Public sector cuts will spur innovation, says DWP CTO

The economic downturn and looming government cuts are likely to spur radical innovations in information technology across the public sector, a senior government...

The economic downturn and looming government cuts are likely to spur radical innovations in information technology across the public sector, a senior government chief technology officer said last night.

James Gardner, CTO at the department of work and pensions, told CIOs at Computer Weekly's 500 Club that the sort of "near-death experiences" facing public sector organisations could lead to better, cheaper and more user-friendly IT.

"There is danger that government departments are constrained by what they do. Sometimes you need to have a near-death experience to get innovation on course. The public sector is facing enormous cuts. That is a golden opportunity for innovation and collaboration."

James Gardner, who joined the Department of Work and Pension a year ago from Lloyds TSB - where he was head of innovation and investment - told Computer Weekly's 500 Club that the public sector could learn from the way the private sector promotes innovation.

"People asked me when I made the transition to the DWP, 'What is there in common with the public sector?' The two organisations are very close. Each has to pay out money. The DWP has to worry about fraud and the banks do the same," he said.

"In the private sector the only reason you do anything is to make things better and to make more money. But you still have a profit motive in the public sector. You still have to take out cost."

There are only two workable innovation strategies, he said: One is to innovate not to lose - to keep up with competitors; the other is to innovate to win - to beat your competitors.

Both strategies are equally valid, he said, depending on your organisation's goals.

Apple is an example of a company that has successfully followed the innovate-to-win strategy. The company spends far less on research and development than Microsoft. Yet it has been far more successful at creating hit products.

"There is nothing special about the iPod. There was already a market for MP3 players. But Apple took it and turned it into a music download business and it became a hit. And there was nothing special about the iPhone. There were plenty of smart phones out there. But Apple created a new paradigm in the market by creating apps," he said.

Gardner quoted the example of a Spanish bank that went from the bottom to the top in six years, by focusing on its consumers. It began simply, by letting its customers vote which charities the bank should donate to. Later it allowed customers a say in which organisations it would lend to.

But it began to make huge returns when it decided to tell customers exactly how much it earned from them each financial period.

"The outcome was something surprising. They started getting massive deposits from big companies. It was quite hard to see what was going on. But the answer was that the companies were buying free corporate responsibility by putting their deposits in the bank," he said. "Suddenly everyone had a corporate responsibility programme."

The same principles are applicable to the public sector. Gardner said he had taken some of the innovation strategies used at Lloyds to the Department of Work and Pensions.

Traditional suggestion box schemes don't work, Gardner said. They are too much of a one-way communication. People put in ideas, but they get no feed back, their ideas are not implemented, and eventually people stop submitting ideas.

To be successful, organisations need to take a much more interactive approach to innovation.

One of the DWP's innovation successes is a social networking innovation strategy, known as Ideas Street. It allows staff to suggest ideas, which are sifted and evaluated by other members of staff, who can vote for the best one.

"It is subject to network effects. Its value increases as more people join. Our experience was that we had to fight to win people over. The first 1,000 people were exhausting and the second 1,000 people were exhausting. But with networks you have to exhaust yourself to get the impact."

But innovation is not easy. Most chief innovation officers last for an average of 18 months in an organisation, said Gardner. The obstacles to change are often too great.

"If you want to do innovation you really have to have the protection of a CEO. If you are going to take up a job as head of innovation in a large organisation, you have to be prepared to be fired. Because what you have to do is change things that people don't want changed."

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