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Implementing an innovative public sector program

The balance between flexibility and control

Jenny Stewart School of Business, UNSW Canberra, Canberra, Australia

Abstract

Purpose – The aim of this paper is to understand factors governing the implementation of an innovative public sector program.

Design/methodology/approach – A longitudinal case study is used to document change and tension in the implementation process.

Findings – The study suggests that because of the embedded character of public sector innovation, it is likely that, as they are implemented, many innovations run up against restrictions and limitations, precisely because they challenge many systems and processes in the host agency. These conflicts, unless specifically addressed, may cause the original innovation to lose its fundamental character.

Research limitations/implications – The case suggests that innovative programs may differ from other types of public sector innovation, such as specific service-delivery initiatives with novel characteristics. Programmatic innovations will be required to produce results according to standard models of managerial accountability which may be difficult to reconcile with innovation.

Practical implications – The study draws attention to the need for flexible support systems, such as HR, Finance and IT in the implementation of innovation in the public sector; where a classic “intrapreneur” is involved, leadership teams with complementary styles may also be significant.

Originality/value – The study demonstrates the nature of the trade-offs that are involved in the implementation of innovative programs and highlights the implications of the challenging, if not subversive, nature of many types of innovation

Keywords Implementation, Innovation, Control, Values, Bureaucracy, Small business programs

Paper type Research paper

There is ample evidence that impediments to innovation are both widespread and significant. Borins’s pioneering study reported a range of obstacles, both internal and external, that had to be overcome before new ideas could become a reality. These included bureaucratic attitudes, internal organisational obstacles and political obstacles (Borins, 1998, 2001).

Public sector managers are particularly conscious of bureaucratic and organisational impediments to innovative practice. Survey results reported in an Australian study reflected a long list of obstacles facing innovators, including “risk aversion, unsupportive processes, lack of access to new technologies, lack of an innovation focus in setting strategic directions, lack of feedback on ideas, a silo mentality, politicisation of issues, and a fear of failure” (MAC, 2010, p. 24).

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/0951-3558.htm

Special thanks are due to Patricia Gray of the Australian Public Service Commission for her research assistance.

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Received 15 May 2013 Revised 14 November 2013

Accepted 18 November 2013

International Journal of Public Sector Management

Vol. 27 No. 3, 2014 pp. 241-250

q Emerald Group Publishing Limited 0951-3558

DOI 10.1108/IJPSM-05-2013-0076

As the Management Advisory Committee went on to observe “While the frequency and impact of each barrier varies across agencies and programs, when viewed collectively they raise concerns about the disincentives public servants can face in trying to innovate” (MAC, 2010, p. 24). Bourgon has expressed similar concerns, pointing out that public sector innovation is particularly dependent upon the motivation of public servants and may therefore be more vulnerable than in the private sector to a lack of incentives (Bourgon, 2008). Supporting this view, Fernandez and Pitts (2011) found that incentives and a sense of empowerment were important for frontline innovators.

Empirical study of obstacles to innovation, however, faces obvious difficulties. Successful innovations are put forward proudly by their originating agencies. We do not hear of those instances where the obstacles simply proved too great. Nor do we hear of innovations that may be struggling along “under the radar”. There is an assumption that, once adopted, an innovation will no longer face the obstacles that may have made its inception difficult.

The research strategy pursued in the current paper reverses this assumption. The paper is premised on the view that the best way to shed light on obstacles is by investigating the sustainability of a particular innovation over time, on the grounds that the process of implementation itself can be expected to re-run (or even intensify) the factors (both positive and negative) that attended the birth of the innovation. We would not expect (nor would it be desirable) for any innovation to persist unchanged. However, if the changes during implementation are extensive, the true worth of the original innovation may never be satisfactorily evaluated or fairly acknowledged.

Case-based research gives detail and richness to the study of implementation. While concentration on a single case is rare in the study of innovation, the approach has particular attractions in this context, in that it enables us not only to track progress over time, but also to “see” the innovation in its detailed organisational context.

Contextualising the study There have been relatively few studies of the implementation of public sector innovations. In many ways, implementation remains the “black box” of innovation studies (Piening, 2011). Those studies have been concerned with factors influencing successful implementation, rather than with the sustainability of a particular innovation within an organisation (Damanpour and Schneider, 2008). Osborne and Brown (2005) interpret sustainability of innovation in terms of the degree of support for continuing innovation which, they believe, must go beyond support for a particular project. Rather, the organisation needs a degree of sensitivity to its external environment, and a framework of support for the individual innovator and innovative leader (Osborne and Brown, 2005, pp. 155-156). Osborne and Brown’s recommendations for sustainability, therefore, are based on a view of innovation as a type of change.

Surprisingly, while diffusion has attracted considerable attention, there are few studies of sustainability in the sense of the persistence over time of the innovative program or initiative. Borins (1998) found that almost all of the winning innovations from the Ford-KSG competition were still operating after the conclusion of the study, although the fall-off rate was highest for the earlier innovations (Borins, 1998, p. 115). Factors influencing persistence have been drawn out across a small number of health sector studies. Bradley et al. (2005) found that of 13 hospitals implementing an innovative program designed to improve hospital-based care for older adults, ten were still operating at the end of the study period (two years after adoption). The key factors

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behind retention were leadership, skill in adaptation and resources (Bradley et al., 2005). Drennan and Goodman (2011) found that the continuation of a contested program supporting nurse-consultants depended largely upon contextually-determined factors of support (Drennan and Goodman, 2011). The results of these studies are unsurprising: innovations that do not have support in the contexts in which they are placed, tend not to survive.

What, however, shapes the realpolitik – that is the clash and movement of interests and the interpretative schema – that shapes this support? Several decades of analysis and commentary have pointed to the emergence of a post-bureaucratic paradigm, in which new professional values and practices have, at least in part, overtaken more traditional ways of working (Barzelay and Armajani, 1992; Considine and Lewis, 2007; Budd, 2007). Other studies published over roughly the same period point to the demands of control and accountability and the continuing impact of organisational culture as factors that may sap the life of an innovation (Radbone, 1987; Van Duivenboden and Thaens, 2008). Clearly, values of flexibility and control are involved. The present paper, rather than attempting to track these variables in a multi-innovation, cross-organisational framework, pursues them in a single case study of a programmatic, internally-generated innovation in an Australian government department.

Research design The case selected for the study was opportunistic, in the sense that it came to the author’s attention as an example of an innovative program in the small business policy field, rather than as an example of the research genre of “innovation”. The program’s characteristics do, however, fit well with Borins’s findings that most innovations come from the motivation of public servants to address problems in their field, and do not emanate “from the top”, but rather from middle-management or from street-level. As with many innovations of this type, the innovation had its origins within the host agency.

The program, which I will call Industry Connect, was designed to assist small and medium-sized enterprises to achieve their potential. While assistance to small businesses has a long public policy history, IC broke new ground in the way in which it sought to build capacity by deploying policy instruments that relied, not on regulatory or incentives-based tools, but rather on knowledge and networking.

Single case studies have well-known drawbacks in relation to their generalizability and public sector innovation is a complex and a varied field. The problems of a single program will not necessarily apply in other situations, and the research design does not capture other sources of variance, as would be the case in a comparative project (Stewart, 2012). However, the type of problem that IC was intended to address and the bureaucratic context in which the solution was attempted, are commonplace in public administration. To this extent, the lesson will be generalizable.

Data collection Interviews with practitioners were the principal source of data on the post-adoption career of the program. Other data sources included program publications, ministerial press releases, website profiles and histories, and portfolio budget statements. A total of 15 interviews were undertaken so as to give information on the program’s evolution at a number of different sites, and at different levels in the host organisation. To this end, interviews were conducted with business advisers, Centre Directors, and Central Office managers at middle management and senior levels. A senior adviser from the Minister’s

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Office was also interviewed. As the purpose of the interviews was (among other things) to establish program contours and priorities, this number and selection was considered appropriate, as they resulted in a coherent and consistent account of the program.

The interviews were conducted in two stages: the first-stage interviews (five in total) took place in 2009, with a further ten in 2011-2012. In three cases, the same officials were interviewed twice (i.e. two years apart). This gave an opportunity to gauge the way the program was evolving from the perspective of those who had been involved from the start. Interviewees were asked for their views about the character of the program; whether they saw it as being innovative or not; the opportunities and challenges it represented, and the skills it had called for, or they had developed, during implementation.

Not every interviewee saw the program as innovative, and as this was the key question asked, it is useful to canvass these views in more detail. All of those (except one), who were with the program at the outset, saw the program as innovative, and described challenges of implementation that flowed (in part) from the way the program worked. Of those who had not been with the program from the outset, almost all saw it as “different”, but were more likely to refer to implementation challenges deriving from the growth of the program, rather than the loss of innovative characteristics as such. Of the two respondents who did not refer to innovative qualities, the one involved at the outset came from a conventional bureaucratic (rather than an industry) background and saw and ran the relevant portion of the program in this way; the second (a higher-level manager) emphasised control issues rather than innovative qualities.

A workshop involving research sponsors, managers and evaluators of the program and chaired by the researcher, was held after the second round of interviews. The workshop discussed the management challenges experienced in running the program, and the impact of the solutions chosen on the innovativeness of the original program design. The workshop was of particular importance, because it enabled the issue of bureaucratic obstacles to be considered in the broad context of the evolution of the program. The data obtained through the interview and workshop processes enabled a coherent dynamic characterisation of the program to be formed, which is reflected in the following account and analysis.

Structure and chronology of the program IC was founded in 2008, by a classic “intrapreneur” that is, a middle manager acting entrepreneurially from within the organisation (Antoncic and Hisrich, 2003). The establishment phase, which lasted from 2008-2009, was a period of creating and defining relationships, finding the right people to run centres and communicating the basic parameters of the program.

Subsequent to this initial phase, the program developed rapidly. The reach of the program grew broader, embracing not only manufacturing firms, and manufacturing-related services, but also defence-related, resources and creative industries. In keeping with this change, the original group of manufacturing centres was complemented by a range of other centres that gave a geographic focus to networks and resources. The program expanded again from 2010, although in a different direction. Its flexible design proved useful in assisting businesses in a range of different circumstances (for example in the wake of natural disasters).

From the end of 2009, there was a period of centralisation, formalisation and consolidation. These changes coincided with a closer alignment of the original program

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with departmental policies and procedures. In particular, the necessity for control based on management information (number of contracts under management; performance against budget) was emphasised.

What made IC innovative? The source of IC’s innovativeness is critical to appreciating its later fortunes. Currie et al. define public sector innovation as: “the quest for creative, unusual or novel solutions to problems and needs, including new services, new organisational forms and process improvements” (Currie et al., 2008). IC represented a good example of an innovative response to a long-standing public policy issue.

There were three key aspects of IC’s innovativeness:

(1) IC’s design;

(2) its people; and

(3) its relationships.

Design While there are many private business consultants who will diagnose ills and sell remedies, the IC vision was of a service that moulded itself to the needs of the businesses it was designed to help. In this sense, the program was exploratory, rather than exploitative in its design and intentions (Duit and Galaz, 2008). The program did not purport to know in each case what the firm would require. The program rationale was that, in helping firms solve their problems, major improvements would result.

Because the program needed to develop and evolve, its guidelines were kept flexible. This made it possible for government to add new elements to the program, without the need to revise the guidelines. In addition, IC’s design was informed by previous policy experience, so was learning-based (an attribute of innovative programs) (Moore, 2005, p. 44). IC was not a radical departure from these predecessors. However, the incremental improvements it represented were significant.

People One of IC’s strengths was its innovative mix of public and private. These were not organisational partnerships in the sense identified in the service delivery literature (see Sullivan et al., 2006) but, rather, extended contract-based networks based on individual expertise. Key actors were the business advisers (BAs), who were for the most part employed by partner organisations, not by the public service. Similarly Centre Directors, ideally, had the business background to establish credibility with clients.

Relationships Networks and networking were a key part of the original IC design. BAs from the private sector played a key role in bringing firms into the network, and once there, using their knowledge to identify further opportunities. In this way, the service aimed to find and deal with “high potential” problems – that is, businesses of a certain size that would be able to develop much more quickly and effectively with the right help.

Tensions By 2011, IC was a well-regarded and successful program of its host agency. Its continuation in this sense was not in doubt. However, those aspects of IC that made it

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“different” were less apparent in 2011 than in 2009. IC was run more conventionally, as a program delivering certain services with certain resources.

Human resources Attracting the right people to the program posed challenges. Centre managers with a more entrepreneurial vision reported some frustration as greater central control was defined and asserted. They did not see themselves as “bureaucrats running a program” but as time wore on, this was increasingly the role they believed they were required by head office to perform.

This shift was paralleled in the human resources realm. The original design of the program made it possible for centre Directors to work under contract to the agency, but this required a number of “work arounds”, as contractors were not technically able to exercise financial delegations. From 2011, this type of engagement was phased out: henceforth Directors would be public servants.

Information technology Information technology was frequently reported to be a source of frustration by those working in the field. The main departmental IT system was set up to enable the most secure communications up to Ministerial level. But for those wanting to work flexibly, it meant entering data twice over: once via laptop when the company was first seen and then again via the secure network. Senior managers could see the efficiencies that might result from the institution of a laptop-accessible network. But with a network as heterogeneous as that of Industry Connect, problems with data security and risk management were understandably seen to be paramount.

Governance It was in the program’s governance that the underlying tensions were most evident. By 2011 (relative to 2009) governance had become more centralised, and the leadership team had increased significantly in size. At the same time, the availability of administrative support had lessened with inter-divisional movement of the program within the host department. New program managers were highly sensitive to the program’s heritage and unique character, but were also mindful of the need to maintain strict control of budgets and information. Centre Directors were to understand that, while they were consulted over the development and direction of the program, these decisions were arrived at and implemented from the centre of management. One notable advance did, however occur. In certain circumstances, firms were able to “sign on” for more than one year (although they did have to re-apply at the end of each period), a significant advance in an environment of one-year appropriations.

Evaluation One of the key attributes of IC was its ability to help clients learn, through flexible networking. But this kind of information-based system was difficult to evaluate. A new opportunity or contact might prove invaluable, but would not show up on most measures. Responses from interviewees with considerable contact with firms stressed the importance to business managers of the enabling aspects of the assistance provided. While “hard” data on management attributes would capture some of this type of achievement, it would not do so entirely. After experimenting with productivity measures, the host department adopted a management index (i.e. a measure of management practice) as an evaluation strategy. However, it was acknowledged that

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measuring success was proving elusive, and that it would take the best part of a decade before the real fruits of the program became apparent.

The political context From 2007 until 2011, the Minister for Industry, Innovation, Science and Resources was Senator Kim Carr, a Labour Minister with strong links to the manufacturing sector. The program aligned well with the political support-base of the Minister and also accorded with broader, network-based policy thinking relating to business development, which had been maturing in the Australian Labor Party since the early 1990 s.

The structure of the host department was affected in major ways by Cabinet changes that occurred at the end of 2011, reflecting the leadership priorities of an embattled minority government. These changes involved the appointment of a new portfolio Minister and the addition of Tertiary education to the responsibilities of the Industry Department. Senator Carr was demoted from Cabinet, moving initially to Defence Personnel (while retaining responsibility for manufacturing). By March 2012 he had been moved from the sector entirely, to Human Services. The new arrangements resulted in three Ministers, one Minister assisting and two parliamentary secretaries covering various aspects of the portfolio. Industry Connect, by now a division in its own right, was well-positioned to hold its own in this changing environment. But this “Canberra-heaviness” and the elaborate yet vaguely-defined expectations that accompanied it, was arguably taking the program further away from its core business.

Control There was evidence of a tension between the improvisatory aspects of the innovative way of working, and the requirements of bureaucratic reporting and control within a specific organisational culture. The key implication of this tension related to the costs, in terms of flexibility and knowledge, of tightening control from the top. The need for greater control was widely agreed. As matters stood, however, the trade-offs between the two seemed quite steep (that is, a given increase in control was likely to produce a noticeable drop in flexibility, as personnel changed and those remaining changed their behaviours.) It was possible to imagine improvements in these parameters, but these would require, in turn, attention being given to supportive innovation in support services, particularly IT.

Leadership Innovative public sector managers need top management support. However, the innovative spirit may not fit well into bureaucratic cultures, systems and processes. Enthusiasm for a project may, in fact, run counter to traditional bureaucratic values stressing detachment and objectivity (Du Gay, 2008).

Innovative public sector leadership may, therefore, require forms of dual leadership based on partnerships between innovators and managers: one manifestation of the complementary-skills approach to leadership. From a practical perspective, rather than trying to change the leadership behaviours of key public servants to embrace creativity, it may make more sense to aim for balanced leadership groups, where a creative leader is supported by a shrewd and practical chief operating officer.

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Discussion Innovation as a species of change introduces new values into the host organisation. The greater the values-dissonance or compatibility gap, the greater the extent to which the initiative will be changed by the host (Lozeau et al., 2002). Rather like an antigen inserted into a biological system, the implementation of IC caused reactions against it in the host department. These reactions were largely occasioned by a perceived lack of control of key aspects of the program, with a consequent increase in centralisation, formalisation and hierarchy. While managers agreed that some consolidation was necessary, doing this while “maintaining what was good in the organisation of the program” was challenging. For the original vision to survive with its visionary in situ, would have required support “from the top” of an exceptional kind. To prioritise flexibility over control would have required a quite different set of management values from those prized by the agency.

The IC story supports understandings of public sector innovation as a process, rather than as a product emerging from a process. It affirms the key importance of networks as both an objective and a characteristic of public sector innovation, but also suggests that in this impetus lies a fundamental conflict involving traditional, versus innovation-friendly, bureaucratic values. This conflict, unless specifically addressed, may cause the original innovation to lose its fundamental character. The case suggests that innovative programs may differ from other types of public sector innovation, such as specific service-delivery initiatives with novel characteristics. Programmatic innovations will be required to produce results according to standard models of managerial accountability which may be difficult to reconcile with innovation.

The case study also highlights the importance of support services (such as HR, Finance and IT), in facilitating change. These parts of the organisation and their characteristic ways of working, which are not normally considered part of the innovation system in the organisation, may have a profound impact on sustainability.

The role of accountability New public management, which stresses both managerial autonomy and accountability for results, sends conflicting messages to public servants in relation to innovation (Welp et al., 2007; Verhoest et al., 2007). Currie et al. (2008), in a study of attitudes towards entrepreneurship among British public managers, found that the policy environment, while nominally favourable towards innovative practice, was in fact perceived to be quite restrictive, particularly in relation to the management of risk (Currie et al., 2008, p. 1004).

The IC case study sheds some light on the way these tensions play out in a Westminster-based bureaucracy, where hierarchy and control by the political executive remain strong. The study highlights the difficulties involved in intrapreneurship in this environment – that is, where an innovative program originates in the vision of someone working within a department of state.

Conclusion The case study confirms the presence and importance of bureaucratic obstacles to innovation, and suggests that, once implementation is underway, these obstacles manifest themselves as a series of tensions within the host department. In particular, risk aversion may become, in the implementation frame, an ongoing concern with control.

It is true that not all innovations will challenge their host departments in these ways. But because of the embedded character of public sector innovation, it is likely

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that, as they are implemented, many innovations run up against restrictions and limitations, precisely because many systems and processes in the host department are involved. This may cause the original impetus to unravel over time, or it may never reach its full potential.

The single case study highlights the importance of the flexibility/control dynamic in understanding and explaining the changes that innovation causes. In itself, innovation may be invoked in the service of either value. But where innovation crosses boundaries, managing trade-offs constitutes an ongoing process of problem-solving. Sustaining innovation may be more difficult than starting it.

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