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?

Entrenched City Halls Defined then Disrupted

In the last blog post, the idea of combining disruption and innovation was suggested as a strategy for implementing New Community Paradigms in communities in which politically controlled bureaucratic government institutions are entrenched.

This post will provide clarification as to what is meant by an entrenched city hall or a politically controlled bureaucratic government institution that is no longer serving the community by reviewing past arguments made over the course of this effort.

The potential push for disruption against an arguably entrenched city hall is based first on the philosophical premise that the democratic basis for the power of governance is based not on the authority of government institutions but on civil society.

The idea of ‘entrenched city hall’ started taking form back in 2011 with Why is this so hard? It's complicated and it's complex but that's OK which promoted the idea of a community creating its own community paradigms despite the complexity of doing so.

There has been an unstated assumption throughout the posts of this blog that ‘City Hall’ has failed to adequately address the need for an economically and environmentally sustainable and livable community. That is obviously not going to be true for all cities and the degree to which it is will be different from city to city. In some cases, the effort will find a willing partner and the collaboration will create a new more expansive form of community governance. In other cases, there will be pushback from the incumbent institutional government. The key issue is whether City Hall truly represents the community as a whole or only special interests or privileged key community members. If it is later, then there are pathways that can be taken to weaken and subsequently disrupt that control in a sustained and innovative manner.

For this to happen requires greater Community Governance - Third Path to City Government, a move away from current entrenched forms of closed city government to more open forms of community-based governance. It also requires recognizing, as did Governance by the Community or Not - Getting with or past City Hall that:

There is a difference though between governance and government. New community paradigms do not assume that people will take turns being the city planner or a city council member for a day. It does work under the premise that the relationships with community leaders and city employees (maybe better would be community-based employees) need to change and become different. How community needs are met and community standards enforced would also likely be different. How to make this work is another challenge for new community paradigms.

The idea is that the community itself makes more of the decisions directly through some system of direct deliberative democracy or a hybrid with the current system rather than indirectly through a mayor and city council system. Support for such an approach will be considered in greater detail in the future but for now, the focus for this post is on the factors involved when Community Governance Takes On City Hall in determining the balance of influence between political leaders, public sector and the community at large. 

The standard argument is the degree to which the process of running communities should be by politicians or by the public sector. This can, however, be a false choice as politicians and the public sector or bureaucrats often come together in a disjointed form of control in which city council members use their political power to force short-term decisions that make poor long-term sense for the community and city management works to protect the political self-interests of the city council members. Even when this is not overtly excessive, it can still significantly define the culture of city hall.

Each component ends up working to support the dysfunction of the other to maintain its own survival and the entire system becomes more closed. This does not always happen, perhaps not even as often or as significantly as my experience leads me to believe but when it does, it creates a culture of entrenched institutional government control and despite appearances to the contrary discourages community participation. 

The second problem with the standard approach to institutionalized community government is that it can discourage ongoing community participation in city government as A Ladder of Citizen Participation by Sherry R. Arnstein explains.

The usual claims that change can come about through elections every four years have little merit as there may be in reality minimal opportunities for true community participation between elections and elections are always under processes controlled by the status quo power culture. Not necessarily in mechanical terms of voter suppression or such but by the culture already instilled by the daily process of city hall control that results effectively in disenfranchisement. Worse, any successful election of a new slate of officials often times only changes the players, not the game. There may be superficial changes in policy when one political clique replaces another but it swings back a few years later and the deeper culture of the existing status quo power system stays in place.

Again, it should be stated that there is no claim that this situation applies to all cities or even in the fullest extent to a substantial number. It does happen though and one of the worst examples has been the City of Bell though on the positive side Bell can also be seen as An Example of Civic Renewal From Broken City.

The City of Bell was an example of what was the worst of local municipal governance with both politicians and top public sector management taking self-serving advantage of the community. Yet, how many California cities looked at the City of Bell with derision when the difference between Bell and those cities is not really one of kind but in truth only a matter of degree. Not that there is any claim that there are numerous city councils or administrations currently breaking the law. Rather, how many city halls adopted policies whether official or not that in the words of newly elected Bell City Council person Ana Maria Quintana, instituted a lack of inclusion by the public in decisions having an impact on the public, whether intentional or through negligence.

This argues that new alternative methods of community transformation need to be developed to change the balance of power in favor of a broad-based community vision and away from entrenched city hall bureaucratic politics when the supposedly democratic process has become corrupted not through blatant illegalities but through the small corruptions of a system turned to protecting itself at all costs and turning away from the real needs of the community.

It should be recognized though that arguing against the existing system is different from arguing for a system proposed to replace it. That will still continue to be needed to be done in future posts. There are though additional challenges beyond getting past an entrenched city hall.

This blog has advocated for ‘radical’ community engagement and through it the far greater inclusion of Non-Experts to Create New Community Innovations.

This has its own set of challenges:

This brings up the at first seemingly unattainable chasm created arguably as a symptom of the current system of local political and economic power. Most people are not involved enough in their communities to make the necessary changes. Many currently have zero involvement because they have been turned off by the current system of power which becomes all the more entrenched because people are not involved. This is a matter of learned helplessness which can be unlearned.

Others continue to try to make changes but are locked out by the current benefactors of politics occupying city hall which often has the appearance of a democratic system but the culture of entrenched power.

In future articles, it will be asserted that this is not as unattainable as may be seemingly apparent. While members of a community may have different degrees of involvement in their community, it is still possible to organize to generate the necessary community will for change.

Finally, many city halls constituted under the current form of local government structure are becoming increasingly unable to adequately address the ‘wicked problems’ facing our communities because it means adopting a complex approach to finding solutions as opposed to the more traditional, complicated, machine-based approach as was argued in Complexity as Cradle for Creativity and Innovation.

Public Sector organizations though, particularly at a local level, are often not able to do this as well. Instead, reacting to protect their status they end up imposing unseen additional layers of complicated or closed processes that are essentially subconscious from an organizational perspective that in time become culturally implicit. It is a means of maintaining power by becoming entrenched as a system both operationally and culturally. This is why so many local city halls or other public sector organizations prefer the more traditional organization as machine approach in which complexity is seen as chaos and why community engagement in some communities remains stuck at the bottom rungs of Arnstein’s Ladder.

Community Governance - Third Path to City Government

Last month this blog featured posts on community governance, both from the perspective of governance through community, which involves community members coming together to deliberate and make decisions, and governance by community, which involves the means of implementing those decisions administratively.  These were admittedly idealistic states that needed to be strived toward.  How to achieve that will be one of the continuing focuses of this blog.  For this to happen requires a move away from current entrenched forms of closed city government to more open forms of community governance.

The two common major styles of city government found today, strong-mayor and council-manager, were featured in two articles, which appeared during the same month in the Washington Examiner, contrasting the supposed strengths of each.   

The first article by Stephen D. Eide, a Senior Fellow at the Manhattan Institute's Center for State and Local Leadership, is “Manhattan Moment: Only politicians can save us now” and the other is “In defense of city managers” which Robert J. O'Neill, Jr., the Executive Director of the International City/County Management Association wrote in response.  

Eide explains that under a council-manager form of government, a professional administrator runs the city government. He or she is, however, not elected by voters but appointed by a city council.  Under the strong-mayor government, the mayor, is elected by the people and directs the city's administration while serving as the city's political head.  

As can be deduced from the titles of the two articles, Eide makes the case that communities have come to depend too much on professional administrative staff and that they would be better off if they would instead turn to politicians to overcome the challenges that they face. O’Neill takes the opposite tact coming to the defense of city managers and other public sector administrators by warning “that pitting strong political leadership against professional local government management as a solution is misguided”. 

Eide makes the argument that when a crisis does arise, “political leadership is needed much more than professional expertise”.  Eide points out “Mayors can make case for their vision directly to the public, through elections and initiatives.  City managers' capacity for political leadership is limited. They can't offend the elected officials who act as their bosses”.  

O’Neill asserts that what is of prime importance is “efficiency of administration” using as the basis for his counter argument the article "Smarter, Faster, Cheaper," by David Edwards who reported that “what determines how efficiently a city deploys resources is management, and that communities with the council-manager form of government are nearly 10 percent more efficient than those with strong mayoral forms of government”.

The real crux of the argument for Eide is a desire to address what Eide calls the “fiscal and administrative inflexibility caused by unreasonable union contracts and the unsustainable costs of public-employee benefits”.  The solution according to Eide is to follow the example of San Diego that with the support of a 2/3 voter majority passed Proposition B which was designed to eliminate defined-benefit pensions for all new nonpublic safety employees and save taxpayers nearly $1 billion.  According to Eide, the San Diego passage of Proposition B could not have happened if the change from council-manager to strong-mayor had not been made.  

This is not meant however to be an argument as to whether this is fair or not or whether it is the proper course of action as it is seen as being unavoidable.  This trend, as will be discussed in future posts, will continue changing the nature of public sector employment.  

What is being questioned is whether people could have the type of communities that they can imagine if they were fully empowered with the necessary resources and not turned off or discouraged from community participation? 

Eide focuses on a single policy decision, cutting public sector employee overall compensation and argues that it is better to bet on politicians to get the public to buy into it than to bet on public administrators to get the policy implemented.  

It does not, however, do anything to directly address his concern that “budgets are rising, but productivity and the quality of city services are not”.  The primary driver of community governance becomes a matter of cost rather than of value. Residents are defined as consumers of government services not as citizens.  Seeking better quality service through only cost cutting without finding means of enhancing those services through new means of innovation simply results in commodification where less is done with less and community needs go unmet. Draconian measures maybe possible under a political fix, such as finding ways to cut costs by reducing overall public sector employment compensation but they do not address issues of continued sustainable community governance.  What can happen instead is a constant winner take all pendulum swing from one side to the other or the disenfranchisement of a portion of the community.  

Eide and O’Neill may both distinguish between politics and administration, giving each a different level of primacy, but both fail to make a distinction for the creation of a community vision and setting of policy to implement that vision which is different from using a political approach to decide among policy choices and from the administration of that policy.    

One approach focuses on the effectiveness of politically motivated measures without much regard made for what happens after they are implemented as long as the correct position of  political power is taken and the other approach focuses on the efficiency of administration without much regard made to how effective the policy in question may be.  Each seemingly leaves the other side of that equation to the its counterpart.  Both could claim to have the best of intentions in mind but still assign only a passive role to the community which is either to be sold to or managed.  Both systems of government focus more of their energy into making sure the current system and its players stay in place than addressing the needs of the community. 

With regards to professional staff, I can agree that we should resist what Eide calls the urge to "trust the experts", at least not to trust them indiscriminately.  I can’t agree though that only politicians, whom Eide himself admits are to blame for much of the trouble American cities are in today, are the only ones that can save us now.  A guiding principle of new community paradigms is that not only should a more substantial role be taken on by the community itself, it is also now more possible than ever before.

Eide claim that the professional is not as accountable to the populous as the politician also falls flat, as it is the politicians who appoint the administrators with the power to fire them and even though residents only get to hold the politicians accountable every four years.  

The framework O’Neill suggests for our cities to be successful does begin to meet a new community paradigms standard though with a change in emphasis to focus first on:

• A strategy for representing and engaging every segment of the community
• A commitment to transparent and ethical government 

A new community paradigms approach still recognizes the importance of:

• Strong political community leadership 
• Strong policy development
• A relentless focus on execution and results

O’Neill says that, “Under any form, the citizenry must be involved in their local governments and select the best possible local elected officials possible. “  No argument as far as it goes but, new community paradigms asserts that we now have the ability to go even further and have a more direct say in real time about how our communities are formed and developed through direct community governance.