Open Innovation 2.0 Yearbook 2013 - European Commission - Europa

2.3. Innovating with and for the public sector
Public sector innovation is increasingly recognised
as an essential mechanism for maintaining the
quality and scope of services whilst reducing costs.
Cross-sectorial collaboration and coordination is
increasingly seen as a solution to the most pressing
social problems [1]. While public sector innovation
holds great potential, it still has many barriers
and challenges that require further research and
experimentation.
This chapter provides a framework for thinking,
debate and action on innovation models and practices
in the public sector from both research and
practical point of views. It explores the similarities
and differences between much studied private sector
innovations and the distinct factors in public–
private innovation, and proposes a typology for
better understanding differences in the innovation
landscapes. Special emphasis is placed on transformative
innovations with potential for broad societal
and economic impact.
Introduction
The share of privately operated public services
and operational functions continues to increase.
Consequently, the public sector needs to increasingly
focus on critical interdependencies between
public and private interests and inherent tensions
between private rent-driven objectives and wider
public or social good [2]. Thus, the much studied
governance and innovation models from the private
sector do not fully apply to these contexts,
but a broader appreciation of underlying value
rationales and broader organisational and managerial
dilemmas inherent in the collaboration for
both parties is needed in successful public–private
collaboration and co-development initiatives.
In the corporate context, it has been proven that
technical inventions per se do not provide value
to the firm, unless they are complemented with
organisational and institutional changes [3], and
framed in the context of a business model that
brings value out of them [4]. Since public sector
innovations are typically systemic by nature, they
disrupt existing linkages and initiate broader-scale
changes. This requires more focus on related
organisational forms and even policies. Furthermore,
the public sector also needs to increasingly
consider its value proposition and related partners,
capabilities and costs (business model) for realising
it. With these complexities, public sector innovation
provides a highly interesting and understudied
area of research.
Public sector innovation today
Public sector innovation is increasingly recognised
as an essential mechanism for maintaining the
quality and scope of services whilst reducing costs.
The public sector is faced with greater emphasis
on performance and accountability, shifts in government
funding, and increased competition for
public resources. The public sector has good bases
for innovation with the strong mandates of public
organisations, and a plethora of benchmarks from
innovation cases in the private sector. The incentives
to innovate are further elevated since, without
innovation, public service costs tend to rise
faster than the rest of the economy. These pressures
have prompted an increase in innovation initiatives,
including new partnerships, collaborations,
and international networking. Another major trend
is the emerging demand for transparency, accountability
and openness in the public sector. The new
policies build on the idea that market creation
benefits from open, ecosystem-based dynamism
that brings together all the relevant players, including
the final users. The new mindset on the roles
and mandates of citizens and public institutions
increasingly highlights broad-based dialogue and
citizen engagement.
There is still an echo of a widely held assumption
that the public sector is inherently less innovative
than the private sector. This has been said to
account for the lack of competition and incentives,
a culture of risk aversion, and bureaucratic conservatism.
However, there are several great reference
cases of public sector innovation (e.g. knowledge
inputs to the World Wide Web, Web-based tax filing).
Debate is ongoing as to whether the public
sector should innovate in the first place, or should
it rather generate the conditions and incentives for
innovation in academia, SMEs and private companies.
However, recent pilots have demonstrated that
the implementation of developed services and systems
call for a sustainable organisational and institutional
setting, which can only be realised through
active public sector participation.
Innovating is a hard and risky endeavour and, in the
public sector, the various mutually exclusive priorities
add yet another layer of complexity. Whereas private
corporations strive to create stakeholder value, public
organisations’ mission is to generate ‘public value’.
Public value is a debatable concept, which can have
various meanings and interpretations. Typically, the
term is understood to refer to added equity, efficiency
and democracy [5]. Therefore, tangible, non-arguable
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