public services innovation

PRIME Conference - Manchester, January 2005

IoIRIoIRInstitute of Innovation Research

Harold Hankins BuildingThe University of Manchester

Manchester UK

Session 1B

The challenge of innovation in public

servicesIAN MILES

[email protected] http://LES.MAN.AC.UK/PREST/http://LES.MAN.AC.UK/CRIC/

PREST, IoIR, University of ManchesterPREST, IoIR, University of Manchester

THE FUTURE OF RESEARCH IN EUROPE – AKNOWLEDGE BASE FOR POLICY AND

MANAGEMENT




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Public Services (innovation) in Crisis?

• Funding crises• New challenges• Governance• Regulatory reform• Modernisation• Inefficiency• Throwing money at problems• Initiative overload•Tech fixes…

MPs demand transparent government IT projectsSelect Committee calls for an end to 'appalling waste of

public money‘ Bryan Glick, Computing 22 Jul 2004MPs are calling for much greater openness on government IT projects to prevent an 'appalling waste of public money and distress caused to thousands of people‘…

U.K. government hit with another large computer failure - biggest in U.K. government history

ComputerWorld | NOVEMBER 26, 2004 | Laura Rohde, IT system failures continued to plague the U.K. government this week, when as many as 80,000 civil servants working for the Department of Work and Pensions (DWP) had to

deal with what is being described in the local press as the biggest computer crash in government history…




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Drawing on http://www.step.no and also other CRIC, PREST work




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The challenge of innovation in public

services

• Conceptual

• Research/empirical/methodological

• Policy/practical

“Challenge? What challenge?”




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1 Conceptual Challenges


INNOVATION:• Beyond technological

innovation• Beyond classic product

and process innovation• Policy innovation,

organisational innovation, and more

• Innovation versus change

PUBLIC SERVICES:• Public versus non-market:

only those provided by the state? What definition of state provision?

• Only those in services sectors (not all nationalised industries) with large levels of state ownership? Or at least with traditionally large levels in most countries?

• Huge variety cross-sector, cross-country, in modes of governance and organisation




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NACE "Nomenclature statistique des Activités économiques dans la Communauté Européenne" - Statistical classification of economic activities in the

European CommunityServices firms and sectors --economic activities covered by Sections G to K and M to O and the units that carry out those activities. ( Generate almost 70% of EU GDP )

Grouped by activity - not by public/private, market-nonmarket




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NACE groups EU employment, 2000 %

G Wholesale and retail trade 22.2

H Hotels and restaurants 6.0

I Transport, storage, communication 9.2

J Financial intermediation 5.1

K Real estate, renting and business activities 13.0

L Public administration, defence; compulsory Social Security 11.4

M Education 10.0

N Health and social work 14.3

O Other community, social and personal service activities 7.0

P Private households with employed persons 1.6

Q Extra-territorial organisations and bodies 0.1

Total services 100

NACE

42




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NACE groups

G Wholesale and retail trade 22.2

H Hotels and restaurants 6.0

I Transport, storage, communication 9.2

J Financial intermediation 5.1

K Real estate, renting and business activities 13.0

L Public administration, defence; compulsory Social Security 11.4

M Education 10.0

N Health and social work 14.3

O Other community, social and personal service activities 7.0

P Private households with employed persons 1.6

Q Extra-territorial organisations and bodies 0.1

Total services 100

NACE

42

Non-market services: public administration and defence,

health, education , community services, etc. However, the non-market sections contain several activities, which are market activities (e.g. driving

schools, cinema, hairdressing, or health services supplied

through the market).

The market sections are also liable to contain some activities, which are non-

market (Official statisticians mention, for instance, e.g. central banking – but there are “service activities ancilliary to…” most sectors! And broadcasting and certain

other important activities…).




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Service Activities• Not so much transforming materials to make artefacts,

as transforming:– The state of artefacts and environments (physical processing)– The state of humans and other organisms (people processing)– The availability and nature of data, information and knowledge

(information processing)

• Huge variety of activities, but frequently service products are characterised by:– Intangibility (issues of transport, storage, coterminality)

– Interactivity (Production and consumption often intertwined)

– Information-intensity (Much specificity as to service, client)

• Public services of all types, but largest groups are person- and information-processing.




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Manchester PUBLIN (health) results ~

• Concept of innovation recognised and people can work with it (to some extent) in interviews, but term “innovation” often not employed – many other terms used.

• “Innovation” often seen as fashionable jargon – or as ‘new technology’ or problem-solving

• Or as a matter of adoption of top-down guidelines, meeting targets (important procedural innovation).

• Often incremental developments, often hard to establish boundaries between innovation and replication.

• Huge number and range of developments, not subject to much direct recording/compilation in databases… Though some recording through incentive schemes, and through efforts to impose IPR models…




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Some examples of innovation…

• Genetic screening• Intraocular lenses• Health informatics• Electronic patient records system – huge scale, clear

benefits (and professional risk perception)• NHS Direct: “most radical innovation” in recent history of

health service”• NICE• Tier Two – reduced waiting lists through appropriate

secondary care rather than using hospitals• Creation of new mental health trust – specialisation• Pilot “out of hours” link with Aus/NZ consultants• Modernisation Agency




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2 Research Challengesα Underresearched – like services innovation, of which

it is part – unclear how far concepts and instruments will work – though we can expect many points of convergence (from life cycles to product

champions, complementary assets to radical innovations).

β Search for commonalities, specificities or both – assimilationist / demarcationist / synthesist

γ Units of analysis, problems of large systems, compounded by problems of access and

politicisation of issues.




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α Services Innovation• Neglected till recently – IT revolution and service

economy have finally prompted attention – analysis still limited, but some results include:

• Often relatively low levels of innovation effort (at least as measured conventionally) – but many exceptions

0

10

20

30

40

50

60

70

80

Wholesale

Transport

Telecoms

Financial

Computer S

Technical S




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α Services Innovation• Neglected till recently – IT revolution and service economy have finally prompted attention – analysis still limited, but some results include:


• Hard to protect via patents – push to increase patentability but (a) controversial (software and BP patenting) and (b) little hard evidence that service innovation is more vulnerable to copying in general.

• Professional inputs often a vector of change• Often poor link to innovation systems, “science base”• Organised in specific ways – often not counted as R&D, often not

R&D departments or managers• Organisational innovation, and changes in relations between client

and service (delivery etc.) are very important. Established indicators may be inadequate.




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• Neglected till recently – IT revolution and service economy have finally prompted attention – analysis still limited, but some results include:


• Hard to protect via patents – push to increase patentability but (a) controversial (software and BP patenting) and (b) little hard evidence that service innovation is more vulnerable to copying in general.

• Professional inputs often a vector of change• Often poor link to innovation systems, “science base”• Organised in specific ways – often not counted as R&D, often not

R&D departments or managers• Organisational innovation, and changes in relations between client

and service (delivery etc.) are very important. Established indicators may be inadequate.

α Services Innovation

Product (PD)Only

ProcessOnly (PC)

OrganizationalOnly (ORG)

PD & PC

PD &ORG

PC & ORG

PC ORGPC & ORG

Key

Manufacturing

22%

23%

11% 8%

5%

26%PD

PD & PC

PD &ORG

DK / None= 5%

Services

10%

6%

8% 37%

9%

19%PD

PC ORG

PD & PC

PD &ORG

PC & ORG

DK / None= 12%

Manufacturing : Product & Process = 71% Services : Organisational + = 54%

Tether and Howells 2004 study




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α Services Innovation– Intangibility (issues of transport, storage, coterminality)

– Interactivity (Production and consumption often intertwined)

– Information-intensity (Much specificity as to service, client)

• Need to relate service product and production process to service client – often extended affair, degree to which individual details involve specialised or customised production varies immensely. Affects scope for innovation oif various kinds.

• Public services have to confront the variety of human characteristics with the dictates of large systems and bureaucratic rationality.




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β Private == Public services Markets as external selection mechanism: consumer choice

Competition between firms: marketing, sales, etc. May be transnational competition, self-service alternatives.

Customer Relationship and Supply chain management

Regulation often higher in services than manufacturing

Flexibility, e.g. in employment terms; Rewards

Profit-driven: strong incentive Rents on innovation

Public policy driven services, sometimes heavily influenced by public attitudes and media renderings of opinion and service quality.

Some forms of competition and” coexistence, with private and voluntary sectors and individual self-service.

Bureaucratic systems and administration. Employee lobbies.

(Nominally) strong emphasis on Equity and related issues, on ethics and privacy issues.

Personal and professional incentives

Public goods




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γ Are there Specific/Stronger Obstacles to Innovation?• Would expect issues to arise concerning regulations, large technical systems, workforce issues (esp. professionalism and status conflicts), reward structures, etc.

• Also (like other services) some strategies to deal with intangibility etc (e.g. targets, tests, credentials) and some to deal with “public” characteristics – esp marketisation, competition, consumer-centric, cosnumer choice…

• Some results from PUBLIN health…




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γ Specific/Stronger Obstacles to Innovation? 2

• Internal diffusion / roll-out repeatedly a major issue - much effort now being spent on identifying, codifying and spreading good practice, new procedures. Lack of structures and mechanisms for organisational learning seen as major issue – efforts being made here. But…

• Initiatives to diffuse good practice seen as “short-lived” – reorganisations promote lack of corporate memory

• Infrastructural and procedural/occupational heritage and legacy, entrenched practice and procedures are commonly experienced.

• ‘Professionalised’ resistance – e.g. clinicians, ambulance service form “disconnected hierarchies”, some self-governing professionals, others “quasi-military” forces. Lack of common command and control structures – conflict with established roles, politics, “empires”

• In particular lack of commitment to consumer orientation was often cited as a major issue (mirroring political rhetoric in UK).

• Public resistance to reorganisation – though public seem very open to new ways of operating

• Lack of “ownership” of innovation – top-down initiatives – • …and IP issues




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γ Specific/Stronger Obstacles to Innovation? 3

• Resistance to ‘out of the box’ thinking plus risk aversion (generic issue in public sector – related to nature of service (large-scale and severe risks) and to political cycles. High public/political profile plus blame culture, accountability and risk of litigation (but US?).

• Pace and scale of change (NHS in particular) – shifting targets and absence of opportunity to reflect/asses consequences

• Very complex organisation – composed of multiple tiered interlinked systems with - Huge staff numbers; Many occupations; Many organisational arrangements; Many service processes

• Lack of “patient information connectivity” between actors in system• Lack of dedicated budgets for innovation at relevant (local, Trust)

level.• Some areas (mental health) not high profile priority for investment (cf.

surgery)• Requirement to consult, lack of clear picture of all eventual effects




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Polic

y f

or

inn

ovati

on

?




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– or Public Sector Opportunities?

• High level of staff expertise, creativity, problem solving• Strong public spirit ethos, motivations beyond personal financial

rewards• Controversial shifts underway (e.g. competitive framework of

Foundation hospitals) believed by proponents to increase innovation by:– Allowing for flexibility and experimentation within target culture and

common standards– Incentivise staff (and management) financially, status-wise, and through

improved service quality– Improve patient choice (will drive resources as money follows patients)

aand “consumer” feedback into innovation process– Management draws on external sources for “directed creativity” and

organisational innovation and knowledge mananagement…• Conscious efforts at innovation management (under various guises)

γ Specific/Stronger Obstacles to Innovation?




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In our studies, the innovations exciting management are:• Those more at the strategic/management level

• Organisational: governance relation changes, new agencies, etc

• New roles, responsibilities, new ways of operating (need for knowledge management capacity), role in training

• Technical and technological (huge) – some systemic, esp.IT-based,

• New specific practices e.g. round pharmaceuticals, clinical practice, techniques, devices, etc. Huge range of artefacts involved. Again, much IT impact.

• Often technological innovation closely tied to further organisational/process change/innovation




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Implications for Research• Many commonalities – many ideas and instruments can be borrowed

• Different selection processes internally and externally. Processes of diversity generation too.

• Much is public-private mixture (many kinds)• Public services highlight areas where innovation

studies are weakSome efforts underway




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3 Policy Challenges• Research Policy – bringing in the public

sector where it is absent, taking better account of it where it is present…

• Public sector policy – governance, regulatory reform, efficiency, modernisation… Building innovation into public policy… Assessing innovation processes and impacts to guide policy, validate expenditure




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Many major initiatives with innovation implications• Could we have innovation audits? We have yet to measure public service

innovation and impacts systematically (several partial attempts)!•Can we do better in assessing costs and benefits of attempts to impose certain “private sector models” on the public sector – are there other elements of innovation management that should be engaged with (first?)




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Public Sector “Modernisation”




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Modernisation Agency• Est. 2001 to support NHS and partner organisations in modernising services and improving experiences and outcomes for patients.

• Has focused on four areas:– improving access,– increasing local support,– raising standards of care,– capturing and sharing knowledge widely.

• “10 high impact changes”:– Treat day surgery as the norm for elective surgery – Improve access to key diagnostic tests – Manage variation in patient discharge – Manage variation in patient admission – Avoid unnecessary follow-ups – Increase the reliability of performing therapeutic interventions through a Care Bundle

approach – Apply a systematic approach to care for people with long-term conditions – Improve patient access by reducing the number of queues – Optimise patient flow using process templates – Redesign and extend roles




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Public Service Innovation…• …is a topic crying out for research

• Policymakers desperately want good knowledge

• Innovation studies themselves can benefit from looking at this

• Its sort of important too…

• Must not be a ghetto!




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End of presentation

public services innovation

Technology