Innovation in the public sector is challenging, both for governments and for providers – why?

10 December 2018
By Clementine Vandeleur
Deputy Director
Serco Institute
Clementine Vandeleur, Deputy Director, Serco Institute

Innovation has been prolific in the B2C and B2B spheres, often driven by entrepreneurial thinkers whose business models have harnessed the power of technology, information and the network effect of the consumers they reach. Further enabled by organisational flexibility and access to private finance, they have been able to test, trial and scale new business models at pace, without the pressures of making short-term profit or delivering immediately on their missions.

Innovation has not just changed the status quo over the last decades, innovation per se has become the status quo. As a result it has raised the expectations of citizens in all aspects of their lives. It is widely realised, consciously or subconsciously, that innovation has brought a world of opportunity (as well as disruption). It can drive greater meritocracy, increased standards of living, and perhaps offer whole systems change for the better – in how we govern ourselves, resource ourselves, and even where we might live.

However, the environment that innovation thrives in is often quite different from that in which governments and government service providers have to operate, making innovation in the public sector particularly challenging. The often unavoidable realities of fiscal pressure, short political tenures, large and inflexible organisational structures, siloed budgets, purchasing bias towards lowest cost services, low tolerance for risk, and distractions of momentous foreign policy decisions, not to mention having to tackle some of the most complex societal challenges, does not lend itself well to enabling the transformational change in public services that citizens have come to expect and value elsewhere in their lives. What this does mean is that the opportunities for transforming public services at the scale that the private sphere has demonstrated, are enormous if they are approached in the right way and made achievable.

This is not just idealistic thinking, rather it is a necessity given the drivers of social, economic, and political change make citizen’s needs ever more complex. Ageing populations, migration flows, the rise of cities and the decline of rural populations, displacement of work, and increased crime (including cybercrime) place further stress and strain on existing public services. This makes transformation a burning priority, both in the way services are delivered and what services are delivered.

So we need new approaches and fresh thinking to create the environments which enable innovation to be developed in the public services that governments currently provide and purchase, but also to enable the next generation of public service solutions to flourish. This might mean overcoming the artificial divide between one sector and another, and between commissioners and providers, so that they can work together to build services that drive societal outcomes; or rethinking purchasing behaviours and payment mechanisms so that providers have margin to innovate; or using completely new models of delivery and financing. There are many areas and approaches to explore.

Through the Serco Institute, we seek to answer some of these questions to enable innovation to work better in the public service sphere. We aim to do this through engaging with as many different voices from across the public, charitable and private spheres - from academics, technologists, start-ups, outsourcers, procurers, policy makers, charities and social enterprises - in order to test and trial public service innovation and thinking free from the inherent restrictions that hold back transformation at scale.

This is not just idealistic thinking, rather it is a necessity given the drivers of social, economic, and political change make citizen’s needs ever more complex. Ageing populations, migration flows, the rise of cities and the decline of rural populations, displacement of work, and increased crime (including cybercrime) place further stress and strain on existing public services. This makes transformation a burning priority, both in the way services are delivered and what services are delivered.

So we need new approaches and fresh thinking to create the environments which enable innovation to be developed in the public services that governments currently provide and purchase, but also to enable the next generation of public service solutions to flourish. This might mean overcoming the artificial divide between one sector and another, and between commissioners and providers, so that they can work together to build services that drive societal outcomes; or rethinking purchasing behaviours and payment mechanisms so that providers have margin to innovate; or using completely new models of delivery and financing. There are many areas and approaches to explore.

Through the Serco Institute, we seek to answer some of these questions to enable innovation to work better in the public service sphere. We aim to do this through engaging with as many different voices from across the public, charitable and private spheres - from academics, technologists, start-ups, outsourcers, procurers, policy makers, charities and social enterprises - in order to test and trial public service innovation and thinking free from the inherent restrictions that hold back transformation at scale.

We need new approaches and fresh thinking to create the environments which enable innovation