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Public sector innovation


Written by Christian Saublens

Reviewed by David Walburn

 

The concept

How to implement it?

Step in the RIS process

What can be expected?

A quote

References

Expert's comments

 

The concept


The public sector is one of the major economic players as its budget represents an important part of the European GDP. So it can influence the innovation process by its purchase power. The public sector can also play a role by being itself innovative when designing and drafting policies and tools to support social and economic innovation and thus growth.

 

How to implement it?


The public sector can mainly innovate through the following means:

  • Pre-commercial procurement
  • Procurement to purchase innovative solutions
  • Co-creation and co-design of innovative services
  • Adopting new collaborative service delivery models
  • Adopting an attitude of experimentation.

To reinforce innovation in the public sector at local and regional level, a holistic view of the innovation cycle has to be considered. The phases to look at are:

  • How to stimulate or collect new ideas;
  • How to implement them (calls, procurement, PPP, in-house development);
  • How to finance their deployment (purchase, grants, revolving mechanism, …);
  • How to assess the risk, the alternative options and the competitive advantage of the innovation ;
  • How to evaluate them (number of changes introduced);
  • How to offset obsolete services/supports/behaviours/clients or target groups.

In some cases, the innovation has of course to balance the social/societal benefits with the costs of the public intervention. In this respect, it should be possible to identify the inefficiency costs from the real costs to eliminate private market failures or market asymmetries.

Innovation should also encourage political “courage” to support innovation. Politicians often face difficulties to chose between the new opportunities and the support to lobby groups’ interests.

Innovation in public administration must encompass different forms:

  • Tangible investments related to a wide range of infrastructures;
  • Intangible investments such as services to stakeholders (citizens, enterprises, researchers, …);
  • Administrative process regarding the selection of investments to be made, how to deliver them, how to assess the real value of public intervention, and what to do with evaluation reports;
  • Financial engineering on how to optimize the costs, generate income and balance the cost of doing things vs. wait and see, and of course what type of funding to be used.

Often representatives of the public sectors justify the resistance to innovation by the risk attached to it. Shouldn’t they look at the risk of doing business as usual with the risk of losing efficiency? Innovation in the private sector has been driving growth for many years. The public sector seems to resist innovation.

 

Step in the RIS process


Step 5: Definition of a coherent policy mix, roadmaps and action plan

 

What can be expected?


  •  Speed up of the take up of new products/services or the opening of new markets. The public sector can become the first client of innovative enterprises, especially local SMEs.
  • Enhancing the efficiency of the public administration.
  • Providing support services which are more meaningful and useful for the beneficiaries.
  • Reducing entrepreneurial risk by sharing some part of the private sector.

 

A quote


“A new vision for the public sector is required, whereby public managers become public entrepreneurs.” from the Expert Group on Public Sector Innovation to DG Research and Innovation

 

References


  • European Commission’s DG Research and Innovation: “Powering European Public Sector Innovation: Towards a new architecture.”
  • European public sector innovation scoreboard (EPSIS)

 

Mr Christian Saublens


 

Christian Saublens has more than 30 years of working experience in European trade organizations. Since 1992 he is the Executive Manager of EURADA, the European Association of Development Agencies, a network of 145 organisations. Christian has been involved in the organization of numerous conferences and meetings dealing with all matters related to regional development. He wrote several papers and working documents on business support schemes for SMEs. He played an important role for the dissemination in European regions of concepts such as benchmarking, business angels, investment readiness, proof of concept, clusters, open innovation, financial engineering, crowdfunding, … Several times Christian has been appointed as an expert by the European Commission and the Committee of the Regions.

christian.saublens@eurada.org

 

Expert's comments


 The potential for the public sector to drive innovation in national and regional economies is very considerable. If anything, this article underestimates just how significant the role of the public sector can be. The current neo-liberal consensus has conditioned the political process to discount the value of the public sector in matters concerning economic development, and this is a great loss. The idea that only the private sector can generate jobs, growth and innovation is clearly without foundation after only a cursory view of the real world. The public sector has huge buying power and leverage over private sector firms, as well as having the capacity to innovate and contribute to growth directly.

The main article is right to emphasise the need for political courage if the potential of public sector innovation is to be realised. Championing the public sector at the current time would be a bold initiative. There is also a need for enlightened leadership from within the public sector to counter the natural tendency towards conservatism, and the fear of change, when the external environment is hostile.

There is an irony in this policy impasse. Whilst neo-liberalism is largely an import from the United States, the involvement of the public sector in economic development there is very much more developed than it is in Europe. The need to protect and boost the tax base in cities and state jurisdictions across the US has led to very active public sector operations in local economic development. Government-funded research and development in the defence, space and medical sectors has driven much of the technological innovation which the EU has sought to emulate in recent years. A liberal policy on immigration has helped to attract talent from all over the world to America which has added greatly to the capacity of the economy to innovate and to grow. The Federal Government in the US, through the Small Business Administration has intervened in the private sector for decades to help boost the performance small and medium-sized businesses.

Additionally, public sector involvement in economic development in the US has not been inhibited by the State Aid policies which have applied in the EU, morphing from a necessary brake on Member States’ abilities to prop up their declining heavy industries in the early days, into what could be seen now, in terms of innovation and small business support, as an unnecessary barrier to bringing the full potential of the public sector to bear on boosting innovation and competitiveness in Europe.   

 

Mr David Walburn


 

After a career in business David Walburn joined Greater London Enterprise in 1986 where he was responsible for venture capital and other small business support, before becoming Chief Executive of the organisation. He was the Chair of the London Business Angels Network and played a key role in the setting up of the European Business Angels Network. He has worked with the UK government and the European Commission on developing public policy initiatives to improve the financing of small and medium-sized enterprises. He was the Chair of Capital Enterprise, the umbrella body for organisations supporting micro business development in London, until 2012.

For the last ten years he has been a Visiting Professor at London South Bank University where he headed the Local Economy Policy Unit and was the managing editor of the journal Local Economy.

He has served as President of EURADA, and been a member of a number of advisory bodies of the European Commission.  He has been an active member of the International Economic Development Council in Washington DC and has a wide range of international contacts with economic development organisations.

He continues to write and lecture on small business finance and regional economic development.

davidwalburn@europe.com

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