Why Disruptive Innovation in the Public Sector Will Not be Easy.

The concept of applying disruptive innovation within the public sector was put forward in the last two posts. There isn't any desire to retreat from this proposition but it does seem necessary to make clear that this will by no means be easy. Disruptive Innovation should not be seen as a slam dunk generator for solutions to the wicked problems facing the public sector and those communities it endeavors to support. (Yes, the public sector in general does try to help the communities with whom they work.) It may, however, be a viable catalyst for bringing about paradigm level changes needed to meet our current wicked challenges by transforming our current systems of community governance and management. The focus will be mainly on local city government, others may focus on other components of government at other levels.

In the previous post a set of premises were established before inquiring about disruptive innovation. I should have added a premise that we are speaking of the United States. How and if these concepts could be implemented elsewhere in the world will depend on local characteristics. I believe that in many cases, perhaps with some modification, that they could but will leave that to others.

First, in no example of private market disruptive innovation was disruption of the incumbent business, purely for the sake of disruption, the primary motivation. It was to capture market share to increase revenue and profits. Of course, the disruption of the incumbent is a logical outcome but there is an incentive of value creation driving the disruptor. Endeavors to create new community paradigms, particularly through disruptive innovation, must create net added value for the community, not merely move it around or block it. Some form of incentive needs to be created to get people to change before the institutions which they make up or live under can be made to change. This will be a difficult hurdle to get over.

Second, it must be understood that true disruptive innovation happens very seldom in the private economy so there will not soon be numerous disruptive innovations in the public sector occurring. Most claims of successful implementation of disruptive innovation within the private market, and perhaps more so in the public sector, are merely overblown promotional claims of at best sustaining innovations. It may be some time before a fully realized disruptive innovation by a community of an entrenched local government institution is accomplished, if ever. The pursuit is still worthwhile though because it has the potential of developing innovative means of far greater expansion of governance directly by the community and enhancement of community wealth.

In discussing the hurdles to implementing disruptive innovation within the public sector, two more premises need to be established. One, perhaps more of a reiteration, is that there is a democratic deficit within our local community government institutions. This issue has been raised before, at least indirectly, in posts such as Entrenched City Halls Defined then Disrupted and others. Two, there will be an innovative transformation of such government institutions and their role in community governance in the future. The second premise is not as hopeful as it might seem because it will depend upon the type of innovation path we decide to follow.

It is important to understand that disruptive innovation is not an event. It is a set of factors defining an economic evolution within a private, free enterprise based economic environment. It was within this environment that the concept of disruptive innovation was discerned, studied, understood to the point of being made predictable so the decisions could potentially be made to help ensure future successes, by Professor Christensen of Harvard University. The intention is to attempt to apply these principles to the public sector.

In his New York Times piece, “A Capitalist's Dilemma, Whoever Wins on Tuesday" from November 3, 2012, Christensen arguably changed his perspective on disruptive innovations and began to use the term “empowering” innovations. Whether this is a change may be more of a matter of semantics or not, I am embracing the updated definition. There are, however, two other modes of innovation which were cited by Christensen, “sustaining” innovations and “efficiency” innovations.

“Sustaining” innovations, Christensen explains, “replace old products with new models.” While the new model Toyota Prius hybrid replaces the older product Camry, the customer likely does not buy both yet still stays loyal to Toyota. There is, though, a zero-sum aspect to sustaining innovations. Many innovations within the public sector today, such as those being put forward by organizations like Code for America, are sustaining innovations which are of great benefit but will not, as I will assert to greater lengths in future posts, be able to fundamentally change the existing systems. At least not without some catalyst for creating a greater momentum for change. These sustaining innovations could be stepping stones or a base for future disruptive or empowering innovations. Coalescing these practices into a disruptive innovation framework through collaboration of relevant stakeholders will not be an easy task.

“Efficiency” innovations, according to Christensen, reduce the cost of making and distributing existing products and services. Many of the institutional innovations within the public sector are of this type. In a time of cities struggling through budget deficits and in some cases going bankrupt, burdened by unfunded pensions and inadequately funded infrastructure this approach can be very enticing.

Some believe that city government should mimic business in structure and purpose so that our democratic institutions of community are run as profit or revenue motivated enterprises rather than laboratories of community collaboration. The argument to made on these pages is that such an approach will invariably lead to a greater democratic deficit. The problem is that if a way cannot be found to transform the sustaining innovations into empowering innovations, communities may default to this more efficient approach so that if they don’t get the actual community related job-to-be-done from city government that they want, that at least what they have acquiesced to is supposedly comparatively inexpensive.

If those within the walls of city hall the and the larger community are in basic agreement with this, then there may be little to no opportunity for disruptive innovation. Even more so, if the larger community is content with the managerial efforts of city hall and does not wish to involve itself to any great extent because it has the ability to address issues of importance through other avenues besides local government institutions. In these cases, the city hall in question serves as the incumbent within an unopposed market and has little worry from competition.

The standard approach to a change in city government is to offer supposed alternatives to the constituents within an electoral framework and then work with the elected representatives through the governmental processes such as planning commission meetings or city council hearings. This blog has asserted in the past that there is a difference between city government and community governance, again in Entrenched City Halls Defined then Disrupted and elsewhere, arguing that the first does not necessarily provide the best outcomes for the second.

The problem is that entrenched systems of government by politically powered institutions can create over time a culture that stymies broader democratic participation. This culture can become entrenched so firmly into the fabric of the community that even if the potential for disruption or change exists, the leverage to make it happen may not be enough.

This could though be a matter of appearances. Overcoming this illusion of supposed democratic processes masking an absence of actual meaningful influence, if and when it exists, is another objective of this effort. It may be easier though to discern this as individuals but far harder as a community as a whole and even harder to change it.

Finally, there may be a diminished sense of community by those living within the geographical boundaries of the community governed by the entrenched bureaucratic institution occupying city hall. Any larger sense of community having been hampered by city hall and replaced by a narrower network of special interests which supports and is supported by city hall. Within the walls of city hall, it may appear that the democratic apparatus is working but in truth is it merely the remnants of those being benefited by the current entrenched system while the majority of the community again settles for whatever is made available.

The development of this particular theory of disruptive innovation within the public sector is a long term strategy starting first with disrupting people’s thinking as to how they relate to politically based power structures that are supposed to represent the will of their community but too often end up serving narrow self interests and those of a limited pool of political supporters. Mere disruption of a political process is not all that hard. Disruption coupled with innovation resulting in meaningful change is impossible though if nobody first believes such disruption is even feasible. By providing an organizing principle that encompasses both disruption and innovation, all instances of either can be seen as potential stepping stones to actual disruptive innovation if such an overarching principle can be pursued.

By understanding how an ostensibly unassailable institutional system can be breeched using that system’s own structure and incentives against it gives hope that people can find innovative means of collaboration to transform a scarcity of community wealth into an abundance for the benefit of the entire community. The still to be answered question is how?