How cities are redefining the future of public innovation

By Ben Rogers, Bloomberg Distinguished Fellow in Government Innovation at LSE Cities, Matúš Vallo, Mayor of Bratislava, and André Sobczak, Secretary General of Eurocities

There is broad agreement on the need for fresh thinking in the public sector. Longstanding challenges, like poverty, insecurity and worklessness, remain unresolved, while new pressures, from climate change to political polarisation, continue to grow. Meeting these demands will require more than business as usual. It calls for creativity, adaptability, and a willingness to try new approaches.

The pressing question is: how can we strengthen and sustain government’s ability to develop and test new ways of solving problems?

Champions of private enterprise have an answer. They point to ability of businesses to invent technologies and create goods and services which would have seemed magical to our grandparents. And they draw a contrast between the apparent agility and inventiveness of businesses sector and the rigid, slow-moving bureaucracies of the public sector.

It follows, the argument goes on, that if we want better, more innovative government, we need to inject some private sector dynamism into it, by recruiting business leaders to run public bodies, dismantling regulation, promoting competition and outsourcing services.

These arguments have a long history, but they are having quite a moment on both sides of the Atlantic, as populist leaders promise to cut and recast government on the model of a private business.

But while history is full of business leaders turned successful government leaders, and while government has much to learn from the business sector, we would point to at least three problems with taking the business sector innovation as a model for government.

First, as Marianna Mazzucato and others have demonstrated, public spending and public agencies have made a vital contribution to pretty much every significant technological innovation of recent decades. The digital technology that powered the personal computer and the smartphone, for instance, resulted from decades of public investment in computing, while services like Google maps, Amazon, Uber and Deliveroo, rely on GPS technology developed by the military.

Second, most of the innovations that supposedly emerge from the business sector have quite a narrow character: they provide goods or services of a relatively limited kind. (The examples of the smartphone and Uber make the point). The public sector, by contrast, confronts challenges–making streets safe, preventing homelessness, creating a zero-carbon economy, developing new towns and urban neighbourhoods, coming up with regulatory frameworks to govern new technologies–that are highly complex, with many interdependencies.  While new technology can certainly help, it is highly unlikely that these complex problems can be fixed with a new device or clever platform.

Third, we relate to government not as consumers but citizens. As a consumer we are primarily concerned with the value a product represents to me. Ethical questions about the way in which the product was produced, say, or its impact on the environment are, at best, of secondary relevance. But as citizens, we look to government to lay down the principles within which society, including businesses, operate.

We expect public agencies to treat everyone, including their employees, fairly, advance social justice, look after the most vulnerable and protect the environment. We require government agencies to be accountable not to the market but to voters, through the ballot box, and to users of public services, through consultation, feedback, co-design and co-production. And because we depend on government for the fundamentals of life–the safety of our neighbourhoods, the soundness of our homes, the health of our air, food and drink, the quality of our children’s schools, the security of our pensions–citizens have a very low tolerance of government failure.

Indeed, taking the private sector as a model for public sector innovation can be dangerous.  Successful societies depend on robust legal systems and strong and impartial public administrations. The dismantling of laws, regulations and public agencies in the name of ‘efficiency’, ‘competition’ and ‘innovation’ opens the way for corruption and the abuse of power.

But if there is only so much the private sector can teach the public about creativity and invention, and if good government depends on respect for rules and a careful tempering of risks and opportunities, does that mean that we have to give up on government innovation?

On the contrary, the authors of this article work with or for cities.  We see municipal innovation all around us.  LSE Cities, in partnership with Bloomberg Philanthropies and Eurocities, recently surveyed over 90 European mayors and 65 senior city hall innovation officers about the barriers and opportunities for innovation in their administrations. The findings, published in November,  make challenging reading for those who think the business sector has a monopoly on creativity.

First, against the view that public servants are instinctively convention-bound, city leaders see government innovation as a priority. In fact, mayors ranked ‘a focus on innovation’ as the second most important strategy to achieve their priorities, after ‘sourcing additional central funding for my city’. More than half of cities we surveyed reported having a formal innovation strategy, and the vast majority, 61 cities out of 65, reported have dedicated innovation teams.

Second, our report highlighted many case studies of European cities working in new ways. Take a couple of examples.  Bologna city government has established an independent foundation–Fondazione IU Rusconi Ghigi (IU)–that provides a forum for the public sector, academics, professionals, business and social entrepreneurs and citizen groups to collaborate in solving problems and improving the city.

IU works to foster innovation, but it’s keen to distinguish its collaborative, citizen centred approach from a competitive, business-led ‘smart city’ one.  The IU has established a ‘lab’ in each of the city’s six districts. Each lab houses two to three staff from the municipality and two to three from the IU. These staff work together to build a deep understanding of the needs of each neighborhood and engage citizens in its development.

Vienna’s municipal government has set up the Innovation Management Coordination Office (IMCO), with a remit and a budget to support innovation throughout city hall. Much of their focus has been creating a culture that supports and welcomes new ideas. Among other initiatives, city officers are invited to pitch for €1.5 million worth of funds for innovation projects, with those participating given training in innovation and pitching techniques.

It is true that if your model of innovation is that of an inspired entrepreneur building a business around a new invention, or a determined CEO downsizing a corporation, then the public sector looks un-enterprising. But that is because this model of innovation is too narrow.  In the public sector, innovation is less about a single entrepreneurial leader imposing his vision and more about political leaders articulating a vision that others can get behind.

It is less about forcing agencies or civil servants to compete with each other, and more about harnessing the creativity that civil servants, and their business and civil society partners, citizens and service users can bring. It is less about tearing up rules and embracing risks, and more about fostering a culture and regulatory environment that welcomes new ideas and provides opportunities to test them.

To be fair, there is a lot in the argument that governments need to become more agile and inventive. We believe that one highly effective step in this direction would be for central governments to devolve more powers and resources to urban governments. Cities are entrepreneurial, creative, highly networked places.

Problems that are daunting when viewed from central government–eliminating carbon emissions, building more affordable homes, creating healthier food systems, accommodating migrants–look more manageable when viewed from city hall. At the same time, national governments, international organisations and, in the European context, the EU, need to find ways of helping build municipal innovation capacities, through funding and other means.

Beyond this, we need much more research into and support for public innovation at all levels of government, but especially at the urban level. Almost every university offers courses that allow students to learn about business innovation and develop their entrepreneurial skills.  But how many teach government innovation?

Building public innovation capacity, especially in cities, is not about taking an axe to regulation, dismissing public servants and importing a competitive business ethos. It is about building on the great examples of public sector creativity that are already there, supporting more research into how to develop it and investing more in growing it.

Read the report – Public Innovation: building capacity in Europe’s city governments, by Nuno F da Cruz, Louise Ellaway, Imogen-Hamilton Jones, Catarina Heeckt, and Ben Rogers, all of whom are from LSE Cities, in partnership with Bloomberg Philanthropies and Eurocities.

Main image: Peshkova | Dreamstime.com