Complex Challenges – Innovative Cities

(CCIC)Methodology Guidelines

Prepared by ARC Fund, Bulgaria

Sofia, 13-14 March 2012

Methodology Objectives• Present basic review of scholarly and practitioners sources on

innovation in the public sector. This review will present commonly used concepts and paradigms of the public sector, and will trace the significance of innovations;

• Establish a common theoretical framework applicable to all partners' context for the understanding of innovation in the public sector. Once there is agreement among partners, the analysis, identification and transfer of good practices will be done uniformly and effectively;

• Set the grounds for the elaboration of a model of public sector innovation, and explore all contingencies and supporting factors in the adoption of this model by each project partner;

• Provide detailed instructions about carrying out research into public sector innovation through the specific instruments provided in the CCIC proposal.

Some Warnings• The methodology is still a “work in

progress”• Input and comments from partners are

highly welcome, and often highly necessary• The methodology does not change CCIC

action plans, but it helps maximise each activity’s outputs

• It is neither a project plan, nor a project strategy; it suggests a “path” to follow for both plan and strategy to be successful

Exploring definitions of innovation• CCIC’s general idea of innovations – “new ideas that

work at creating public value”• “adoption of an internally generated or purchased device,

system, policy, program, process, product, or service that is new to the adopting organization” (Damanpour, 1991)

• “an idea, practice, or object that is perceived as new by an individual or another unit of adoption” (Rogers, 1995)

• “success in the creation and implementation of new processes, products, services and methods of delivery which result in significant improvements in outcomes efficiency, effectiveness or quality.” (Mulgan & Albury, 2003)

Exploring definitions of innovation

• “[a] change in policy or management practice that leads to a lasting improvement in level of service or quantity or quality of output by an organisation.” (Bartos, 2003)

• “successful exploitation of new ideas” (Baxter et al., 2010)

• “the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organisational method in business practices, workplace organisation or external relations.” (Oslo Manual, 2005)

Exploring definitions of innovation• For the purposes of CCIC, public sector innovation should be

analysed not so much in terms of individual and isolated ideas, but rather within the framework of complete policies and their implementation. Thus the analysis will need to focus not solely on the single new idea, product, service or practice, but also on the larger context, within which that novelty becomes significant, including its short-term and long-term policy implications.

• Where possible, multiplication factors should also be analysed, that is how an enhanced policy contributes to the improvement of other policies, thus multiplying the effects (and public value) of the original innovation. The latter perspective could be used as a clear demonstration of why innovations are important for a viable and effective public sector.

Innovations in the Public Sector

• Source of added public value• Help “public services [become] better targeted, more responsive

to community needs and more efficient” (Australian National Audit Office, 2009)

• Crucial to the relentless pursuit of improvement in public services; have a powerful learning effect (Mulgan & Albury, 2003)

• Successfully implementing an innovation in the public sector is a political process (Grady & Chi, 1994)

• Adoption of a (successful) idea depends on political impetus (Bartos, 2003)

• Diffusion - the underlying process of transferring innovation knowledge from one context to another (i.e. across countries) and the subsequent adoption of that knowledge as new policies, programmes, products or services (Rogers, 1995; Ashley, 2009)

Innovations and Entrepreneurship

Source: Roberts, 1992

Logical tree of the public entrepreneurship process

Areas of Thematic Inquiry• Innovative Financial Instruments• Public Procurement• Publicly owned enterprises• Civil society inclusion• Horizontal area - Innovation in

regional blind-spots (unequal distribution of opportunities)

Innovative Financial Instruments• How was the financial instrument (FI) set up? Who

initiated it, and what was the key motivation? Was that instrument meant to address a specific gap in policy implementation, or was it meant to introduce new possibilities?

• What kind of financial transactions are covered by the FI? Has there been a change, and what, in how these transactions are monitored and “controlled”? If yes, how has this change influenced the effectiveness of the FI?

• How is that instrument structured? What are the responsible management bodies and lines of accountability?

• What are the key issues the FI is addressing?• How is this instrument representing a significantly new

approach to tackling the target problem?• How is the financial instrument being evaluated (if at all)?

What are specific indicators to judge the FI's success or failure? What measures are being taken in either case? Has the instrument been redesigned since its inception?

Public Procurement• Have procuring procedures evolved over the past five

years? How do they fit in the national legislative framework? Could these be considered innovative in themselves?

• What are the kind of services/activities that are procured? Of those, which involve providing a public service (that is, a service of benefit to citizens) from the outside (private) entity?

• What public policies are being implemented through procured services? Why were these policies chosen?

• Are there particular economic sectors (or clusters of firms) dependent (in terms of market opportunities) on public procurement?

• Are there services, which are only partly procured to external vendors, but continue to be offered by the municipal authority or a related public enterprise? If yes, how is that sustainable?

Public Procurement, cont.• What is the current share of budget that is paid to

private vendors as a results of approved tenders? How has that share changed over the past five years?

• How is procurement being managed (i.e. through what internal structure, according to what laws and executive orders, etc.)?

• Which procurement notices over the past five years apply to services or products that the procuring authority considers innovative? Which (and how many in general) resulted in the adoption of an innovation?

• What are examples of public-private partnerships formed on the basis of (or initiated through) public procurement? What time period do such partnerships typically cover?

Publicly Owned Enterprises• What is considered a publicly owned enterprise? How is it

structured in relation to the local or regional authority?

• What are the kinds of services or goods that are offered by a publicly owned (e.g. municipal) enterprise?

• How does the size of all public enterprises compare to the rest of the local economy?

• What are the specific relationships between owners of the enterprise, assuming the public authority is not the sole owner? Are there any principle differences where co-owners are from the private sector?

Publicly Owned Enterprises• How is profit realised and distributed? Are the profits of such

enterprises used to offset other public expenditure, and why? Is revenue from usual operations sufficient to keep the enterprise financially healthy?

• Does the principle owner invest in the enterprise, that is how is taxpayer revenue used in/by publicly owned enterprises?

• How do public owned enterprises innovate? Are they subject or target to specific policies on the local level? What is the focus of innovations in publicly owned enterprises - i.e. enterprise management, service delivery, technology transfer and embedding, etc.?

Civil Society Inclusion• What are the mechanisms in place to solicit public

feedback?

• What partnerships are present between the authority entity and civil society organisations? What kind of services or products are concerned?

• What is the involvement of civil society organisations in policy deliberations on innovation, or on products/services considered to be innovative?

• How are civil society organisations relied upon in the diffusion of innovations?

• How are civil society organisations relied upon (or involved in) the evaluation/recognition of innovations?

Regional Blind-spots• CCIC recognises that certain cities and regions concentrate

more resources than others, thus resulting in an unequal distribution of opportunities from one region to another;

• It is important to analyse thoroughly the national contexts in each country and to identify if and how country specifics facilitate the persistence of blind-spots. Therefore, this thematic area is concerned with:1. how to identify regional blind-spots;2. elaboration of obstacles to innovation diffusion;3. outlining policy options for the elimination of diffusion obstacles.

• Particular attention would be paid to specific systemic innovations that could enable opportunity creation in regional blind-spots, thus facilitating future (regional) policy development.

Outline of a Comparison FrameworkArea of Inquiry Key tools and methods to be used in the

inquiry processOverall understanding of what constitutes innovation in the public sector

Questionnaire among city council members, municipal employees engaged with service or strategic planning

Identifying examples of innovations - discussions of successes, failures, lessons learned

Questionnaire among city council members, municipal employees; interviews with stakeholders; study groups

Elaborating organisational factors and options with regard to innovation, including the sources of motivation for innovating

Organisational analysis (based on questionnaire, desk research, in-depth interviews with department heads and service managers); interviews with external stakeholders

Elaborating policy factors and options with regard to innovations

Interviews with internal and external stakeholders; study visits; deep delegations

Outline of a Comparison Framework, cont.

Area of Inquiry Key tools and methods to be used in the inquiry process

Describing the adoption process Desk research; interviews with internal and external stakeholders; study visits

Evaluation of innovations (how is it being done, if at all)

Questionnaire; interviews with stakeholders; possible interviews with evaluators; study visits; review of evaluation reports when available

Diffusion of innovations Questionnaire among city council members, municipal employees, external stakeholders; interviews; study groups; deep delegations

Sustainability of the innovations Questionnaire among city council members, municipal employees, managers of public enterprises, stakeholders, citizens (beneficiaries/users); interviews; study groups

Creating knowledge on public sector innovation

Policy report

Performance Tasks• Thematic group meetings• Questionnaire• Stakeholder interviews• Identification and mapping of good

practices• Study visits• Deep delegations

Most Pressing Deadlines in 2012• Finalising all methodological guidelines – end of April

2012• Mapping of stakeholders - end of April 2012• Conducting stakeholders interviews (semi-structured)

– May & June 2012• State-of-the-art Questionnaire – July 2012• Analytical Report on Public Sector Innovation –

September 2012• Thematic Group Meeting 1 (Innovative Financial

Instruments) – September 2012• First study visit to Birmingham, UK – September-

November 2012

Transferability• Transferability of best practices has the

potential to maximise the public value of innovation policies under different circumstances, and thus to enhance the social impact of the adopted innovations.

• Rests on the assumption that existing practices in one place (a municipal or regional administration) may be considered innovations, if adopted at another

Assessing Innovation Appeal for Transferability

• Relative advantage - the extent to which an innovation is perceived to offer significant advantage over currently employed alternatives. Innovations considered superior to current practice are better candidates for transferring;

• Comparability - refers to the degree of consistency of an innovation with past practices, current values and existing needs. Innovations thought to fit better within the current context, have higher chance of adoption;

• Complexity - expresses the level at which an innovation could be understood and implemented, with innovations considered more complex having lower chance of adoption. Complexity is necessarily linked to organisational variables, such as capacity;

• Trialability - if parts of an innovation could be tried out before full adoption, that increases the chances for adoption, as it allows adopters to have early exposure to the effects of the innovation;

• Observability - the extent to which an innovation's use and benefits are visible to others; innovations with readily exposed (or easily identifiable) benefits are more likely to be adopted through diffusion.

Source: Ashley, 2009

Questions and comments are welcome!

Zoya Damianovazoya.damianova@online.bg

Ventseslav Kozarevventseslav.kozarev@online.bg