Measuring Innovation in the Public Sector: a literature review

Project 6 - The Innovation Unit

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Project 6 - The Innovation Unit

The Innovation Unit, a not for profit social enterprise that supports innovation in the third sector, education and children's services, and local government, sought to develop models and instruments for measuring innovation activity, innovation capability and innovation results18. They also tested the models and measuring instruments in a junior school, a Local Authority Children’s Services Department and, to a more limited extent, in a secondary school.

Recommendations included:

An initial focus should be placed on measuring innovation capability and large scale innovation activity, defined in terms of innovation projects and ventures.

Further work is needed on developing measures for smaller scale innovation activity and innovation results.

The model of capability, developed by Disciplined Innovation Pty Ltd, that links foundation and innovation capabilities should be used.

Ensuring the Innovation is easy to use, engages leadership teams, generates recommendations, and is valuable to the organisation and not only a process for data collection.

Working with inspectorates to encourage them to be more consistent in their language, observations and judgements about innovation so that in the future their data can be used to validate the index.

Developing a quality mark for the most highly innovative organisations to incentivise them to engage with the Index and use the measurement tool.

The main contribution of the Innovation Unit’s work was a model of capacity developed and its application to assessing innovation capability. The model is based on the pioneering theory of Katz and Kahn (as discussed the Innovation Unit’s report)19 that explored how organisations operate, perform and interact with their environment. The model comprises twelve capabilities that organisations need if they are to sustain superior performance. Six of these are strategic management capabilities:

  • Management – integrating and coordinating activities and sub-systems

  • Strategy – formulating future business plans

  • Opportunity Scanning – tracking trends and gathering competitive intelligence

  • Marketing – maintaining and growing the reputation of organisations and the value of their programmes

  • Production – accomplishing the core tasks of the organisation

  • Administration – measuring, maintaining and recording key resources such as finance, personnel and IT systems.

The six matching innovation capabilities are:

  • Leadership of innovation – inspiring and integrating

  • Strategy for innovation – ensuring alignment, focus and an appropriate portfolio of innovations

  • Opportunity creation – exploiting external discontinuities and networks

  • Culture – marketing the importance of innovation internally

  • Core innovation processes – creating, capturing, assessing and applying innovative ideas

  • Measuring and maintaining innovation – applying the administration systems to innovation.

All twelve capabilities are measured through a platform module which comprises a self-assessment tool, facilitator training, a psychometric tool for individuals, and optional workshops. The assessment process and facilitator training are underpinned by a set of change management principles that emphasise engagement, reflection, linking of theory and practice, and self-managed learning. The Innovation Unit also developed a customised version of assessment questionnaires to test with sample organisations, but it was not published.

Appendix 2 – Nordic countries MEPIN Project

The MEPIN project involved developing a preliminary framework, testing in five Nordic countries, building a model, clarifying relevant definitions, and conducting a common pilot questionnaire.

Developing a conceptual framework

The first stage of the MEPIN project was the development of a conceptual framework20 for public innovation measurement. This drew on existing work on public sector innovation and insights from innovation measurement in the business sector. It was concluded that public sector innovation cannot be measured with the same framework as for businesses. While the differences are not fundamental and a generalised conceptualisation of public sector innovation is similar to that for businesses, definitions and questions need to be different to reflect the specificities of the public sector.

Key elements of the framework include a definition of innovation in the public sector and a set of indicators that capture innovation activities, determinants and barriers to innovation, and forms of external interaction. The preliminary framework has been tested with respondents in all five Nordic countries.

A model of innovation in public sector organisations was developed (Figure 1). In a similar fashion to businesses, public sector organisations need to specify their objectives, invest in innovation activities and organise their innovation process. Innovation may yield outputs in terms of implemented innovations and a broad range of potential outcomes. This entire process is also influenced by a number of drivers and barriers, or framework conditions. An overall model is important for setting individual indicators in the appropriate context.

Figure 1: A model of innovation in public sector organisations – a pictorial representation of how external actors and framework conditions impact on innovation objectives and outcomes.

Box 1 details the definitions developed by the project team for the pilot questionnaire. These definitions have been adapted to the public sector context from a number of sources including the Oslo Manual.

With respect to the scope of innovations in general terms, the four types of innovations – product, process, organisational and marketing – appear transferrable to public sector organisations. In initial discussions, both users and respondents were asked how they understood innovation and also how they viewed the four types of innovations (product, process, organisational and marketing), whether each type was relevant and whether they thought other types of innovations should also be included. The general view in most cases was that all four types seemed relevant and adequately covered innovations in public sector organisations. The term, “marketing innovations” does not seem appropriate for the public sector. On the other hand, there appears to be fairly wide recognition that “marketing” is important for the public sector; promotional and other types of initiatives are important for the success of public sector organisations. Thus, these types of innovations have been termed “communication innovations”.

The preliminary definitions given in Box 1 include the four types of innovations, with the central requirements being that innovations must have been implemented, be new to the organisation itself and constitute significant changes. The report also discusses a number of other types of innovations that have been proposed in earlier studies, such as social innovations, policy innovations, strategic innovations and systemic innovations. In general, the report did not find good reasons to include these additional types of innovations, with the possible exception of strategic innovations.

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