Customer-Driven Innovation for Public Sector Organizations

Last Sunday I presented my Innovation Opportunities Map, and described the process we have recently been using with an entrepreneurial client using this map to help them become a much more innovative company. Several readers have asked me how this process would change if the client were a Public Sector Organization (PSO) — either a governmental or non-governmental not-for-profit organization focused on the provision of public services (education, health care, social services, advocacy etc.). I’ve given this some thought, and I came up with a revised Innovation Opportunities Map for PSOs, above.

The principal differences between this map and the one for private sector companies are:

  • Some of the mega-processes for PSOs, while analogous, are modestly different: PSOs generally have New Program Development instead of R&D, Program Awareness and Access instead of Sales & Marketing, and Program Implementation instead of Production.
  • The ‘business’ of most PSOs is the delivery of services, through programs and deployment of information, tools and technologies, to those in need, rather than the sale of products to those who can afford them.
  • Because of the close interface with customers (students, patients, and citizens) that most PSOs enjoy, there is even more opportunity for, and even more reliance on, the use of cultural anthropology to identify customers’ needs than there is in for-profit organizations (new innovation type A8 on the chart).
  • Because PSOs are often networked with other PSOs providing similar programs and services in other jurisdictions around the world, an additional innovation opportunity arises from sharing successes and failures and otherwise collaborating with other PSOs (new innovation type B9 on the chart).
  • Unlike for-profit organizations, PSOs can employ volunteers both for customer outreach activities (new innovation type C3 on the chart) and to supply time and other resources to the PSO (amended innovation type D4 on the chart).
  • Because of the personal nature of many PSO services (like education and health care) there are opportunities for PSOs to deploy some of their services and programs directly to (and in) customers’ homes, instead of or in addition to using external facilities (amended innovation type E2 on the chart)
  • Because the services they provide are so essential and continuous, there are expanded opportunities for PSOs to forge innovative partnerships with customers to provide extended life cycle services (e.g. continuous education, chronic care, recurring monthly service visits) in ways not usually available to companies selling one-off products (new innovation type H4 on the chart)
  • Some innovation opportunities (e.g. vertical integration, new market creation) open to for-profit companies are generally not available or not applicable to PSOs as these are normally beyond their scope or mandate (omitted innovation types B1, B3, B4, C1, H2, J1, J4, listed on the for-profit chart, from this chart

While the mega-processes and innovation opportunities for PSOs are slightly different from those of for-profit companies, the process I would use to help a PSO assess these opportunities would be essentially the same that we have used with our private sector entrepreneur:

  1. Help the organization understand the urgency for, and set criteria for assessing, innovations, and create a cross-functional Innovation Team.
  2. Help them learn, through research, training sessions and by visiting highly innovative PSOs, what organizational innovation really is, how it helps organizations meet their customers’ needs sustainably and effectively, and the process the Team will use to make the organization more innovative.
  3. Help them understand, through comparative analysis and benchmarking, and through ‘cultural anthropology’ visits with selected customers, how customers experience the organization’s programs and services, what those customers’ needs are, and what needs are currently not being met.
  4. Drawing on steps 2 and 3, create a database of Learnings and Ideas.
  5. Using the Learnings and Ideas in the database, the Innovation Opportunities Map, and an intensive process that draws on both the creative and the critical thinking skills of the entire Innovation Team, and team-members’ program knowledge, service knowledge and customer knowledge, identify Innovation Opportunities that the organization could deploy to improve customer satisfaction and hence improve organizational effectiveness.
  6. Aggregate these Innovation Opportunities into a series of Innovative Offerings, and tell a Vision or Story about how each Offering would be experienced from the customer’s perspective. For each Offering, identify:
  • A ten-word Name for the Innovative Offering.
  • A Tagline and/or statement of the Value Proposition (“how is this different from and more valuable than what the organization offers now?”) for the Offering.
  • A listing of which of the identified Innovation Opportunities this Offering aggregates, listed in order by innovation type (A1 through J7) using the Innovation Opportunities Map above.
  • A 200-500 word Story, told from the perspective of the customer in the future, explaining how the customer experience will have changed as a result of implementing the Innovative Offering.
  • A list of New Capabilities the organization would need to acquire in order to provide the Innovative Offering.
  • A Strategy Canvas  showing the different attributes, effectiveness and strengths of the organization’s programs and services both before and after implementing the Innovative Offering. Although the strategy canvas was designed for competitive analysis purposes, there is no reason why PSOs cannot use them to assess improvements to organizational effectiveness that innovative offerings could realize. Effectiveness criteria might include: value-for-money, quality and timeliness of service, customer awareness, customer satisfaction, employee satisfaction and retention etc. both ‘before’ and ‘after’ the innovation has been implemented, and perhaps also against expectations or benchmarks of the organization’s board.
  1. Assess the pros and cons of the different Innovative Offerings against the criteria established in step 1. Evaluate the feasibility, fit with the organization’s mandate etc. of each Offering, and, for those deemed feasible, test them using small-scale experiments and pilot programs with selected customers. Reassess/tweak offerings based on tests and pilots and, for those that are successful, scale up to full implementation across the organization. [This is a bit of an oversimplification — we actually recommend a fairly sophisticated and rigorous, but forgiving, ‘stage-gating’ process to move Offerings through to successful implementation; I’ll describe this further in a future article].

My partners and I would, of course, be pleased to help facilitate your organization, for-profit or not, through this process, or, if you’re a consultant yourself, co-facilitate the process with you for your client. If your client is still skeptical, buy them a copy of Blue Ocean Strategy or The Innovator’s Solution and let them read for themselves about the power of innovation, and why so many organizations just aren’t able to generate significant innovation without outside help.

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