Academic journal article Innovation: Organization & Management

Innovation by Elimination: A Proposal for Negative Policy Experiments in the Public Sector

Academic journal article Innovation: Organization & Management

Innovation by Elimination: A Proposal for Negative Policy Experiments in the Public Sector

Article excerpt

CREATION REQUIRES DESTRUCTION

The very definition of innovation is doing new things or undertaking new activities; a familiar notion broadly understood by all who write on innovation and advocate its advance into all corners of economy and society. In much of the market sector, as in most Schumpeterian academic writing, innovation is read to mean the origination, adoption and retention of a new idea that then crucially displaces old ways of doing things. That's what is meant by innovation as a study in 'creative destruction', namely not just a new idea - the creative innovation - but also the destruction or elimination of the old in order to make way (i.e. to release resources for re-use or market share for re-capture, etc). This can be ruthless and brutal, but it is the sine qua non of the innovation process as an evolutionary mechanism. The second phase of the innovation process - the destruction of the old - is just as important as the first phase - the creation of the new; but it typically receives far less attention in innovation theory and practice. Indeed, it receives almost none in the context of public sector innovation analysis and policy.

Yet a moment's thought reveals that the first phase cannot properly occur without the second phase because the first phase depends upon the release of currently bound resources and managerial and consumer attention to be shifted away from the old use and into the new use. In a competitive economy (i.e. in which there is scarcity), any new activity must by definition draw resources away from an old activity. This is the function of reduced investment activities, market exit, consumer substitution, bankruptcies and job destruction as the various means and mechanisms to shift the focus of economic activity toward the new ideas and uses that have been entrepreneurially proposed. This will of course be a difficult experience for individuals or companies who directly or indirectly experience the innovation process as competitive displacement, and one that is commonly resisted by calls for political action and redress. Historically considered, government generally and the public sector in particular is typically on the defensive side of innovation, seeking to minimise harm to citizens and interest groups through protective measures or redistribution in relation to the displacements of old ways of doing things, including the effects on jobs, industries, regional economies, and so forth.

In the past decade or so there has been increased recognition that public sector organizations (which by definition deliver services and commonly on a large scale) can benefit from greater attention to innovation in the effectiveness, scope and delivery of the services they provide (e.g. Mulgan and Albury 2003; Kamarck 2004; Walker 2006; Windrum and Koch 2008). The result has been a serious and widely discussed, analysed and implemented program of moves toward a goal of increased and improved public sector innovation. Given the sheer scale of public sector services in most economies, this is plainly a worthy goal. But what I want to address here is what seems to be a systemic oversight in this innovation programme - possibly one that is in the 'too hard basket' or perhaps viewed as politically infeasible - namely that the classic meaning of innovation, and the very reason it is lauded by economists, business and technology scholars alike, is due to the gains that come not just from the new, but from the elimination of the old.

Under market forces of competition this elimination or destruction process occurs as a direct consequence of consumer substitution, which is why innovation is a powerful form of competition (Metcalfe 1998). Firms compete by innovating new goods or services and measure this by their growth in market share or capture of new business. But in public services, which are mostly monopolised, this substitution and implicit destruction or elimination mechanism is not necessarily assumed to work. …

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