. New, more flexible norms and guidance Simplification efforts should be accompanied by new approaches to assessing and managing risk and performance . Increasing flexibility needs to be balanced by public service values and a robust integrity framework. Innovative problem solving approaches Focus on outcomes and adapt existing processes Rely on collaboration, pilot testing, experimental design and prototyping NemID, the Netherlands (single e-signature across government) The scale of the project including both public and private organisations resulted in a large amount of interdependencies, which had to be tendered on many levels including technical, judicial and political. Adoption of agile development, user involvement, tight supplier management, breaking down the project into manageable chunks and sustained close collaboration with suppliers and stakeholder organisations were introduced as solutions. Identify and fix issues on the go, supported by manageable deliveries and implementations in iterations enabled the project to continuously make any necessary improvements based on second order learning in the project. Cardboard Hospital, Finland The Finnish government has used prototyping to redesign hospital features by using cardboard cut-outs of furniture and tools with a group of hospital employees, architects and patients. Their “Cardboard Hospital” innovation allowed them to experiment with a particular approach to co-creation: The cardboard hospital provides an opportunity for staff and architects to meet the patients as users of hospital environment and services as co-creators of that infrastructure. The central idea is that by constructing physical spaces, one is situated in the environments through all senses, thus enabling new ideas and their evaluation. Through prototyping activities that aim for a concrete end-result the cross-disciplinary group has to negotiate differing needs in a constructive way. The props work as representations that can be combined to achieve different elements of hospital spaces (walls, screens, tables, benches, ICT etc.) and they were coated with a film that allowed writing on them.

OECD Public Sector Innovation Framework HR regime Individual Organisation Public Sector Society Generating & Sharing Knowledge & Ideas Empowering the Workforce Adapting Rules and Process Reviewing Organisational Design We have identified four interrelated organisational factors that have the potential to drive successful public sector innovation, or, conversely, to block it.

Thank you daniel.gerson@oecd.org http://www.oecd.org/governance/observatory-public-sector-innovation