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What can the Public Sector Learn from the Best Corporate Innovation Strategies? – Part 2

July 25, 2012 - 2 Comments

In my previous post, I described the “culture of innovation,” for which Bay Area companies have become renowned. And we looked, briefly, at what it could mean for the public sector.

It may come as something of a surprise that Bay Area companies are no more likely to follow a Technology Drivers innovation model than companies located elsewhere. Like many top innovators, companies in the Bay Area have not only found success in creating ground-breaking technologies, but they are almost twice as likely as other companies to have developed the capabilities needed to provide a superior understanding of the stated and unstated needs of their end customers. It isn’t just about how many transistors you can fit on a chip.  It’s about how such advances can lead to products and services that gain traction in the marketplace through superior insight into, and understanding of, customers’ needs.The effectiveness of this approach – customer insight and product development – is backed by some significant metrics. When it comes to innovation, it turns out that R&D spending doesn’t necessarily correlate with success. The study team at the Bay Area Council Economic Institute (BACEI) asked global innovation leaders to name what they considered to be the world’s most innovative companies. The top 10 included three Silicon Valley firms – Apple, Facebook, and Google – in addition to long-established companies like IBM. These innovative firms outperformed the top 10 R&D spenders across three financial measures over five years: revenue growth, earnings before interest, taxes, depreciation and amortization, and market capital growth. Only three of the top 10 R&D spenders – Microsoft, Samsung, and Toyota – ranked in the top 10 innovators

The innovation comes not just from how much you spend, but also how you spend it. . This was one point made in a recent IBSG blog post on tech innovation. As the Bay Area experience shows, an innovative culture may be the secret sauce in that process. These lessons from best practices in corporate innovation absolutely carry over to the public sector — and to the big government challenges we face, such as smart city design and intelligent urban planning.

BACEI’s Sean Randolph puts it this way: “Two connections are evident. One is leadership: the most innovative companies start with a vision that is led from the top and systematically communicated throughout the system – and the officers responsible for innovation (CTOs in companies, but this could be senior planners in cities) work directly with other senior managers from inside the corporate suite. In other words, innovation strategy is closely aligned with operations, and not located in some external box that’s connected to leadership by a dotted line.

The other lesson is in the “need seeker” strategy. Top-down models that deliver a product (in government’s case a public policy or urban plan) that are conceived without an understanding of and deep connection to the people who will be affected – urban residents and businesses – are likely to be less effective.”

To innovate successfully, government leaders and urban planners must innovate both from the top-down and from the bottom-up. It means embracing what Randolph describes as “an over-arching vision” that’s grounded in a deep insight into people’s needs, how they live, how they use services, and how their lives can change for the better through policy innovation.

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  1. Hi Gordon,

    As an urban planner who has worked in the private and public sector, I enjoyed reading your article.

    Whilst I agree with innovation being fundamental to smart city design, the ability to modernize stringent planning controls (which are in most cases lawfully bound) is of equal importance.

    Bold changes that permit creative and practical solutions to current and intractable urban issues will only ever be made by leaders who can adapt complex public policy to our future needs. This is often more challenging than the private sector implementing innovative projects (more times than often on behalf of the public sector).

    Your article points out what the public sector may learn from corporate innovation, yet it may only be realized by a bureaucracy that enables change to occur over different leadership terms and values and committs to longer term investments rather than short term wins.

    A quandary faced the world over with glimpsed of hope in cities such as Seoul and on a smaller scale all over the world (including changes to land use zoning changes in local settings that have fundamental influence to the life of a city).

    • Thanks for your note…and I do tend to agree with you.

      But on one count I do very much hope that you’re wrong —specifically when you say that “Bold changes that permit creative and practical solutions to current and intractable urban issues will only ever be made by leaders who can adapt complex public policy to our future needs.”

      Some of the entreprenuers in the bustling City of Busan in South Korea is transforming their economic development and tech-infrastructure by harnessing the power of the public cloud:

      And the folks behind this initiative are not the big names in the government…..I believe that’s good news, and I know that it’s not the only place where it’s happening today.

      Thanks again for reading and for weighing in. I hope you’ll continue to follow this space.