Public sector dinosaur?

In the second part of his blog, Neil Stott, Chief Executive of Keystone Development Trust and Executive Director, Centre for Social Innovation at Cambridge Judge Business School, says the public sector could play a key role in encouraging enterprise.

When you read about entrepreneurship and innovation, it is easy to become captivated by stories of heroic entrepreneurs implementing revolutionary innovations that are real game changers. However, that is only part of the story.

For all organisation types, most innovation occurs at a relatively mundane level: that of incremental innovation – the innovation required to achieve continual improvement or operational efficiencies. To diversify and grow, organisations then innovate through building on and expanding existing capabilities – substantial innovation adjacent to current models or markets. This involves taking calculated risk. Finally, some organisations engage in radical innovation – speculative, high-risk activity that has the potential for high reward, such as a new market or a product with the possibility of social, technology and financial breakthroughs.

“In order to be effective, all innovation needs to be managed – innovative organisations balance risk across all three areas. And in this I see a role for the public sector, both in encouraging enterprise within and without its own bounds. I suggest three key areas of focus: public intrapreneurship; the public entrepreneur and the entrepreneurial local state.”

Public intrapreneurship is about encouraging incremental change to improve practises, performance and impact. It is encouraging the learning, experimentation and managed risks needed to make change. It is about building the confidence of staff to do so and a culture of tolerance to getting it wrong occasionally.

The entrepreneurial public body would focus on creating new public enterprises to generate social, environmental and financial benefits, shaping the environment for others as well as creating alliances, organisations or partnerships with others to deliver public or social enterprises.

Finally, we must not lose sight of the fact that we all operate in a wider ecosystem. While cynics argue that most of us find it hard to play nicely together unless it is in pursuit of other people’s money, I believe the really great gains to be made are in public agencies working in partnership with each other, with the private sector and the social sector.

Therefore an entrepreneurial local state would aim to leverage economies of scale and create public enterprise to meet shared objectives and achieve significant scale; leverage financial instruments; shape the environment for others to engage and provide services with or on behalf of public agencies and seek opportunities for radical, speculative innovation.

One important learning point from the public enterprise experience in the US is that transparency can go out of the window very quickly. A new generation of public enterprises should embody transparent governance to avoid creating new dark corners for poor practise and organisational self-interest.

A lot to ask a dinosaur? Only if you believe the mammals’ propaganda.