Back to Contents

September / October 2009
Volume 21, Number 5

Keys to Cultivating Ideas in the Public Sector
By William D. Eggers and Shalabh Kumar Singh

To supplement the articles highlighting Best Practice Awards presented by the TAC Leadership Foundation, this article is an excerpt from The Innovator’s Playbook: Nurturing Bold Ideas in Government, published by Deloitte Research with the Harvard Kennedy School’s Ash Institute for the Democratic Governance and Innovation. Eggers is also the co-author of Revolution at the Roots: Making our Government Smaller, Better and Closer to Home and is the executive director of Delotte’s Public Leadership Institute. Previously, Eggers served as a commissioner for the Texas Incentive and Productivity Commission and was a designee on the Texas Council on Competitive Government.The book describes, using real-world examples, how a public sector organization can go from a culture of “innovation by accident” to one in which a sustained organizational commitment to innovation is baked into the organization’s DNA.

There is no established the ore tical framework for cultivating innovation — no immutable laws that, when applied, will start good ideas rolling off an assembly line. But successful organizations create an atmosphere that welcomes suggestions — and adopts them when appropriate.

For instance, Southwest Airlines employees spent 10 hours a week for six months brainstorming changes in the company’s aircraft operations. Those meetings, which included members of the airline’s in-flight, ground, maintenance, and dispatch operations, generated 109 ideas for high-impact changes. A critical part of this process was tapping into the diverse, even if imperfect, knowledge base of each employee. O ne director from the schedule-planning division successfully challenged assumptions held by the maintenance and dispatch personnel for 30 years. Three ideas developed through these meetings triggered extensive operational adjustments, one of which allowed Southwest to reduce the number of aircraft “swaps” when mechanical failures require one aircraft to be substituted for another.

In the public sector, rigid rules and processes, often developed to control corruption and nepotism, constrain innovation. Most innovations (around 50 percent) are triggered by senior and middle managers, followed by ministers (around 20 percent). Frontline employees tend to play a very small part in innovations (around 8 percent), according to the report. They often do not know what constitutes a good suggestion, let alone how to lead an initiative to improve performance.

But it is possible to cultivate an environment in public agencies that more consistently sparks moments of creativity — the brilliant idea, the novel principle, the solution to a long-standing problem, or the argument that finally debunks old prejudices and dogmas.

Tap into the diverse tacit knowledge in the field
Tacit knowledge which exists within the minds of employees, is born of sheer experience. It is the know-how gained by practice and deliberate study, the wisdom and judgment derived from daily exposure to an environment over time. It is the kind of knowledge that makes a 30-year government employee an expert at navigating Byzantine public sector personnel rules.

Tacit knowledge can generate innovation. But how do you capture that knowledge and convert it into practices that not only help organizations perform better but also deliver more valuable service? This question has attracted the attention of the best minds in the business world.

Companies now promote cross-functional excellence, an approach that requires tapping into the divergent perspectives of employees from different functions and disciplines to challenge established mind-sets, open up the organization to new thinking, and generate high-impact solutions.

Frontline employees often know more about customer needs and have better ideas about how to improve performance than their bosses. However, they often need help understanding the needs of the entire organization, explaining how their ideas address those needs, and determining how to implement change.

Engage employees at all levels.

Three questions need to be answered when considering how to engage employees to innovate.

How do employees know what a good suggestion is? Tesco, the largest supermarket chain in the U nited Kingdom, has defined the criteria in simple terms: better for customers, simpler for staff, and cheaper for Tesco. Management communicates these principles to all employees. Each year, the top 2,000 executives spend a week on the shop floor at the checkout counter or in a warehouse stacking shelves. They get feedback from colleagues and customers, collate all the information, and send it to the relevant division heads. The program, called Tesco Week in Store Together (TWIST), is making a real difference in serving customers better by bringing the senior management and store-level employees together. According to Sir Terry Leahy, Tesco’s chief executive, “TWIST will mean that every senior manager has worked for a week in store, served our customers, and listened to what they and their colleagues have to say. That is experience you can’t get in a training room or on a quick store visit.”

Who decides which ideas are worth following up, and who takes charge of implementing changes? The In-House R&D Network at the Bureau of Motor Equipment of the New York City Department of Sanitation allows worksite committees of mechanics to adopt proposals and implement changes within the scope of their operations, with the agreement of the facility manager. Bureau analysts help work out the business case for each project. If the proposal demands greater resources than the operation can provide, or if it requires coordination with other government agencies, the bureau’s leaders are enlisted. For even bigger projects, the bureau seeks approval through the city’s budget process. A number of innovations by the workers have been patented, such as a device that shuts down the engine to protect it from burnout when the oil in a truck drops too low.

Are frontline employees ready to create the required change? When the U.S. Department of the Interior began a new approach to land management known as “cooperative conservation,” it engaged its frontline employees in establishing partnerships to create holistic solutions by combining local understanding with scientific knowledge. For example, to prevent the endangered short-tailed albatrosses from getting caught on the fishermen’s hooks in the waters off Alaska, local groups in partnership with scientists came up with several solutions: one of them was to weight the fishing lines to sink the hooks below the surface, where they wouldn’t snag the birds.

The department’s 4Cs Team, which was formed to identify barriers to and best practices for the new initiative, realized that implementing cooperative conservation required not only technical skills but also managerial capabilities. It further concluded that teams composed of people from diverse professional backgrounds and with varied competencies tend to outperform teams of “experts” who all have the same knowledge and skill sets. For example, the program needed people who could create a work environment that encourages creative thinking, who could persuade others and build consensus, and who would keep up-to-date on key national and international trends. To find such people, the department changed its hiring criteria. It also redesigned its training programs to create the new competencies. To strike a balance between flexibility and accountability, it is currently analyzing exactly how employees can be creative and still meet certain basic policy objectives.

Use tools for collaboration. Web 2.0 is changing the way governments do their business. It makes collaboration possible in innovative ways through blogs, wikis, tags, and peer-to-peer networking.

Blogs or web logs let people share information and knowledge and allow informal networks to operate within an organization. These are “online diaries” of posts and comments that establish a channel of communication and promote free discussion of issues within the organization. Blogs can be updated easily at virtually no cost. They also give management an effective way to convey information to employees, answer questions, build logs of projects, and provide other updates.

Wikis are used to organize and update blogs, but their uses extend beyond that. A wiki is an online tool that allows users to create and edit pages of information, with the changes appearing on the site almost as soon as contributors make them. To control abuse, some systems require users to authenticate their identities before making changes. An example of the use of a wiki in government is Intellipedia, developed by the CIA, which lets employees across a number of security agencies engage in open discussions on topics of concern to them. Typically, a wiki has no structured hierarchy, whether in regard to the names on an organizational chart or the way information might be structured within the site, and no formal control systems for organizing or editing content. These are considered to be the main advantages of a wiki: they give it speed and flexibility.

In addition to wikis, organizations may also use peer-to-peer networking sites (which allow users to share files and data through highspeed connections) for real time collaboration. One of the best-known examples of this technology is the music-sharing service N apster, which music publishers sued successfully for copyright infringement. The U .S. military is experimenting with peer-to-peer networking to allow troops on the ground to interact and collaborate instantaneously, without being bogged down by organizational and technical protocols and hierarchies. During operations in both Kosovo and Afghanistan, disparate computer systems blocked effective communication between the Army, Navy, and Air Force. Peer-to-peer systems can ease communication among soldiers on the ground and between U .S. troops and allied troops, bypassing the obstacles raised by incompatible systems or security protocols.

The most important contribution these collaboration tools make is that they “separate the idea of chain of command from chain of information,” according to James Cartwright, vice chairman of the Joint Chiefs of Staff.

Tap informal networks. Recent research shows that informal channels are more efficient conduits for information and ideas than formal channels defined by the organizational structure. The methodology and process of social network analysis is a good example of a new means of igniting organizational learning. As noted by experts Dr. Rob Cross of the U niversity of Virginia and Valdis Krebs, management consultant, social network analysis of an organization or community’s informal networks can provide new insights for leaders trying to understand how organizations work.

Dr. Cross has argued that social network analysis can be a valuable analytical tool for exposing and analyzing networks that exist within an agency or community. Social network analysis can help to answer important questions, including:

• How does information flow across networks?
• Are certain people overly central to managing work and information flows?
• Are some people loosely connected and underused?
• Are there divisive subgroups?
• Is the network’s level of connection sufficient?

Consider the need for interagency cooperation for national security. The ability to create and maintain a personal network is crucial to enhancing collaboration and transcending the bureaucracy that has historically blocked interorganizational cooperation. As such, security agencies could greatly enhance their self-awareness, and fill an important information gap, by using social network analysis to increase their understanding of actual processes and workflows.

Dr. Cross’s social network analysis tool also reveals the most important players in an agency or communities’ informal networks, including those who facilitate and impede collaboration. This kind of analysis has the potential to be a baseline study from which to assess progress on collaboration. It also could fill a key knowledge gap by giving an accurate portrayal of the agency’s current level of connectivity and integration. Finally, the analysis can identify key niche experts who have abilities that may be very specific to certain areas of the network. Productive peripheral positions can be created for these individuals, along with individualized career paths that fit their specialized skill set.

Tapping into the wisdom of employees requires new mechanisms that separate responsibility and performance from job title and position in the hierarchy. However, organizations need to supplement these efforts with incentive mechanisms that nurture change by breaking the perception that innovations are high-risk, low-gain affairs.

Drive organizational change
Creating an innovative organization does not always require largescale changes that turn the organization upside down. Sometimes it merely requires figuring out the levers for change. Like the trim tab that turns the rudder, changing the direction of a huge ship, these levers of an organization facilitate change without a major upheaval.

Small changes can sometimes create big results. U sing blogs and wikis, creating prediction markets, and allowing employees to implement their own ideas: these are small changes to create big results. It does not stop there, however. Creating an innovative organization requires addressing issues that influence behavior. For instance, when employees are asked to share their views openly, are managers ready to get honest feedback that shows what is wrong? O r will they get embroiled in a blame game, trying to corner the employee into thinking that she is wrong?

Take a “systems” view. For a ship to turn left, its rudder has to turn right. For the rudder to turn right, the trim tab (like a tiny rudder, which helps turn the rudder around.) has to go left. A captain knowing the way the whole system works together prevents the ship from going off-course. A systemic view allows an understanding of the interrelationship between key variables and how changing a variable affects the entire system. Human systems are, of course, infinitely more complex than rudders.

Systems influence behavior. If you create a system where employees generate a lot of good ideas but fail to put in place measures to acknowledge and implement these ideas, it will ultimately create a negative response that brings the entire system back into balance. In this case, the idea generation process will slow to a crawl. The harder you push the system to generate ideas, the greater the resistance because more good ideas accumulate and employees get the signal that their ideas are not being heard. Addressing this systemic problem requires building credibility by tracking the conversion rate of good ideas into meaningful innovations and converting more and more good ideas into practice.

Align incentives. Governments need to provide incentives for risk taking and create mechanisms for calculating risk, so that the fear of failure does not trump the desire to create new initiatives. Any innovation carries risks; in general, the bigger the change, the higher the risk.

Many governments provide financial rewards (bonuses and performance pay) and offer awards and recognition to innovators. Gainsharing, or sharing the financial benefits of performance improvement and cost reduction with employees, is one example of this.

The U.S. federal government has developed rules and programs meant to recognize the value of contributions that employees make to the government. However, “those of us with government experience,” notes Patrick J. Keogh, “know that award programs tend to be reactive rather than proactive.”Keogh, a onetime employee at Vice President Al Gore’s N ational Performance Review, cites an interesting personal example to show that these programs are not as well publicized or utilized as they should be. While working at the General Services Administration (GSA), Keogh was approached by an investment banker with a proposal that would save the government $25 million. Keogh realized that he would need the support of six or seven key people within the government for the initiative to succeed. Researching the Code of Federal Regulations and GSA’s internal orders, he found a provision buried in the personnel policy that allowed cash awards to employees who created savings. He decided that he could share the award with his colleagues as an incentive for pushing ahead with the project. “A year later, the deal was done and we requested our spiff,” Keogh says. “It was split between five GSA employees and two at the treasury department.”

Keogh points out that many government agencies have the same kinds of award and bonus programs found in the private sector. Managers do not use them widely, however, and employees often have no idea how they are likely to be measured and rewarded if they make suggestions that improve operations.

Proactive award programs empower employees to pursue rewards, rather than leaving managers to dispense them as an afterthought for a job well done. Aligning incentives also means that when employees perform in ways that merit awards, their annual reviews note that performance. Cultural change is not likely to happen if employees who “risk” innovation see no positive impact on their careers.

Some organizations also provide innovative employees with grants they can use in any way to promote further innovation, perhaps hiring staff or procuring new technology. In government, this tactic sometimes takes the form of a productivity bank, a pot of money that funds good ideas offered by employees, thus encouraging employees to suggest new ideas and receive funding.

Accept failures. Innovation is about experimentation. Experiments often fail. A can’t-afford-to-fail environment is not very conducive to making ambitious decisions or investments. It also seldom results in a high-performance organization. Successful innovations tend to be unpredictable. Innovative companies often build failure into their systems of innovation. The idea is to fail quickly if you have to, learn from the experience, and move on to the next big idea. At IDEO, the design company that designed Apple’s first mouse and the sleek palm-held device called Palm V, the culture invites employees to “have the guts to create a straw man” that others can criticize, so that they can “fail often to succeed sooner.” 3M, which manufactures adhesives, oral care products, and software for supply chain management, among other things, brings together “skunk works” teams to investigate the problems in a potential product.

Accepting failures has the potential to keep good money from following bad money. If employees know that they can stop a project that has failed or is likely to fail without damaging their careers, they are more likely to shut it down before it blows up into a big-ticket failure. The option to do so is better than persisting with a project to the end, wasting time, money and effort. Accepting failure also sends the signal to employees that innovation is important and that failure will not result in a blame game.

Editor’s Note: This article has been reprinted with the permission of the author.
A full PDF version of the publication is available online at www.deloitte.com.
The 164-page book can also be purchased via Amazon.com.