We need more public sector innovation

by Peter Nicholson. Posted March 5, 2012


The Drummond report on Ontario’s fiscal woes came mixed with a visionary challenge to make Ontario “a province that provides the best public services, delivered in the most efficient manner, in the world . . . We goad our business sector to win new customers globally in the face of stiff competition. Why not apply the same standards to our government?”

Good question. But to meet Drummond’s challenge, the broad public sector in Ontario will have to muster the same sort of commitment to innovation that politicians constantly urge on the business sector. Unfortunately, governments have been strangely silent when it comes to public sector innovation where they alone have both the tools and the responsibility to act. So the blunt message to policy-makers who want to foster a more innovative Ontario and Canada is, first, to get your own house in order.

The public sector is Canada’s biggest industry, accounting for a quarter of GDP. And public policies regarding education, health care and regulation touch every aspect of society and set the context in which the business sector operates. So while innovative businesses are surely important, an innovative public sector is at least equally important.

We need to distinguish two different public sector roles — one as deliverer of public services and the other as policy-maker.

In the delivery role, the challenge is that public services are rarely subject to the discipline of competitive markets, so the incentives to innovate to achieve greater efficiency are less keenly felt. It is also hard to measure the productivity of most government services — they aren’t like “widgets” that can easily be counted. Thus it is difficult to apply many of the management techniques that foster productivity-boosting innovation in sectors like manufacturing.

So we need innovation to develop practical metrics for public sector productivity and to design the right behavioural incentives. Considerable effort is underway in the U.K., Scandinavia and Australia to do just that. Governments in Canada need to be members of this innovation-minded club, learning and sharing best practices.

Unfortunately, none of this is politically sexy. But as the Drummond report put it: “The ultimate challenge in the years ahead will be to find ways to make government work better and preserve as much as possible the programs Ontarians cherish most.” So governments finally need to pay far more than lip-service to innovation in public service delivery since this is the only way to achieve fiscal sustainability without compromising service quality.

This will require an about-face because today the internal incentives in governments are precisely the opposite of what is needed. Rather than reward the calculated risk-taking on which innovation depends, we have instead created a risk-averse public service culture, hobbled by excessive “accountability” regimes that no longer serve the public interest.

The need for greater innovation is just as apparent in government’s policy function. Although the words “innovative government” sound today like an oxymoron, it was not always so. Canada enjoys the legacy of many visionary and innovative public sector initiatives dating from a former era — initiatives like the CBC, the St. Lawrence Seaway, the National Research Council, medicare, the Charter and others like the Auto Pact, often in creative partnership with business.

Could it be that we have we run out of opportunities for innovative public sector leadership on the really big issues? Obviously not. For example:

• We need a fiscally sustainable way to deliver universal public health care to an aging population.

• We need to redesign grade school education to be more relevant to the realities of the information age.

• We need massive, ongoing investment in new generations of public infrastructure as part of any strategy to make Canada more productive, competitive and environmentally responsible.

Consider, for example, medical care where greater adoption of best clinical practices could be induced by creating a cadre of physicians who would meet face-to-face with doctors and administrators — in effect challenging them to explain the existing widespread discrepancies between their practices and “best practices.” Such evidence-based assessment would lead to improved quality and cost-efficiency of health care.

Or consider K-12 education, where we desperately need to discover the best way to teach the new generations of “digital natives”? How can we instill the critical faculties appropriate for an information-besotted culture? What are practical alternatives to the teacher-centric, lock-step classroom tradition? These are huge questions for which no one in the world has reliable answers. So we need an urgent “R&D” program to inform a new education paradigm for the information era. As one concrete initiative, we should create a “Canada Foundation for Innovation and Research in Education” (or C-FIRE), with federal-provincial co-operation, so as to provide the focus and financial support this vital endeavour will require.

These examples set the bar high, but that is because the stakes are so high. And while specific policy ideas can always be debated, the main message is the need to get governments focused on innovation in their own backyards where both the responsibility to act, and the magnitude of the potential payoff, is greatest.

Peter Nicholson was the inaugural president and CEO of the Council of Canadian Academies and was policy director for prime minister Paul Martin.