WORKING PAPER FEBRUARY 2016 LICENCE TO INNOVATE. How government can reward risk

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1 WORKING PAPER FEBRUARY WP 24 LICENCE TO INNOVATE How government can reward risk

2 EXECUTIVE SUMMARY LICENCE TO INNOVATE: HOW GOVERNMENT CAN REWARD RISK Peoples ability to access information anytime, anyplace, has altered their expectations from government. If you can shop online from the comfort of home, why should you be content to wait in line at a government office during standard business hours to access public services? 6 LICENCE TO INNOVATE: HOW GOVERNMENT CAN REWARD RISK

3 THESE changes are taking place in a context of fiscal austerity, shifting demographics, and wicked policy challenges. As a result, government must tighten its purse strings and think of alternative approaches. In other words, government needs to enhance innovation. This means creating space for policy makers, stakeholders, and delivery agencies to improve policy design, the policy process, and policy implementation. Yet there is an aversion toward innovation within government. Less than half of policy professionals in Ontario s Public Service feel innovation is valued in their work unit. This is likely due to the costs of innovation, namely an appetite for risk, strong leadership, and dedicated resources. Failure to innovate carries its own costs. It means that government may not improve the effectiveness and efficiency of public services. In addition, the government may weaken its human capital, disengage the public, and be viewed as an illegitimate institution. Therefore, government needs a licence to innovate. In this Working Paper, the Institute reviews the government of Ontario s work to enhance innovation in policy design, the policy process, and policy implementation. These efforts are compared to initiatives adopted in public and private sectors at home and abroad. Overall, Ontario has taken steps to enhance innovation. Some of these initiatives include applying behavioural insights, modifying engagement with stakeholders, and streamlining the delivery of public services. Yet more can be done. Revising funding frameworks, advancing human resource management, and revitalizing relationships with service providers can all boost government innovation. Less than half of policy professionals in Ontario s Public Service feel innovation is valued in their work unit. Enhancing innovation in government also requires advancing accountability. Doing so ensures responsible use of public resources, incentivizes innovation, and fosters a culture that welcomes moderate risk. Ontario can advance accountability in government innovation by capitalizing on existing tools at the individual and organizational levels. The Institute also suggests evaluating government innovation according to four metrics: context investigation, input itemization, output identification, and outcome inspection. LICENCE TO INNOVATE: HOW GOVERNMENT CAN REWARD RISK 7

4 Based on comparative case studies, the Institute outlines eight recommendations to enhance innovation in the government of Ontario. Integrate innovation into government activity to counter the risk-averse culture Government operates in a risk-averse environment. To counter this, Ontario should expand the Program Review, Renewal, and Transformation process to embrace innovation. Doing so signals that innovation is both desirable and acceptable. It also creates a need for senior leaders to champion innovation. Revise funding frameworks to boost policy design Funding frameworks determine how policies are designed. The government of Ontario currently allocates funds along ministerial lines and this impedes resource sharing. Adopting a mission-driven approach would foster collaboration and thereby enhance innovation. Ontario should also expand and centralize innovation funds to experiment with alternative policy designs. Apply behavioural insights to improve policy design Traditional policies are based on assumptions about human behaviour, which may not reflect reality. Adopting behavioural insights into policy design provides opportunities to yield more effective outcomes. Ontario should expand the number and scope of policy experiments to test behavioural models and be more upfront about these activities. This can enhance innovation, counter a risk-averse culture, and advance accountability. The Institute also recommends policymakers reflect on how users access public services by further incorporating design thinking into their work. Advance human resource management to strengthen the policy process There is a need to improve the bureaucracy s capacity and willingness to innovate. Revising recruitment techniques and training programs can build internal capacity for innovation. Expanding performance development plans and performance evaluations can incentivize workers as well as foster a culture that is open to change. Employees should further be provided with greater autonomy in the design and presentation of internal communications. 8 LICENCE TO INNOVATE: HOW GOVERNMENT CAN REWARD RISK

5 Modify the quality and scope of engagement to support the policy process Ontario needs to review how it engages with the broader public. Institutionalizing open data policies can enhance consistency, transparency, and accountability. While being sensitive to privacy concerns, government should also provide individuals with greater access to their personal records. Revitalize relations between government and delivery agencies to upgrade policy implementation Joining public interest values with private sector techniques in service delivery has backfired. Broadening the mandate of delivery agencies and assessing their propensity to try new things can incentivize innovation. Moreover, allowing service providers to take chances and adopt a moderate level of risk demonstrates trust and indicates that government does not always have ready-made solutions. Streamline services to refine policy implementation Integrated service delivery requires bigger policy silos. Ontario has already taken action to streamline service delivery, but there is more to be done. Government should adopt a mission-driven approach and organize federal, provincial, and local public services across policy objectives. Sharing resources and integrating public services can create ripe opportunities for innovation. Monitor government innovation to advance accountability Government needs to be open and honest about how and why it is innovating. The government of Ontario should broaden its existing tools to evaluate workers innovation as well as report on organizational innovation. Context investigation, input itemization, output identification, and outcome inspection are some metrics to assess innovation. The Institute is ready to report on innovation in the Ontario government, and calls on third party bodies of the legislature (like the Auditor General) to do the same. On the political side, opposition parties should dedicate one session of Question Period per year to assess government innovation. LICENCE TO INNOVATE: HOW GOVERNMENT CAN REWARD RISK 9