Supporting Public Sector Innovation

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By Malcolm Morley, Chief Executive at Harlow Council, Visiting Professor atThe Lord Ashcroft International Business School, Anglia Ruskin University and Visiting Professor, The Business School, University of Bedfordshire

As a management consultant I worked with a multinational company to identify how it could more effectively exploit the intellectual property that was being created by its very talented people.  The reason for my engagement was that the technically brilliant people that the company employed were more interested in innovation than in entrepreneurship.  This meant that many patents were achieved for great technological innovations but few were developed further and exploited commercially.  The company’s significant investment in innovation was not producing a significant financial return for it.

This issue was addressed by:

1. Introducing a new innovation investment evaluation process to identify innovation proposals with commercial potential.

2. Providing support for the innovators to develop their ideas beyond proof of concept in the form of allocating time and budgets.

3. The provision of access to people with commercial skills to work alongside those with technical skills to ensure that the commercial potential of the innovation was developed and a credible business plan was created for it.

4. Giving an equity stake to the innovators in companies created to achieve the successful realisation of the commercial potential being created through their innovation.

The result was that more innovations were exploited commercially and provided a real return on the company’s investments in patent development.  The innovators became more aware of, and interested in, entrepreneurialism as well as their technical discipline.  A number of companies based on the innovations were created and spun out of the parent company generating significant rewards for both the company and the innovators.  Service users received better services from the innovations which previously had not been developed into operational activities.

The innovators needed time, resources and support to enable them to develop their innovations and to recognise and realise the commercial potential of them.  It was noticeable that as the success of this initiative grewothers became interested in it and the focus of those involved broadened with increased interest in what their innovations could actually achieve for service users and how they could share in the benefits arising from taking innovation from concept to practical application.  The organisational culture changed for that part of the business and more proposals for investment in innovation came forward to be evaluated.

People working in the public sector often create intellectual property, have ideas about how to improve the economy, efficiency and effectiveness of their organisations through innovation and ideas for improved products.  I believe that many of these people are capable, with appropriate support, of converting their ideas into practical benefits for service users.  I also believe that with appropriate support they would be able to create businesses and move from the public to the private sectors generating a financial return for the public sector and enhanced career prospects for themselves.

In the public sector, whether in the UK or in Abu Dhabi, there are many talented individuals with the skills and desire to innovate.  I believe that given time to develop their innovation ideas (whilst still being employed by the public sector), financial support (including for product and service development) and access to specialist help, many public sector innovators would be able to develop products and services that could make a real difference to service users.  To achieve this requires people in the public sector to increase their understanding of markets and strategy (see Understanding Markets and Strategy: How to exploit markets for sustainable business growth).

Public Sector Innovation Enablers

1. A panel of experts who understand both the public sector context and the commercial world to evaluate and support proposals for investment in innovation as part of a Public Sector Innovation Programme.

2. People in the public sector with the willingness and ability to make proposals for innovation that have both serviceimprovement and commercial potential.

3. Sufficient budgets to provide financial support to those successful in applying for support to develop their innovation and to provide access to people with commercial expertise to work alongside them.

4. Willing organisations in the public sector to allow their employees to focus on the development of innovation as part of thePublic Sector Innovation Programme.

5. A means to enable innovators to share in the rewards generated by their innovations and for the public sector to achieve a return on its investment in the innovation.

6. Support, where appropriate, for successful public sector innovators to move to the private sector to continue the development and commercial exploitation of their innovation with or without an on-going equity holding by the public sector.

The above could transform innovation in the public sector, improve service provision, lead to the creation of new businesses, generate a financial return for the public sector and see more people in the public sector acquire commercial skills and move from the public sector to the private sector.

Sources of the finance to make this happen could be from the Government and/or from venture capitalists and other investors.  My experience, however, is that venture capitalists and other investors will only want to get involved once there is proof of concept.  They want confidence that their investment will enable them to generate a significant return in three to five years and that there are the skilled and experienced people in place to deliver the development of the innovation and the business to generate that return.

This means that it is likely that Government would have to provide the initial funding to develop the innovation from concept to a commercial proposition sufficient to attract external funding.  This reinforces the need to have a panel of experts with the necessary mix of skills and experience to evaluate innovation proposals to select those with service and commercial potential.  It also emphasises the need to support innovators by providing access to people with commercial skills and experience to work as part of the innovation process in the development of products and services.

As the private sector plays a growing role in the provision of public services it is important that the public sector plays a role in the development of innovation and that it benefits from it.  Innovation and its commercial exploitationneeds to be seen as part of the evolution of the strategy for the public sector and as a component of the organisational culture change required to pursue that strategy.  Public private partnerships need to be developed to provide a win win for both sectors.  See my book on how to do this: The Public Private Partnership Handbook: How to maximize value from joint working.

A pipeline of projects needs to be identified for a Public Sector Innovation Programme.  A programme that will act as a symbol of the public sector’s willingness and ability to contribute to providing solutions to the challenges that it faces rather than merely reaching for the solutions offered by the private sector.  A programme that recognises the talent of people within the public sector and which recognises that innovation, and the realisation of the benefits arising from it, is part of the changing the role and performance of the public sector.

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