Innovation in the public sector: better practice guide

• Australian National Audit Office

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01 December 2009Innovation in a public sector context has been defined as the ‘creation and implementation of new processes, products, services and methods of delivery which result in significant improvements in the efficiency, effectiveness or quality of outcomes’. In short, innovation is the application of new ideas to produce better outcomes.

Innovative activity in the public sector can be considered in various ways. Three common streams are:

• shaping policy directions — where the role of the public sector is to provide objective and reasoned advice, and options, to assist the Government’s decision-making in relation to policies and programs;
• implementing policies and programs — that is, delivering services to the Australian community efficiently and effectively; and
• administrative innovations — introducing new internal processes and practices to improve productivity/reduce costs.

The benefits of innovation are diverse. It is widely recognised that innovation is crucial to enhanced economic performance, social welfare and environmental sustainability. Innovations can also improve organisational efficiency; provide higher quality and more timely services to citizens; reduce business transaction costs; and provide new methods of operation. Innovation can enable better performance and drive new directions.

This Guide has been developed in the context of the legislative, regulatory, monitoring and reporting framework that currently applies in the Australian government public sector. The Guide’s focus is on the culture and practices that can be adopted within the current framework to encourage and facilitate innovation in the public sector.

There are other Government review processes underway dealing with the development of options and longer term issues for the public service. The Management Advisory Committee’s examination of public sector innovation will explore how innovation can be further facilitated on an ongoing basis and the need for possible reforms. The Prime Minister has also established an Advisory Group to develop a blueprint for reform of the public service. These exercises will, among other things, consider the adequacy of the current framework and where changes may be required.

The Guide has been developed through a review of relevant academic, professional and government literature (including international experience), discussions with a cross-section of leaders, predominantly from the public sector, information obtained through case studies and professional experience. The interviews and case studies were important sources for better understanding the tacit knowledge held by experienced practitioners within the APS. Summaries of the agency case studies, key themes from the interviews with leaders and a summary of the literature review are set out in the Guide’s appendices. This material is intended to be a resource for readers, while also setting out the Guide’s foundations.

In addition to the Guide, the ANAO has also prepared two supplements providing details on the innovation case studies and the full report of the literature review. The literature review supplement contains extensive material on overseas perspectives on innovation and overseas practice.

The two supplements to the Guide, entitled Detailed Case Study Material from Agencies and Public Sector Innovation: A Review of the Literature are available through the ANAO website: www.anao.gov.au.