It is in relation to the citizen that the need for public sector reform is greatest. Despite the public sector’s ardent willingness to adapt, implementing these ‘profound reforms’ remains problematic.

In 2009, when the financial crisis appeared to be at its peak, I wrote a column for the Danish weekly, Mandag Morgen. In it, I argued that it was necessary for the public sector to take action and thereby demonstrate how important the public sector is to our economy when the private financial markets fail. The public sector alone was in a position to provide bailout packages to the banks, acquire crisis-hit companies and implement more sensible regulation of the financial sector.

At the time I wrote that the public sector was part of the solution. Today, however, it increasingly appears as if the public sector is part of the problem.

The most significant welfare areas – both in Denmark and in the countries with which we compare ourselves – require things to be done very differently. By this I mean that reducing expenditure in certain areas by a few percentage points or prioritising slightly more rigorously is not enough. On the contrary, what’s needed is a fundamental transformation of what we perceive to be public service. One could call this ‘profound reform’.

Profound reform is about ascertaining a new set of principles for defining public service and using these principles to redefine organisations,  projects and processes. An essential aspect of profound reform is that its guiding principles can emerge from many sources, for example internally within public organisations, in not-for-profit organisations and NGOs, in the private sector, or among the citizens themselves.

The consequences of profound reform are barrier-breaking for public sector managers and their employees, since the profound reform necessitates a public sector that:

- Shows empathy for the individual citizen, family and local community. It is thus based on greater sympathy for the citizen than for the system.

- Builds on the principle that the individual is an expert in his or her own life, and thus challenges professional competencies/‘professionalism’.

- Takes as its starting point people’s and groups’ actual behaviours and needs as opposed to classic economic or professional considerations.

- Focuses on the long-term social and economic effects on the individual and community instead of on short-term budget optimisation.

- Organises efforts for citizens in a way that focuses on their service experience as opposed to on public sector organisation.

There are in fact enough good examples of profound, innovative reform if one looks at it from an international perspective. Whichever welfare area comes under focus, radically more effective and significantly less expensive models – compared to those familiar to Denmark – do exist.

As an example, both the US and Australia have found better and cheaper ways of helping vulnerable children and young people while avoiding the expense of forcible removals by adopting a health-oriented family approach whereby families help other families. Also, in both the UK and the US, efforts to support people with learning disabilities have been made more effective through individual budgets, ensuring a better and more efficient use of public resources. Moreover, as has now become well known, Fredericia Municipality in Jutlland has massively improved and increased the effectiveness of its home care efforts by systemising daily rehabilitation.

Despite the increasing demand, however, profound reform remains a rarity in the Danish context. This is because the problem lies in the fact that genuine profound reform requires the public system – the public sector architecture – to change in equally profound ways.

In all of the the above-mentioned examples the relationship between citizens and the public sector has changed fundamentally:

- In terms of families, efforts have been made to take advantage of the unique strengths exhibited by diverging families who have experienced – and managed to overcome – tough challenges. They are therefore able to help other families in crisis. This represents a complete shift away from perceiving the families as the problem, towards accepting their ability to provide the solutions if given partners who understand how to help them on their way.

- With regards to people with learning disabilities, the reforms are evidence of how even the most intellectually vulnerable are better able to manage their own money than professional social workers and therapists.

- In terms of home care in Denmark, it has been acknowledged that most elderly people actually prefer to live the life they have always lived as opposed to one characterised by home care dependency. It does, however, require assistance to enable individuals to regain their physical and mental strength.

In light of the reforms currently being announced at the highest level, there is little doubt that people want radically new ideas on how to structure our public services.

The pertinent question is whether our public sector leaders and their employees have the imagination and determination to push through the kinds of profound reforms that are in fact needed. 

But is it possible to develop a design policy without involving a wider circle of users and stakeholders? And should new methods of “co-design” not be applied in such a process? For these reasons, the European Design Leadership Board invited a select group of 65 people to develop policy propositions along with them. Aalto University serves as secretariat for the expert panel and designed the workshop in collaboration with MindLab.

The expert panel will issue a final report of recommendations, in part based upon the workshop sessions, to EU Commissioner Tajani, who is responsible for European policy regarding enterprise and industry matters. The Commissioner will receive the report at a ceremony in Brussels late June.

Below are photos from the workshop session by MindLab and a short film by Aalto University.

There is a lot of talk about innovation in the public sector – and with good reason; but a new way of thinking should never be an end in itself. The vision should rather be to discover new and better principles for the future of public governance. In this regard, there are two great challenges to be met.

The asymmetry problem
The first challenge is an asymmetry problem. Our public sector management suffers from an imbalance between those who bear the cost of an activity and those who reap the rewards. This asymmetry means that public authorities often lack a clear incentive to undertake tasks in a way that is overall the best and least expensive for the individual as well as society. The challenge is complicated by the presence of a second asymmetry that emerges in practice: silo asymmetry. The public sector’s organisation into various administrative domains (horizontally), and into national, regional and municipal administrative levels (vertically) impedes holistic thinking. It is, of course, impossible to conceive of a public sector without any organizing principle. But the silo asymmetry means there is a need for much stronger and binding cross-sectoral management processes than we have at present, at the top level as well as the operational level. We have spoken of “joined-up government” for more than a decade, but where has anyone really implemented the leadership and management models that will allow the cohesion to become real?

Time asymmetry The outcomes of public sector efforts are created over time – in some cases over several decades. But those making the effort (e.g., national prisons making enormous investments in rehabilitation) are not those who will reap the subsequent rewards (e.g., municipal social services, which will save money when former convicts find employment). Where do we see actual new management models that take on this dilemma? This is where one could explore whether social finance or social impact bonds can help short-circuit the time asymmetry by finding investors willing to pay for long-range societal outcomes – in exchange for a return that reflects the risk they run. This requires a completely undogmatic approach to whether the investors are private, public or NGOs. This is one of the areas in which the British-American organisation Social Finance is working.

Relationship problems
The second challenge is that public governance and management is often based on a flawed perception of the relationship to citizens. There is still a widespread notion that public authorities best achieve results through control and regulation. At the same time, there is an opinion that as a public official one cannot take credit for the results of one’s efforts, because many other (external) conditions are involved. Nonetheless, we need a more radical shift from control to service; a service-oriented relationship to the public is generally much more effective and inexpensive. The Danish Tax Agency has already demonstrated this through its Compliance Strategy, and the Danish Working Environment Authority, with its new 2020 plan, is headed in the same direction.

Top executives in government must take responsibility for the results they create, even if they are achieved indirectly or through others. We have (again) spoken for many years about networked governance, but incredibly few organisations are explicitly practicing it. There needs to be far greater focus on what I would perhaps rather call value chain governance: a laser-sharp eye for those causal connections and resources outside one’s own organisation which will create value and results for the end-user. We must step back from the abstract practices of administration and toward a sincere interest in what will make a difference in the lives of real people. This includes, not least, an eye for how people’s own resources can be part of meaningful coproduction with the public sector – also as an “active citizen”.

Semiautonomous municipalities as frontrunners?
There is enormous potential to be realised if our public institutions seriously address these two governance problems. It would give us more holistic approaches to how to get the greatest outcomes for our tax income and catapult our public institutions into new value-creating partnerships, not least across municipalities, regions and the state.

Some rather radical innovation processes must come into play for the new governance models to become reality. Perhaps the small handful of “semiautonomous” Danish municipalities, which the government has recently given the license to experiment beyond current rules and regulations, are ready to pick up the gauntlet?

I have always thought that there are limits to what public sector managers can learn from their private sector colleagues, but after reading the new biography of the late Steve Jobs, Apple’s founder and CEO, I have come to think differently.

In mid-September, I had the unusual experience of seeing a roomful of French central administration department heads being taught innovation by an American computer company. The occasion was a summit meeting on public innovation held by “Bercy”, as the French Ministry of Finance is popularly known. In that context, an Apple European director was invited to talk about the secret behind the California firm’s incredible ability to constantly innovate.

Think about it: The French central administration elite deigning to hear about the experiences of a private American company? The financial crisis must really be hurting the French public sector!

Nonetheless, the assembled appeared to listen attentively to the presentation. At one point the Apple director emphasised the company’s ambition that every new product be “magical and transformative”. In other words, customers must have a totally exceptional impression of what Apple does for them. During the ensuing plenary discussion among the French managers, the man next to me (a British consultant, the only other foreign participant) leaned forward and pointedly said: “Imagine if your services, too, were perceived that way: magical and transformative”.

The room fell silent. One could sense the managers’ pondering. Magical and transformative social assistance? Magical and transformative foreign service? Magical and transformative postal service?

And yet… Well, why not? It’s one thing if a teenager is willing to spend a month’s paper route money on an iPad 2 because it is so delicious (in Apple terminology) that one wants to lick it, but whether it should be magical and transformative to be treated at hospital, go to elementary school or be helped by the job centre is another matter. After all, our public institutions are responsible for a range of more fundamental and at times vital functions. Why isn’t the ambition so high as to make it a transformative experience to be in contact with the institutions that literally matter so much in our lives?

Apple’s founder, Steve Jobs, died shortly after the French conference, and shortly thereafter came Walter Isaacson’s biography of the man. I read it as soon as I could get hold of a copy, with a hidden personal agenda: Would there be other insights from his life or from Apple that could teach us something about innovation in the public sector? There were. Let me give three examples:

First of all, Steve Jobs always put himself in the customer’s place. He was never satisfied with what Apple’s hoards of engineers, designers and developers suggested. There was always something that could be done better to create a better user experience. Luckily, Steve Jobs was in many ways an archetype of the company’s target group: a culturally radical music lover. He insisted that computers and technology should be understandable and usable by ordinary people in everyday situations. That is why he was the first to commercialise the graphical user interface that we today take for a given in all computers, but which Apple still does best. And that is why he insisted that the company’s latest transformative technology, the iPad, should not have a pointer. The most intuitive thing is obviously to use our fingers to navigate the screen.

Secondly, the visionary Jobs made Apple employees tremendously proud of their work. One of his best-known sayings came when, at a company retreat, he invited his staff to join him in “making a dent in the universe”. Not a small ambition, yet one that you could say has been realised by what is today the world’s most valuable company, whose products are found in the hands of millions of people the world over. How many public sector managers have such an ambition?

Thirdly, Steve Jobs created a design-driven organisation. That is, Apple’s very organisational DNA – management structure, development processes, IT infrastructure, work methods, production, logistics and marketing – are put together with the sole goal of ensuring that the customer has a fully integrated experience of Apple’s stores, products, packaging and services such as iTunes and App Store. A central concept in this context is that Apples chief designer, Jonathan Ive, reports directly to the CEO. This means that it is design that guides the business’s decisions; not technology, not the financials, not marketing. The design is, at the end of the day, what the customer experiences. As design and innovation guru Roberto Verganti – a great Jobs admirer – so precisely said, good design is “the creation of meaning”. Apple’s organisation is highly geared to creating a meaningful experience for the user. A magical and transformative experience.

Could a public service organisation hire a “head designer” to report directly to the chief executive? Might it have a chief executive who is personally, deeply engaged in every detail of the concrete service provision, in citizens’ experiences and in inspiring employees to do things they wouldn’t think possible?

Naturally, we in the public sector can never create as elegant and coherent solutions and experiences as does Apple, given the necessity to balance conflicting political requirements, considerations and pressures in a social and institutional world that is all too complex and unpredictable. Nonetheless, I believe we are duty-bound to try, especially since our “business” does not concern something as banal as electronic products, but rather the lives and welfare of people. In this, Steve Job’s insistence that we all deserve a better experience can serve as a pretty relevant guideline.

Innovation strategies are currently being developed throughout the public sector – including in the government. This is encouraging and long overdue. But the challenge will be to create strategies that lead to innovation in practice. The following presents a little more than five examples of what this means.

 “Can you give me some concrete examples of innovation for our coming strategy process?” (city manager). “Can you give a presentation to provide inspiration to our strategic work with innovation, now that we are a free municipality?” (development director). “We are finalising our innovation strategy, but what can we do about the incentive structure?” (municipal development consultant). These are examples of enquiries I receive from the municipalities. At the moment, I hear them almost daily.

Right now, interest in innovation in the public sector – particularly in the municipalities ­– is rapidly growing. This topic has certainly been on the agenda for years. But it is no longer a matter of isolated projects or initiatives. Innovation is now a strategic agenda that has the undivided attention of top management – both in the municipalities and national government. After the election, the victorious parties have set a national innovation strategy in its programme.

It is nothing new that the government will propose initiatives to boost research, development, productivity and growth in Danish companies. But it is new that a national strategy for innovation also includes the public sector. And it’s good timing – not just in relation to developments in the municipalities, but also in relation to the world around us. Other countries are already in full swing. If the government establishes a strategy, it will place us in the current of countries such as Australia and Sweden, who in recent months have adopted ambitious action plans to promote innovation in the public sector. For example, Canberra passed an Australian Public Service Innovation Action Plan.

The need for a more strategic and systematic approach to public innovation has rarely been greater. The challenges are many, whether we are speaking of education, employment, health or even productivity in the public sector. As shown by the municipal leaders’ statements above, the question is not whether innovation is needed, but rather how we will choose to approach the task of innovation. So what key considerations must a public sector innovation strategy include if it is to make a difference? Here are five questions:

1. What should the strategy be about? In my book, “Leading Public Sector Innovation” (Policy Press, 2010), I emphasise that a good public innovation strategy requires direction. What key challenges must the strategy specifically focus on? What significant national, regional or municipal initiatives will we invest in to increase the probability of finding truly radical, innovative solutions? What should comprise the strategy’s portfolio?
2. How will we work with innovation? Which means, methods and processes should the strategy utilise? For example, will we emphasise new technology, research, employee-driven innovation, or strengthening the involvement of citizens and businesses? Or will we use a mix of these? Are we seeking incremental or radical innovation? Do we even have a clear idea of these different forms of innovation? Do we have the competences to use them?
3. Who must be involved? Innovation is made possible from the top, but is executed from below. Should the strategy primarily involve stakeholders in the public sector, or should there be a collaboration between a range of state, regional and municipal organisations, private companies, NGOs, or citizens themselves? What activities can ensure that the involvement happens in practice and that it focuses on practical, effective solutions rather than special interests?
4. How will we measure the success of the strategy? Public innovation occurs when new ideas are implemented and create value for society. The bottom line is completely different from that of the private sector. Or rather, bottom lines. There are four in all: Productivity, service experience, effects, and democracy. Are some of these dimensions to be prioritised more than others? How will we continually document that the strategy delivers results?
5. Where will the strategy be rooted? Where will we embed the strategy in the organisation so that we both secure top management focus and a broad commitment? How and by whom is it to be executed and what governance structures will ensure that it happens?

In fact, there is a sixth question that may be the most difficult of them all. When the Australian government announced its new innovation strategy back in May, I received an e-mail from one of its key advisors. “They’ve even included ‘courage’!” he wrote. The Australians thereby point out that strong and courageous leadership is essential if we want to translate innovation to action. How will we choose to approach this challenge?

Redesigning family care

Perhaps the most striking example I came across was in South Australia, where TACSI is engaging to help transform ‘chaotic families’ into ‘thriving families’. Chaotic families are typically characterised by high levels of alcohol abuse, violence, unemployment, and dysfunction. TACSI, a not-for profit, is applying ethnography and design thinking – much like MindLab’s work – supplemented by engagement with the state authorities, which are also co-funding the project. For the past eight months a public manager from the state’s Department for Families has been seconded to the project. In that capacity, she has no longer acted formally as a manager, but has participated together with a small team of a designer and a sociologist in exploring how the families live their lives, with the aim of finding new opportunities for helping them to become “thriving families”. When I visited, the project team was beginning to see the results of their work – going far beyond insights into the families’ lives, to generating concrete positive change in their situation.

The project has facilitated links and collaborations between the positive deviant families with the families at risk and is thus generating a positive circle of building resources and helping the strengthened network of families help themselves to tackle the challenges they are facing.

Carolyn, the manager seconded to the project, describes TACSI’s families project as a ‘resourcing model’, which is radically different from how she has worked during her 10-year career as a manager. “It is bottom-up, it has end-user focus, and there is no fixed structure, criteria or categories. The work has been extremely intensive. We have focused on motivation and on strengths within the families – identifying the ‘positive deviances’ where some families are actually thriving, even though they shouldn’t be, according to the government’s expectations. We have focused on finding entry points and opportunities, rather than just trying to mediate risk. It is a co-design, or co-creation approach, and it has been entirely new to me.”

Whether it will be possible to bring the project findings to bear on the public administration’s current practices, and actually redesign the state’s entire approach to at-risk families, remains to be seen. However, just like we at MindLab seek to demonstrate how new insights can lead to real change, TACSI has certainly already made a powerful contribution to how we think and act in such a difficult field of social policy.

Digital innovation enablers

A few thousand kilometres East of Adelaide, the Victoria Public Service continues to pursue its one-year old Innovation Action Plan, embedding collaborative networks through use of new social media. During my session with public officials there, there was constant blogging and tweeting via smartphones and iPads – still something rather rare amongst even the more innovative Danish public servants. As our conversation unfolded, listeners in the US, nearly a dozen time zones away, joined in and commented on the posted remarks. As there has since been a change of government in Victoria, it will be interesting to see whether the Action Plan is sufficiently resilient to adapt and work with a shifting political landscape.

Strategic design in practice

During the final stop of my tour, to Sydney, I had the opportunity to visit 2nd Road, a well-known design consultancy, and engage in dialogue with founder Tony Golsby-Smith and senior adviser Jenkins. Interestingly, the firm’s approach to strategic change has largely been driven from the field of rhetoric, emphasising ‘strategic conversations’ with decision-makers. Interestingly, Second Road has had a long-standing engagement with the Australian Taxation Office, making them one of the exclusive few private design firms with more than a decade-long experience with strategic design in the public sector. See the case here.  Moreover, 2nd Road’s Julian Jenkins has published their experiences rather extensively, which provides for very interesting reading on the potential of design for public organisations.

And now to something completely different…

Travelling from the Northern to the Southern Hemisphere is much less of a change than the shift from Western culture to Japanese society – the final stop of my late 2010 journey. Part III of this blog will share the dialogues we had in Tokyo over the potential of Future Centres, space as ‘Ba’, and the role of Japan’s government in engaging citizens in new innovative practices.

What to make of it?

On the one hand, Britain is clearly endowed with extremely smart, engaged and capable public servants and not-for profit and business leaders. They are asking all the right and difficult questions about how a big society vision could be made practical and workable. They are searching for innovative solutions that can help, and they are extremely open to outside input. Even better, in many pockets around the country, it seems that innovative models for new forms of collaboration, engaging citizens and communities, are already up and running. From time banks, were citizens can earn credits for voluntary work and “cash” them for other services, to diversifying service provision to ngos and businesses, and to a growth in service design projects run by the likes of Participle, ThinkPublic and the NHS Institute for Innovation and Improvement, new approaches are flourishing. Most want to make the big society work.

On the other hand, one senses confusion and frustration. Implementing a major vision for society alongside almost unprecedented cuts to public services is a tough call. As one panel participant said at the Guardian’s public services summit, communities should be seen partners with the state, not as alternatives to it. Following this line of thought made me think that devolving power, finance and responsibility to local governments implies that the local level must become more, not less, of a partner with central government. However, when the new UK local government bill not just devolves power, but also requires an amazingly detailed level of transparency of public expenditure and reporting of it (public bodies must publish all expenditure items above £500 online, and the salaries of senior officials), one can’t help but think: Does central government really trust the local level to be able to step up to the challenge? Are central government departments prepared to let go, perhaps limiting themselves to demanding better outcomes, at less cost, in return? Are national politicians prepared to, in their own words, stop tinkering? If not, can the Big Society become a success?

Flipping through a copy, still almost warm from the printer’s, it strikes me that if there is one key message in it, it is that building the innovative public organisation isn’t a destination, it’s a journey. Why? Because…

It is not enough to start talking about innovation and what it means to the organisation.

It is not enough to put an innovation strategy in writing.

It is not enough to recruit a talented, diverse workforce.

It is not enough to leverage new digital media to drive collaboration, and to power new service solutions.

It (even) is not enough to build innovation labs or put into practice new design-driven methods for co-creating new solutions with citizens and business.

It is not enough to start measuring  innovation activities and results.

…and pure, raw courage to initiate new ideas and solutions in the face of stark opposition is not enough either.

The most ambitious, professional and results-oriented public managers I know are, rather, trying to leverage all of these dimensions, and more, in order to create truly innovative organisations. They recognize that reshaping public bureaucracies for the 21st century  is a long and difficult journey with no final destination in sight. As times of economic austerity clashes with demographic change and rising  service demands, it is a challenge to even keep pace with the wicked problems that are facing us every day.

For simplicity,  I therefore argue that the journey towards the highly innovative public organisation must be led simultaneously across four dimensions:  Creating consciousness of what innovation is and means to the organisation; building capacity to innovate, from political context over strategy and organisational structure to people and culture; mastering a process of co-creating new solutions with people, not for them; and finally, to display the courage at all levels of management to really lead innovation.

Although many are trying, I have yet to see a public organisation that can honestly say it is working effectively on all four dimensions.

Who will be the first?

Of course there are some reasons for all the guesswork, and the time the policy development process takes:

First, policy development is often a complex progress, where the positions of various stakeholders (such as political majorities and minorities, lobbyists, industrial organisations, etc.) need to be taken into account. And there are of course delicate matters of timing, which may mean that a wonderful piece of new policy can be put in the drawer for months until the time is ripe for launch.

Second, senior managers in government have very tight schedules. They must be available at all times for their own boss and particularly the minister. They simply can’t fit in the time and resources to engage systematically in collaborative dialogue, brainstorming and idea generation, just because some of their staff need it. At MindLab, where we regularly run workshops focusing on high-level policy development, it is a rarity that anyone above the level of Head of Division can spend more than an hour in a work session, if that much.

Finally, paper work takes time. The century-old tradition of drafting papers to go up the multiple rungs of hierarchy and back lives on. Sometimes the process can be extreme, with little benefit. Recently, a senior official told me that a case concerning just 5 mio kr. (less than USD 1 mio) had dragged on for more than two years during which several government departments had haggled over who was to foot the bill.

These all (somewhat) understandable reasons.  But still, it seems the process just isn’t good enough. How to rid ourselves of all the guessing going on, and how to conduct the policy innovation process more efficiently?

First, as I wrote in an earlier blog post, even though innovation is a terrible word, we do need a language of innovation. We need it because we need to be more conscious about creating more efficient and creative everyday working practices. As British professor Fiona Patterson, who studied everyday innovation practices across more than 800 companies has found, “(…) organisations that clearly articulate what is meant by ‘innovative working’ are more likely to be successful in their attempt to encourage innovative behaviours”. No  serious new discipline  has, I believe, ever taken root in modern organisations without having a distinct vocabulary.

Secondly, other than speaking in meaningful ways about innovation, we should simply start meeting in a different way.  Key public servants desperately need to meet with each other  in better prepared, more focused sessions to actually craft policy together, rather than to just let lowly minions guess their best in writing and then give them the thumbs up or down. Senior public servants, advisers, junior staff, and — even — external stakeholders such as citizens, businesses, academics, interest organisations  and ‘wild cards’ need to collaborate much more consciously and intensively, if we are to come up with the effective and intelligent solutions we need. Smarter collaboration would save tax payer money, not just because we’d save substantial time and frustration by reducing all the guessing. It would also save tax payer money because such forms of co-creation have a much higher chance of producing  outcomes that actually work.