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.

Read about the thoughts behind the meeting and read about Mindlabs case

 In other words, Co-production empowers citizens to become active participants in the delivery of public services. Exciting stuff!

 Below are my top three “aha” moments of Co-production:

 1. The Timing is Right
The added pressure of recent economic hardships has catalyzed innovative grassroots co-production solutions that not only function better than the status quo but also save time and money. Among my favourite examples is Youth Court of DC, a youth reintegration program where Peer Jurors interrogate and sentence first time juvenile offenders in the District of Columbia, USA. As individuals who were once in the same position as the offenders, Peer Jurors are empathetic and able to connect with Offenders in a way that governments alone could not. This innovative program has reduced the recidivism rate from 30-40% down to 10%. Such co-production bright spots show us that it is possible to adapt to the growing economic and social pressures while improving service and saving resources.

2. New Media Advantage
New media creates opportunities for co-production in the public sector by creating faster and more direct communication with individuals and communities. As we saw in Barack Obama’s 2008 US Presidential election campaign, facebook, youtube and blogs are incredibly powerful tools in connecting, relaying information and mobilizing citizens. These tools are already widely used by citizens and many are free. Directly engaging with citizens is at the core of co-production; thus incorporating new media tools into public service is a great starting point.

 3. Mutuality
Co-production works best when both civil servant and beneficiaries/citizens become equal partners in the delivery of the service. The benefits of this mutuality go beyond getting added “buy-in” from both parties. By operating in this way, both civil servants and citizens receive timelier information and are able to build a relationship based on transparency, trust and respect. Citizens are empowered to reach out in their community, identify issues early, prevent escalation and help each other, ultimately relieving strain on the public service system and creating more self sufficient and robust communities.

 The timing is right for Co-production; we have the tools and we know where to start.

 Satsuko VanAntwerp is an International MBA Candidate at Schulich School of Business in Toronto, Canada who worked at MindLab during an exchange semester at Copenhagen Business School. As an Associate at Venture Deli, a firm that builds and capitalizes social ventures, Satsuko brings a strong background in social entrepreneurship. She also runs a blog, thinkthrice.ca, exploring ideas for social innovation and systemic change.

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?

MindLab has for many years insisted that the road towards spotting the great potentials for innovation often passes through an interest for the little details in the everyday lives of businesses and citizens. Last week, I was offered yet a perspective on why insisting on this may pay off. David Halpern visited MindLab and presented his work on “nudging” that the UK Cabinet Office has commenced at their Behavioural Insight Unit.

What is nudging?

To make a long story short, Behavioural Insight Unit works on finding specific suggestions to how we can increase the probability that people voluntarily do what we want them to do; importantly without forcing specific patterns of behaviour on them e.g. through rules and regulation. It is this kind of “guiding the individual’s choice”, which is the core of nudging.

Behavioural Insight Unit works with nine ways that people can be nudged, which is collected in the acronym MINDSPACE. Read more here.

The devil is in the detail

What I found most interesting in Halpern’s presentation was that all his examples were on a very  basic practical level. And I think that there is a tendency amongst us working with innovation to overlook the basic practical perspective.

An American insurance company had for example moved the signature box from last to first page of their insurance policy documents. The fact that the customers signed on page one made them more honest when they stated their yearly mileage, even though it made their car insurance more costly.

In the UK all applicants for a drivers licence must concurrently consider whether they want to join the NHS Organ Donation Register. The initiative is only three months old, but the number of registered potential donors has already skyrocketed due to this simple solution.

When guests reserve a table on a restaurant is it common that the waiters asks if the guest will call back and cancel her reservation if she is unable to make it. Here research has shown that once that the guest has said ‘yes’ to that question, the probability increases significantly that the guest actually does call back and cancel if the waiter waits for three seconds before saying “thank you”. The small hesitation simply creates a greater sense of obligation with the guest.

An agenda for government executives?

When Halpern showed us his examples I could not resist asking him how he would get government executives to show interest in something as ordinary as pauses during a telephone call and the placement of signature boxes. He simply answered that a good business case can make any executive to listen.

This appeal to focus not just on radical and complex new solutions is hereby passed on. I personally think that Halpern’s approach is extremely suitable with regards to debureaucratization and directing citizens and businesses to choose digital over analogue solutions. Perhaps somebody already knows any other examples of small adjustments with massive outcomes?

The reason that innovation then is expensive begins with the hiring process. According to Vaughn, innovative groups do not form if people are hired through a process where the seemingly best candidate for the job impresses in tests and interviews and thus selected accordingly. Rather Vaughn suggested that people enter the group through a process he calls “negotiated joining”, meaning simply that the candidate is given responsibility and works with the group for a lengthy period of time (like 2-3 months) before actually getting hired. This helps defining roles, clarifying mutual expectations and loosens up the work flows because it requires a flexible mentality and approach to the work. This is an expensive process, but pays off well according to Vaughn. Indeed, some of the worlds top restaurants work in this way.

Since this is expensive but easy, where comes the hard part? During the talk, I became increasingly aware of Vaughn’s emphasis that really innovative organisations have a tactical rather than strategic approach to their work processes. Tactical manoeuvring means that you as an organization constantly respond to how the world changes – and that means that decision making in the organization must be rapid and not constrained by bureaucratic structures. However, besides an organisational culture that allows this to happen, Vaughn also emphasised that all levels of management must endorse this for innovation to lead to success. This is what the top restaurants of the world have understood and it is reflected in their hiring processes.

I think Vaughn’s observations resonate well with our own experiences with public innovation. Setting up the team, identifying problems and developing insights is not the hard part. The difficulties enter when you need your insights to bloom within organisations, when large organisational change is necessary in order to achieve results, and when innovation carries risks to organisation and managers. This is not to say that it is impossible – indeed a well defined strategy can set a direction that may handle this. Incidentally, here at MindLab we have revised our own strategy to improve and foreground our work with organisational change. These are, however, baby steps in a complex process that requires much thought and skill along the way. We all know the societal challenges ahead, but which public organisation will be the first Noma of government?

“Why wait if you can do it now and do it yourself?” asks Kalevi Ekman, director of Aalto Design Factory, Helsinki, when MindLab comes by to visit. Design Factory is a product of the fusion of the design school, the technical university and business school and has existed for just over two years. They work with design here and teach design in all its forms.

At Design Factory, most people seem to do their best to live up to Ekman’s motto. For example, when MindLab visits the walls are getting painted from white to black and red. A larger group of international students are having their lunch the same place. No one seems to take notice of paint buckets, high ladders and painting equipment used to the significant refurbishment. As a physical proof that the place is always changing.

Or when some of the students develop a new videolink-equipment and place it in the common room/kitchen/coffee lounge, connects it to the new sister organisation in Shanghai and declares that it should be streaming sound and video 24/7. That should solve the potential problem with enormous physical distances between the two organisations!

Design Factory seems to be a living proof of what design can do. The whole place stems with a spirit where you localise a problem and without much hesitation use design methods to develop solutions in one format or another, with the purpose to improve them and perhaps give them yet another format.  Maybe this is where the basis of successful development lies. This basic passion and will to experiment is what the place builds on.

To use design as a strategic tool is the headline of Sitra’s new design unit, Design Lab, which MindLab also visited. Sitra is well placed in a Helsinki high rise, with a view where you feel that you can see all nooks and crannies of the city. As a manifestation of Design Lab’s goal of using design methods to rethink the system and through this develop new solutions. Here you literally see everything from the top.

Sitra is an independent funding organization and was actually a present to the people of Finland on the 50^th anniversary of independence and has thus existed since 1967, but it is a novelty that they engage in strategic design.

Bryan Boyer is a member of the design team and tells us that they work with using design, not to give physical form to objects, but to create a better platform for decision making. For example, Design Lab has been taking up some of Finland’s serious challenges, like the increasing old age burden. The design team gathers twenty experts on the topic for up to one week and demands prototypes of new solutions by the end of the meeting. Not finalized new solutions, but provisional and qualified suggestions.