Public Innovation and the Knowledge Economy

To the Work Foundation, recently removed from the faded grandeur of Carlton House Terrace to brash modernity by the back entrance to St James’s Park tube station, for a seminar on public innovation as part of their programme of research on the knowledge economy.

The first presentation was about the knowledge economy programme itself, attempting to answer the question of what a knowledge economy is in the first place.  Their formal definition is suitably ponderous:

The share of national income and employment produced by innovating organisations combining ICT and highly skilled labour to exploit global scientific, technological, and creative knowledge networks.

On the project webpage, they also define it rather less formally:

The knowledge economy is what you get when you bring together powerful computers and well-educated minds to meet an expanding demand for knowledge based goods and services.

That looks all right at first glance.  But the definition in use gets very hazy very quickly.  When the focus turns to ‘public based knowledge industry’, it becomes increasingly difficult to discern how the knowledge economy is not being used as a synonym for what the more old-fashioned among us still refer to as service industries.  At one point, if I was following along correctly, “recreation” was being identified as a branch of the public based knowledge industry.  If that is a way of observing that running a council leisure centre doesn’t involve extracting raw materials or making physical objects, so be it – but that doesn’t seem to take us very far forward.

The second presentation also tied itself in knots a bit.  It was based on a research report Public Service Innovation, which is dated June 2007 but doesn’t seem to have made it on to the Work Foundation website yet.  There was some quite sensible stuff about why innovation may be more difficult in the public sector – levels of risk aversion, absence of positive incentives, tendency for public service organisations  to be monopolist service providers.  But then it started to get a bit tricky.  Rohit Lekhi, the presenter and the author of the report, went on to argue that the public sector can’t do small scale innovation, citing the poll tax of an example of trying to do large scale innovation and failing.

The problem with that is that two fold.  The first is that the public sector does do small scale innovation, the second is that it also does larger scale innovation.  The choice of the poll tax as an example of the latter is revealing.  It is a policy from twenty years ago, implemented almost 18 years ago.  If that were the most recent (or even most clear cut) example of innovatory disaster in government, the world would be a happier place than I suspect it is.  But it is very unclear exactly what the poll tax example does show about innovation.

It certainly was innovative in some senses:  it was a radical change from the system of local taxes which preceded it.  What is more,  it was implemented very effectively in procedural terms.  The problem was that its political opponents turned out to be stronger than its political supporters.  In that sense at least, the poll tax is a clear example of failed innovation.  What is much more interesting, though, is the council tax which replaced it in 2003.  This was a solution to exactly the same problem, implemented by exactly the same actors, on exactly the same scale, which has proved to be sufficiently successful to be still in place today.  All of that means that if the poll tax is to be taken as the defining example of innovation failure, council tax should surely be taken as the countervailing example of innovatory success.  From which I for one conclude that this does not demonstrate a neat symmetry of opposites so much as that this is not a constructive game to be playing in the first place.

Much more importantly, this approach seems to define all, or virtually all, change initiated at the edge of organisations rather than at their centre and change which is small scale rather than large scale as not being innovation at all.  Challenged by members of the audience, the response seemed to be that continuous improvement couldn’t be defined as innovation, because that was just a normal management responsibility – and that in any case, change and innovation were not the same thing.  At one level, that’s clearly right: self-evidently, not all change is innovative.  But in another sense, it’s profoundly wrong.  Continuous improvement can be – and often is – introduced into organisations precisely as way of fostering innovation.  In more concrete terms, much successful innovation is driven from the edge, not the centre, not least because that is where the people who best understand both the problems and potential solutions to them are to be found.  Perhaps oddest of all, the case study which was then presented, which was by far the most powerful and interesting part of the seminar was an example of precisely that.  It deserves and will get a post of its own.