Innovation in the Public Sector - Literature review Example

?CHAPTER II LITERATURE REVIEW While a considerable amount of research has transpired during the last forty years regarding innovation among the private companies, there exists a substantial knowledge gap as regards innovation in the public sector, where there is only a limited amount of quality research on the subject (Mulgan & Albury, 2003). The objective of this literature review is to provide an overview of innovation within the public sector, deriving from American, European, and UK theoretical and empirical reports from 1999 up to the present. Innovation – What is It? Successful innovation deals with creating and implementing new services, products, processes, and means of delivery which bring about a considerable increase in the improvement level of the quality, effectiveness, and efficiency of outcomes, as defined by Mulgan and Albury (2003). This definition seems straightforward and lucid in its meaning, but it conceals the actual intricacy of this subject, as with majority of the definitions of innovation. It was observed that the innovation process is social, interactive, and extensive; numerous individuals with various resources, competencies, and capabilities have to come together in order to successfully innovate (Leadbeater, 2003). Forty years of studying innovation within the private sector and nearly twenty years of curiosity for the innovation within the public sector has demonstrated that innovation is a complex trend that comes out in the context of many interceding factors, and there exists no universal formula that can be implemented to guarantee its success (Borins, 2001). Why Innovate Within the Public Sector? At least potentially, common to all companies are political motives for innovation (Mintzberg, 1989). However, these political motives are, by nature, less acquiescent to analysis and rational planning. When taking into account the more strategic, economic motives, these are ostensibly more pertinent in the private sector than the public. Public companies are not likely to survive within markets where the level of competition is high. Compared to business, public companies generally exist within a more complicated social system, with values and objectives that are more vague and hard to put a figure on (March & Olsen, 1989; Lewis & Hartley, 2001, Denis, Hebert, Langley, Lozeau, & Trottier, 2002). There are also other restraints, including the desire or need to avoid “rocking the boat” for susceptible service users. On the whole, the risks are usually greater and the motivations to innovate are lower in the public sector than in the private sector. Innovation in the public sector may thus come to be regarded, at least in some situations, as an “additional burden or optional extra” (Mulgan & Albury, 2003). Then again, there are essential drivers and contentions in favor of innovating within the public sector. The image and reputation of local and national governments can be enhanced by exploiting innovation in three key approaches. First, currently and in the UK and USA (Moore, 2005) in particular, public companies are attacked on a regular basis for their efficiency levels and service quality. They may be critically compared to private institution working in the same subject areas. Second, administrations are eager to send off a public image that will attract private investments and increase global appeal. One example can be derived from the field of academic research. This impetus is also intensely apparent in the embracing of “e-government” strategies and/or ICTs by the government and other public companies (McLoughlin et al, 2004). Third, the government must call for votes, and/or be interested in the fulfillment of manifesto obligations or austerely, in marking their identity on the public sector as an outcome of elections or observed changes in public opinion. In a dynamic society, innovation is critical factor in the effectiveness of public service management (Hartley, 2005; Walker, 2004; Mulgan & Albury, 2003), typified by “hyperchange”. Barrett (1998) defines hyperchange as a chaotic, discontinuous, exponential, and linear change combined. As a result, a more “holistic” government is demanded by the state and the public sector. This brings about an array of various public service institutions, many of whom are involved in duties that are socially critical (Donahue, 2005), pressured to enhance their ability in developing common standards of data, sharing information, and changing practices where these are relevant to their relationship with other institutions (Walker, 2004). Furthermore, it is argued that only through the innovation process can public services be shifted out of a 20th century mode of “mass provision” to a more personalized mode (Albury, 2005). Society is becoming more and more diverse, and people are becoming more insistent of their privileges to public service. The hyperchange mentioned earlier, new forms of family and social organizations, new practices in work, and new information and communications technologies have all resulted in a disintegration of social groups that were previously homogenous, such as those based on class stratification. One repercussion of this rising demand is that consumers generally expect that services can be accessed 24/7. Nowadays, the old “9 to 5” availability and accessibility provision of services may no longer be good enough to clients where both of the parents are working, and are more and more able, for instance, to order products online and decide when they get to be delivered. In addition, Better quality is also expected, whether as a result of public pressure, the dictates of national audit processes or those of supranational bodies like the EU (Karmack 2004). Ultimately the aim is increasingly, to fit services to the citizen, rather than vice versa. Almost by definition, without innovations in the areas of staffing, organisation and delivery, service agencies will not be able to adapt to these changed demands. Public service organisations are often under as much pressure to cut costs, reduce waste and improve efficiency as private sector ones. Indeed, there is a historic tendency for costs in the public sector to rise faster than those in the rest of the economy (Mulgan and Albury 2003). This stems primarily from the general lack of competition. Here, innovation is seen to be a mechanism which will stimulate a more commercial orientation within public services. In particular, government increasingly focuses on the skills required amongst public servants in order to build the capacity and ability to administer and deliver those core state functions which are less amenable to being provided by purely private actors (eg defence, welfare) (Kamarck 2003). Changes in this area often, though not always, involve the integration of ICTs into the administration or delivery of public services. Despite these many drivers, innovation generally remains a fragile and unpredictable process, with a high rate of failure, particularly in the public sector (Tidd et al 2001, Hartley 2005). In some ways this is inevitable; if all innovations could be predicted in advance the term would lose all meaning. But the lack of clarity in studies of innovation is also a consequence of a lack of agreement on what actually defines and constitutes innovation (cf. Greenhalgh et al 2004 and section 1.2 below). In order to better understand the benefits and processes of innovation, therefore, it is useful to establish a clear definition, and to identify the different types of innovation that exist at the present moment. That is the topic of the next section. Types of Innovation Various categorisations of innovation have been put forward by the existing literature. A common typology applicable to both private sector and public sectors differentiates between three types of innovation (Baker, 2002), i.e. Process; Product/Service; and Strategy/Business Concept innovation. In our reading, we have come across two other types of innovation relating to the delivery of public services and the wider system interaction. Innovations in the area of strategy/policy refer to new missions, objectives, strategies and rationales that signify a departure from current reality. Service/Product innovation results in changes in the features and design of services/products, while delivery innovation involves new or altered ways of delivering services or otherwise interacting with clients. Process innovation itself came to prominence as a result of the quality and continuous improvement movements and refers to the way new internal procedures, policies and organisational forms may be required for supporting innovation. Finally, innovation in system interaction new or improved ways of interacting with other actors and knowledge bases, changes in governance Read More