The Innovation Deficit in Public Services: The Curious Problem of Too Much Efficiency and Not Enough Waste and Failure

By Potts, Jason | Innovation : Management, Policy & Practice, April 2009 | Go to article overview

The Innovation Deficit in Public Services: The Curious Problem of Too Much Efficiency and Not Enough Waste and Failure


Potts, Jason, Innovation : Management, Policy & Practice


ABSTRACT

It has long been recognized that government and public sector services suffer an innovation deficit compared to private or market-based services. This paper argues that this can be explained as an unintended consequence of the concerted public sector drive toward the elimination of waste through efficiency, accountability and transparency. Yet in an evolving economy this can be a false efficiency, as it also eliminates the 'good waste' that is a necessary cost of experimentation. This results in a systematic trade-off in the public sector between the static efficiency of minimizing the misuse of public resources and the dynamic efficiency of experimentation. This is inherently biased against risk and uncertainty and, therein, explains why governments find service innovation so difficult. In the drive to eliminate static inefficiencies, many political systems have subsequently overshot and stifled policy innovation. I propose, instead, the 'Red Queen' solution of adaptive economic policy.

Keywords: public sector economics, economic evolution, innovation, innovation policy

1. INTRODUCTION

The government or public sector of most nations typically accounts for between onequarter and one-half of all economic activity. Yet the criteria that we evaluate the effectiveness of such services is not automatic, as it is in private business enterprise due to the disciplining effect of the market, but must be imposed. Democratic mechanisms function to both reward and discipline political parties and thus to create incentives to improve public services. However, in the short run, the evaluation of the management and provision of public assets and services rely on criteria of efficiency.

There is a vast literature on the economics of government services, optimal policy, social and public choice theory and political economy that is based on a framework of instruments and targets, or mechanisms and goals, as evaluated in terms of efficiency. This is both in terms of the goal (e.g. Pareto efficiency for an allocative goal) and also the means by which it is achieved, such that some mechanisms may be more efficient than others in achieving the same goal (e.g. an income distribution target, or a target level of production of a service). It is thus a widely held axiom that public sector management of assets and provision of services is properly evaluated as effective when it is judged to be efficient. In consequence, improvements in the management of public assets and in the provision of public services are then implicitly defined as anything that renders these services more efficient (or less inefficient).

However, this evaluation criterion is only meaningfully defined with respect to assets and services that already exist. It excludes from the outset criteria that relate to the innovation of new services or even the elimination of services because the efficiency criterion is meaningless in such cases. This, in essence, is why innovation is difficult in the public sector. The goal of efficiency is inconsistent with the goal of innovation. Put differently, this is why one-half to three-quarters of the economy remains in the private sector where this inconsistency does not hold.

Now although considerations of economic efficiency do not of course entirely determine the nature and shape of all public policy and government actions - for these are also driven by political expediencies, citizen pressures and realpolitik - it remains a widely held axiom of both effective policy and good governance that to go strongly against considerations of economic efficiency makes for bad policy. This is easily witnessed in public demand for, and government accord with, the general sensibilities of transparency, accountability and efficiency in the conduct of government economic intervention in the drafting of regulation, the use of public money and the management of public assets. Yet I shall argue here against this seemingly sensible proposition by noting the implications of it going too far: indeed, I shall specifically argue the benefits of a reduction in efficiency. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

The Innovation Deficit in Public Services: The Curious Problem of Too Much Efficiency and Not Enough Waste and Failure
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.