Social Entrepreneurship Chapter 9 Social Entrepreneurship in the Public Sector

Opening Discussion Read the case of Seattle’s Solid Waste Utility and answer the following questions: What factors may have led to the failure of the recycling plan? What were the key factors that led to the success of the Solid Waste Utility plan?

Chapter Outline Context of public sector entrepreneurship New public management (NPM) and Reinventing Government New public service (NPS) Current practices and approaches

Context of Public Sector Entrepreneurship Because government is responsible for the public good, government entrepreneurship is social entrepreneurship – the process of creating value for citizens by bringing together unique combinations of public and/or private resources to exploit social opportunities. Social entrepreneurship includes entrepreneurship in the operations, outputs, and outcomes of public sector organizations.

Context of Public Sector Entrepreneurship This entrepreneurship is influenced by the nature of the public sector. Limiting factors include: Multiple, ambiguous, hard-to-measure goals Hard-to-risk taxpayer money Limited managerial autonomy and high visibility Short-term budgeting and election cycles Bureaucracy and civil service protecting the status quo Lack of incentives for improvement Concerns about increased autonomy of public managers

Context of Public Sector Entrepreneurship There are, however, also facilitating factors: Goal ambiguity can increase managerial discretion. The media can be used as a source of power. Outsiders can be co-opted. A study of public managers found that most managers: Felt positive about entrepreneurship. Thought it would improve performance. Thought the workplace could be designed to foster employee entrepreneurship.

New Public Management (NPM) Was developed in the late 1980s to counter excessive government bureaucracy and hierarchy Suggests that managers be more entrepreneurial and use business-sector, market-oriented principles to improve efficiency Establishes ten principles for government: to be catalytic, community-owned, competitive, mission-driven, results-oriented, customer-driven, enterprising, anticipatory, decentralized, and market-oriented

New Public Management (NPM) Entrepreneurial techniques would enhance flexibility, responsiveness, efficiency, and innovativeness. Techniques are still widely used today. Some concerns have been raised: Reconciliation between decentralization and need for control Promotes a view of individuals as customers rather than citizens

New Public Service (NPS) Developed in reaction to NPM Draws on work in democratic citizenship, community, and civil society Public sector and public administrators should: Serve society Build the public interest Think strategically and act democratically Serve citizens, not customers Accept complex accountability Value people, not just productivity Value citizenship and public service above entrepreneurship

New Public Service (NPS) Moves away from using entrepreneurial techniques from business Is based on model of owners using their resources States that public administrators are not owners, but stewards of public resources Sees importance of developing innovative solutions Advocates carrying out public entrepreneurship in a shared-power, collaborative, multisector setting

Public Sector Innovations Eggers & Singh authored a guide for public sector innovation. Innovation can come from internal (staff, partners) or external (citizens, partners) sources. Each can be strategically used for the innovation process, which includes: Idea generation Selection Implementation Diffusion

Public Sector Innovations Eggers & Singh’s framework for the first stage of the innovation process Figure 9.1

Encouraging Social Entrepreneurship Government can take steps to encourage social entrepreneurship: Lay the foundation: support, promote, recognize, convene stakeholders. Set policy: new tax structures, agency R&D policies. Develop and leverage resources: partner with foundations and business, coordinate volunteer resources.

Culture of Performance Improvement The Government Performance and Results Act of 1993 (GPRA) instituted standards for public agency performance improvement. The Office of Management and Budget produces an annual report on agency performance. A performance improvement focus has been continued in subsequent administrations.

Culture of Performance Improvement Recent recommendations include: Build a learning culture. Balance top-down targets with bottom-up innovations. Ensure management commitment to performance improvement. President’s 2014 budget expects agencies to: Test new practices to identify what works. Adjust and reallocate resources or change practices based on evidence of what works. Constantly seek lower-cost ways to get the job done.

Social Entrepreneurship Incubators State-level initiatives can also be used to support social entrepreneurship; for example: The Louisiana Office of Social Entrepreneurship was created in 2006. It launched a state-wide initiative to promote citizen involvement in social entrepreneurship. It established the Social Innovators Institute to recognize and support the most promising statewide social innovations.

New State-Level Financing Minnesota “pay for performance” bond proposal: Plan would offer private investors a 4-percent return on investments made to needed state services. State would pay nonprofit providers, but only if they produced results that save the state money. Investors get their return no matter what. Nonprofits carry the risk and get paid only if they succeed.

What about Korea?

Discussion Consider the points just made about the social entrepreneurship of public agencies and answer the following questions: How might social entrepreneurship differ depending on the level of government (federal, state, local)? How might the different branches of the federal government differ in terms of entrepreneurship? When might entrepreneurship conflict with other public values?