Measuring Innovation in the Public Sector: a literature review

Box 1: Definitions of innovation in the public sector

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Box 1: Definitions of innovation in the public sector

  • An innovation is the implementation of a significant change in the way an organisation operates of in products provided. Innovations comprise new or significant changes to services and goods, operational processes, organisational methods, or the way the organisation communicates with customers. The innovation must be new to the organisation, but it may have already been implemented by other public organisations or businesses. The innovation must constitute a significant change for the organisation. It must significantly affect the operations or character of the organisation. An important requirement is implementation. Innovations much have been taken into use by the organisation. However, organisations do not need to have developed the innovations themselves.

  • A product innovation is the introduction of a good or service that is new or significantly improved with respect to its characteristics or intended uses. This includes significant improvements in customer access, ease of use, technical specifications or other functional characteristics that improve the quality of the good or service offered.

  • A process innovation is the implementation of a new or significantly improved method for the creation and provision of goods and services. This includes significant changes in methods, equipment and/or skills with the aim of improving quality or reducing costs or time of delivery.

  • An organisational innovation is the implementation of significant changes in the way work is organised or managed in your organisation. This includes new or significant changes to management systems, workplace organisation and/or programs to improve learning and innovative capacity.

  • A communication innovation is the implementation of a new method of promoting the organisation or its goods and services, or new methods to influence the behaviour of individuals or others.

  • Innovation activities are all steps which actually, or are intended to, lead to the implementation of innovations. These include development and implementation activities conducted in-house, in cooperation with others, or externally through acquisitions of external knowledge, machinery, IT or know-how related to innovations. Innovation activities also include training and other competence building activities necessary for the development and implementation of innovations.

A second key element of the framework is innovation activities. These comprise the main inputs to the innovation process, but also provide information on the innovation process itself; that is, what types of activities are being undertaken and also what types of work or technology is outsourced or acquired.

The following initial list of innovation activities was used in testing with respondents:

  • In-house activities:

    • In-house research and development (creative work to increase the stock of knowledge towards the development of innovations)

    • Other in-house innovation activities (planning and design; market research and other user studies; other activities to implement innovations, such as feasibility studies, testing and other preparatory work)

    • Internal or external training and education of staff for innovation activities (development and introduction)

  • External activities:

    • External research and development

    • Other consultancy services (management, market research, technical, etc.)

    • Acquisitions of other external know-how (patents, licenses, other types of knowledge)

    • Acquisitions of machinery, equipment and software.

The framework also developed proposed lists for:

  • Information sources – channels of knowledge transfer, both formal and informal, arising from interactions between public organisations and other enterprises, citizens etc;

  • Procurement practices – as a tool to promote innovation activities. For example, acquisition of services, components or software from ICT suppliers, or contracting management consultancy services;

  • Driving forces – people, organisations or other factors that push organisations to innovate. Examples include new policy priorities, citizen feedback, new laws or regulation, staff and management;

  • Organising innovation – innovation strategy (e.g. an innovation strategy is included in the overall vision or strategy of the organisation), the role of management (e.g. managers give high priority to developing new ways of working), organising innovation activities (e.g. the organisation has a development section), and competences (e.g. staff time devoted to learning about new technologies or other new knowledge);

  • The role of ICT;

  • Measuring effects or objectives – efficiency, quality, ICT, organisation and staff, and other factors (e.g. improved health and safety); and

  • Barriers – political factors, bureaucracy, other internal conditions such as lack of incentives for staff to innovation, and external conditions like resistance of users to changes.

Mapping user needs

In recent years the public sector has started to deal with outside groups to improve responsiveness. This differs to the traditional administrative model. The new approach allows and requires interaction with other groups both to obtain better results and enhance accountability. By introducing customer surveys, focus groups etc., new ways of gathering information on the users exist, which at the same time also allow the processes to be run directly by administrators. Taking a client focus is aimed at greater responsiveness to improve the quality of interaction between public administrations and their clients.

Thus, to ensure the usefulness of their indicators, the MENET project has also analysed user needs through background research, interviews and dialogue with stakeholders from national and regional policymaking institutions and representatives of industry, trade and public sector organisations.

The user needs study was structured in two stages. The first stage conducted open discussions with key stakeholders on what they felt was important to measure on public sector innovation and their views on how public sector innovation metrics could be used. In the second stage, more specific feedback was sought from stakeholders on the questionnaires and indicators developed in the project. The main findings were reported in Mapping user needs: For Nordic project on measuring public innovation.

Figure 2 shows different aspects highlighted by users to focus on in the measuring of public innovation when considering an input-output relation.

The input side was mainly an issue in Denmark, Sweden and Finland. Where Finnish users wanted to look at the monetary side (expenditures), Danish users suggested looking at time (personnel) instead, because it was seen as difficult to specify the economic investments in innovation in the public sector. In Sweden users also mentioned training as an input element.

The process side includes a wide range of issues including how institutions organise their work and act in relation to innovation. Users from Denmark, Sweden and Norway mentioned interest in the initialisation of innovation, incentives as well as the relevance of the framework, like rules and regulations. In relation to that, aspects concerning culture and risk aversion have been mentioned as well as organisations’ ability to share and disseminate knowledge. Danish users put further emphasis on the organisational or management practices used to promote learning, knowledge exchange and innovation, including the use of incentive mechanisms. The process side in the figure accordingly relates to the barriers and drivers for innovation where, for example, the political influence is mentioned by users in all countries. In Finland users mention cost savings and political pressure as relevant drivers and users were interested in some simple questions on organizing innovation. In general these aspects have been discussed in relation to the draft questionnaires.

Regarding the impact/output side, users in all countries found measures of innovative output important, however all also indicated that it could be difficult to define as well as create good and operational measures. Also this aspect is reflected in the draft questionnaire. In the second round of user involvement it was mentioned by some users that the issue was of course interesting, but that some of the questions were difficult to understand and answer. There was for some also a preference for looking at effects rather than objectives by the Danish users.

With respect to the indicators, all users acknowledged that the indicators could be used for benchmarking purposes, monitoring (including good practice), policy making (policy debate, decision making, strategies), improving implementation (including good practice) and common understanding.

Users could also see value in the draft questionnaire; however they identified areas for improvement including length, complexity, stated objectives and definitions. For example, the language in the questionnaire needed to be more ‘understandable’ (though this issue may have arisen due to the questionnaire being in English) and more specific and action-oriented questions might also make it easier for respondents (e.g. “have you in period x introduced a new or changed service?”). The overall definition of ‘innovation’ was also considered to be too broad.

Finally the level and target group of the questionnaire were mentioned by the users. Users expressed concerns that the questionnaire would burden the lowest levels (i.e. those that deliver services, schools etc) and that questions appeared to have a top-down focus whereas research suggests that much of innovation activities in the public sector are bottom-up innovations. The project aimed to investigate these issues further in the feasibility studies.

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