Niinikoski, Marja-Liisa – Aalto University, School of Economics, June 8, 2011, HelsinkiDemand- and user-driven innovation ...
1 IntroductionAccordingly the expansion of innovation policy and its measures towards public innovations(Niinikoski, 2011)...
systemic innovation activities in the public sector. It can be also seen a way to increase resilience 2(Välikangas, 2010) ...
synonymous with all kinds of change and transformation. Both Sørensen and Torfing (2010) andJæger (2009) see that the conc...
knowledge construction, can be seen promising in order to outline demand-driven innovationmanagement and its practices in ...
While no doubt staffing levels and queue sizes between partners in service supply chains areimportant, they ask, whether s...
angel which will be closer examined in empirical part of the study. If public organizations have alow integration, the imp...
Conceptually the integration of demand-based and interactive knowledge-based managementpractices to foster innovations in ...
and Torfing (2010) have spoken about collaborative innovation in the public sector context, and thetype of metagovernance ...
aimed at producing reasonable, well-informed opinions in which participants are willing to revisepreferences in light of d...
macro5. Goodin and Dryzek define mini-publics as designs in which small groups of peopledeliberate together. They do not m...
Collaborative,                   Innovations                                                                              ...
knower and knower. Knower and know are not separate in this interactive relation. Thus, in thisresearch we do research wit...
4 Case examples4.1 The location and the size of the citiesTwo cities in Finland, Espoo and Mikkeli, are research partners ...
Currently there are about 50 e-services available through the city’s electronic service network.Typically the services are...
prepares a plan of available funds given by the municipal council and decides about aids targetedfor local development pro...
Economic scarcity seems to be one driver for public innovations. This relates especially to theoperational performance of ...
the aspects of operational performance of public organizations, not that much of the issues ofdemocratic legitimacy.Refere...
Goodin, Robert E. & Dryzek, John S. (2006). Deliberative Impacts: The Macro-Political Uptake of Mini-Publics. Politics & S...
Vollmann, T.E., Cordon, C., Heikkila, J., 2000. Teaching supply chain management to business executives. Production and Op...
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Demand- and User-Driven Innovation Management In Public Organizations


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Demand- and User-Driven Innovation Management In Public Organizations

  1. 1. Niinikoski, Marja-Liisa – Aalto University, School of Economics, June 8, 2011, HelsinkiDemand- and user-driven innovation management in public organizationsAbstractTo a large extent innovation studies, and more precisely innovation management studies, have beenfocused on innovation management and innovation systems to deal with innovations in the privatesector context. Recently public measures of national innovation policies, as well as innovationstudies, have started to expand to the field of public innovations. This paper aims to set up aconceptual framework drawing on management and governance approaches in order to experimentand explore innovation management in the public sector context. More particularly the paperfocuses especially on the questions of demand- and user-driven innovation management, itspractices and operational principles in public organizations. Finally, the paper highlights somepreliminary empirical observations concerning obstacles and enablers of public innovations andtheir management in the context of public organizations.Key words: public innovation, innovation management, demand-driven approach, user-drivenapproach
  2. 2. 1 IntroductionAccordingly the expansion of innovation policy and its measures towards public innovations(Niinikoski, 2011), also innovation studies concerning innovation activities of the public sectorhave expanded (Jæger, 2009). Traditionally innovations have been discussed in the context of theprivate sector. In the private sector innovations have been seen as potent levers of productdevelopment, cost reduction, market expansion, higher sales and increasing profits (Sørensen andTorfing, 2010). The role of the public sector and public policy has traditionally focused onimproving the conditions of private sector innovation activities. The role of public demand ininnovation has traditionally served this aim (see e.g. Dalpé et al., 1991). Recently more attention ininnovation policy and innovation studies has been paid how the public sector could innovate byitself and how public policy measures could be used also in this respect.Although public innovation as such has not been in the focus of innovation studies, Sørensen andTorfing (2010) claim that there is a lot of innovation in the public sector. According to themadministrative reforms, policy changes and transformation of the content and repertoire of publicservices are frequent. However, they see that in most cases public innovation is a result of more orless accidental events. According to Sørensen and Torfing this accidental character of publicinnovation demonstrates the need for a new innovation agenda that aims to turn innovation into apermanent and systemic activity that pervades the entire public sector. The new agenda in thisrespect is needed, since the citizens have rising expectations to the quality, availability andeffectiveness of public services; the professionals, the public managers and the elected politicianshave growing ambitions with regard to public governance; and a growing number of public taskshave the character of wicked problems1.In order to enter into constructing this ‘new public sector innovation agenda’ this paper explores thenature of innovation management in public organizations, especially innovation managementpractices and operational principles. More precisely the paper discusses the role of demand andusers in public innovation activities and in their management. By using the concept of publicinnovation, and locating it in the recent approaches of demand- and user-driven frameworksespecially in the public sphere with the integration of governance theories, this paper aims to set upa theoretical and conceptual framework for public innovation management in order to later onexperiment empirically and examine innovation management practices in public organizations. It isassumed in this paper that innovation management is one crucial factor to enable permanent and1 According to Koppenjan and Klijn (2004) wicked problems are ill-defined, difficult to respond, require specializedknowledge, involve a large number of stakeholders and carry a high potential for conflicts. 2
  3. 3. systemic innovation activities in the public sector. It can be also seen a way to increase resilience 2(Välikangas, 2010) in public organizations and in the public sector meaning to take timely actionbefore a misfortune has a chance to wreak havoc.The whole study, which this paper is a part of, is carried out as a co-operative inquiry, which meansthat representatives of public organizations act as co-researchers. The study is initiated andfacilitated by academic researchers but the actual process is carried out co-operatively whererepresentatives of public organizations can take part in decision-making of the study. Thisconference paper tries to set up a theoretical and conceptual framework for the study, which in turncan be specified and defined through the empirical case studies. We focus to examine twoquestions. Firstly, we are interested to figure out what kind of innovation management practices canbe used in the public sector, more precisely in the framework of demand- and user-driveninnovation management practices. Secondly, we ask how these practices can serve both theoperational performance of public organizations, as well as democratic legitimacy of public sector,its operations and policies.2 Public innovation and innovation management2.1 Public innovationJæger (2009) has recently outlined special features of public innovations in relation to innovationsin the private sector. She sees that the differences derive from the role and tasks of publicorganizations and the essence of the public sector. First of all, public organizations are engaged inimplementing the policies aiming to increase welfare, democracy, and legitimacy (at least inWestern-style democracies). Furthermore, they are based on the rationales of the legal state drivenby the ‘public interest’ including the equality of law, legitimacy, democracy, and a dignifiedtreatment of the citizens. The public sector itself is governed by political and bureaucraticgovernment in the first line, but also by the citizens who vote for the politicians at elections.Additionally, the public sector has a much more complicated relationship with the user/citizens thanthe private sector. According to Jæger these aspects constitute very different platform for innovationin the public sectors from the private one.Sørensen and Torfing (2010) call for a rigorous definition of innovation, also in the public sectorcontext, in order to avoid a risk that the concept of innovation loses it edge by becoming2 Resilience is defined as a notion to mean the capacity to change without first experiencing a crisis, change without alot of accompanying trauma, and to take action before it is a final necessity. 3
  4. 4. synonymous with all kinds of change and transformation. Both Sørensen and Torfing (2010) andJæger (2009) see that the concept of public innovation is best understood, if the concept is definedin the context of policy networks (Jæger, 2009), or through a collaborative approach (Sørensen andTorfing, 2010). These approaches take into account the special nature of public innovation byemphasizing its systemic and contextual character trying to serve different purposes of variousstakeholders, like elected politicians, public employees, users and citizens.Sørensen and Torfing (2010) define public innovation “as a more or less intended and proactiveprocess that generates, implements, and disseminates new and creative ideas, which aim to producea qualitative change in a particular context”. Jæger (2009) in turn stems from the systemicapproach and defines innovation “as an interactive learning process between different actors in thesystem/network within the institutional settings of the legal state”. By integrating these definitionsof public innovation this study develops and explores public innovation management in the contextof Finnish municipalities. More precisely the focus is in the demand- and user-driven approaches ofpublic innovation.2.2 Demand-driven innovation management in the public sector2.2.1 Public organizations in the first user roleTraditionally the role of the public sector in the demand-driven approaches has been seen throughits first user role. Government procurement has been identified as an important instrument to directand pace innovation in industry (Dalpé et al., 1991; Hebert and Hoar, 1982; Ponssard ,1981). In thisrespect public procurement has served aims of technology policy (Dalpé et al., 1991) andinnovation policy (Edler and Georghiou, 2007), and so called demand-side policy measures havebeen seen as an important intervention for the development of new technologies (Freeman 1978),and recently strategic public procurement for the development of whole market areas in terms oftheir importance in the economy (Edler and Georghiou, 2007). In these approaches the public sectoritself has not been seen as an innovator using innovations in order to improve its own performance.In this paper we look the public sector and especially public organizations from the point of view,where public organizations themselves will be seen as innovators or as co-innovators. At the sametime we acknowledge the role of the public sectors in relation to suppliers in the first user role, andsee the dualist role of public organizations in this respect.2.2.2 Public organizations as innovatorsFrom the point of view organizing and producing services in the public sector demand-orientedmanagement studies, and knowledge management studies emphasizing the interactive mode of 4
  5. 5. knowledge construction, can be seen promising in order to outline demand-driven innovationmanagement and its practices in the public sector. Although it has been known about the theoreticalbenefits of demand chain management (DCM) for many years, making it work in practice wastypically impossible before the Internet (Frohlich & Westbrook, 2002). Secondly, IT-basedKnowledge Management (KM) approaches have limited potentials for encouraging the knowledgesharing that is crucial to interactive innovation processes (Swan et al., 2000). Swan et al. (2000)argue that interactive innovation processes depend on the integration of knowledge across disparatesocial communities and require the exploration (creation) of knowledge, rather than simply theimproved exploitation of knowledge. In this study demand-orientation in public sector’s innovationmanagement and in its practices conceptually draws, besides the market-oriented first user role, onthe DCM approach and the KM approach which acknowledge interactive innovation processes.Demand-driven approach through information of demandIn demand-oriented management studies the DCM approach has been developed to describe amanagement practice that manages and coordinates the supply chain from end-customersbackwards to suppliers (Vollmann et al., 2000). DCM requires extensive up- and downstreamintegration between all business partners in order to succeed and these types of connections haveonly recently become possible due to the web. Web-based technologies now permit strong customerand supplier integration for inventory planning, demand forecasting, order scheduling, targetedmarketing and customer relationship management. Real-time information travels immediatelybackwards though these web-based, demand-driven supply chains while inventory flows swiftlyforwards. In this study we define the concept of demand-driven orientation of innovationmanagement first of all from the point of view of demand information, as the DCM approachdeclares.However, the empirical results of companies using DCM seem to be more relevant formanufacturers than for service companies (Frohlich & Westbrook 2002), which has to be taken intoaccount when speaking about public organizations, since their products are first and foremostservices. Typically services are simultaneously produced and consumed. In services, thematerials/labor ratio is often the reverse of that in manufacturing and service supply chainsnormally involve human skills over material flows (Cox et al., 2001). According to Frohlich andWestbrook (2002) service stockouts are mainly driven by underestimating future demand andlacking sufficient capacity (i.e. service providers) on the day that customers actually arrive in theprocess. However, in public organization the question of demand typically returns towards anotherdirection where the optimization problem is sometimes to prevent the emergence of demand. 5
  6. 6. While no doubt staffing levels and queue sizes between partners in service supply chains areimportant, they ask, whether sharing real-time demand data with suppliers and improving inventoryvisibility over relatively few materials is really that strategic in services like it is in manufacturingbusiness3. Frohlich and Westbrook (2002) suggest that if there is a significant bullwhip in services,then DCM probably makes sense in services, too. They claim that if the bullwhip is not a significantfactor, then service providers may have the luxury of only concentrating on the web-based demandintegration (web-based integration with their customers) 4. This suggests according to Frohlich andWestbrook (2002) that demand integration is more driven by proactive rational efficiency factorslike performance and market share. Moreover, demand-driven strategies (web-based integrationwith their customers and web-based integration coordinating the whole demand chain fromcustomers backwards to suppliers) were also strongly motivated by the rational access to newmarkets. It seems likely that only when upstream supply pressures and downstream marketopportunities collide that companies take the ultimate step and implement DCM. This is animportant insight for managers—the time may not be right to implement broad supply chainintegration until upstream pressures and downstream opportunities are both present.In the case of public organizations the proactive rational efficiency factors can be reverse comparedto companies. This means that the smaller the market share is, the better the performance of a publicorganization is, and thus increases its efficiency. However, this also is a relevant point where we seethe different role of public organizations compared to private ones. Thus, only creating innovationsbased on demand information in order to increase the rational efficiency of public organizations isnot enough. Policy-making processes and practices are used to define the scope of publicorganizations. About innovation management in line with this definition function we will turn laterin this paper. However, we see that the DCM approach as such has value to improve innovationmanagement practices and operational principles when innovations are tried to create andimplement in the service of operational performance of public organizations.Based on their empirical results Frohlich and Westbrook (2002) argue that for most services thebest approach right now is to focus on demand integration. They see that it may be a waste ofresources for services to chase either supplier integration or full-blown DCM integration. Thisempirical result may apply for public organizations, as well. In this empirical study it is at least one3 In manufacturing business is spoken about the bullwhip effect. The bullwhip effect is called a phenomenon when thevariance of orders may be larger than that of the sales, and the distortion tends to increase as one moves upstream (Leeet al. 1997).4 This parallels Watson’s (2001, p. 41) services finding that for insurance companies, while downstream customerintegration was straightforward, upstream integration “remains little more than an unfulfilled desire”. 6
  7. 7. angel which will be closer examined in empirical part of the study. If public organizations have alow integration, the implementation of the web-based supply and demand integration may unlocktheir operational performance based on Frohlich’s and Westbrook’s results. They acknowledge thatalthough it is a daunting task, the alternative of trying to compete without integration is worse sinceorganizations’ survival may ultimately be at stake. According to them enhanced competitivenessrequires that companies ceaselessly integrate within a network of organizations—manufacturers andservices ignoring this new challenge are destined to fall hopelessly behind their more Internet-enabled rivals. Although the existence of public organizations is not determined through the marketcompetition, we see that their operational performance still plays a role when it is defined what andto what extent public organizations can carry and implement public tasks.From the point of view of public organizations DCM seems to be relevant what concerns services,demand of services and co-operation with external service producers. However, we see that theDCM approach is not enough but might help public organizations to innovate in order to improvetheir operational performance. Web-based integration with suppliers and customers can create aconsistent information flow which can be used as a database in innovation processes, and can beaccording to our understanding especially relevant when electronic and web-based service networksof public organizations are developed. It can also be seen as one form of metagovernance whichwill be discussed later on in this paper.Knowledge construction and communicative processesInteractive innovation process approaches argue that not only knowledge achieved through IT-based tools is relevant but knowledge exploration is dependent on shared understanding (Swan etal., 2000). It is very difficult where those involved are from different cultural and disciplinarybackgrounds. In these situations, knowledge has to be continuously negotiated through interactivesocial networking processes. Based on community models of knowledge construction (Nonaka &Takeuchi, 1995; Blacker, 1995) knowledge cannot simply be processed; rather it is continuously re-created and re-constituted through dynamic, interactive and social networking activity. This isespecially important for innovation processes that are interactive. According to Swan et al. (2000)the community model highlights the importance of relationships, shared understanding and attitudesto knowledge formation and sharing within innovation processes. They argue that it is important toacknowledge these issues since they help to define likely success or failure of attempts toimplement KM practices that facilitate innovation. The community model emphasizes dialogueoccurring through networks rather than linear information flows. 7
  8. 8. Conceptually the integration of demand-based and interactive knowledge-based managementpractices to foster innovations in the public sector can take into account two roles of the publicsector; its role as a service organizer and as a service producer. The DCM approach emphasizes therole of information about suppliers and customers and its integration in strategic planning, while theKM approach highlights the community based understanding in the construction of knowledge,where IT-tools as such seem to be insufficient to fulfill the requirements of interactive innovationprocesses. Before entering into the role of public sector as a service definer from the point ofdemocratic theories the recent conceptualizations of user-driven innovation in the public sector isdiscussed in this paper. This in turn enlarges the perspective of suppliers and customers from thepassive knowledge providers towards active participants in innovation processes (see also Jæger,2009).2.3 User-driven innovation management in the public sectorDrawing on the criticism of the linear model of innovation processes and drawing on user-drivenapproaches of innovation (von Hippel, 1998) and innovation system approaches (e.g. Edquist &McKelvey, 2000; Lundvall, 1992) Jæger (2009) has depicted empirically the definitions of user-driven innovation and users in the public sector context. Based on her empirical analysis she seesthat in the public sector context user-driven innovation covers products and services, organizationsand processes, and these have to be built on user’s needs, wishes and praxis. The role of usersseems to vary in the public sector context. In the narrowest sense it refers to the user’s role as acustomer and a consumer, in a broader sense user can also be seen as a participant in policynetworks, and even as a supplier of public services. In this paper we use the concept of user in thebroadest sense.The idea of user-driven innovation approaches is related to the idea of relevant sources ofinnovations. Based on several empirical case studies in different branches von Hippel concludesthat “empirical studies of the sources of innovation in both industrial and consumer goods fieldshave shown that in many but not all of the fields studied, users rather than manufacturers aretypically the initial developers of what later become commercially significant new products andprocesses” (von Hippel, 2002, 6). Now the question is what kind of roles users can have ininnovation activities in the public sector context, and how these types of activities can be managedby public organizations.Given the wide range of actors in user-driven innovation approaches, recognised by Jæger (2009)not only in terms of end-users of product and services (see eg. von Hippel, 1998, 2002), Sørensen 8
  9. 9. and Torfing (2010) have spoken about collaborative innovation in the public sector context, and thetype of metagovernance of innovation processes and their management. They definemetagovernance as the ‘governance of governance’ as it involves deliberate attempts to facilitate,manage and direct more or less self-regulating processes of collaborative interaction withoutreverting to traditional statist styles of government in terms of bureaucratic rule making andimperative command (Sørensen and Torfing, 2009). Drawing on this understanding ofmetagovernance they define metagovernance as a new kind of innovation management that aims toenhance drivers and remove barriers while respecting the self-regulating character of thecollaborative interaction processes (Sørensen and Torfing, 2010). They see that the exercise ofmetagovernance involves a combination of hands-off tools such as institutional design and networkframing and hands-on tools such as process management and direct participation (Sørensen andTorfing, 2009).To sum up, user-driven approach to innovation management practices deepens the viewpoint of therole of various parties in innovation activities and in innovation processes. When looking at theinnovation cycle integrating generation of ideas, selection of ideas, implementation of ideas anddissemination of new practices (Eggers and Singh, 2009), the relevant question is how innovationmanagement in public organizations take into account the various phases of the cycle and the role ofdemand information, knowledge construction and users in various phases.Before summarizing our conceptual model of demand- and user-driven innovation management andits key functions areas in public organizations to be tested and expanded in empirical cases, wedescribe the definition function of public organizations from the point of view of governancetheories.2.4 Insights of democratic approaches: deliberative governance as a type of metagovernanceAs discussed above, the sphere of public affairs is not defined through markets but through politicaland policy processes. In this study we do not enter into the question of democracy or deliberatedemocracy as such but open the forms and practices of metagovernance towards deliberativegovernance and discuss through our empirical cases what type of metagovernance as deliberativegovernance practices can be used in the context of the public sector’s user-driven innovationmanagement framework. We ask what can be innovated and how in order to increase and/or ensuredemocratic legitimacy at the local level.Deliberative governance can be considered as a derivate of deliberate democracy (Hendriks, 2009).Deliberate democracy can be defined through deliberation, which signifies "debate and discussion 9
  10. 10. aimed at producing reasonable, well-informed opinions in which participants are willing to revisepreferences in light of discussion, new information, and claims made by fellow participants"(Chambers, 2003). It can be clarified to mean a process which is participatory (Raisio et al., 2010),and is based on public deliberation in which a reflective and mature public judgement develops (e.g.Button & Ryfe, 2005). According to Friedman (2006, 17-26) with deliberation, citizens can maturetheir opinions about the discussed issues, and as a result – with an improved recognition of politicalmanipulation – understand the issues better. Deliberative public engagement also helps tostrengthen democratic culture and practice. It especially gives new methods for democracy tohappen. Ideally, with public deliberation it is possible to build stronger communities and, in the bestcase, deliberation precedes civic action; i.e. it creates more active citizens. In our case study thisdeliberative starting point mean how deliberation can be used in public organizations and morespecifically how it can be integrated with public innovation management and its practices.According to the ideas of governance and metagovernance public organizations represent onestakeholder in multi-actor processes (see e.g. Bingham, Nabatchi & OLeary, 2005; Sørensen andTorfing, 2009). In deliberative governance the word ‘deliberative’ adds an imperative ofdeliberation to it, resulting in "the application of deliberation and deliberative processes to theactivities of governance" (Scott, Adams & Weschler, 2004). Through our empirical cases we aim tofigure out what kind of deliberation has or can be used in the context of public innovationmanagement and how it relates to more representative forms of democratic practices at the locallevel.We do not ask how to make deliberative governance a continuing practice, where the part of theanswer is how public administration creates an environment favorable for deliberation to take placeand blossom (Scott, Adams & Weschler, 2004), but how this type of governance can be used in thecontext of innovation management practices occurring in public organizations, in publicadministration. As examples of deliberative governance have been mentioned citizen deliberativecouncils (Atlee, 2008, 169), which can be for instance citizens juries, deliberative polls andconsensus conferences (Fung, 2003). According to Raisio et al. (2010) deliberative practices havenot yet established their position in the Finnish context, although several university- and NGO-driven examples can be identified.We speak about deliberation in a very specific context, and refer especially to deliberative mini-publics, as defined by Goodin and Dryzek (2006). They highlight the role of lay citizens and non-partisans in the forums, and discuss how to link this type of micro level democratic practices to the 10
  11. 11. macro5. Goodin and Dryzek define mini-publics as designs in which small groups of peopledeliberate together. They do not mean statistical representativeness, nor electoral representation.They mean that the diversity of social characteristics and plurality of initial points of view in thelarger society are substantially present in the deliberating mini-public. They see that socialcharacteristics and viewpoints need not be present in the same proportions as in the largerpopulation, nor need members of the mini-public be accountable to the larger population in the wayelected representatives are.2.5 The conceptual framework of demand- and user-driven innovation management in thepublic sectorDrawing on the metagovernance type of public sector innovation management and integrating itwith DCM and KM approaches and with deliberative governance approach we define in this paperinnovation management to occur at two distinctive but interrelated levels in the public sectorcontext. According to our understanding public organizations can use innovation management inorder to define their tasks and services. In this respect democratic innovations enhancingdeliberative forms of democracy beside of representative democratic models seem to be promising,to increase experiences of citizens in democratic legitimacy of public policies and publicorganizations. On the other hand public organizations can use innovation management in order toimprove their operational performance. These various levels of innovation management of publicorganizations and their focuses integrated with the ideas of metagovernance have been described inthe figure below.5 By macro Goodin and Dryzek (2006) mean the larger political system and its need for collective decisions. 11
  12. 12. Collaborative, Innovations Democratic Legitimacy interactive innovation arenas DEFINING Demanding Demanding end- demand user demand Suppliers, producers Public organization Customers, users, citizens Degree of supply Degree of demand integration integration ORGANIZING AND PRODUCING Collaborative, interactive innovation arenas Innovations Operational PerformanceFigure 1. The conceptual framework of demand- and user-driven innovation management of publicorganizations used in the studyBased on the given conceptual modeling we will focus on our empirical case studies on the bothangles of innovation management in the public sector in order to explore and experiment innovationmanagement practices in public organizations. The case examples of this study are described in thenext chapter.3 Research methods and preliminary empirical materialMethods used in this study are based on the idea of co-operative inquiry (Heron, 1998), whichmeans doing research with people. Here representatives of cities have been invited to be full co-inquirers with the initiating researchers and to become involved in operational decision-making.There is a requirement that they are committed to this kind of participative research design inprinciple, both politically and epistemologically. Ontologically the selected research methodologyaffirms a mind-shaped reality which is subjective-objective. It is subjective because it is onlyknown through the form the mind gives it, and it is objective because the mind interpenetrates thegiven cosmos which it shapes. Epistemologically the research methodology asserts the participativerelation between the knower and the known, and, where the known is also a knower, between 12
  13. 13. knower and knower. Knower and know are not separate in this interactive relation. Thus, in thisresearch we do research with people not on them or about them.At the first reflection phase the study was initiated by university researchers, and the cities ofMikkeli and Espoo were invited to participate in. The specific case examples were selected togetherwith the representatives of the municipalities. The city of Espoo established a project team wherecivil servants representing the various operational fields of the city are members. In the firstmeeting of the project team key concepts of the study were discussed and instructions were givenby researchers to prepare proposals to be concrete case examples. Three proposals were made to beselected as a case example in the study. The final decision about the case was done in the secondmeeting of the project team by using the following criteria: the coverage of all operational areas ofthe city, the strategic focus of the case according to the existing strategy of the city. The caseexample is described in the next chapter.As will be described in the next chapter, the city of Mikkeli diverges in many respects from the cityof Espoo. Therefore, also the case example to be selected in Mikkeli reflected its urgent issues, aswell acknowledged in the current strategy of the city. The case example was selected in the meetingbetween the initiating researchers and the representative of the city.Furthermore, in the first reflection phase a national seminar was organized where the researchdesign and case cities were presented and reflected with the same type of ongoing research projects.The discussions in the meetings with the city representatives were recorded by researchers asdescriptive notes. These notes were discussed in the next meeting in the case, where organized. Thedata was gathered in the national seminar in two forms, as descriptive notes and as ‘table notes’produced by working group members. Results of these discussions will be described in Chapter 5where preliminary findings of the study will be presented.Documentary research material has been gathered of case examples. Through this material moredetailed plan of the first action phase will be organized. Since the research aim is to experiment andexplore new innovation management practices and operational principles in two dimensions in thenext phase citizens’ juries will be carried out, as well as focus group –oriented ideation andinnovation arenas, where collaboration and interaction between various partners are enabled. 13
  14. 14. 4 Case examples4.1 The location and the size of the citiesTwo cities in Finland, Espoo and Mikkeli, are research partners as empirical cases in this study.They represent public organizations at the local level. According to Finnish law both the state andmunicipalities, as the cities as public organizations as, have the right to tax. Compared for instanceto Germany the regional level of public administration is rather weak.Espoo is located in Southern Finland, the Helsinki Metropolitan area, whereas Mikkeli is set inEastern Finland. The Helsinki Metropolitan Area has been one of the fastest growing city areas inFinland in terms during the recent decades, whereas Eastern Finland has lost inhabitants. The futureexpectations concerning the studies cities in terms of their population seem to vary between cities. Itis expected that the population will increase by 13,9 percentage by the year 2020, being now244 330 inhabitants. In Mikkeli it is not expected big changes in population in next ten years. Theamount of population in 2020 is expected to be almost the same, as in 2010 being 48 720inhabitants.Espoo has budgeted about 1,4 milliard euros for public services and public administration in the cityfor the year 2011. It means 1,3 percentage increase compared to the previous year. For the comingyears the city suspects not to increase its operational costs, although its population is expected toincrease by 3 450 inhabitants per year. According to Espoo’s strategy this ‘optimization problem’ issolved by the productivity growth.Mikkeli has budgeted about 340 million euros for the year 2011. In the previous year operationalcosts of the city were about 292 million euros. The actual economic performance in 2010 was betterthan expected in the operational and financial plan for the last year. There are not expectedsignificant changes in the amount of population in Mikkeli. The target of the city is to increase thenumber of inhabitants with 100 persons per year.4.2 The electronic service network in EspooIn Espoo the case to experiment and explore public innovation management focuses on theelectronic service network targeted for the citizens of the city. As a part of the service structure andnetwork the city aims to improve the electronic service network. In this study the aim means thatnot only information about services and their location or information about demand and suppliers isachievable through e-services and web-based solutions but also users, citizens and customers couldinnovate, get and even organize and produce e-services by themselves which they need and want toget through electronic service network. 14
  15. 15. Currently there are about 50 e-services available through the city’s electronic service network.Typically the services are information services, booking services, application services, feedback,reclamation and evaluation services, use of social media, electronic content, like electronic books,and electronic channels for citizens’ initiatives. The ideation and development of e-services and theelectronic service network is currently to a large extent done from the point of view of variousspheres of authority, and in the co-operation with service providers. A part of current e-serviceshave been developed based on the feedback and preferences of inhabitants, but the electronicservice network and its role in the whole service structure is not discussed in detail in democraticdecision-making bodies. However, co-operative ideation and development between various partiesis not well-established practice in the e-service development.4.3 The vital rural city – MikkeliThe city has expanded by its physical size and the number of inhabitants, since two municipalities,Anttola in 2001 and Haukivuori in 2007, were merged with the city of Mikkeli. These two parts ofthe city are physically in the longest distance from the city centre, and their image look more likecountryside than a traditional city image. The identified challenge, especially in terms of itspopulation in the city and in its various parts, as well as the challenge to organize and producepublic services, created a background for the case decision in Mikkeli. The case theme in Mikkeliwas formulated around the idea to increase the vitality of the city.Currently the population in the Haukivuori district is about 2100 inhabitants, and it is expected todecrease in coming years. The situation in the Anttola district is the same, the population beingcurrently about about 920 inhabitants. Public services of health-care, day care, comprehensiveschool, library, sheltered homes and waste management are available in the Haukivuori district.Furthermore, there is a joint service point of various public services in Haukivuori. Typically theseservices are information, application and cash services. Besides these public services there are alsopublic services of a library, a public veterinarian, supervision of building in the Anttola district.After the city fusions special district boards were established as a part of representative democraticsystem in the both districts. According to the existing ordinance the task of the boards is to developwelfare of inhabitants in the district, support and enhance development projects in the district,promote local activities and culture, and carry out the tasks of the board of the elementary school.Five of the listed tasks of the board are related to the school affairs, and thus the main emphasis ofthe working of the board is in these issues. Furthermore, the board gives statements of operationalprinciples of the earlier described service points and other significant municipal activities. It also 15
  16. 16. prepares a plan of available funds given by the municipal council and decides about aids targetedfor local development projects and activities which activate and serve local inhabitants, and fosterculture.The vitality is integrated with the issues of the number of population, as well as the coverage ofservice network. In this respect the question of concerning the districts and their boards is whether anew type of role for the board could be identified and how local inhabitants and other partners, likeprivate enterprises and associations, see their role as co-developers both in defining the coverage ofservices, as well as in their arrangement and production.5 Preliminary observations: current obstacles and identified enablersIn the first meetings with the city representatives the current status of innovation management inpublic organizations was discussed. It was acknowledged that innovation activities have beencarried out for a long time in city organizations but it seemed to be that structures, models andpractices of managing these practices at least at the city level were missing. The city representativespointed out that there are significant differences for instance between schools in terms of theirinnovativeness, and they argued that these differenced can be explained by missing innovationmanagement.Clear obstacles for innovation activities and their management in public organizations wererecognized. One of them is the practice of annual budgeting, which creates frames which arefollowed in a regimented way. There are too little international and national co-operation betweenpublic organizations and other type of organizations. Especially at the national level cityrepresentatives argued that the current structure between municipalities and in relation to the stateprohibit well-functioning co-operation. Currently innovation activities are poorly linked withstrategic management. Existing organizational structures do not support innovation activities widelyin the organization. From the point of view of the innovation cycle new ideas come up but there areproblems to further develop them. Furthermore, attitudes towards co-creation and co-implementation seem to be negative. The city representative called the phenomenon like a ‘notinvented here’ attitude.A kind of basic dilemma in the embedding of the user-driven approach was recognized to be inattitudes and culture. It was claimed that the new approach requires a new type of thinking. Insteadof calling for change and forcing pressure on decision-makers everyone should see him- or herselfas a resource. 16
  17. 17. Economic scarcity seems to be one driver for public innovations. This relates especially to theoperational performance of public organizations. Furthermore, in cases where new premises havebeen planned and constructed they have also opened a way to plan and develop public servicesstemming from not so traditional perspectives. However, there seems to be many factors whichcould create preconditions for innovations and innovation activities in the public sector context, likedevelopment of innovation capabilities, constructing innovation dynamics inside of publicorganizations and towards external partners, systematic evaluation procedures of ideas andinnovations, the involvement of personnel, participation of various social groups. These all seems tobe requirements for innovation management and its practices, which will be further experimentedand elaborated through empirical case studies.6 ConclusionsTo sum up, I have aimed in this paper to set up a conceptual framework to experiment and exploreinnovation management, its practices and operational principles in the public sector context. Basedon the re-defined understanding of innovation in the public sector and drawing on deliberativegovernance and management studies the paper discusses the specific features of public innovationmanagement in two directions. Firstly, innovation management in the public sector context can bediscussed in terms of increasing operational performance of public organizations throughinnovations. Secondly, since public tasks are dominantly defined by (more or less) democraticprocesses, innovation management was defined in this paper also in relation to the question ofdemocratic legitimacy. By integrating these viewpoints and by emphasizing the large interpretationof the concept of user the ongoing study wants to highlight and discuss public sector reforms inrelation to citizens’ experiences of their legitimacy. I argue in this paper that recognized societaland economic ‘wicked’ problems cannot be resolved relying on traditional representativedemocratic practices but new ways to discuss and tackle these problems with all type of users areneeded. In this respect developing innovation management, which recognizes the role of demandand users not only by voting and giving a voice but also in terms of cooperative and collaborativepartners, in the public sector and in public organizations could be one answer to the current societaland economic needs. Permanent and systematic innovations activities in the public sector requiremanagement practices which support them, too.As the preliminary empirical findings show, innovation activities have been carried out in publicorganizations but systematic structures, practices and operational principles of innovationmanagement seemed to be missing. Furthermore, current innovation activities seemed to highlight 17
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