27

Innovation in Governance and

Public Services: Past and Present
Jean Hartley
Three approaches to innovation in the public sector in the post war period are
identified and analysed for their implications for policy-makers, managers and
citizens. Various relationships are identified between innovation and improvement
in public services. The traditional bias of the literature that innovation is
necessarily functional is undermined. Important lessons for policy, practice and
research include the need to develop an understanding of innovation which is not
over-reliant on the private sector manufacturing literature but reflects the
distinctive contexts and purposes of the public sector.
Definitions of innovation such as ‘novelty in perspective is a useful approach to public sector Jean Hartley is
action’ (Altschuler and Zegans, 1997) and ’new innovation across a range of services. Professor of
ideas that work’ (Mulgan and Albury, 2003) Innovation may include reinvention or Organizational
emphasise that innovation is not just a new idea adaption to another context, location or time Analysis, Institute of
but a new practice. This is the difference between period. The diffusion of innovations (sometimes Governance and
invention and innovation (Bessant, 2003). Some called dissemination, or spread of good or Public
writers reserve the notion of innovation for promising practices) to other organizations, Management,
‘radical’ or ‘breakthrough’ novelty, while others localities and jurisdictions is particularly Warwick Business
emphasise a spectrum of innovation from large- important for the public sector (Rashman and School and an
scale dramatic, ‘headline-making’ innovations Hartley, 2002). This highlights some important ESRC AIM Public
to small scale, incremental changes. However, differences between public and private sector Service Fellow.
the definition needs to recognize practical innovation. Innovation in the latter is driven
impact: primarily by competitive advantage—this tends
to restrict the sharing of good practice to
Those changes worth recognizing as innovation strategic partners. By contrast, the drivers in
should be…new to the organization, be large the public sector are to achieve widespread
enough, general enough and durable enough to improvements in governance and service
appreciably affect the operations or character of performance, including efficiencies, in order
the organization (Moore et al., 1997, p. 276). to increase public value (Moore, 1995).
Such public goals can be enhanced through
How extensive, therefore, does the change collaborative arrangements to create, share,
have to be in order to be classed as innovation transfer, adapt and embed good practice (for
(rather than continuous improvement)? Much example through cancer collaboratives,
of the innovation theory and literature has Beacons, peer review, pilots and demonstration
derived from new product development, where projects). This is not to deny that a centralized
an innovation in technology can be observed government system, such as the UK, may create
and broadly agreed, even if its full implications competitive pressures between public service
or its impact are not initially known. By contrast, organizations, or that decentralized systems,
innovations in governance and services are such as in the USA, militate against sharing
more ambiguous. Here innovation is usually good practice and actually encourage
not a physical artefact at all, but a change in the reinvention of the wheel. However, it suggests
relationships between service providers and that the spreading of good practice, and the
their users. In such changes judgements have adoption and adaption of existing innovations
to be made about processes, impacts and in a different time and context is a significant
outcomes, as well as product. Greenhalgh et al. element of public sector innovation.
(2004) suggest that, for the National Health Public services also need to consider
Service (NHS), innovations have to be governance innovations. In recent years, such
‘perceived as new by a proportion of key innovations have included new political
stakeholders’ (p. 40). Such a socially-constructed arrangements in local government and

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devolved government for Wales and Scotland, (for example the Connexions service for
as well as changes in the organizational form young people).
and arrangements for the planning and delivery •Strategic innovation—new goals or purposes
of services (for example privatization and new of the organization (for example community
collaboratives between the public and private policing; foundation hospitals).
sectors to provide services). There have also •Governance innovation—new forms of citizen
been innovations in public and user engagement, and democratic institutions (for
participation in service design and delivery example area forums; devolved
and in the use of boards to govern particular government).
choices and services (for example school •Rhetorical innovation—new language and
governing bodies). new concepts (for example the concept of
Some writers have attempted typologies of congestion charging for London, or a carbon
innovation, for example, that distinguish tax).
between technical and administrative
(‘organizational’) innovations (Damanpour, In practice, any particular change may have
1993). Distinctions between product, service elements of more than one type of innovation.
and process innovations have also been For example, congestion charging in London
proposed (Wolfe, 1994). Bessant’s (2003) may be characterized as an innovation which
categories include market innovation and includes a new strategy, service, organizational
Moore et al. (1997) highlight the importance of arrangements, rhetoric, and user relationship.
strategic innovation. Drawing on these and Therefore, we should consider innovations,
other writers who examine innovation in either particular radical or complex ones, to be
the public or private sectors, we may distinguish multidimensional, specifying the dimensions
the following: (and the size of the innovation in those
dimensions) in the interests of systematic
•Product innovation—new products (for comparison.
example new instrumentation in hospitals).
•Service innovation—new ways in which Innovation in Public Services: An Historical
services are provided to users (for example Perspective
on-line tax forms). There is sometimes a sceptical view of innovation
•Process innovation—new ways in which in the public sector. Yet, in the post-war period
organizational processes are designed (for there has been substantial innovation, which
example administrative reorganization into becomes more evident in reflecting on how
front- and back-office processes; process innovations arise. In the private sector, the
mapping leading to new approaches). focus is on managers and staff as sources of
•Position innovation—new contexts or users innovation, both working inside the

Figure 1. Competing paradigms: Changing ideological conceptions of governance and public management.
(Source: Benington and Hartley, 2001.)

‘Traditional’ ‘New’ Networked

public Public governance
administration Management

Context Stable Competitive Continuously changing

Population Homogeneous Atomized Diverse

Needs/problems Straightforward, defined Wants, expressed Complex, volatile

by professionals through the market and prone to risk

Strategy State and producer centred Market and customer Shaped by civil society
centred

Governance Hierarchies Markets Networks and partnerships

through Public servants Purchasers and providers Civic leadership
actors Clients and contractors

Key concepts Public goods Public choice Public value

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organization, and networking outside it. The public administration approach,

However, for the public sector, we also have to evident particularly in the post-war period and
consider the role of policy-makers and policy up to the early 1980s, is largely based on a
advisors in the innovation process. legislative, bureaucratic and rule-based
Benington and Hartley (2001) have approach to public service provision. The
characterized three competing paradigms of population is assumed to be fairly
governance and public management which homogeneous, and the definition of needs and
may be conducive to particular ways in which problems is undertaken by professionals, who
innovation is both generated and adopted. provide standardized services for the
Each is a world view or a consistent pattern in population. Power and authority lies with
that each contains particular conceptions and government, and the provision of welfare and
assumptions about the nature of the world, and regulatory services is assumed to emanate from
the roles of politicians, managers and the the state, through elected representatives. Both
population. The three paradigms are shown in national and local politicians have a central role
figure 1. The first two may be familiar as in innovation—developing radical new policy
‘traditional’ public administration and ‘New frameworks, and building the support among
Public Management’ (NPM), while a third citizens and their parties for the enactment of
paradigm is based on evidence of emerging those innovations in legislation. Examples of
patterns of governance and service delivery, major, radical innovations include the
which we call ‘citizen-centred governance’, or establishment of the NHS, the 1944 Education
‘networked governance’. Act, the nationalization of major industries,
Each paradigm may be linked to a particular and the establishment of new towns. At the
ideology and historical period. However, they local level, radical innovations initiated by
can also be seen as competing, in that they co- politicians affect the whole locality, for example
exist as layered realities for politicians and the redesign and redevelopment of Coventry
managers, with particular circumstances or city centre after the bombing, the establishment
contexts calling forth behaviours and decisions of comprehensive schools, and community
related to one or the other conception of development. This is the period characterized
governance and service delivery. This is not a by large-scale innovation, often national and
normative framework, because each conception universal in scale.
has both strengths and weaknesses for society. The large scale of the changes, and the
The different conceptions of governance legislative, financial and staffing resources
and public management outlined above have deployed, mean that change is evident early.
implications for the role of policy-makers, In most cases, improvement is widespread and
managers and the population in innovation. objectively evident to a range of stakeholders.
These are explored in figure 2. However, the top-down implementation means

Figure 2. Innovation and improvement in different conceptions of governance and public management.

‘Traditional’ ‘New’ Networked

public Public governance
administration Management

Innovation Some large-scale, Innovations in organizational Innovation at both

national and universal form more than content central and local levels
innovations

Improvement Large step-change Improvements in managerial Aiming for both transformational

improvements initially, but processes and systems. Customer and continuous improvement
less capability for continuous focus produces quality improvements in front-line services
improvement in some services

Role of
policy-makers Commanders Announcers/commissioners Leaders and interpreters

Role of public
managers ‘Clerks and martyrs’ Efficiency and market maximizers ‘Explorers’

Role of the
population Clients Customers Co-producers

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that the capacity for continuous improvement mechanisms. Newman’s (2001) analysis of
and adaption is limited. government since 1997 shows that there has
The role of policy-makers in this approach been a shift to more networked forms of
to innovation is to act as commanders—creating governance, as an alternative to the state and
legislation and then support for whole-scale the market, and some evidence of more steering
changes, while assuming that the detailed work and community governance, though not
of implementation will be carried out by officials. without tensions between centralization and
These public managers, working within the decentralization, and networks and hierarchies.
organizational form of a bureaucracy, act either Innovation under networked governance
as ‘clerks’ (impassive officials implementing revitalizes the leadership role of policy-makers
political will) or ‘martyrs’ (holding private views in translating new ideas into new forms of
about the wisdom or necessity of action but action. While the Cabinet continues to innovate
continuing to implement political decisions through large-scale legislation (for example
without comment) (Moore, 1995). As for the devolution of powers to the constituent
population, the political and professional countries and regions of the UK), others are
domination of innovation leaves users of services concerned with supporting innovation through
as clients, with little say about services. enabling legislation or providing resources for
A different approach to innovation is seen experiments and collaboration (for example
in the approach now known as NPM and action zones, pilots, and Beacons), and
developed from the 1980s onwards in the UK, orchestrating the interests of different
New Zealand and elsewhere. Underpinned by stakeholders. For their part, the role of public
a different set of assumptions in neo-liberal managers is to nurture innovation as they
economics and a particular form of become:
management theory, the innovations arising
through this approach focus particularly on …explorers commissioned by society to search for
organizational forms and processes such as public value. In undertaking the search, managers
executive agencies in central government, the are expected to use their initiative and
purchaser–provider splits seen in health, imagination. But they are also expected to be
education and local government, and a responsive to more or less constant political
‘customer’ focus. The innovations were guidance and feedback (Moore, 1995, p. 299).
politically radical at the time, and created
considerable organizational restructuring but At the same time the public is seen to have a
it can be argued that the innovative elements larger role as co-producers of service and
are primarily about organizational form and innovation.
business processes. The extent to which they This brief historical review indicates that
led to improvements is contested. The customer innovation is not serially associated with each
focus, for example, has led to improvements in period. Rather, each paradigm, with its
some services where casting users as customers particular set of assumptions about governance
has been helpful, but in others has obscured and management, engenders and supports
the nature of more collective relationships. particular emphases in innovation.
What of the policy-makers, managers and
citizens in this form of innovation? Of the Innovation With or Without Improvement?
policy-makers, the national cabinet remains as As other articles in this issue of Public Money &
‘commander’, but the managerial focus of NPM Management show, there is an important
reduces the role of other politicians to difference in innovation between private and
‘commissioners’ of services or ‘announcers’ of public sectors. In the private sector, successful
change (Pollitt and Bouckaert, 2004). Mandarin innovation is often seen to be a virtue in itself,
officials have been transmuted into public as a means to ensure competitiveness in new
managers as efficiency maximizers, seeking markets or to revive flagging markets. In public
innovations to improve the quasi-market and services, however, innovation is justifiable only
the quality of service ‘delivery’. The public where it increases public value in the quality,
increasingly take on customer roles which give efficiency or fitness for purpose of governance
them a voice, as users, in service scope and or services. Moreover, in the public sector at
content. least, innovation and improvement need to be
As the UK moves to networked governance, seen as conceptually distinct and not blurred
the role of the state is to steer action within into one policy phrase. Unfortunately, this is
complex social systems rather than control not always the case in UK practice where public
solely through hierarchy or market organizations feel almost obliged to provide

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evidence and arguments that they are Figure 3. Innovation and improvement.
‘modernizing’ and ‘improving’. The Innovation
Forum, for example, is a group of ‘excellent’
(high-performing) local authorities working
with central government departments on new High

ways of working to deliver better services to

Improvement but no innovation Innovation and improvement
local communities. The ODPM website notes
• continuous improvement
that ‘Membership of the Forum is open for at methodologies
least a year to councils whose category slips to
“good”’. This implies that high performance
and the ability of the organization to innovate 2 4
belong together. However, this runs counter to 1 3

IMPROVEMENT
the private sector literature, which suggests No improvement and no innovation Innovation but no improvement
that innovations (especially radical ones) are • stable environment • increased choices but not desired
often identified and implemented by those • organizational inertia by service users
firms which are not market leaders (for example • loss of performance due to
Utterback, 1996). In addition, the world is learning curve and operational

littered with examples of innovations that led bugs

Innovation unsuccessful but useful
either to few, if any, improvements, or which •
organizational learning
had unintended consequences (for example Low
• Innovation not valuable
high-rise housing and out-of-town
Low INNOVATION High
supermarkets).
It is therefore useful to consider a number
of possible relationships between innovation
and improvement. These are shown in figure
3. The analysis is based on organizations, but it
is equally possible to apply this to service areas,
business units, or partnerships. predicated on the assumption that
In box 1, an organization has neither improvement follows. Yet, ‘Studies of product
improvement nor innovation. This may occur innovation consistently point to a high level of
in a highly stable environment, where failure to progress from original idea to
innovation is not needed because there is a successful product in the market-place…Actual
close fit between that environment and the figures range from 30% to as high as 95%; an
organizational processes, systems and accepted average is 38%’ (Tidd et al., 2001, p.
stakeholder needs. Alternatively, the 16). There may be reasons for being even more
organization may be in inertia, either not pessimistic about public sector failure: the
recognizing the need to innovate or improve to caution of politicians in supporting innovation
meet new needs/changing circumstances, or (since they carry responsibility for failure),
else paralysed from taking action to meet the media interest which can exaggerate failure in
new circumstances. public services, traditional public administration
In box 2, improvement occurs but without theory which separates policy-making from
innovation. This is an organization which implementation, and the difficulties of achieving
focuses on small, incremental changes in order unambiguous success.
to achieve improvement (for example Second, there is the situation where
continuous improvement methodology, total innovation occurs and is based on a proliferation
quality management), but where the changes of choices but with no improvement in service
do not individually constitute innovation in content as needed by service users or other
that they are not sufficiently large, general or stakeholders. In the private sector, innovations
durable as new improvements. Of course, based on increasing choice is valuable in its own
cumulatively, continuous improvement can right as this may give market advantage (for
lead to substantial changes over the long term. example producing 50 variants of trainer
In box 3 the organization engages in footwear to meet fashion demands). Yet, in
innovation but there is no resulting public services if the extra choices are not
improvement. Indeed, there may even be a wanted or needed, or only give wider but not
deterioration of performance. Several situations better services, then innovation has not led to
fit this pattern. First, innovations do not always improvement.
lead to success. Some of the public sector There are situations, however, where there
rhetoric about innovation appears to be may initially be no improvement and yet the

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innovation is worth pursuing. This can happen implemented. Increasingly, innovation is as

where the innovation leads to a temporary much a ‘bottom-up’ and ‘sideways-in’ process
performance decrease, for example, as as a ‘top-down’ process. Recent research from
operational processes or bugs are ironed out as Borins (2002) suggests that, in the USA, half of
staff get used to new ways of working. This all innovations (51%) come from either middle
feature, well recognized in the operations managers or front-line staff. The figures are
management literature, reflects innovation as higher for developed Commonwealth countries
a journey which is not linear and rational but (for example the UK and Australia) where 82%
which leads to dead-ends, mistakes, adaptions come from organizational staff (75% from
and obstacles to be overcome. Innovation middle managers). Borins notes that:
without improvement may also occur where
organizational learning takes place which does bottom-up innovations occur more frequently in
not benefit the immediate innovation but the public sector than received wisdom would
contributes to the innovative capacity of the have us believe. The individuals who initiate and
organization, aiding later attempts to innovate. drive these innovations are acting as informal
Deciding when to abandon an innovation leaders…Politicians and senior public servants
as no longer showing promise is an important create organizational climates that will either
judgement. Kimberley (1976) argued for paying support or stifle innovations from below (p.
attention to ‘exnovation’, i.e. making the 475).
decision to cut losses on an innovation and kill
it. This is a significant issue for public services, In addition, innovation through networks of
where innovations are not so much formally professionals and managers is also a potent
ended as overlaid with new initiatives. form of innovation, especially the diffusion of
Finally, box 4 indicates that desirable innovation, which often requires local adaption,
category, an organization engaging in both not simply adoption. What are the relative
innovation and improvement with noticeable advantages and disadvantages of top down,
improvements in outputs and outcomes. There bottom up and lateral innovation for particular
are challenges here to move beyond types of innovation, and about the ‘innovation
improvement as meeting a set of performance journey’ through setbacks and barriers.
indicators, to ensuring that the improvements Given that a high proportion of innovations
are sustained. in the private sector fail, we need to understand
more about the failure or the extinguishing
What We Still Need to Know process or ‘exnovation’ (Kimberley, 1976). What
The analysis so far suggests that public sector are the similarities to and differences from the
innovation needs to be linked to considerations private sector? What is, or could be, the role of
of improvement, but should not be shackled to both politicians and managers in preventing
it. It may be instructive to learn about and unsuccessful innovations from proceeding
understand innovations which fail, as well as beyond a certain point of development?
those which succeed. The failures may help us
to understand the innovation process, and the Innovations in Governance
barriers and facilitators of innovation, rather What little research there has been on
than assuming that innovation leads inexorably innovation in the public sector has tended to
to improvement. Moreover, while there is a lot focus on service delivery. There is relatively
to learn from product and service development little about innovations in governance. There is
in the private sector, policy-makers, managers a lot written about new forms of governance,
and researchers in the public sector need to but these issues are not generally discussed
recognize their own contexts more explicitly. from an innovations perspective (i.e. in what
ways is the shift an innovation, how does the
Innovation Processes innovation emerge and how is it sustained?).
The classic public service model of innovation This is an area which is ripe for investigation
as designed by policy-makers and implemented and would be informative about democracy
by public managers is a case in point. It is no and society, and public sector innovations.
longer the sole or even necessarily the optimal
strategy. If we start from the assumption that Diffusion of Innovation
most if not all organizations need to innovate As we have seen, diffusion of innovation is
because the wider world is dynamic, then we particularly important for public services. Some
need to understand more about how innovation organizations prefer the language of
is fostered, supported, sustained and dissemination as implying more active processes

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than diffusion (which relies on a chemistry leadership to understand how innovation

metaphor). Whatever the language, there is climates are nurtured, how policy-makers and
still a lot to be learned about how diffusion managers can work together in related but
takes place, and how and why innovations are distinctive roles in innovation, and how far
adapted to different contexts and cultures. For innovation leadership is distributed within and
example, how can organizations or groups across organizations.
which have successfully created an innovation
recognize and describe to others its distinctive Conclusions
features? Successful innovators are not always Innovation is an issue of considerable
aware of how distinctive their own practices are significance for both public and private sector
and are not automatically good communicators organizations. Although the sceptical view of
about how to develop the innovation in another the public sector is that it is resistant to significant
context. In addition, what communication innovation, there have been numerous and
channels and learning exchanges facilitate what significant examples. This article has used three
sorts of innovation? And what features of the different conceptions, or paradigms, of
‘receiving’ organization enable it to recognize governance and public management in order
and use innovations from elsewhere and to to examine the ways in which innovation is
embed them locally? pursued by policy-makers, managers and
citizens. This suggests that there are several
Innovative Capacity in Organizations mechanisms for the development of innovation.
Taking a step beyond individual innovations, The literature about innovation in the
why do some organizations appear to be more public sector is still sparse, and so there has
receptive to innovation than others? Some been, until recently, an over-reliance on
evidence suggests that organizations which literature derived from the private sector. There
implement major innovations successfully are are some similarities in innovation processes
more open to, and have the structures and and outcomes (from which it is important to
cultures to support, further innovation (for learn), but also distinctive and important
example Newman et al., 2000; Downe et al., differences between innovation in private firms
2004). Is it that an innovative organization is and in public service organizations. The private
better at surfacing and sustaining innovative sector literature still focuses mainly on
ideas and practices—or is it better at killing off technological innovation, especially new
ideas and practices which do not fulfil early product development, but there are limitations
promise? in applying concepts about product innovation
to service and organizational innovation. Overall,
Innovation and Improvement these features suggest that the transfer of theory
There is a wealth of performance data (of and empirical findings from private firms to
variable quality) about public service public services is far from straightforward.
organizations and a real opportunity to explore Accordingly, there is a need for robust theory
the diverse relationships between innovation and evidence derived directly from the public
and improvement. There are considerable sector.
opportunities to examine changes over time, Increasingly, there is recognition that
taking into account the impact of early context has an impact, both directly on
performance losses, learning curves, innovation determinants, processes and
improvements or further decline. Better outcomes and indirectly through organizational
understanding could help in providing realistic features such as the amount of organizational
promises to citizens and users of services, and resources and organizational strategy. Tidd
contribute to building trust in public service (2001) argues that the complexity of the
organizations. We also need to know if innovation and uncertainty of the environment
improvements are a ‘flash in the pan’, or substantially shape innovation. These are key
whether they are sustained over time. dimensions for public service organizations.
We also need to understand much more about
Leadership and Innovation the organizational processes of innovation
The idea of the creative individual engaging in development through ‘top-down’ policy
innovation single-handedly is very limited. development, through ‘bottom-up’ innovation
There is certainly a role for individuals but also emerging from the activities of managers and
important are groups, teams and a critical mass staff in organizations, and through ‘lateral’
of support. We need to be able to step beyond innovation from good practice adoption and
the traditional hierarchical models of innovation adaption.

© CIPFA, 2005 PUBLIC MONEY & MANAGEMENT JANUARY 2005

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One element of the context of complexity Coordinating Centre for NHS Service Delivery
for public service organizations is that they are and Organization (London).
embedded in society, producing not only Hartley, J. and Allison, M. (2002), Good, better,
benefits (and obligations) for individuals but best? Inter-organizational learning in a network
also providing public goods and services, of local authorities, Public Management Review,
establishing collective efficiency, and creating 4, pp. 101–118.
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innovation needs to consider not just the longitudinal organizational research.
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innovation and improvement need to be Strategic Management in Government (Harvard
mapped, so that there is a better understanding University Press, Cambridge).
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needed to illuminate and explain the processes (1997), Innovation in policing: From
which support or which undermine innovation production line to jobs shops. In Altchuler, A.
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innovation as a journey rather than a linear Government (Brookings Institution,
process. ■ Washington, D.C.).
Mulgan, G. and Albury, D. (2003), Innovations in
Acknowledgement the Public Sector (Cabinet Office, London).
The author acknowledges the support of the Newman, J. (2001), Modernizing Governance: New
ESRC/EPSRC Advanced Institute of Labour, Policy and Society (Sage, London).
Management Research, grant number RES- Newman, J., Raine, J. and Skelcher, C. (2000),
331-25-0008. Innovation in Local Government: A Good Practice
Guide (DETR, London).
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PUBLIC MONEY & MANAGEMENT JANUARY 2005 © CIPFA, 2005