Making Room for Innovation in the Public Sector

We all want innovation in the public services- it’s an essential recognition that the world in which most of our public provision came into being has gone, perhaps never to return.

Several commentators have drawn attention to Schumpeter’s creative destruction theory and its applicability to the current situation.  Creative destruction is the theory of the market that shows how entrepreneurs displace old-fashioned and unprofitable activity in a process that continually creates new markets and closes off obsolete ones.

We have seen this happening this week with the electrical retailer Comet formally entering administration, frozen out reportedly by internet shopping. In the media’s eyes, Apple has been labelled as the main 'creative destroyer'. 

The theory of creative destruction doesn’t apply perfectly in the public sector, because here it is usually the same organisations who have to do both and creating and the destroying.  As we know it’s a whole lot more difficult to shut down bits of your own organisation- there are psychological, emotional and cultural barriers in play as well as the inevitable costs.

What is more, users of services in the public sector have both a louder voice and a reason for expressing it.  It is unlikely there will be too many placard-waving protesters outside the local branch of Comet, but contrast that with the closure of a local library or leisure centre.    And yet curiously my local branch of Comet always seemed to be so much busier than the library.

Libraries are a good example  of how creative destruction applies – or doesn’t apply – in the public sector.  Local authorities have been reinventing their library ‘offer’ over recent years and in addition to the traditional book lending and reference libraries, many now provide CD and DVD lending, internet access, adult learning and even a café. Some are even getting into lending e-books.  You might say that innovation is not the problem so much as mission creep - which would be fine if local authority budgets were expanding to keep pace but presents a problem when they are not.  

But before I fall a victim to the militant wing of CILIP (for the uninitiated, the Chartered Institute of Library and Information Professionals), let me just say that I am using libraries only as a convenient and familiar example of a wider issue.  

Two years ago, NESTA suggested that the way to creative destruction in public services was to focus on outcomes, changing funding to incentivise delivery of results, reforming procurement and commissioning to deliver outcome-based specifications and introducing lighter touch inspection arrangements to facilitate.   

It cannot be wrong to ask ourselves what exactly we are getting with the services we provide, but none of these solutions address the fundamental issue that ultimately closing things is a matter of political leadership. This week we saw Stoke City Council leader Mohammed Pervez on BBC4 grappling with this problem as he set out to close old peoples’ homes, libraries and the city farm in order to preserve Sure Start children’s centres in his city.   He came across as a serious and concerned politician doing his best with a difficult situation, but he knew as we did that this was just the start of the attrition.  

The point is we can be as innovative as we like in the public services, and we frequently are,  but the logic of the market does not apply in the way it did to poor old Comet.  The problem is learning how to turn off those services that no longer offer value for money while persuading people that it’s the right thing to do.   It is the destructive bit of creation that’s almost the bigger challenge.