Innovating in Public sector

Public sector innovation takes root when the knowledge of a problem and its potential solutions come together with people who are able and motivated to do something about it. These people also need the opportunity and the resources to innovate and this suggests the need to consider how the rules, laws, and bureaucratic processes that regulate the public sector can be designed to encourage public sector innovation to flourish.

Public sector organisations are regulated by a complex web of laws, rules and procedures. These include budgeting, resource management, reporting obligations, project management Standardand approval processes, communication protocol, legal frameworks that regulate public sector organisations activities in areas such as privacy, security, or procurement.

While these rules are established for good reasons (protecting the public interest, ensuring ethical use of resources, promoting accountability, establishing common operating procedures for consistency and efficiency), their design may have unintended effects that can inhibit individual and organisational capacity to innovate. For example, regulation may constrain programmatic changes or inhibit co-operation across ministries or in partnership with other sectors.Clarifying and simplifying regulations internal to government Rules, regulations and internal requirements accumulate over time leading to complex interactions that require legal expertise to clarify. Reducing government red tape has been a common focus in many countries over recent years, primarily to reduce the burden for businesses. However, regulatory simplification could also be considered to reduce the burden of requirements on public agencies with a focus on maintaining the public objectives behind existing regulations while considering alternative solutions.

Clarifying the limits of acceptable practice and ensuring a common understanding of these standards can go a long way in enabling innovative practices and identifying the need for regulatory reform. It can also show where rules and regulations may be overlapping and even contradictory, and how changes to one set of rules and regulations can impact others.

Resource flexibility and budgeting agility for more innovation and experimentation. Budgeting and resource allocation is a central process of every public sector organisation, which is usually highly regulated and subject to specific practices, policies and protocol. While their impact on innovation capacity has not yet been fully researched, budgeting processes and rules can be expected to play a role in a number of ways. For example, budgeting policies can influence the available sources of innovation financing in government, as well as the organisational incentives for innovation by determining the possibilities for reinvestment to build innovative capacity and to support organisational priorities. They can also impact organisations’ ability and/or willingness to share funding and/or savings across organisational boundaries in support of shared objectives.

Managing risk and complexity through experimental approaches to project management and service design. Another group of processes that relate to the innovative capacity of public sector organisations are those associated with project management and reforms themselves. Most public administrations regulate their approach to project management through prescribed staged methods that specify common steps and requirements ex-ante for project design and implementation. While some level of standardisation is helpful for good financial stewardship, the nature of the problems that the public sector seeks to address through innovation - ill-structured wicked problems characterised by a high level of uncertainty – can challenge traditional approaches to project management and organisational reform.