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Licence to Innovate Revisited: How Government Can Reward Risk

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LICENCE TO INNOVATE REVISITED How government can reward risk 24.5WP WORKING PAPER JUNE 2016 24.5
LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 1 CHAPTER 1 The Institute for Competitiveness & Prosperity is an independent not-for- profit organization that deepens public understanding of macro and microeconomic factors behind Ontario’s economic progress. Research by the Institute is intended to raise public awareness and stimulate debate on a range of issues related to competitiveness and prosperity. It is the aspiration of the Institute to have a significant influence in increasing Ontario and Canada’s competitiveness, productivity, and capacity for innovation. We believe this will help ensure continued success in creating good jobs, increasing prosperity, and building a higher quality of life. We seek breakthrough findings from our research and propose significant innovations in public policy to stimulate businesses, governments, and educational institutions to take action. The Institute was formerly the research arm of the Task Force on Competitiveness, Productivity and Economic Progress established in 2001 by the Ontario Premier, and led by Roger L. Martin. The Task Force completed its work at the end of 2014. The Institute is now advised by Ontario’s Panel for Economic Growth & Prosperity, led by Tiff Macklem. Comments on this report are welcome and should be directed to the Institute for Competitiveness & Prosperity. The Institute is funded by the Government of Ontario through the Ministry of Economic Development and Growth. Copyright © June 2016 The Institute for Competitiveness & Prosperity ISBN: 978-1-927065-19-8
2  INSTITUTE FOR COMPETITIVENESS & PROSPERITY EXHIBITS EXHIBIT1 Government innovation defined 13 EXHIBIT2 Three types of barriers to government innovation 14 EXHIBIT3 Five reasons to enhance government innovation 15 EXHIBIT4 Three costs of government innovation 16 EXHIBIT5 Government should build lattices, not ladders 21 EXHIBIT6 Hack it 22 EXHIBIT7 Help wanted 23 EXHIBIT8 Four criteria to evaluate government innovation 28
LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 3 CONTENTS Foreword & Acknowledgements 4 Executive Summary 6 12 CHAPTER 1: A FRAMEWORK FOR GOVERNMENTINNOVATION Revised definition of government innovation 13 Barriers to government innovation 14 Benefits of government innovation 15 Government innovation comes at a cost 15 18 CHAPTER 2: STORIES ABOUTGOVERNMENTINNOVATION Enhance government innovation by boosting design 19 Enhance government innovation by improving processes 20 Enhance government innovation by supporting implementation 23 26 CHAPTER 3: ACCOUNTING FOR GOVERNMENTINNOVATION Innovation requires accountability 27 Develop reporting tools 27 Create a monitoring body 28 Determine assessment criteria 28 30 CHAPTER 4: RECOMMENDATIONS End Notes 36 Previous Publications 37
4  INSTITUTE FOR COMPETITIVENESS & PROSPERITY Jamison Steeve Executive Director Institute for Competitiveness & Prosperity ON behalf of Ontario’s Institute for Competitiveness & Prosperity, I am pleased to present our 24th and a half Working Paper, Licence to innovate revisited: How government can reward risk. Yes. You read that correctly. This is a half paper, in the sense that it is a continuation of our 24th publication. That paper, dealing with how government could be more innovative, contended that the public sector needed to be iterative, more willing to take risk, more willing to prototype. So, we decided to write another version of our paper in that spirit. After the release of Working Paper 24, we went back out to our audience, including government, the broader public sector, academia, and the private sector. We asked them for their input and feedback. What did we get right? What did we get wrong? What subjects did we miss the first time through? For us, the process was refreshing and illuminating. It allowed us to look at our own work critically and make improvements. Most think tanks are unwilling to turn back so quickly on a subject. We benefitted from such a strategy immensely. What we learned from the feedback was that we got the big things right. Our major recommendations remain relatively in tact. Much of the feedback from government led us to further examples of innovation already happening. This fact seems to lend credence to Tony Dean’s comment that the public sector has more licence to innovate than they know. Surprisingly, and disappointingly, the strongest feedback surrounded our suggestion to dedicate one day of Question Period wherein the opposition holds the government to account on innovation. The hope was that the tone would be less acrimonious, and more about learning about mistakes made on the road to innovation and what further steps could be taken. Continuing along the road to innovation FOREWORD & ACKNOWLEDGEMENTS
LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 5 Most had little faith that our elected officials had the capacity to have that conversation on the floor of the Legislature. Many felt that the tone of Question Period is too soured and the goal is to “score political points” rather than improve public policy. That led some to suggest a special committee for the subject of innovation, or a third party body of the Legislature. As a person who believes in the supremacy of the Legislature and the capacity of our elected officials, we have decided to keep the recommendation in. Maybe it is more hopeful than rational, but having one hour of one day at Queen’s Park governed by a rational discussion about innovation and learnings should not be too much to ask of our elected officials. As always, and explicitly in this paper, we are thankful for the feedback from our audience. In particular, we would like to thank Carrie Wright from Wilfrid Laurier University who shared survey results on managers’ experience with innovation in the Ontario Public Service. We are also grateful for the funding support from the Ontario Ministry of Economic Development and Growth. We look forward to sharing and discussing our work and findings with all Ontarians, and especially the policy community. We hope that this paper makes a contribution to the increasingly important dialogue around government innovation. All comments and suggestions are welcome. “It is common sense to take a method and try it; if it fails, admit it frankly and try something else. But above all, try something.” FRANKLIN D. ROOSEVELT
6  INSTITUTE FOR COMPETITIVENESS PROSPERITY EXECUTIVE SUMMARY LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK I n February 2016, the Institute for Competitiveness Prosperity released its 24th Working Paper, Licence to innovate: How government can reward risk. This discussed why government should innovate and how to do it.
LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 7 THE INSTITUTE received an overwhelming positive response to this work. People wanted to know how they could contribute to the conversation and hear more stories about government innovation. This Paper does just that. This Paper revises and expands on Licence to innovate by incorporating perspectives from practitioners within and outside of government. These voices include: Karim Bardeesy Deputy Principal Secretary, Office of the Premier Peter MacLeod Co-founder and Principal, MASS LBP Sandford Borins Professor, University of Toronto Greg Orencsak Deputy Minister, Treasury Board Secretariat Jonathan Craft Assistant Professor, University of Toronto Karen Pitre Special Advisor to the Premier on Community Hubs, Cabinet Office Kevin French Associate Deputy Minister, Ministry of Government and Consumer Services Jay Porter Director, Cabinet Office Karl Frost Manager, Cabinet Office Donna Ratchford Director of the Policy Innovation Platform, Ryerson University Josh Hjartarson Vice President Public Sector, KPMG Sean Twyford Director, Ministry of Children and Youth Services Julian House Behavioural Scientist, Treasury Board Secretariat Blaine Woodcock Public Strategy and Innovation, Deloitte Lauren Hunter Head of IN.spire Innovation Hub, Natural Resources Canada Judith Wright Consultant to the Ministry of Children and Youth Services on the Collective Impact for Disconnected Youth Sheldon Levy Deputy Minister, Ministry of Advanced Education and Skills Development This project was part of a new process for the Institute, and we are grateful to those who shared their insights. In the spirit of innovation, we realize our work can be modified and are open to further discussion. Change is not possible without you. We look forward to continuing the conversation.
8  INSTITUTE FOR COMPETITIVENESS PROSPERITY GOVERNMENT INNOVATION IS IMPROVING DESIGN, PROCESSES, AND IMPLEMENTATION OF PUBLIC SERVICES TO ACHIEVE A STATED GOAL. THIS MUST BE ROOTED IN A CULTURE OF COLLABORATION, A FOCUS ON END USERS, AND EXECUTIVE LEADERSHIP THERE ARE THREE BARRIERS ASSOCIATED WITH GOVERNMENT INNOVATION… ...AND FIVE BENEFITS Design Focus on users Culture of collaboration Government innovation ImplementationProcess Executive leadership Organizational realities Cultural practices EFFICIENT USE OF RESOURCES EFFECTIVE POLICY GOVERNMENT LEGITIMACY CIVIC ENGAGEMENT HUMAN RESOURCE MANAGEMENT PERMISSION GRANTED Accountability framework GOVERNMENT INNOVATION IS IMPROVING DESIGN, PROCESSES, AND IMPLEMENTATION OF PUBLIC SERVICES TO ACHIEVE A STATED GOAL. THIS MUST BE ROOTED IN A CULTURE OF COLLABORATION, A FOCUS ON END USERS, AND EXECUTIVE LEADERSHIP THERE ARE THREE BARRIERS ASSOCIATED WITH GOVERNMENT INNOVATION… ...AND FIVE BENEFITS Design Focus on users Culture of collaboration Government innovation ImplementationProcess Executive leadership Organizational realities Cultural practices EFFICIENT USE OF RESOURCES EFFECTIVE POLICY GOVERNMENT LEGITIMACY CIVIC ENGAGEMENT HUMAN RESOURCE MANAGEMENT PERMISSION GRANTED Accountability framework
LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 9 DESIGN IMPLEMENTATION PROCESS Ontario's Licence Plate Sticker Renewal Institute for Public Administration of Canada Awards Penn Medicine's Innovation Tournament Ontario’s Open Government Initiative Toronto's Participatory Budget Adobe’s Kickbox Initiative Ontario's Community Hubs Ontario’s Environmental Registry United Kingdom's Employment Zones US’s Small Business Administration BC’s Employment Program Ontario's ServiceOntario Centres Ontario's Local Poverty Reduction Fund Ontario's Innovation Procurement Initiative BUTWE NEED TO OVERCOME THE COSTS DID YOU KNOW ABOUTTHESE EXAMPLES OF GOVERNMENT INNOVATION? WE PROPOSE THIS ACCOUNTABILITY FRAMEWORK Ontario's Gift of Life Consent Form Canada’s Carrot Rewards Program United Kingdom’s Community Budgets Brookfield’s Policy Hacks 1 Comprehend, articulate, and reflect on an issue. Context investigation Tally the financial and human resources involved in innovation. Input itemization Determine the outputs of innovation, or what was produced. Output identification Review the overarching results of innovation. Outcome inspection 2 3 4 REWARD DEVELOP ALLOCATE
10  INSTITUTE FOR COMPETITIVENESS PROSPERITY Integrate innovation into government activity to counter the risk-averse culture Ontario should expand the Program Review, Renewal, and Transformation process to include innovation. Establishing innovation hubs and labs within government’s central organizations presents other opportunities. Further, Ontario should build innovation into ministerial mandate letters, integrate innovation into organizational objectives, and embed innovation into core processes. This requires a whole-of-government approach. Revise funding frameworks to boost design Ontario should allocate resources across missions (not by ministries), aligning ministerial funding cycles along the way. In addition, government should centralize innovation funds. Central agencies, namely Cabinet Office, the Ministry of Finance, and Treasury Board Secretariat should champion this work. Apply behavioural insights to improve design Ontario should expand the number and scope of policy experiments conducted by its Behavioural Insights Unit. Celebrating this work internally (through Topical) and externally (through News Releases and social media) is also a must. This is a role for Ontario’s Policy Innovation Leadership group. Advance human resource management to strengthen processes Ontario should strengthen human resource management through gamification and employee awards. Hosting an OPS-wide innovation tournament, awarding winners with job opportunities is one idea. Partnering with organizations to celebrate innovators is another. Further, Ontario should attribute and recognize public servants’ work within and outside the office. Treasury Board Secretariat, who is centralizing human resources, should play a leadership role. HOW TO ENHANCE GOVERNMENT INNOVATION
LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 11 Modify the quality and scope of engagement to support processes Ontario should develop the institutional frameworks and leadership talent to engage the public. This can be done by mandating the public release of hackathons and mind labs. Broadening job responsibilities of bureaucrats working in communications departments, along with evaluating efforts to engage the public, are also required. Lastly, the Institute encourages Ontario to undertake its own participatory budget projects, especially in publicly funded organizations. Ontario’s Treasury Board Secretariat and Ministry of Finance should play leadership roles. Revitalize relations between government and delivery agencies to upgrade implementation Ontario should view itself as a commissioner of services. Part of this involves incorporating innovation into government-wide procurement; this is work for Ontario’s Ministry of Government and Consumer services. Government must further adopt a payment-by-outcomes framework and organize delivery agencies’ work across community hubs. Partnerships between Ontario’s Treasury Board Secretariat and the Community Hub Secretariat are worth exploring. Streamline services to refine implementation Ontario should convene province-wide community planning to build on the work of community hubs. In addition, the province should proceed with the Collective Impact for Disconnected Youth, communicating successes and failures. This should be a government-wide effort, led by Cabinet Office. Monitor government innovation to enhance accountability Ontario should account for innovation by tasking an external third party body to monitor government activity. The Institute is ready to report on government activity and third party bodies of the Legislature should do the same. On the political front, elected officials should engage in open and honest dialogue. Allocating Standing Committee meetings or creating an external review board to account for government innovation is a start. Changing the tone of Question Period is a must.
12  INSTITUTE FOR COMPETITIVENESS PROSPERITY CHAPTER 1 T he Institute sought external opinion on its definition of government innovation. Comments were also provided on the barriers, benefits, and costs associated with an innovative public service. In response, the Institute amends its framework for government innovation in Ontario. A FRAMEWORK FOR GOVERNMENT INNOVATION
LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 13 instruments proves the point, as it influences information pro- vision, problem-solving capacity, and policy responses.1 That said, the need to focus on users requires clarification – users include clients, stakeholders, bureaucrats, and political staff. The Institute is also adding a third foundational aspect to what is required for government innovation: executive leadership. Improvements in design, process, and implementation necessi- tate senior managers who believe in and champion change. Licence to innovate did not explicitly mention the scope or orchestrators of government innovation. It should have. The magnitude of innovation can range – it can mean big improve- ments (such as adopting a new problem-solving methodology) or small changes (such as revisions to a form). Moreover, inno- vation can occur at the individual level or within a team, and is not restricted to either junior or senior staff at the political or bureaucratic levels. In fact, managers in the Ontario Public Service (OPS) report that the majority (41 percent) of success- ful innovations originate from staff ideas.2 Revised definition of government innovation In Licence to innovate: How government can reward risk, the Institute defined government innovation as improvements to policy design, processes, and implementation, all built on a culture of collaboration that focuses on end users. The Institute’s definition also stressed that innovation must achieve a stated goal that does not have to be realized. In other words, innovation is not an end in and of itself, and ‘failed’ innovations can fuel ‘successful’ innovations. The Institute is revising the language of its government inno- vation definition (Exhibit 1). External opinion suggested that attaching the word ‘policy’ to the three aspects of the definition was both overly broad and too narrow. ‘Policy’ means some- thing different to different people – incorporating this term creates ambiguity. Moreover, focusing on ‘policy’ detracts from the multiple functions of government, such as operations, communications, and IT. With regards to the definition’s foundational aspects (culture of collaboration and focus on users), external opinion noted this requires a culture change and perspective shift. The Institute agrees – innovation is an outlook. The digitization of policy Design Executive leadership Focus on users Culture of collaboration Government innovation ImplementationProcess EXHIBIT 1 Government innovation defined “Innovation doesn’t require a big change. Innovation requires trying something new.” Karl Frost MANAGER Cabinet Office
14  INSTITUTE FOR COMPETITIVENESS PROSPERITY “If innovation means trying something that hasn’t been done before, then the possibility of failure has to be accepted. Therein lies the value of combining innovation with rigorous evaluation methodologies, like randomized controlled trials. These allow you to fail fast and discriminate between winning and losing ideas quickly and accurately.” Julian House BEHAVIOURAL SCIENTIST Treasury Board Secretariat Given the above considerations, the revised definition reads as follows: Government innovation is improving design, processes, and implementation of public services to achieve a stated goal, and requires a culture of collaboration, a focus on end users, and executive leadership. Barriers to government innovation There are three barriers to government innovation: organi- zational realities, cultural practices, and the accountability framework (Exhibit 2). These influence government’s risk tolerance – only 18 percent of OPS managers feel senior management is fully willing to take risks to support innova- tion.3 Organizational barriers include the sheer size of public institutions, lack of leadership, disintegrated operations, and onerous layers of approvals. Cultural barriers – an overem- phasis on targets, managerial resistance, lack of incentives, and uneven power relations – further obstruct innovation. Finally, the framework within which government operates bars new practices. Short election cycles, along with the desire for accountability and transparency, all encourage government to pursue makeshift, low-risk projects. External opinion noted two other obstacles to government innovation. Internal capacity – or a lack of staff with key skill sets – is another cultural barrier that hinders opportunities for innovation. Federalism, an aspect of the accountability framework, additionally bars innovation. Innovation requires collaboration, and divided responsibility creates uncertainty over which party is responsible for innovating.4 • Large institutions • Decentralized IT systems • Disintegrated budgets • Onerous approvals Organizational realities • Target emphasis • Managerial resistance • Lack of incentives • Unbalanced stakeholder relations • Internal capacity Cultural practices • Short election cycles • Accountability • Transparency • Federalism EXHIBIT 2 Three types of barriers to government innovation Accountability framework
LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 15 Benefits of government innovation There are five benefits of innovative gov- ernment (Exhibit 3). First, it can improve the effectiveness of public policy, or how well policy achieves its intended objective. A second benefit is greater efficiency of public policy, or allocating fewer resources toward an objective. Third, an innovative govern- ment can act as a human resource strategy by attracting, inspiring, and retaining talent. Introducing new ideas can, moreover, increase civic engagement – a fourth benefit of govern- ment innovation. Lastly, when public services are effective and efficient, and users provide input into the policy process, this can promote a government’s legitimacy. The Institute broadens its understanding of effectiveness based on external opinion. Innovation can create spillover benefits. For example, civic engagement can generate effective policy which can, in turn, increase a government’s legitimacy, and vice versa. This phenomenon makes it difficult to predict and measure the benefit associated with a given innovation. However, spillover benefits garner greater support for government innovation. Government innovation comes at a cost In Licence to innovate, the Institute identi- fied three costs of government innovation. The first, and most often cited, is risk. This refers to the sense of uncertainty the public service feels when taking new approaches and introducing different voices. A second cost of government innovation is leadership – consistently and effectively championing an innovation-driven agenda takes time and energy. A third cost of government innovation is securing adequate financial and human resources. In a context of fiscal austerity, investing resources can be difficult to justify, yet these are often required to pursue innova- tive projects. EFFICIENT USE OF RESOURCES EFFECTIVE POLICY GOVERNMENT LEGITIMACY CIVIC ENGAGEMENT HUMAN RESOURCE MANAGEMENT PERMISSION GRANTED EXHIBIT 3 Five reasons to enhance government innovation
16  INSTITUTE FOR COMPETITIVENESS PROSPERITY members and senior leadership, both of whom may be reluctant to allocate financial and human resources to an innovative project. In Licence to innovate, the Institute defined government innovation and described the associated benefits, barriers, and costs. Based on external opinion, the Institute revised its definition, expanded the range of benefits, and noted an additional barrier of government innovation. Concrete ways to overcome costs of government innova- tion were also provided. External opinion asked how Ontario could overcome these costs (Exhibit 4). To counter the risk-averse culture, government should build innovation into organizational priorities and consistently communicate them at the political and bureaucratic levels.5 Building innovation into ministerial mandate letters is one way to achieve this on the political front. Within the bureaucracy, managers should integrate innovation into their organizational objectives and priorities at the divisional, branch, and unit levels. Leaders should further celebrate success and learn from failure – this can spearhead change and model best practices. Strengthening leaders’ capacity and willingness to innovate (through mandatory innovation training and performance assessments) is one way to do this. Formal and casual recognition and reward of new ideas is another way to moti- vate and inspire public servants. Finally, team meetings, divisional newsletters, and intranet portals are some forums where leaders can communicate opportunities for innovation. About 92 percent of OPS managers feel there are insufficient resources to develop an innovation.6 To overcome the third cost of government innovation – resources – elected officials and policymakers must adopt a long- term horizon and holistic thinking. Doing so can generate greater buy-in from opposition EXHIBIT 4 Three costs of government innovation Integrate innovation in ministerial mandates and organizational objectives Incentivize risk-taking within the public service Strengthen leaders’ capacity and willingness to innovate Incorporate innovation in internal communications Streamline public sector innovation funds Prioritize long-term outcomes REWARD DEVELOP ALLOCATE
LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 17 “No one should ever be told, ‘That’s not how we do things here.’” Jay Porter DIRECTOR Cabinet Office “Part of being successful innovators means testing hypotheses, scaling those that work, and continuing to test outcomes.” Greg Orencsak DEPUTY MINISTER Treasury Board Secretariat “Government can act as a platform for policy innovation. One strategy is to enable policymakers, stakeholders, and the general public to co-generate new solutions through low-risk, innovative problem solving approaches.” Donna Ratchford DIRECTOR OF THE POLICY INNOVATION PLATFORM Ryerson University
18  INSTITUTE FOR COMPETITIVENESS PROSPERITY STORIES ABOUT GOVERNMENT INNOVATION C ase studies provide an opportunity to share and learn from best practices. Here, the Institute highlights additional examples of government innovation within and outside of Ontario. These stories can further the discourse as well as incite and inspire change in the design, process, and implementation of public services. CHAPTER 2
LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 19 Enhance government innovation by boosting design The first pillar of the Institute’s government innovation definition focuses on design, or improvements to government outputs. External opinion emphasized the expansive literature on design and asked for clarification. Design is a problem-solving activity – it means developing plans to achieve an outcome in a given environment.7 Design processes involve developing guidelines about particular prod- ucts and services, as well as outlining potential interactions and relationships.8 Although concepts and practices can vary, design considerations typically occur early on (specifically during problem identification), and influence process and implementation.9 Revise funding frameworks Government should revise funding frameworks to boost design. This means allocating resources according to policy objectives, not budget lines. Mission-driven budgeting does just that. External opinion questioned whether mission-driven budget- ing obscures accountability – what if resources are dedicated toward an activity tangent to a given mission? The Institute agrees that this is an important consideration, and maintains that mission-driven approaches actually support accountabil- ity for results. If resources are allocated based on objectives, it is easier to assess whether these resources effectively and efficiently achieved the desired outcomes. (See What’s mine is yours). Apply behavioural insights Innovation is more than designing better services; it means getting ahead of users. Behavioural economics looks to better understand how people make decisions by fusing traditional economic models with psychological insights. This approach to problem-solving is being applied internationally and can boost government innovation. For example, Ontario’s Behavioural Insights Unit conducts randomized control trials that change the context in which individuals make decisions. The recent pilot with a user-friendly Gift of Life Consent form, as profiled in Licence to innovate, demonstrates their success. Other stories CASE STUDY: What’s mine is yours Ontario is adopting mission-based approaches through the Local Poverty Reduction Fund. Three reasons inspired the creation of this program. First, government wanted to improve the outcomes of those most affected by poverty. Second, Ontario, was looking to make evidence-based decisions. Third, a stringent fiscal context and uncertain economic environment meant that public resources needed to be evidence-based and effective. A competitive application based program, the Fund financed 41 organizations in the 2015 funding round.10 Recipients include the Tungasuvvingat Inuit ($281,000 to develop and evaluate a culturally appropriate program to reduce poverty among Ontario’s urban Inuit) and CHATS ($205,000 to develop and evaluate a program that helps vulnerable seniors).11 The Fund provides $50 million over six years, and the Ontario Trillium Foundation supports organizations submitting proposals and monitors funding agreements.12 Outcomes of this initiative, especially as they relate to delivery agencies’ understanding of evaluation, are to be analyzed and shared in the short- and medium-terms. Results and best practices will be used to inform and influence long-term policy. Unfortunately, this instance of mission-based funding is signifi- cantly outweighed by Ontario’s general approach of assigning public resources according to ministry and program lines. This means that government is making its work harder. The recent Cabinet shuffle, which created 30 provincial ministries, proves the point. Siloed resources result in duplicate efforts and lost opportunities to measure results. Moreover, mission-based models organically yield innovative ideas and propagate information across local communities – Ontario is missing out.13
20  INSTITUTE FOR COMPETITIVENESS PROSPERITY CASE STUDY: Would you like a sticker? In 2013, ServiceOntario began renew- ing licence plate stickers online, but uptake was low. Three reasons led to the Behavioural Insights Unit’s involvement. First, a disconnect between citizen expectations and behaviour suggested an alternative approach was warranted. Second, government committed to delivering more efficient services and was willing to experiment. Third, ServiceOntario’s senior leadership directed staff to consult the Behavioural Insights Unit. Research revealed several barri- ers to online service adoption, and a pilot project was developed to shift behaviour.14 Over eight weeks, ServiceOntario mailed 626,212 licence plate renewal notifications. In addition to the traditional form, three conditions were tested: • Condition 1: introduced new messag- ing, highlighted in colour • Condition 2: added five reasons to renew online • Condition 3: added five reasons to renew online and time lost from in-per- son renewal The pilot was a success – 13,057 more licence plate stickers were renewed online. The second condition had the greatest effect as online renewals rose by 14.6 percent.15 Plus, it did not incur any additional costs. In fact, the pilot saved government about $28,053 by reducing in-person transactions. Based on these results, the government imple- mented a revised form in 2016, and outcomes have remained consistent. Government should celebrate this success. Did you know about Ontario’s Behavioural Insights Unit or their work before reading this? The Unit shares their reports internally through the intranet and has begun publishing public reports, but this is insufficient. The Institute encourages government to further capacity building and appetite for behavioural economics. Celebrating the Behavioural Insights Unit’s work internally through the weekly news- letter, Topical, and externally through Ontario News Releases and social media can achieve this.16 Greater coordination with Cabinet Office can better leverage the Unit’s work. are worth sharing. (See Would you like a sticker?). Yet behavioural economics can only go so far. Focusing on users is not novel – design think- ing does just that! Ontario should capitalize on other opportunities, like simulation activities, that focus on users of public services. Doing so can help answer questions like, How can government forms be optimally designed? How can public spaces be more accessible? and What standards are required to balance government’s objectives and stakeholder wants? Actually experiencing a policy can generate new ideas and foster an appreciation for users’ needs. Enhance government innovation by improving processes Process innovation is the second dimension of government innovation. This means improving internal capacity and external engagement. These elements have undoubtedly been shaped by the changing nature within the OPS. As research, delivery, and evaluation of public services are contracted out, bureau- crats’ abilities narrow and the nature of conversation with those outside government changes. Advance human resource management The OPS is a diverse workforce. This is cele- brated internally and is formally recognized as one of Canada’s Top 100 Employers. When it comes to innovation, diversity is a strength. It means that different people with various experiences bring multiple perspectives. Government needs to capitalize on this. A recent survey of OPS managers revealed that only 19 percent feel there is an established system to evaluate and develop innova- tive ideas forwarded by staff.17 In addition, only 19 percent feel senior decision-makers support trial-and-error testing of new ideas.18 Leveraging workers’ skills, abilities, knowl- edge, and experiences for innovation is a must. “We need a much stronger professional orientation toward people and innovation. More human processes and policies might flourish.” Peter MacLeod CO-FOUNDER AND PRINCIPAL MASS LBP
LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 21 Assistant Deputy Minister Analyst Manager Director Deputy Minister EXHIBIT 6 Government should build lattices, not ladders External opinion further noted that the OPS is an aging work- force – the demographic profile is such that leaders and their successors are retiring simultaneously. This has implications on how government works. Rather than a top-down approach, leadership should model a lattice structure – interlacing to allow for horizontal and vertical dialogue (Exhibit 5). Licence to innovate reviewed human resource practices in the OPS, namely recruitment, training, and management. Ways to improve internal information sharing were also discussed. External opinion showed great interest in these topics and recognized that human resource practices in the OPS are due for renew. (See Invite others to play.) CASE STUDY: Invite others to play Work can be frustrating, difficult, and, sometimes, monotonous. But it can also be fun, especially with people looking to achieve similar objectives. Only 30 percent of OPS managers believe staff are motivated to think of new ideas and take part in their development.19 This is why the public sector should incorporate gamification – applying elements of games like rules, healthy competition, and points – into its work. An example from Penn Medicine at the University of Pennsylvania proves the point.20 The organization was looking for new ideas to improve patient satisfaction. Ideation was, however, typically a top-down approach. Penn Medicine realized they needed fresh thinking from front line staff who had an intimate understanding of patient experiences. In response, the hospital launched an American Idol-style innovation tournament. New ideas competed with one another in numerous vetting rounds; only the strongest and most promising ideas made it to the finals. And it worked! Five thousand employees generated more than 1,700 new sugges- tions ranging from patient service kiosks in the waiting room to a concierge that fills patient prescriptions. The experience of Penn Medicine highlights two lessons for OPS-ers. First, gamification ignites innovation. Second, people want to be engaged, they want to be asked to make a difference. As demonstrated by an analysis of Harvard Kennedy School Awards, formal recognition can further incentivize innovation.21 The government of Ontario currently offers Amethyst Awards to recognize excellence within the public service. However, these are not overtly dedicated toward innovation and do not recognize participation in broader public activities. In addition, the existence or recipients of Amethyst Awards are not well-communicated outside the public sector ‒ the latest government acknowledge- ment was in 2009. Ontario should take note from the Institute for Public Administration of Canada (IPAC), who offers and celebrates a variety of awards for junior and senior public servants.22 In addi- tion to drawing from existing networks, awards from an external body may be perceived as neutral. Innovation also requires people to share information and learn. The OPS does provide opportunities to move within, but not outside of, the bureaucracy. Government should encourage staff to explore professional opportunities within the public and private sectors (such as delivery agencies and think tanks). Ontario once offered secondments for academics, but this program has been terminated.23 “If we fail, it means systems are broken – there are insufficient incentives for providers to collaborate to improve outcomes.” Judith Wright CONSULTANT TO THE MINISTRY OF CHILDREN AND YOUTH SERVICES ON THE COLLECTIVE IMPACT FOR DISCONNECTED YOUTH
22  INSTITUTE FOR COMPETITIVENESS PROSPERITY Modify engagement ‘Wicked’ policy challenges cannot be solved by government alone – there is a need to bring in different voices to generate new ideas. For government, this means acting as a platform for innovation, or creating the conditions for new ideas to prosper. (See Don’t hate, participate). The government of Ontario is committed to improving public engagement, as demonstrated by the Open Government Initiative, Situation Tables, Environmental Registry, Red Tape Challenge, and public consultations. In addition, the prov- ince has been selected to participate in the Open Government Partnership’s pilot program to develop and fulfill commitments with civil society and organizations. Unfortunately, efforts are not always genuine. Data sets provided through the Open Government Initiative are sparse and difficult to navigate. In addition, engagement activities are sometimes perceived or operate as ‘window dressings.’25 In fact, only 7 percent of OPS managers report clients and citizens are actively involved in the design or planning of innovations.26 Worse, engagement activities are often one-sided – govern- ment presumes it knows best by proposing ideas and asking for input. A good example of this is Ontario’s 2016 Budget consultations. About 10 percent of votes (5,412 out of 53,402) suggested amalgamating Catholic and public school boards – Budget 2016 was silent on this.27 Non-governmental actors have taken a lead. Hackathons – which convene public and private sector actors to assess, solve, and present solutions to everyday challenges – are one example (Exhibit 6). The Brookfield Institute for Innovation Entrepreneurship has hosted several hackathons, ranging from improving accessibility to combating climate change.28 Ontario has supported some events, but it is imperative that public institutions are able and prepared to deliver on proposed solu- tions. Moreover, senior leaders must have an understanding of and willingness to champion such initiatives. Legislation and senior management evaluations are tools to make this happen. CASE STUDY: Don’t hate, participate Participatory budgeting (PB) is an engagement process where people propose and vote on projects funded from a pre-deter- mined budget. In 2015, the City of Toronto launched a PB pilot in three areas: Ward 33 (Don Valley East); Oakridge in Ward 35 (Scarborough Southwest); and Rustic in Ward 12 (York South- Weston).29 Seven improvement projects, totalling $435,000, were selected. Moreover, participants reported high levels of sat- isfaction; they also expressed intent to participate in future PB activities and recommend others do the same.30 The outcomes associated with the pilot, and the potential to implement the approach more broadly in Toronto, have yet to be assessed.31 There are several benefits associated with PB. First, it creates a sense of ownership and increases civic engagement. Second, community members may have a better sense of local challenges and can thereby propose solutions that better address these issues. Third, people get to know and work with city staff and elected officials. PB’s shortcomings should not be overlooked but can be overcome. Skewed community representation is one concern. This can be countered by using government’s coer- cive powers to mandate representation from diverse groups. Moreover, outreach can go a long way to ensure all members of the community feel welcome and their interests represented. A second critique of PB is that it leads to suboptimal outcomes since the general public, not policy experts, make decisions. This, however, assumes that government always has the best answer. This is why government should equip the public with adequate information about a problem and the impact of proposed solutions. Ontario should incorporate PB, especially in provincially funded organizations such as post-secondary institutions and hospitals. PB requires resources – staff to engage the public and money to fund projects. Broadening job responsibilities of bureaucrats working in communications departments would free up human capital to modify engagement. Source: Brookfield Institute for Innovation + Entrepreneurship. EXHIBIT 6 Hack it
LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 23 CASE STUDY: Two-way transfer In 2013, Ontario’s Ministry of Government and Consumer Services developed an Innovation Procurement Initiative based on four elements: collaborating within and outside government; training providers and procurement professionals; assessing alternative procurement methods; and building leaders’ capacity to drive innovation and procurement competency. Implementation innovation requires more than developing alternative procurement models. For government to truly act as a commissioner of services, it must reconceptualise its contractual relationships with delivery agencies. Payment- by-outcome is a performance management framework that does this. Delivery agencies receive funding based on the results they achieve, not pre-set targets.32 This approach can reduce service providers’ administrative burden and promote learning; it can also allow for greater flexibility and save public resources.33 Moreover, payment-by-outcome shifts accountability from processes to outcomes, altering government’s role from regulation-makers to standard-enforcers. As a result, the relationship between government and delivery agencies changes which, in turn, necessitates a culture shift. Although measuring outcomes can be difficult (results cannot always be observed and disentangled from other effects), developing standards and incentives to capture desired outcomes is helpful.34 Employment Zones, a payment-by-outcome program for skills retraining in the United Kingdom, shows this is possible. The program helps the unemployed find sustainable employment (measured as the number of jobseekers achieving 13 and 26 weeks in continuous work).35 The transfer payment structure emphasizes the importance of these outcomes. Service providers receive initial funding and retain a proportion of it only if jobseekers find work within a certain period of time. Delivery agencies receive additional payment if jobseekers are placed in employment and retain work for 13 weeks. This approach differs from that adopted by Ontario’s Ministry of Advanced Education and Skills Development, where service providers are allocated set funding to provide a given number of services – flexibility and incentives are lacking. Enhance government innovation by supporting implementation The third pillar of the Institute’s government innovation definition considers implementa- tion, or the delivery of public services. Under the new public management framework, Canadian governments significantly restruc- tured this work during the 1990s by moving from direct to indirect delivery of public services. This approach was designed to join public interest values with private sector techniques, but has created an environment where public sector techniques and private sector values are the norm. Furthermore, relations between government and private organizations can be unbalanced in favour of government who holds the purse strings. Revitalize relationships Transfer payments play a key role in the imple- mentation of public services – they provide the resources delivery agencies need. Adhering to and reporting on contractual obligations can, however, be administratively burdensome. Importantly, this diverts resources away from service delivery, and creates tension amongst and between government and delivery agencies. Whenever government creates transfer pay- ments, it actually creates a market (Exhibit 7). Government should embrace its role as a market steward, incentivizing innovators to capture greater market share. In other words, government should view itself as a commis- sioner of services, assessing users’ needs along with designing and delivering services to meet those needs. This means focusing less on processes and more on outcomes. Ontario’s Transfer Payment Administration Modernization initiative is amalgamating registration processes for transfer payment recipients. This is a step in the right direction. (See Two-way transfer). Must: • Assess users’ needs • Design and deliver services to meet users’ needs • Incentivize innovators to capture greater market share • Focus on outcomes, not processes Please contact the Ontario government for more information. LOOKING FOR Market Steward EXHIBIT 7 Help wanted
24  INSTITUTE FOR COMPETITIVENESS PROSPERITY CASE STUDY: Come together Community hubs – a physical or virtual place for people to access a variety of programs – is one approach to streamlining government services. A community hub can be a school, neigh- bourhood centre, or another public space that offers co-located or integrated services, such as education, health care, and social services.37 Hubs are unique as the community they serve and are defined by local needs, services, and resources.38 To date, six mandate letters instruct elected officials to collab- orate in the development of community hubs.39 Although there is no single place in government to convene community planning across the province, the Premier’s Community Hubs Framework Advisory Group released a Strategy Framework and Action Plan to support community hubs in Ontario. This body is supported by the Community Hubs Secretariat in Cabinet Office.40 Amongst other outcomes, the Action Plan includes recommendations about the disposal of public property to meet community needs. Ontario’s Ministry of Children and Youth Services is working on a similar initiative. The province wanted to improve outcomes related to crime, employment, and graduation for youth not in employment, education, or training.41 In response, Budget 2016 committed to piloting a Collective Impact approach – cross-sec- tor stakeholders collaborate with youth to identify and solve complex social problems.42 Through the Collective Impact for Disconnected Youth, Ontario is convening service providers, local employers, public institutions, as well as local governments and bands.43 The province has established a provincial partnership table to consolidate leadership and experience. Work is also underway to select three to five demonstration communities as well as establish local backbone organizations.44 The Institute applauds this work, and is interested in the processes and out- comes that follow. Streamline services Many, if not most, government services are interrelated yet frequently operate in silos. This is not news to people interacting with government. Worse, it is the reality for those navigating the labyrinth of government offices and sifting through endless paperwork. (See Come together). The government of Ontario is working to break down (or build bigger) silos. ServiceOntario, a third party organization that delivers a wide range of government services (such as drivers’ licences, health cards, legal certification, and business registrations) is one example. The province’s Poverty Reduction Strategy – which amalgamated five programs delivered by two ministries – is another illustration. More can be done, especially when it comes to business supports. Ontario provides 127 initiatives across 14 separate ministries designed to help provincial businesses – ironically, several claim to be a one-stop-shop.36 Examples in Ontario and abroad show that government innovation does happen and can improve public services. As such, pol- icymakers should be encouraged to share and learn from best practices. Doing so can further the discourse. It can also incite and inspire change. “Everyone knows we should be planning horizontally. But the system is set-up vertically. This is why we need to change the way we plan and deliver services to better meet community needs.” Karen Pitre SPECIAL ADVISOR TO THE PREMIER ON COMMUNITY HUBS Cabinet Office
LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 25 “Design is about connecting aims with means, all to achieve stated goals in context- sensitive environments.” Jonathan Craft ASSISTANT PROFESSOR University of Toronto “What we’re doing is novel – bringing together the key actors to co-develop a new approach to supporting communities to achieve change.” Sean Twyford DIRECTOR Ministry of Children and Youth Services “We dissuade and discourage public servants who take intelligent risks and then fail. This means less intelligent risk- taking. Government should reward those who try something new, and encourage those whose efforts didn’t work exactly as expected.” Karim Bardeesy DEPUTY PRINCIPAL SECRETARY Office of the Premier “People who join the OPS should feel they can make a difference and have an impact.” Greg Orencsak DEPUTY MINISTER Treasury Board Secretariat “Whenever government creates a transfer payment, it creates a market. Government must embrace its role as a market steward by creating space for innovators to capture greater market share.” Josh Hjartarson VICE PRESIDENT PUBLIC SECTOR KPMG
26  INSTITUTE FOR COMPETITIVENESS PROSPERITY A dvancing accountability is key to enhancing government innovation. It signals that innovation is important and provides a framework to measure progress. It is also imperative given the context in which government operates. The Institute further explores accountability considerations related to reporting tools, monitoring bodies, and assessment criteria. ACCOUNTING FOR GOVERNMENT INNOVATION CHAPTER 3
LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 27 Innovation requires accountability Government innovation requires accounting for individual and organizational activities. Unfortunately, only 22 percent of OPS managers feel innovations are evaluated after implementa- tion; 17 percent say that evaluation results are used to improve innovation practices.45 Yet monitoring innovation signals its importance and ensures objectives are achieved. This necessi- tates a conversation on reporting tools, a monitoring body, and assessment criteria for government innovation. That said, external opinion questioned whether ‘accountability’ was the best language to describe the monitoring of govern- ment innovation. The term’s negative connotation, combined with a risk-averse culture, may actually stifle innovation. Narrating accountability efforts as ‘opportunity frameworks’ can encourage, rather than suppress, efforts. Develop reporting tools The Ontario government has tools to measure innovation at the individual level. Incorporating innovation into public servants’ performance management plans and performance evaluations is one way to do this. Reconceptualising performance feedback tools is another option. Piloted by some departments in the federal government, the Upward Feedback Questionnaire is a confidential online survey that provides employees with an opportunity to share honest, constructive, and confidential feedback on their managers’ leadership skills. Managers can take this information and learn what they are doing well and how they can improve. If such a tool incorporated innovation and was used by all public servants, it could also monitor individual activities. Organizational tools can further monitor government innova- tion. Ontario’s Results-based Planning Briefing Books, if organized by policy topic, can serve this purpose. Further, there may be a role for the province’s Centre of Excellence for Evidence-Based Decision Making. Housed in Treasury Board Secretariat, the Centre builds capacity to assess program performance, using evidence to inform choices and lead change.46 Incorporating and monitoring innovation into the work of the Centre of Excellence for Evidence-Based Decision Making seems a natural fit. “Innovation needs to consider the different lines of business performed by the public service.” Kevin French ASSOCIATE DEPUTY MINISTER Ministry of Government and Consumer Services
28  INSTITUTE FOR COMPETITIVENESS PROSPERITY Taking one (or multiple) sessions of Question Period to discuss government innovation is a start. That said, the tone of Question Period may preclude it as a forum to account for government innovation. This was a common remark from the feedback collected – poli- ticians of all stripes should be embarrassed. As such, Standing Committee meetings can serve as an alternative forum. The Institute does, however, believe in the primary of the Legislature. Changing the tone of Question Period – less heckling and more cooperating – is a must. A third alternative would be to create a stat- utory body whose responsibility is to monitor government innovation. This could be an external review board composed of academics, practitioners, and experts. Determine assessment criteria Licence to innovate presented four criteria to evaluate individual and organizational innova- tion: context investigation; input itemization; output identification; and outcome inspection (Exhibit 8). External opinion agreed that these criteria should be deliberated by those within and outside of government. Criteria should be scalable – they should be appropriate and relevant for innovations of different magni- tudes. Criteria should also reflect the diversity of work performed within the public service. For example, implementation innovation There are other examples of public reporting of government innovation. The Organization for Economic Cooperation and Development created an Observatory of Public Sector Innovation. This collects and analyzes public sector innovations to encourage sharing, discussion, and co-creation.47 Innovations are searchable by various factors, such as innovation objective, stage, and result.48 Ontario could enhance its contribution to this Observatory or adopt a similar database to better monitor (as well as share information about) organizational innovation. Create a monitoring body After establishing tools that report on indi- vidual and organizational innovation, a body must monitor innovation. This cannot strictly be a public service conversation. In Licence to innovate, the Institute suggested reimagining the roles of third party organi- zations that report to the Legislature (such as the Auditor General). These bodies should adopt a prospective rather than retrospective approach by identifying risks government can take, not just past mistakes. That said, experts have speculated whether third party bodies have the capacity and mandate to adopt this role. The Institute maintains that adopting a business-as-usual approach stifles, rather than encourages, innovation. A second way to monitor innovation is to build on the role of opposition members whose purpose is to hold the government to account. 1 Comprehend, articulate, and reflect on an issue. This creates space for innovation and lends to a more appropriate solution. Context investigation Tally the financial and human resources involved in innovation. Input itemization Determine the outputs of innovation, or what was produced. Output identification Review the overarching results of innovation. This provides information about best practices and lessons learned. Outcome inspection 2 3 4 EXHIBIT 8 Four criteria to evaluate government innovation
LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 29 may mean something different to a scientist working with the Ministry of Environment and Climate Change, or to a lawyer working with the Ministry of the Attorney General. Accountability is integral to the framework within which elected officials and bureaucrats operate. Narrating accountability efforts as opportunity frameworks may encourage, rather than stifle, innovation. Based on external opinion, the Institute expands its discussion of reporting tools, monitoring bodies, and assessment criteria. “The Auditor General currently focuses on learning from the past. Evaluating past performance may compound risk-averse attitudes and unintentionally stifle innovation.” Alex Ryan SENIOR SYSTEMS DESIGN MANAGER Government of Alberta “Question Period may not be the best forum to account for government innovation – opposition would be overly critical and unsupportive of failure.” Sandford Borins PROFESSOR University of Toronto
30  INSTITUTE FOR COMPETITIVENESS PROSPERITY HOW GOVERNMENT CAN REWARD RISK T here are eight ways Ontario can enhance government innovation. Based on external opinion, the Institute is revising and expanding its initial recommendations. These are feasible options to help government counter the risk-averse culture and advance accountability. Opportunities to enhance innovation in the design, process, and implementation of public services are also discussed. RECOMMENDATIONS
LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 31 Revise funding frameworks to boost design Funding frameworks influence design. Licence to innovate argued for mission-based approaches, rather than allocating resources by ministry and program, to foster collaboration and enhance innovation. Importantly, this process would allow government to align ministerial funding cycles. The Institute applauds the work of the Local Poverty Reduction Fund, which demonstrates that mission-based approaches are viable. That said, Cabinet Office should centralize innovation funds to experiment with design. Innovation funds are currently scat- tered across ministries – a centralized approach would avoid duplication of efforts and promote information-sharing. Integrate innovation into government activity to counter the risk-averse culture Government needs to take centralized action to counter the risk-averse culture. In Licence to innovate, the Institute recom- mended expanding Ontario’s Program Review, Renewal, and Transformation process – a framework for evidence-based decision-making – to include innovation. Establishing innova- tion hubs and labs within the provincial government’s central organizations (such as Cabinet Office, Treasury Board Secretariat, and the Ministry of Finance) presents another opportunity. Creating spaces where there is a greater tolerance for risk and experimentation signals that innovation is desir- able and acceptable. The work of the federal government shows this is possible. A second way to counter the risk-averse culture is to build innovation into organizational priorities and consistently communicate them. Building innovation into ministerial mandate letters, along with integrating innovation into organizational objectives and priorities, are core actions. Sharing successes and failures associated with innovation is also a must – communicating within and outside of govern- ment can build capacity and tolerance for change. A third approach is to embed innovation into core government processes such as Cabinet Submissions. Requiring policymak- ers to describe if and how proposed policies are innovative, and requiring decision-makers to take these considerations into account, can incite change.
32  INSTITUTE FOR COMPETITIVENESS PROSPERITY Advance human resource management to strengthen processes Ontario should strengthen process innovation by focusing on human resource management. As suggested in Licence to innovate, revising recruitment messaging and developing training programs to motivate innovative talent are some ways to do this. In addition, the Ontario government should have an honest conversation about employee incentives. Case studies show that non-monetary incentives – like gamification and employee awards – are effective. Hosting an OPS-wide innovation tournament, along with awarding winners with job opportuni- ties within and outside the public sector, is one idea. Partnering with organizations external to government, such as IPAC, to leverage capacity and networks can additionally celebrate innovators. Recognizing individual work and efforts within and outside the office can further strengthen capacity and willingness to innovate. Attributing projects to non-managerial staff is one example. Many public servants are active in their communities and social media – their efforts to engage the public should further be rewarded. In all cases, individual behaviour can be monitored through performance development plans and evaluations. Treasury Board Secretariat, who is centralizing human resource functions, should play a leadership role. Apply behavioural insights to improve design The Institute encourages Ontario to expand the number and scope of policy experiments conducted by the Behavioural Insights Unit. Moreover, government should better commu- nicate the number of experiments conducted, the resources committed to such initiatives, and their results. These recom- mendations were echoed in Licence to innovate. Celebrating the work of the Behavioural Insight Unit internally (through Topical) and externally (through News Releases and social media) can achieve this. In addition to enhancing the quantity and quality of innovation, information sharing can counter the risk-averse culture and advance accountability. This is a role for Ontario’s Policy Innovation Leadership group. Yet behavioural economics may only be a tool to pick low-hanging fruit. As such, government should view itself as a commissioner of services by assessing users’ needs as well as designing and delivering services to meet those needs.
LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 33 Revitalize relations between government and delivery agencies to upgrade implementation Most provincial programs are delivered by the private sector. This approach was designed to join public interest values with private sector techniques, but has backfired. Ontario needs to revitalize relations between government and delivery agencies by viewing itself as a commissioner of services. This means focusing less on processes and more on outcomes. As discussed in Licence to innovate, Ontario’s Transfer Payment Agreement Modernization is one way to align registration processes for delivery agencies, but more can be done. Procurement models are due for renewal. The Innovation Procurement Initiative, which emphasizes new ways of collaboration, guidance, funding, and capacity-building, is a step in this direction. Incorporating innovation into government-wide procurement should be a priority, particu- larly by adopting alternative models that focus on buyers and end-users. Ontario’s Ministry of Government and Consumer Services should lead this work. To truly act as a commissioner of services, government must shift its focus from monitoring processes to outcomes – this means developing standards rather than enforcing regulations upon delivery agencies. Adopting a payment-by-outcomes framework to allocate resources to delivery agencies, as well as monitoring performance, can achieve this. There are many areas where this framework can be applied in Ontario, such as skills training, health care, and social services. This approach can be taken a step further by organizing the work of delivery agencies across community hubs. A coordinated approach led by Ontario’s Treasury Board Secretariat in partnership with the Community Hub Secretariat is worth exploring. Modify the quality and scope of engagement to support processes Ontario is willing to engage the public, but more can be done. Institutionalizing open data policies to create a common and transparent framework for future action is a must. This was a proposed in Licence to innovate. Public engagement initiatives should not be hearsay – this would counter the spirit of engagement and backfire on the government’s objectives. This is why Ontario must ensure that it has the institutional frameworks and leadership talent to implement projects. Legislating that the outcomes of hack- athons, mind labs, or other brainstorming activities be made public is one recommendation. A second option is to evaluate senior leaders specifically on their efforts to engage the public. Lastly, the Institute encourages Ontario to undertake its own PB projects, especially in provincially funded organizations such as post-secondary institutions and hospitals. Here, government could require a certain portion of funding to have a participatory requirement. The province must further ensure there is a sufficient number of staff to facilitate PB. Broadening job responsibilities of bureaucrats working in communications departments is one way to do this. To secure funding, govern- ment can allocate existing resources toward projects desired and chosen by people. In all cases, Ontario’s Minister Responsible for Digital Government and Ministry of Finance should play leadership roles.
34  INSTITUTE FOR COMPETITIVENESS PROSPERITY Streamline services to refine implementation As recommended in Licence to innovate, integrated service delivery requires bigger policy silos, or better collaboration across and within government. Ontario’s work to create community hubs is an excellent start, and the Institute encour- ages senior leaders to convene and dedicate resources to this initiative. As it currently stands, there is no body that convenes province-wide community planning.50 Cabinet Office should lead this work and further disseminate information about community hubs across the OPS. In addition, the Institute encourages Ontario to pilot the Collective Impact for Disconnected Youth, communicating successes and failures within and outside government. Doing so would increase transparency and accountability; it would also allow others to learn from best practices and offer alterna- tive insights. On that note, provincial initiatives designed to streamline government-wide services are few and far between. The Institute recommends the province adopt a mission-driven approach to organize public services and internal deci- sion-making. Organizing government’s work across objectives can facilitate resource sharing and service integration – this creates ripe opportunities for innovation. Monitor government innovation to enhance accountability Government should account for individual and organizational innovation. To encourage change, efforts should be communi- cated as ‘opportunity frameworks.’ Broadening individuals’ performance management plans and evaluations to include innovation activities is one way to do this. These suggestions are echoed in Licence to innovate. Adopting other tools and learnings from the government of Canada’s pilot programs are additional suggestions. At the organizational level, the Institute recommends incorporating innovation into Ontario’s Results- based Planning Briefing Books to report on government innovation by policy field. Further, monitoring innovation can complement the Centre of Excellence for Evidence-Based Decision Making’s work. Contributing to other avenues for public reporting, such as the Observatory of Public Sector Innovation, should also be explored. An external third party body should monitor government innovation – the Institute is ready to report on government activities, and third party bodies of the Legislature (like the Auditor General) should do the same. This may require reimag- ining their capacity and mandate. On the political front, elected officials across party lines should engage in open and honest dialogue on what government has done (and should do) to enhance innovation. Allocating Standing Committee meetings or an external review board to account for government innova- tion is a start. Improving the nature of Question Period is a must. Finally, the Institute proposed four criteria to monitor govern- ment innovation: context investigation; input itemization; output identification; and outcome inspection. These criteria are starting blocks to assess innovation and should be amended following broader consultation.
LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 35 “Government needs to create an ecosystem that allows them to innovate.” Blaine Woodcock PUBLIC STRATEGY AND INNOVATION Deloitte “Without risk there is no innovation.” Sheldon Levy DEPUTY MINISTER Ministry of Advanced Education and Skills Development “Government needs to create space where people have the time and freedom to think about experimenting and advancing innovation. This means creating a culture that lives beyond an individual leader or team.” Lauren Hunter HEAD OF IN.SPIRE INNOVATION HUB Natural Resources Canada “We’ve all taken the same oath. Now we have to act on it better.” Jay Porter DIRECTOR Cabinet Office
36  INSTITUTE FOR COMPETITIVENESS PROSPERITY and the Ontario College of Art and Design on the Discoverability Design Jam. The objective of this hackathon was to develop media on how content connects with audiences. Climate Hack-To-Action: Unlocking a Low Carbon Future was a third hackathon. Brookfield partnered with the Ministry of Environment and Climate Change to develop innovative solutions that empower people to make low carbon choices and reduce their carbon footprints. This took place between April 7 and 9 2016. Lastly, PoliHack was done with the Ministry of Children and Youth Services on April 12, 2016. The objective of this hackathon was to design and create tools that analyze and share Ministry data. 29 Oakridge and Rustic are considered Neighbourhood Improvement Areas. 30 Given these results, it has been recommended that the PB pilot be extended for 2016 and 2017 in the same wards, with an increase in capital funding allocation in each area from $150,000 to $250,000. “Evaluation Report: Participatory Budgeting Pilot Evaluation,” Environics Research, 2015, http://www.toronto.ca/ legdocs/mmis/2016/bu/bgrd/backgroundfile-87192.pdf. 31 An evaluation will examine the impact of increased funding ($250,000 per region) for 2016 and 2017. 32 Sturgess, Gary L. and Lauren M. Cumming, “Payment by Outcome: A Commissioner’s Toolkit,” 2020 Public Services Trust, 2011. 33 Ibid.; Boyd, Ross, “Better Public Services Results: Putting outcomes for users at the heart of the strategic planning process,” New Zealand Performance Hub. 34 Sturgess, Gary L. and Lauren M. Cumming, “Payment by Outcome: A Commissioner’s Toolkit,” 2020 Public Services Trust, 2011. 35 Ibid. 36 Working Paper 23, “A place to grow: Scaling up Ontario’s firms,” Institute for Competitiveness Prosperity, 2016, http://www.competeprosper.ca/work/ working_papers/working_paper_23. 37 “Community Hubs,” Government of Ontario, 2016, https://www.ontario.ca/page/ community-hubs. 38 Pitre, Karen, “Community Hubs in Ontario: A Strategic Framework Action Plan,” Government of Ontario, 2016, https://www.ontario.ca/page/community-hubs- ontario-strategic-framework-and-action-plan. 39 Ibid. 40 This also reports on stakeholder engagement, identifies provincial barriers and opportunities, and discusses intra-ministerial collaboration. Further, the report highlights community hubs in Ontario, like the Mount Community Centre in Peterborough and the London Family Centre Service System. Ibid. 41 Outcomes have remained stagnant for youth who are not in employment, education, or training. Further, marginalized youth (including racialized, Aboriginal, and new- comers) experience growing outcomes disparities. 42 Corcoran, Mimi, Fay Hanleybrown, Adria Steinberg, and Kate Tallant, “Collective Impact for Opportunity Youth,” FSG, 2012. 43 There are five stages of the Ontario’s Collective Impact for Disconnected Youth Model: developing an integrated approach; sharing resources; seeking youth input; responding to local experiences; and monitoring and adapting to outcomes. “Collective Impact for Disconnected Youth: Provincial Partnership Table,” Ontario Ministry of Children and Youth Services, 2016. 44 Next steps include designing and implementing a measurement framework, and creating a working group to resolve program and funding issues. 45 Wright, C., “Innovation in the Government of Ontario,” 2016. Manuscript in preparation. 46 The Centre’s mandate is six-fold: develop an enterprise-wide framework to embed standards for evidence-based decision making; identify and develop tools to support the framework’s implementation; build capacity for evidence-based activities; support decision-making processes through collaboration and information presentation; identify and leverage internal and external partners to support implementation; and support transparency in public reporting through ministry performance measures. 47 “The Observatory of Public Sector Innovation,” OECD, https://www.oecd.org/ governance/observatory-public-sector-innovation/about/. 48 Ibid. 49 “Transfer Payment Administration Modernization (TPAM),” Ontario Nonprofit Network, http://theonn.ca/our-work/sector-financing/transfer-payment- administration-modernization/. 50 Pitre, Karen, “Community Hubs in Ontario: A Strategic Framework Action Plan,” 2016, https://www.ontario.ca/page/community-hubs-ontario-strategic- framework-and-action-plan. 1 Clarke, Amanda and Jonathan Craft, “From Analogue Traditions to Digital Dreams: Digital Era Policy Design,” ECPR Joint Session, 2015. 2 Wright, C., “Innovation in the Government of Ontario,” 2016. Manuscript in preparation. Research on the American public service further shows that about half of government innovations originate from middle managers or front-line staff. Borins, Sandford, “Leadership and innovation in the public sector,” Leadership Organization Development Journal 23, no. 8, 2002. 3 Wright, C., “Innovation in the Government of Ontario,” 2016. Manuscript in preparation. 4 Borins, Sandford, “The Persistence of Innovation in Government: A Guide for Innovative Public Servants,” IBM Center for The Business of Government, 2014. 5 Borins, Sandford, “Leadership and innovation in the public sector,” Leadership Organization Development Journal 23, no. 8, 2002. 6 Wright, C., “Innovation in the Government of Ontario,” 2016. Manuscript in preparation. 7 Ulrich, Karl T., Design: Creation of Artifacts in Society, Pennsylvania: McGraw-Hill, 2011; Howlett, Michael, “From the ‘old’ to the ‘new’ policy design: design thinking beyond markets and collaborative governance,” Policy Sci 47, 2014. 8 Junginger, Sabine, “Design and Innovation in the Public Sector: Matters of Design in Policy-Making and Policy Implementation,” 10th European Academy of Design Conference – Crafting the Future, 2013. 9 Ibid. 10 “Local Poverty Reduction Fund – Successful applicants,” Government of Ontario, 2016, https://www.ontario.ca/page/local-poverty-reduction-fund-successful- applicants. 11 All 2015 recipients (along with project descriptions, objective, and funding) are online. Ibid. 12 An additional $10 million is allocated for 2016 and 2017. “Local Poverty Reduction Fund,” Government of Ontario, 2016, https://www.ontario.ca/page/ local-poverty-reduction-fund. 13 Ibid. 14 Barriers to online service included form style, minimal awareness, privacy concerns, perceived delay, and individual habit. “Behavioural Insights Pilot Project: Licence Plate Sticker Renewal,” Government of Ontario, 2014, https://www.ontario.ca/ page/behavioural-insights-pilot-project-license-plate-sticker-renewal. 15 Ibid. 16 Topical is a newsletter circulated amongst Ontario’s public servants. 17 Wright, C., “Innovation in the Government of Ontario,” 2016. Manuscript in preparation. 18 Ibid. 19 Ibid. 20 “Why some innovation tournaments succeed and others fail,” University of Pennsylvania, 2014, http://knowledge.wharton.upenn.edu/article/ innovation-tournaments-succeed-others-fail/. 21 Borins, Sandford, “The Persistence of Innovation in Government: A Guide for Innovative Public Servants,” IBM Center for The Business of Government, 2014. 22 The Association of Professional Executives of the Public Service of Canada also offers awards to Canadian public servants. 23 The federal government currently offers a Fellow-in-Residence program for academics, but limited positions are available. 24 “Ontario, Canada - OGP Subnational Pioneers,” Open Government Partnership, 2016, http://www.opengovpartnership.org/node/9015. 25 Ferguson, Rob, “Charles Sousa criticized for ignoring public consultations with early budget plan,” Toronto Star, 2016, https://www.thestar.com/news/queen- spark/2016/02/02/finance-minister-charles-sousa-taken-to-task-for-sham-public- budget-consultations.html. 26 Wright, C., “Innovation in the Government of Ontario,” 2016. Manuscript in preparation. 27 “Budget Talks,” Government of Ontario, https://talks.ontario.ca/. 28 Four hackathons have been conducted. In Hack-cessibility: Innovation to Build a More Accessible Ontario, Brookfield partnered with the Accessibility Directorate of Ontario to design and prototype ideas that improve accessibility. This event was held between October 23 and November 6, 2015. On March 5, 2016, Brookfield worked with the Canadian Radio-television and Telecommunications Commission END NOTES
LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 37 Annual Reports FIRSTANNUAL REPORT – Closing the prosperity gap, November 2002 SECOND ANNUAL REPORT – Investing for prosperity, November 2003 THIRD ANNUAL REPORT – Realizing our prosperity potential, November 2004 FOURTH ANNUAL REPORT – Rebalancing priorities for prosperity, November 2005 FIFTH ANNUAL REPORT – Agenda for our prosperity, November 2006 SIXTH ANNUAL REPORT – Path to the 2020 prosperity agenda, November 2007 SEVENTH ANNUAL REPORT – Leaning into the wind, November 2008 EIGHTH ANNUAL REPORT – Navigating through the recovery, November 2009 NINTH ANNUAL REPORT – Today’s innovation, tomorrow’s prosperity, November 2010 TENTH ANNUAL REPORT – Prospects for Ontario’s prosperity, November 2011 ELEVENTH ANNUAL REPORT – A push for growth: The time is now, November 2012 TWELFTH ANNUAL REPORT – Course correction: Charting a new road map for Ontario, November 2013 THIRTEENTH ANNUAL REPORT – Finding its own way: Ontario needs to take a new tack, November 2014 FOURTEENTH ANNUAL REPORT – Disruptions ahead: The making of a dynamic and resilient Ontario economy, November 2015 Working Papers WORKING PAPER 1 – A View of Ontario: Ontario’s Clusters of Innovation, April 2002 WORKING PAPER 2 – Measuring Ontario’s Prosperity: Developing an Economic Indicator System, August 2002 WORKING PAPER 3 – Missing opportunities: Ontario’s urban prosperity gap, June 2003 WORKING PAPER 4 – Striking similarities: Attitudes and Ontario’s prosperity gap, September 2003 WORKING PAPER 5 – Strengthening structures: Upgrading specialized support and competitive pressure, July 2004 WORKING PAPER 6 – Reinventing innovation and commercialization policy in Ontario, October 2004 WORKING PAPER 7 – Taxing smarter for prosperity, March 2005 WORKING PAPER 8 – Fixing fiscal federalism, October 2005 WORKING PAPER 9 – Time on the job: Intensity and Ontario’s prosperity gap, September 2006 WORKING PAPER 10 – Prosperity, inequality and poverty, September 2007 WORKING PAPER 11 – Flourishing in the global competitiveness game, September 2008 WORKING PAPER 12 – Management matters, March 2009 WORKING PAPER 13 – Management matters in retail, March 2010 WORKING PAPER 14 – Trade, innovation, and prosperity, September 2010 WORKING PAPER 15 – Small business, entrepreneurship, and innovation, February 2012 WORKING PAPER 16 – Making sense of public dollars: Ontario government revenue, spending, and debt, May 2013 WORKING PAPER 17 – Untapped potential: Creating a better future for service workers, October 2013 WORKING PAPER 18 – Taxing for growth: A close look at tax policy in Ontario, October 2013 WORKING PAPER 19 – The realities of Ontario’s public sector compensation, February 2014 WORKING PAPER 20 – Building better health care: Policy opportunities for Ontario, April 2014 WORKING PAPER 21 – Open for business: Strategies for improving Ontario’s business attractiveness, May 2015 WORKING PAPER 22 – Better foundations: The returns on infrastructure investment in Ontario, September 2015 WORKING PAPER 23 – A place to grow: Scaling up Ontario’s firms, January 2016 WORKING PAPER 24 – Licence to innovate: How government can reward risk, February 2016 WORKING PAPER 25 – Toward a low-carbon economy: The costs and benefits of cap-and-trade, April 2016 PREVIOUS PUBLICATIONS
The Institute for Competitiveness Prosperity 105 St. George Street Suite 9000 Toronto, Ontario M5S 3E6 Telephone 416 946 7300 Fax 416 946 7606 Should you wish to obtain a copy of one of the previous publications, please visit www.competeprosper.ca for an electronic version or contact the Institute for Competitiveness Prosperity directly for a hard copy. DESIGN Hambly Woolley Inc. www.hamblywoolley.com Illustration: ©2016 John Krause / The iSpot To learn more about the Institute please visit us at: www.competeprosper.ca Should you have any questions or comments, you may reach us through the website or at the following address: EXECUTIVE DIRECTOR Jamison Steeve 416 946 7585 j.steeve@competeprosper.ca RESEARCH DIRECTOR Dorinda So 416 946 5325 d.so@competeprosper.ca POLICYANALYSTS Erica Lavecchia (Project Lead) 416 946 5595 e.lavecchia@competeprosper.ca Julia Hawthornthwaite 416 978 7843 j.hawthornthwaite@competeprosper.ca Christopher Mack 416 978 7859 c.mack@competeprosper.ca Jonathan Thibault 416 946 3503 j.thibault@competeprosper.ca Saad Usmani 416 978 7839 s.usmani@competeprosper.ca HOW TO CONTACT US
ISBN: 978-1-927065-19-8

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Licence to Innovate Revisited: How Government Can Reward Risk

  • 1. LICENCE TO INNOVATE REVISITED How government can reward risk 24.5WP WORKING PAPER JUNE 2016 24.5
  • 2. LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 1 CHAPTER 1 The Institute for Competitiveness & Prosperity is an independent not-for- profit organization that deepens public understanding of macro and microeconomic factors behind Ontario’s economic progress. Research by the Institute is intended to raise public awareness and stimulate debate on a range of issues related to competitiveness and prosperity. It is the aspiration of the Institute to have a significant influence in increasing Ontario and Canada’s competitiveness, productivity, and capacity for innovation. We believe this will help ensure continued success in creating good jobs, increasing prosperity, and building a higher quality of life. We seek breakthrough findings from our research and propose significant innovations in public policy to stimulate businesses, governments, and educational institutions to take action. The Institute was formerly the research arm of the Task Force on Competitiveness, Productivity and Economic Progress established in 2001 by the Ontario Premier, and led by Roger L. Martin. The Task Force completed its work at the end of 2014. The Institute is now advised by Ontario’s Panel for Economic Growth & Prosperity, led by Tiff Macklem. Comments on this report are welcome and should be directed to the Institute for Competitiveness & Prosperity. The Institute is funded by the Government of Ontario through the Ministry of Economic Development and Growth. Copyright © June 2016 The Institute for Competitiveness & Prosperity ISBN: 978-1-927065-19-8
  • 3. 2  INSTITUTE FOR COMPETITIVENESS & PROSPERITY EXHIBITS EXHIBIT1 Government innovation defined 13 EXHIBIT2 Three types of barriers to government innovation 14 EXHIBIT3 Five reasons to enhance government innovation 15 EXHIBIT4 Three costs of government innovation 16 EXHIBIT5 Government should build lattices, not ladders 21 EXHIBIT6 Hack it 22 EXHIBIT7 Help wanted 23 EXHIBIT8 Four criteria to evaluate government innovation 28
  • 4. LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 3 CONTENTS Foreword & Acknowledgements 4 Executive Summary 6 12 CHAPTER 1: A FRAMEWORK FOR GOVERNMENTINNOVATION Revised definition of government innovation 13 Barriers to government innovation 14 Benefits of government innovation 15 Government innovation comes at a cost 15 18 CHAPTER 2: STORIES ABOUTGOVERNMENTINNOVATION Enhance government innovation by boosting design 19 Enhance government innovation by improving processes 20 Enhance government innovation by supporting implementation 23 26 CHAPTER 3: ACCOUNTING FOR GOVERNMENTINNOVATION Innovation requires accountability 27 Develop reporting tools 27 Create a monitoring body 28 Determine assessment criteria 28 30 CHAPTER 4: RECOMMENDATIONS End Notes 36 Previous Publications 37
  • 5. 4  INSTITUTE FOR COMPETITIVENESS & PROSPERITY Jamison Steeve Executive Director Institute for Competitiveness & Prosperity ON behalf of Ontario’s Institute for Competitiveness & Prosperity, I am pleased to present our 24th and a half Working Paper, Licence to innovate revisited: How government can reward risk. Yes. You read that correctly. This is a half paper, in the sense that it is a continuation of our 24th publication. That paper, dealing with how government could be more innovative, contended that the public sector needed to be iterative, more willing to take risk, more willing to prototype. So, we decided to write another version of our paper in that spirit. After the release of Working Paper 24, we went back out to our audience, including government, the broader public sector, academia, and the private sector. We asked them for their input and feedback. What did we get right? What did we get wrong? What subjects did we miss the first time through? For us, the process was refreshing and illuminating. It allowed us to look at our own work critically and make improvements. Most think tanks are unwilling to turn back so quickly on a subject. We benefitted from such a strategy immensely. What we learned from the feedback was that we got the big things right. Our major recommendations remain relatively in tact. Much of the feedback from government led us to further examples of innovation already happening. This fact seems to lend credence to Tony Dean’s comment that the public sector has more licence to innovate than they know. Surprisingly, and disappointingly, the strongest feedback surrounded our suggestion to dedicate one day of Question Period wherein the opposition holds the government to account on innovation. The hope was that the tone would be less acrimonious, and more about learning about mistakes made on the road to innovation and what further steps could be taken. Continuing along the road to innovation FOREWORD & ACKNOWLEDGEMENTS
  • 6. LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 5 Most had little faith that our elected officials had the capacity to have that conversation on the floor of the Legislature. Many felt that the tone of Question Period is too soured and the goal is to “score political points” rather than improve public policy. That led some to suggest a special committee for the subject of innovation, or a third party body of the Legislature. As a person who believes in the supremacy of the Legislature and the capacity of our elected officials, we have decided to keep the recommendation in. Maybe it is more hopeful than rational, but having one hour of one day at Queen’s Park governed by a rational discussion about innovation and learnings should not be too much to ask of our elected officials. As always, and explicitly in this paper, we are thankful for the feedback from our audience. In particular, we would like to thank Carrie Wright from Wilfrid Laurier University who shared survey results on managers’ experience with innovation in the Ontario Public Service. We are also grateful for the funding support from the Ontario Ministry of Economic Development and Growth. We look forward to sharing and discussing our work and findings with all Ontarians, and especially the policy community. We hope that this paper makes a contribution to the increasingly important dialogue around government innovation. All comments and suggestions are welcome. “It is common sense to take a method and try it; if it fails, admit it frankly and try something else. But above all, try something.” FRANKLIN D. ROOSEVELT
  • 7. 6  INSTITUTE FOR COMPETITIVENESS PROSPERITY EXECUTIVE SUMMARY LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK I n February 2016, the Institute for Competitiveness Prosperity released its 24th Working Paper, Licence to innovate: How government can reward risk. This discussed why government should innovate and how to do it.
  • 8. LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 7 THE INSTITUTE received an overwhelming positive response to this work. People wanted to know how they could contribute to the conversation and hear more stories about government innovation. This Paper does just that. This Paper revises and expands on Licence to innovate by incorporating perspectives from practitioners within and outside of government. These voices include: Karim Bardeesy Deputy Principal Secretary, Office of the Premier Peter MacLeod Co-founder and Principal, MASS LBP Sandford Borins Professor, University of Toronto Greg Orencsak Deputy Minister, Treasury Board Secretariat Jonathan Craft Assistant Professor, University of Toronto Karen Pitre Special Advisor to the Premier on Community Hubs, Cabinet Office Kevin French Associate Deputy Minister, Ministry of Government and Consumer Services Jay Porter Director, Cabinet Office Karl Frost Manager, Cabinet Office Donna Ratchford Director of the Policy Innovation Platform, Ryerson University Josh Hjartarson Vice President Public Sector, KPMG Sean Twyford Director, Ministry of Children and Youth Services Julian House Behavioural Scientist, Treasury Board Secretariat Blaine Woodcock Public Strategy and Innovation, Deloitte Lauren Hunter Head of IN.spire Innovation Hub, Natural Resources Canada Judith Wright Consultant to the Ministry of Children and Youth Services on the Collective Impact for Disconnected Youth Sheldon Levy Deputy Minister, Ministry of Advanced Education and Skills Development This project was part of a new process for the Institute, and we are grateful to those who shared their insights. In the spirit of innovation, we realize our work can be modified and are open to further discussion. Change is not possible without you. We look forward to continuing the conversation.
  • 9. 8  INSTITUTE FOR COMPETITIVENESS PROSPERITY GOVERNMENT INNOVATION IS IMPROVING DESIGN, PROCESSES, AND IMPLEMENTATION OF PUBLIC SERVICES TO ACHIEVE A STATED GOAL. THIS MUST BE ROOTED IN A CULTURE OF COLLABORATION, A FOCUS ON END USERS, AND EXECUTIVE LEADERSHIP THERE ARE THREE BARRIERS ASSOCIATED WITH GOVERNMENT INNOVATION… ...AND FIVE BENEFITS Design Focus on users Culture of collaboration Government innovation ImplementationProcess Executive leadership Organizational realities Cultural practices EFFICIENT USE OF RESOURCES EFFECTIVE POLICY GOVERNMENT LEGITIMACY CIVIC ENGAGEMENT HUMAN RESOURCE MANAGEMENT PERMISSION GRANTED Accountability framework GOVERNMENT INNOVATION IS IMPROVING DESIGN, PROCESSES, AND IMPLEMENTATION OF PUBLIC SERVICES TO ACHIEVE A STATED GOAL. THIS MUST BE ROOTED IN A CULTURE OF COLLABORATION, A FOCUS ON END USERS, AND EXECUTIVE LEADERSHIP THERE ARE THREE BARRIERS ASSOCIATED WITH GOVERNMENT INNOVATION… ...AND FIVE BENEFITS Design Focus on users Culture of collaboration Government innovation ImplementationProcess Executive leadership Organizational realities Cultural practices EFFICIENT USE OF RESOURCES EFFECTIVE POLICY GOVERNMENT LEGITIMACY CIVIC ENGAGEMENT HUMAN RESOURCE MANAGEMENT PERMISSION GRANTED Accountability framework
  • 10. LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 9 DESIGN IMPLEMENTATION PROCESS Ontario's Licence Plate Sticker Renewal Institute for Public Administration of Canada Awards Penn Medicine's Innovation Tournament Ontario’s Open Government Initiative Toronto's Participatory Budget Adobe’s Kickbox Initiative Ontario's Community Hubs Ontario’s Environmental Registry United Kingdom's Employment Zones US’s Small Business Administration BC’s Employment Program Ontario's ServiceOntario Centres Ontario's Local Poverty Reduction Fund Ontario's Innovation Procurement Initiative BUTWE NEED TO OVERCOME THE COSTS DID YOU KNOW ABOUTTHESE EXAMPLES OF GOVERNMENT INNOVATION? WE PROPOSE THIS ACCOUNTABILITY FRAMEWORK Ontario's Gift of Life Consent Form Canada’s Carrot Rewards Program United Kingdom’s Community Budgets Brookfield’s Policy Hacks 1 Comprehend, articulate, and reflect on an issue. Context investigation Tally the financial and human resources involved in innovation. Input itemization Determine the outputs of innovation, or what was produced. Output identification Review the overarching results of innovation. Outcome inspection 2 3 4 REWARD DEVELOP ALLOCATE
  • 11. 10  INSTITUTE FOR COMPETITIVENESS PROSPERITY Integrate innovation into government activity to counter the risk-averse culture Ontario should expand the Program Review, Renewal, and Transformation process to include innovation. Establishing innovation hubs and labs within government’s central organizations presents other opportunities. Further, Ontario should build innovation into ministerial mandate letters, integrate innovation into organizational objectives, and embed innovation into core processes. This requires a whole-of-government approach. Revise funding frameworks to boost design Ontario should allocate resources across missions (not by ministries), aligning ministerial funding cycles along the way. In addition, government should centralize innovation funds. Central agencies, namely Cabinet Office, the Ministry of Finance, and Treasury Board Secretariat should champion this work. Apply behavioural insights to improve design Ontario should expand the number and scope of policy experiments conducted by its Behavioural Insights Unit. Celebrating this work internally (through Topical) and externally (through News Releases and social media) is also a must. This is a role for Ontario’s Policy Innovation Leadership group. Advance human resource management to strengthen processes Ontario should strengthen human resource management through gamification and employee awards. Hosting an OPS-wide innovation tournament, awarding winners with job opportunities is one idea. Partnering with organizations to celebrate innovators is another. Further, Ontario should attribute and recognize public servants’ work within and outside the office. Treasury Board Secretariat, who is centralizing human resources, should play a leadership role. HOW TO ENHANCE GOVERNMENT INNOVATION
  • 12. LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 11 Modify the quality and scope of engagement to support processes Ontario should develop the institutional frameworks and leadership talent to engage the public. This can be done by mandating the public release of hackathons and mind labs. Broadening job responsibilities of bureaucrats working in communications departments, along with evaluating efforts to engage the public, are also required. Lastly, the Institute encourages Ontario to undertake its own participatory budget projects, especially in publicly funded organizations. Ontario’s Treasury Board Secretariat and Ministry of Finance should play leadership roles. Revitalize relations between government and delivery agencies to upgrade implementation Ontario should view itself as a commissioner of services. Part of this involves incorporating innovation into government-wide procurement; this is work for Ontario’s Ministry of Government and Consumer services. Government must further adopt a payment-by-outcomes framework and organize delivery agencies’ work across community hubs. Partnerships between Ontario’s Treasury Board Secretariat and the Community Hub Secretariat are worth exploring. Streamline services to refine implementation Ontario should convene province-wide community planning to build on the work of community hubs. In addition, the province should proceed with the Collective Impact for Disconnected Youth, communicating successes and failures. This should be a government-wide effort, led by Cabinet Office. Monitor government innovation to enhance accountability Ontario should account for innovation by tasking an external third party body to monitor government activity. The Institute is ready to report on government activity and third party bodies of the Legislature should do the same. On the political front, elected officials should engage in open and honest dialogue. Allocating Standing Committee meetings or creating an external review board to account for government innovation is a start. Changing the tone of Question Period is a must.
  • 13. 12  INSTITUTE FOR COMPETITIVENESS PROSPERITY CHAPTER 1 T he Institute sought external opinion on its definition of government innovation. Comments were also provided on the barriers, benefits, and costs associated with an innovative public service. In response, the Institute amends its framework for government innovation in Ontario. A FRAMEWORK FOR GOVERNMENT INNOVATION
  • 14. LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 13 instruments proves the point, as it influences information pro- vision, problem-solving capacity, and policy responses.1 That said, the need to focus on users requires clarification – users include clients, stakeholders, bureaucrats, and political staff. The Institute is also adding a third foundational aspect to what is required for government innovation: executive leadership. Improvements in design, process, and implementation necessi- tate senior managers who believe in and champion change. Licence to innovate did not explicitly mention the scope or orchestrators of government innovation. It should have. The magnitude of innovation can range – it can mean big improve- ments (such as adopting a new problem-solving methodology) or small changes (such as revisions to a form). Moreover, inno- vation can occur at the individual level or within a team, and is not restricted to either junior or senior staff at the political or bureaucratic levels. In fact, managers in the Ontario Public Service (OPS) report that the majority (41 percent) of success- ful innovations originate from staff ideas.2 Revised definition of government innovation In Licence to innovate: How government can reward risk, the Institute defined government innovation as improvements to policy design, processes, and implementation, all built on a culture of collaboration that focuses on end users. The Institute’s definition also stressed that innovation must achieve a stated goal that does not have to be realized. In other words, innovation is not an end in and of itself, and ‘failed’ innovations can fuel ‘successful’ innovations. The Institute is revising the language of its government inno- vation definition (Exhibit 1). External opinion suggested that attaching the word ‘policy’ to the three aspects of the definition was both overly broad and too narrow. ‘Policy’ means some- thing different to different people – incorporating this term creates ambiguity. Moreover, focusing on ‘policy’ detracts from the multiple functions of government, such as operations, communications, and IT. With regards to the definition’s foundational aspects (culture of collaboration and focus on users), external opinion noted this requires a culture change and perspective shift. The Institute agrees – innovation is an outlook. The digitization of policy Design Executive leadership Focus on users Culture of collaboration Government innovation ImplementationProcess EXHIBIT 1 Government innovation defined “Innovation doesn’t require a big change. Innovation requires trying something new.” Karl Frost MANAGER Cabinet Office
  • 15. 14  INSTITUTE FOR COMPETITIVENESS PROSPERITY “If innovation means trying something that hasn’t been done before, then the possibility of failure has to be accepted. Therein lies the value of combining innovation with rigorous evaluation methodologies, like randomized controlled trials. These allow you to fail fast and discriminate between winning and losing ideas quickly and accurately.” Julian House BEHAVIOURAL SCIENTIST Treasury Board Secretariat Given the above considerations, the revised definition reads as follows: Government innovation is improving design, processes, and implementation of public services to achieve a stated goal, and requires a culture of collaboration, a focus on end users, and executive leadership. Barriers to government innovation There are three barriers to government innovation: organi- zational realities, cultural practices, and the accountability framework (Exhibit 2). These influence government’s risk tolerance – only 18 percent of OPS managers feel senior management is fully willing to take risks to support innova- tion.3 Organizational barriers include the sheer size of public institutions, lack of leadership, disintegrated operations, and onerous layers of approvals. Cultural barriers – an overem- phasis on targets, managerial resistance, lack of incentives, and uneven power relations – further obstruct innovation. Finally, the framework within which government operates bars new practices. Short election cycles, along with the desire for accountability and transparency, all encourage government to pursue makeshift, low-risk projects. External opinion noted two other obstacles to government innovation. Internal capacity – or a lack of staff with key skill sets – is another cultural barrier that hinders opportunities for innovation. Federalism, an aspect of the accountability framework, additionally bars innovation. Innovation requires collaboration, and divided responsibility creates uncertainty over which party is responsible for innovating.4 • Large institutions • Decentralized IT systems • Disintegrated budgets • Onerous approvals Organizational realities • Target emphasis • Managerial resistance • Lack of incentives • Unbalanced stakeholder relations • Internal capacity Cultural practices • Short election cycles • Accountability • Transparency • Federalism EXHIBIT 2 Three types of barriers to government innovation Accountability framework
  • 16. LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 15 Benefits of government innovation There are five benefits of innovative gov- ernment (Exhibit 3). First, it can improve the effectiveness of public policy, or how well policy achieves its intended objective. A second benefit is greater efficiency of public policy, or allocating fewer resources toward an objective. Third, an innovative govern- ment can act as a human resource strategy by attracting, inspiring, and retaining talent. Introducing new ideas can, moreover, increase civic engagement – a fourth benefit of govern- ment innovation. Lastly, when public services are effective and efficient, and users provide input into the policy process, this can promote a government’s legitimacy. The Institute broadens its understanding of effectiveness based on external opinion. Innovation can create spillover benefits. For example, civic engagement can generate effective policy which can, in turn, increase a government’s legitimacy, and vice versa. This phenomenon makes it difficult to predict and measure the benefit associated with a given innovation. However, spillover benefits garner greater support for government innovation. Government innovation comes at a cost In Licence to innovate, the Institute identi- fied three costs of government innovation. The first, and most often cited, is risk. This refers to the sense of uncertainty the public service feels when taking new approaches and introducing different voices. A second cost of government innovation is leadership – consistently and effectively championing an innovation-driven agenda takes time and energy. A third cost of government innovation is securing adequate financial and human resources. In a context of fiscal austerity, investing resources can be difficult to justify, yet these are often required to pursue innova- tive projects. EFFICIENT USE OF RESOURCES EFFECTIVE POLICY GOVERNMENT LEGITIMACY CIVIC ENGAGEMENT HUMAN RESOURCE MANAGEMENT PERMISSION GRANTED EXHIBIT 3 Five reasons to enhance government innovation
  • 17. 16  INSTITUTE FOR COMPETITIVENESS PROSPERITY members and senior leadership, both of whom may be reluctant to allocate financial and human resources to an innovative project. In Licence to innovate, the Institute defined government innovation and described the associated benefits, barriers, and costs. Based on external opinion, the Institute revised its definition, expanded the range of benefits, and noted an additional barrier of government innovation. Concrete ways to overcome costs of government innova- tion were also provided. External opinion asked how Ontario could overcome these costs (Exhibit 4). To counter the risk-averse culture, government should build innovation into organizational priorities and consistently communicate them at the political and bureaucratic levels.5 Building innovation into ministerial mandate letters is one way to achieve this on the political front. Within the bureaucracy, managers should integrate innovation into their organizational objectives and priorities at the divisional, branch, and unit levels. Leaders should further celebrate success and learn from failure – this can spearhead change and model best practices. Strengthening leaders’ capacity and willingness to innovate (through mandatory innovation training and performance assessments) is one way to do this. Formal and casual recognition and reward of new ideas is another way to moti- vate and inspire public servants. Finally, team meetings, divisional newsletters, and intranet portals are some forums where leaders can communicate opportunities for innovation. About 92 percent of OPS managers feel there are insufficient resources to develop an innovation.6 To overcome the third cost of government innovation – resources – elected officials and policymakers must adopt a long- term horizon and holistic thinking. Doing so can generate greater buy-in from opposition EXHIBIT 4 Three costs of government innovation Integrate innovation in ministerial mandates and organizational objectives Incentivize risk-taking within the public service Strengthen leaders’ capacity and willingness to innovate Incorporate innovation in internal communications Streamline public sector innovation funds Prioritize long-term outcomes REWARD DEVELOP ALLOCATE
  • 18. LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 17 “No one should ever be told, ‘That’s not how we do things here.’” Jay Porter DIRECTOR Cabinet Office “Part of being successful innovators means testing hypotheses, scaling those that work, and continuing to test outcomes.” Greg Orencsak DEPUTY MINISTER Treasury Board Secretariat “Government can act as a platform for policy innovation. One strategy is to enable policymakers, stakeholders, and the general public to co-generate new solutions through low-risk, innovative problem solving approaches.” Donna Ratchford DIRECTOR OF THE POLICY INNOVATION PLATFORM Ryerson University
  • 19. 18  INSTITUTE FOR COMPETITIVENESS PROSPERITY STORIES ABOUT GOVERNMENT INNOVATION C ase studies provide an opportunity to share and learn from best practices. Here, the Institute highlights additional examples of government innovation within and outside of Ontario. These stories can further the discourse as well as incite and inspire change in the design, process, and implementation of public services. CHAPTER 2
  • 20. LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 19 Enhance government innovation by boosting design The first pillar of the Institute’s government innovation definition focuses on design, or improvements to government outputs. External opinion emphasized the expansive literature on design and asked for clarification. Design is a problem-solving activity – it means developing plans to achieve an outcome in a given environment.7 Design processes involve developing guidelines about particular prod- ucts and services, as well as outlining potential interactions and relationships.8 Although concepts and practices can vary, design considerations typically occur early on (specifically during problem identification), and influence process and implementation.9 Revise funding frameworks Government should revise funding frameworks to boost design. This means allocating resources according to policy objectives, not budget lines. Mission-driven budgeting does just that. External opinion questioned whether mission-driven budget- ing obscures accountability – what if resources are dedicated toward an activity tangent to a given mission? The Institute agrees that this is an important consideration, and maintains that mission-driven approaches actually support accountabil- ity for results. If resources are allocated based on objectives, it is easier to assess whether these resources effectively and efficiently achieved the desired outcomes. (See What’s mine is yours). Apply behavioural insights Innovation is more than designing better services; it means getting ahead of users. Behavioural economics looks to better understand how people make decisions by fusing traditional economic models with psychological insights. This approach to problem-solving is being applied internationally and can boost government innovation. For example, Ontario’s Behavioural Insights Unit conducts randomized control trials that change the context in which individuals make decisions. The recent pilot with a user-friendly Gift of Life Consent form, as profiled in Licence to innovate, demonstrates their success. Other stories CASE STUDY: What’s mine is yours Ontario is adopting mission-based approaches through the Local Poverty Reduction Fund. Three reasons inspired the creation of this program. First, government wanted to improve the outcomes of those most affected by poverty. Second, Ontario, was looking to make evidence-based decisions. Third, a stringent fiscal context and uncertain economic environment meant that public resources needed to be evidence-based and effective. A competitive application based program, the Fund financed 41 organizations in the 2015 funding round.10 Recipients include the Tungasuvvingat Inuit ($281,000 to develop and evaluate a culturally appropriate program to reduce poverty among Ontario’s urban Inuit) and CHATS ($205,000 to develop and evaluate a program that helps vulnerable seniors).11 The Fund provides $50 million over six years, and the Ontario Trillium Foundation supports organizations submitting proposals and monitors funding agreements.12 Outcomes of this initiative, especially as they relate to delivery agencies’ understanding of evaluation, are to be analyzed and shared in the short- and medium-terms. Results and best practices will be used to inform and influence long-term policy. Unfortunately, this instance of mission-based funding is signifi- cantly outweighed by Ontario’s general approach of assigning public resources according to ministry and program lines. This means that government is making its work harder. The recent Cabinet shuffle, which created 30 provincial ministries, proves the point. Siloed resources result in duplicate efforts and lost opportunities to measure results. Moreover, mission-based models organically yield innovative ideas and propagate information across local communities – Ontario is missing out.13
  • 21. 20  INSTITUTE FOR COMPETITIVENESS PROSPERITY CASE STUDY: Would you like a sticker? In 2013, ServiceOntario began renew- ing licence plate stickers online, but uptake was low. Three reasons led to the Behavioural Insights Unit’s involvement. First, a disconnect between citizen expectations and behaviour suggested an alternative approach was warranted. Second, government committed to delivering more efficient services and was willing to experiment. Third, ServiceOntario’s senior leadership directed staff to consult the Behavioural Insights Unit. Research revealed several barri- ers to online service adoption, and a pilot project was developed to shift behaviour.14 Over eight weeks, ServiceOntario mailed 626,212 licence plate renewal notifications. In addition to the traditional form, three conditions were tested: • Condition 1: introduced new messag- ing, highlighted in colour • Condition 2: added five reasons to renew online • Condition 3: added five reasons to renew online and time lost from in-per- son renewal The pilot was a success – 13,057 more licence plate stickers were renewed online. The second condition had the greatest effect as online renewals rose by 14.6 percent.15 Plus, it did not incur any additional costs. In fact, the pilot saved government about $28,053 by reducing in-person transactions. Based on these results, the government imple- mented a revised form in 2016, and outcomes have remained consistent. Government should celebrate this success. Did you know about Ontario’s Behavioural Insights Unit or their work before reading this? The Unit shares their reports internally through the intranet and has begun publishing public reports, but this is insufficient. The Institute encourages government to further capacity building and appetite for behavioural economics. Celebrating the Behavioural Insights Unit’s work internally through the weekly news- letter, Topical, and externally through Ontario News Releases and social media can achieve this.16 Greater coordination with Cabinet Office can better leverage the Unit’s work. are worth sharing. (See Would you like a sticker?). Yet behavioural economics can only go so far. Focusing on users is not novel – design think- ing does just that! Ontario should capitalize on other opportunities, like simulation activities, that focus on users of public services. Doing so can help answer questions like, How can government forms be optimally designed? How can public spaces be more accessible? and What standards are required to balance government’s objectives and stakeholder wants? Actually experiencing a policy can generate new ideas and foster an appreciation for users’ needs. Enhance government innovation by improving processes Process innovation is the second dimension of government innovation. This means improving internal capacity and external engagement. These elements have undoubtedly been shaped by the changing nature within the OPS. As research, delivery, and evaluation of public services are contracted out, bureau- crats’ abilities narrow and the nature of conversation with those outside government changes. Advance human resource management The OPS is a diverse workforce. This is cele- brated internally and is formally recognized as one of Canada’s Top 100 Employers. When it comes to innovation, diversity is a strength. It means that different people with various experiences bring multiple perspectives. Government needs to capitalize on this. A recent survey of OPS managers revealed that only 19 percent feel there is an established system to evaluate and develop innova- tive ideas forwarded by staff.17 In addition, only 19 percent feel senior decision-makers support trial-and-error testing of new ideas.18 Leveraging workers’ skills, abilities, knowl- edge, and experiences for innovation is a must. “We need a much stronger professional orientation toward people and innovation. More human processes and policies might flourish.” Peter MacLeod CO-FOUNDER AND PRINCIPAL MASS LBP
  • 22. LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 21 Assistant Deputy Minister Analyst Manager Director Deputy Minister EXHIBIT 6 Government should build lattices, not ladders External opinion further noted that the OPS is an aging work- force – the demographic profile is such that leaders and their successors are retiring simultaneously. This has implications on how government works. Rather than a top-down approach, leadership should model a lattice structure – interlacing to allow for horizontal and vertical dialogue (Exhibit 5). Licence to innovate reviewed human resource practices in the OPS, namely recruitment, training, and management. Ways to improve internal information sharing were also discussed. External opinion showed great interest in these topics and recognized that human resource practices in the OPS are due for renew. (See Invite others to play.) CASE STUDY: Invite others to play Work can be frustrating, difficult, and, sometimes, monotonous. But it can also be fun, especially with people looking to achieve similar objectives. Only 30 percent of OPS managers believe staff are motivated to think of new ideas and take part in their development.19 This is why the public sector should incorporate gamification – applying elements of games like rules, healthy competition, and points – into its work. An example from Penn Medicine at the University of Pennsylvania proves the point.20 The organization was looking for new ideas to improve patient satisfaction. Ideation was, however, typically a top-down approach. Penn Medicine realized they needed fresh thinking from front line staff who had an intimate understanding of patient experiences. In response, the hospital launched an American Idol-style innovation tournament. New ideas competed with one another in numerous vetting rounds; only the strongest and most promising ideas made it to the finals. And it worked! Five thousand employees generated more than 1,700 new sugges- tions ranging from patient service kiosks in the waiting room to a concierge that fills patient prescriptions. The experience of Penn Medicine highlights two lessons for OPS-ers. First, gamification ignites innovation. Second, people want to be engaged, they want to be asked to make a difference. As demonstrated by an analysis of Harvard Kennedy School Awards, formal recognition can further incentivize innovation.21 The government of Ontario currently offers Amethyst Awards to recognize excellence within the public service. However, these are not overtly dedicated toward innovation and do not recognize participation in broader public activities. In addition, the existence or recipients of Amethyst Awards are not well-communicated outside the public sector ‒ the latest government acknowledge- ment was in 2009. Ontario should take note from the Institute for Public Administration of Canada (IPAC), who offers and celebrates a variety of awards for junior and senior public servants.22 In addi- tion to drawing from existing networks, awards from an external body may be perceived as neutral. Innovation also requires people to share information and learn. The OPS does provide opportunities to move within, but not outside of, the bureaucracy. Government should encourage staff to explore professional opportunities within the public and private sectors (such as delivery agencies and think tanks). Ontario once offered secondments for academics, but this program has been terminated.23 “If we fail, it means systems are broken – there are insufficient incentives for providers to collaborate to improve outcomes.” Judith Wright CONSULTANT TO THE MINISTRY OF CHILDREN AND YOUTH SERVICES ON THE COLLECTIVE IMPACT FOR DISCONNECTED YOUTH
  • 23. 22  INSTITUTE FOR COMPETITIVENESS PROSPERITY Modify engagement ‘Wicked’ policy challenges cannot be solved by government alone – there is a need to bring in different voices to generate new ideas. For government, this means acting as a platform for innovation, or creating the conditions for new ideas to prosper. (See Don’t hate, participate). The government of Ontario is committed to improving public engagement, as demonstrated by the Open Government Initiative, Situation Tables, Environmental Registry, Red Tape Challenge, and public consultations. In addition, the prov- ince has been selected to participate in the Open Government Partnership’s pilot program to develop and fulfill commitments with civil society and organizations. Unfortunately, efforts are not always genuine. Data sets provided through the Open Government Initiative are sparse and difficult to navigate. In addition, engagement activities are sometimes perceived or operate as ‘window dressings.’25 In fact, only 7 percent of OPS managers report clients and citizens are actively involved in the design or planning of innovations.26 Worse, engagement activities are often one-sided – govern- ment presumes it knows best by proposing ideas and asking for input. A good example of this is Ontario’s 2016 Budget consultations. About 10 percent of votes (5,412 out of 53,402) suggested amalgamating Catholic and public school boards – Budget 2016 was silent on this.27 Non-governmental actors have taken a lead. Hackathons – which convene public and private sector actors to assess, solve, and present solutions to everyday challenges – are one example (Exhibit 6). The Brookfield Institute for Innovation Entrepreneurship has hosted several hackathons, ranging from improving accessibility to combating climate change.28 Ontario has supported some events, but it is imperative that public institutions are able and prepared to deliver on proposed solu- tions. Moreover, senior leaders must have an understanding of and willingness to champion such initiatives. Legislation and senior management evaluations are tools to make this happen. CASE STUDY: Don’t hate, participate Participatory budgeting (PB) is an engagement process where people propose and vote on projects funded from a pre-deter- mined budget. In 2015, the City of Toronto launched a PB pilot in three areas: Ward 33 (Don Valley East); Oakridge in Ward 35 (Scarborough Southwest); and Rustic in Ward 12 (York South- Weston).29 Seven improvement projects, totalling $435,000, were selected. Moreover, participants reported high levels of sat- isfaction; they also expressed intent to participate in future PB activities and recommend others do the same.30 The outcomes associated with the pilot, and the potential to implement the approach more broadly in Toronto, have yet to be assessed.31 There are several benefits associated with PB. First, it creates a sense of ownership and increases civic engagement. Second, community members may have a better sense of local challenges and can thereby propose solutions that better address these issues. Third, people get to know and work with city staff and elected officials. PB’s shortcomings should not be overlooked but can be overcome. Skewed community representation is one concern. This can be countered by using government’s coer- cive powers to mandate representation from diverse groups. Moreover, outreach can go a long way to ensure all members of the community feel welcome and their interests represented. A second critique of PB is that it leads to suboptimal outcomes since the general public, not policy experts, make decisions. This, however, assumes that government always has the best answer. This is why government should equip the public with adequate information about a problem and the impact of proposed solutions. Ontario should incorporate PB, especially in provincially funded organizations such as post-secondary institutions and hospitals. PB requires resources – staff to engage the public and money to fund projects. Broadening job responsibilities of bureaucrats working in communications departments would free up human capital to modify engagement. Source: Brookfield Institute for Innovation + Entrepreneurship. EXHIBIT 6 Hack it
  • 24. LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 23 CASE STUDY: Two-way transfer In 2013, Ontario’s Ministry of Government and Consumer Services developed an Innovation Procurement Initiative based on four elements: collaborating within and outside government; training providers and procurement professionals; assessing alternative procurement methods; and building leaders’ capacity to drive innovation and procurement competency. Implementation innovation requires more than developing alternative procurement models. For government to truly act as a commissioner of services, it must reconceptualise its contractual relationships with delivery agencies. Payment- by-outcome is a performance management framework that does this. Delivery agencies receive funding based on the results they achieve, not pre-set targets.32 This approach can reduce service providers’ administrative burden and promote learning; it can also allow for greater flexibility and save public resources.33 Moreover, payment-by-outcome shifts accountability from processes to outcomes, altering government’s role from regulation-makers to standard-enforcers. As a result, the relationship between government and delivery agencies changes which, in turn, necessitates a culture shift. Although measuring outcomes can be difficult (results cannot always be observed and disentangled from other effects), developing standards and incentives to capture desired outcomes is helpful.34 Employment Zones, a payment-by-outcome program for skills retraining in the United Kingdom, shows this is possible. The program helps the unemployed find sustainable employment (measured as the number of jobseekers achieving 13 and 26 weeks in continuous work).35 The transfer payment structure emphasizes the importance of these outcomes. Service providers receive initial funding and retain a proportion of it only if jobseekers find work within a certain period of time. Delivery agencies receive additional payment if jobseekers are placed in employment and retain work for 13 weeks. This approach differs from that adopted by Ontario’s Ministry of Advanced Education and Skills Development, where service providers are allocated set funding to provide a given number of services – flexibility and incentives are lacking. Enhance government innovation by supporting implementation The third pillar of the Institute’s government innovation definition considers implementa- tion, or the delivery of public services. Under the new public management framework, Canadian governments significantly restruc- tured this work during the 1990s by moving from direct to indirect delivery of public services. This approach was designed to join public interest values with private sector techniques, but has created an environment where public sector techniques and private sector values are the norm. Furthermore, relations between government and private organizations can be unbalanced in favour of government who holds the purse strings. Revitalize relationships Transfer payments play a key role in the imple- mentation of public services – they provide the resources delivery agencies need. Adhering to and reporting on contractual obligations can, however, be administratively burdensome. Importantly, this diverts resources away from service delivery, and creates tension amongst and between government and delivery agencies. Whenever government creates transfer pay- ments, it actually creates a market (Exhibit 7). Government should embrace its role as a market steward, incentivizing innovators to capture greater market share. In other words, government should view itself as a commis- sioner of services, assessing users’ needs along with designing and delivering services to meet those needs. This means focusing less on processes and more on outcomes. Ontario’s Transfer Payment Administration Modernization initiative is amalgamating registration processes for transfer payment recipients. This is a step in the right direction. (See Two-way transfer). Must: • Assess users’ needs • Design and deliver services to meet users’ needs • Incentivize innovators to capture greater market share • Focus on outcomes, not processes Please contact the Ontario government for more information. LOOKING FOR Market Steward EXHIBIT 7 Help wanted
  • 25. 24  INSTITUTE FOR COMPETITIVENESS PROSPERITY CASE STUDY: Come together Community hubs – a physical or virtual place for people to access a variety of programs – is one approach to streamlining government services. A community hub can be a school, neigh- bourhood centre, or another public space that offers co-located or integrated services, such as education, health care, and social services.37 Hubs are unique as the community they serve and are defined by local needs, services, and resources.38 To date, six mandate letters instruct elected officials to collab- orate in the development of community hubs.39 Although there is no single place in government to convene community planning across the province, the Premier’s Community Hubs Framework Advisory Group released a Strategy Framework and Action Plan to support community hubs in Ontario. This body is supported by the Community Hubs Secretariat in Cabinet Office.40 Amongst other outcomes, the Action Plan includes recommendations about the disposal of public property to meet community needs. Ontario’s Ministry of Children and Youth Services is working on a similar initiative. The province wanted to improve outcomes related to crime, employment, and graduation for youth not in employment, education, or training.41 In response, Budget 2016 committed to piloting a Collective Impact approach – cross-sec- tor stakeholders collaborate with youth to identify and solve complex social problems.42 Through the Collective Impact for Disconnected Youth, Ontario is convening service providers, local employers, public institutions, as well as local governments and bands.43 The province has established a provincial partnership table to consolidate leadership and experience. Work is also underway to select three to five demonstration communities as well as establish local backbone organizations.44 The Institute applauds this work, and is interested in the processes and out- comes that follow. Streamline services Many, if not most, government services are interrelated yet frequently operate in silos. This is not news to people interacting with government. Worse, it is the reality for those navigating the labyrinth of government offices and sifting through endless paperwork. (See Come together). The government of Ontario is working to break down (or build bigger) silos. ServiceOntario, a third party organization that delivers a wide range of government services (such as drivers’ licences, health cards, legal certification, and business registrations) is one example. The province’s Poverty Reduction Strategy – which amalgamated five programs delivered by two ministries – is another illustration. More can be done, especially when it comes to business supports. Ontario provides 127 initiatives across 14 separate ministries designed to help provincial businesses – ironically, several claim to be a one-stop-shop.36 Examples in Ontario and abroad show that government innovation does happen and can improve public services. As such, pol- icymakers should be encouraged to share and learn from best practices. Doing so can further the discourse. It can also incite and inspire change. “Everyone knows we should be planning horizontally. But the system is set-up vertically. This is why we need to change the way we plan and deliver services to better meet community needs.” Karen Pitre SPECIAL ADVISOR TO THE PREMIER ON COMMUNITY HUBS Cabinet Office
  • 26. LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 25 “Design is about connecting aims with means, all to achieve stated goals in context- sensitive environments.” Jonathan Craft ASSISTANT PROFESSOR University of Toronto “What we’re doing is novel – bringing together the key actors to co-develop a new approach to supporting communities to achieve change.” Sean Twyford DIRECTOR Ministry of Children and Youth Services “We dissuade and discourage public servants who take intelligent risks and then fail. This means less intelligent risk- taking. Government should reward those who try something new, and encourage those whose efforts didn’t work exactly as expected.” Karim Bardeesy DEPUTY PRINCIPAL SECRETARY Office of the Premier “People who join the OPS should feel they can make a difference and have an impact.” Greg Orencsak DEPUTY MINISTER Treasury Board Secretariat “Whenever government creates a transfer payment, it creates a market. Government must embrace its role as a market steward by creating space for innovators to capture greater market share.” Josh Hjartarson VICE PRESIDENT PUBLIC SECTOR KPMG
  • 27. 26  INSTITUTE FOR COMPETITIVENESS PROSPERITY A dvancing accountability is key to enhancing government innovation. It signals that innovation is important and provides a framework to measure progress. It is also imperative given the context in which government operates. The Institute further explores accountability considerations related to reporting tools, monitoring bodies, and assessment criteria. ACCOUNTING FOR GOVERNMENT INNOVATION CHAPTER 3
  • 28. LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 27 Innovation requires accountability Government innovation requires accounting for individual and organizational activities. Unfortunately, only 22 percent of OPS managers feel innovations are evaluated after implementa- tion; 17 percent say that evaluation results are used to improve innovation practices.45 Yet monitoring innovation signals its importance and ensures objectives are achieved. This necessi- tates a conversation on reporting tools, a monitoring body, and assessment criteria for government innovation. That said, external opinion questioned whether ‘accountability’ was the best language to describe the monitoring of govern- ment innovation. The term’s negative connotation, combined with a risk-averse culture, may actually stifle innovation. Narrating accountability efforts as ‘opportunity frameworks’ can encourage, rather than suppress, efforts. Develop reporting tools The Ontario government has tools to measure innovation at the individual level. Incorporating innovation into public servants’ performance management plans and performance evaluations is one way to do this. Reconceptualising performance feedback tools is another option. Piloted by some departments in the federal government, the Upward Feedback Questionnaire is a confidential online survey that provides employees with an opportunity to share honest, constructive, and confidential feedback on their managers’ leadership skills. Managers can take this information and learn what they are doing well and how they can improve. If such a tool incorporated innovation and was used by all public servants, it could also monitor individual activities. Organizational tools can further monitor government innova- tion. Ontario’s Results-based Planning Briefing Books, if organized by policy topic, can serve this purpose. Further, there may be a role for the province’s Centre of Excellence for Evidence-Based Decision Making. Housed in Treasury Board Secretariat, the Centre builds capacity to assess program performance, using evidence to inform choices and lead change.46 Incorporating and monitoring innovation into the work of the Centre of Excellence for Evidence-Based Decision Making seems a natural fit. “Innovation needs to consider the different lines of business performed by the public service.” Kevin French ASSOCIATE DEPUTY MINISTER Ministry of Government and Consumer Services
  • 29. 28  INSTITUTE FOR COMPETITIVENESS PROSPERITY Taking one (or multiple) sessions of Question Period to discuss government innovation is a start. That said, the tone of Question Period may preclude it as a forum to account for government innovation. This was a common remark from the feedback collected – poli- ticians of all stripes should be embarrassed. As such, Standing Committee meetings can serve as an alternative forum. The Institute does, however, believe in the primary of the Legislature. Changing the tone of Question Period – less heckling and more cooperating – is a must. A third alternative would be to create a stat- utory body whose responsibility is to monitor government innovation. This could be an external review board composed of academics, practitioners, and experts. Determine assessment criteria Licence to innovate presented four criteria to evaluate individual and organizational innova- tion: context investigation; input itemization; output identification; and outcome inspection (Exhibit 8). External opinion agreed that these criteria should be deliberated by those within and outside of government. Criteria should be scalable – they should be appropriate and relevant for innovations of different magni- tudes. Criteria should also reflect the diversity of work performed within the public service. For example, implementation innovation There are other examples of public reporting of government innovation. The Organization for Economic Cooperation and Development created an Observatory of Public Sector Innovation. This collects and analyzes public sector innovations to encourage sharing, discussion, and co-creation.47 Innovations are searchable by various factors, such as innovation objective, stage, and result.48 Ontario could enhance its contribution to this Observatory or adopt a similar database to better monitor (as well as share information about) organizational innovation. Create a monitoring body After establishing tools that report on indi- vidual and organizational innovation, a body must monitor innovation. This cannot strictly be a public service conversation. In Licence to innovate, the Institute suggested reimagining the roles of third party organi- zations that report to the Legislature (such as the Auditor General). These bodies should adopt a prospective rather than retrospective approach by identifying risks government can take, not just past mistakes. That said, experts have speculated whether third party bodies have the capacity and mandate to adopt this role. The Institute maintains that adopting a business-as-usual approach stifles, rather than encourages, innovation. A second way to monitor innovation is to build on the role of opposition members whose purpose is to hold the government to account. 1 Comprehend, articulate, and reflect on an issue. This creates space for innovation and lends to a more appropriate solution. Context investigation Tally the financial and human resources involved in innovation. Input itemization Determine the outputs of innovation, or what was produced. Output identification Review the overarching results of innovation. This provides information about best practices and lessons learned. Outcome inspection 2 3 4 EXHIBIT 8 Four criteria to evaluate government innovation
  • 30. LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 29 may mean something different to a scientist working with the Ministry of Environment and Climate Change, or to a lawyer working with the Ministry of the Attorney General. Accountability is integral to the framework within which elected officials and bureaucrats operate. Narrating accountability efforts as opportunity frameworks may encourage, rather than stifle, innovation. Based on external opinion, the Institute expands its discussion of reporting tools, monitoring bodies, and assessment criteria. “The Auditor General currently focuses on learning from the past. Evaluating past performance may compound risk-averse attitudes and unintentionally stifle innovation.” Alex Ryan SENIOR SYSTEMS DESIGN MANAGER Government of Alberta “Question Period may not be the best forum to account for government innovation – opposition would be overly critical and unsupportive of failure.” Sandford Borins PROFESSOR University of Toronto
  • 31. 30  INSTITUTE FOR COMPETITIVENESS PROSPERITY HOW GOVERNMENT CAN REWARD RISK T here are eight ways Ontario can enhance government innovation. Based on external opinion, the Institute is revising and expanding its initial recommendations. These are feasible options to help government counter the risk-averse culture and advance accountability. Opportunities to enhance innovation in the design, process, and implementation of public services are also discussed. RECOMMENDATIONS
  • 32. LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 31 Revise funding frameworks to boost design Funding frameworks influence design. Licence to innovate argued for mission-based approaches, rather than allocating resources by ministry and program, to foster collaboration and enhance innovation. Importantly, this process would allow government to align ministerial funding cycles. The Institute applauds the work of the Local Poverty Reduction Fund, which demonstrates that mission-based approaches are viable. That said, Cabinet Office should centralize innovation funds to experiment with design. Innovation funds are currently scat- tered across ministries – a centralized approach would avoid duplication of efforts and promote information-sharing. Integrate innovation into government activity to counter the risk-averse culture Government needs to take centralized action to counter the risk-averse culture. In Licence to innovate, the Institute recom- mended expanding Ontario’s Program Review, Renewal, and Transformation process – a framework for evidence-based decision-making – to include innovation. Establishing innova- tion hubs and labs within the provincial government’s central organizations (such as Cabinet Office, Treasury Board Secretariat, and the Ministry of Finance) presents another opportunity. Creating spaces where there is a greater tolerance for risk and experimentation signals that innovation is desir- able and acceptable. The work of the federal government shows this is possible. A second way to counter the risk-averse culture is to build innovation into organizational priorities and consistently communicate them. Building innovation into ministerial mandate letters, along with integrating innovation into organizational objectives and priorities, are core actions. Sharing successes and failures associated with innovation is also a must – communicating within and outside of govern- ment can build capacity and tolerance for change. A third approach is to embed innovation into core government processes such as Cabinet Submissions. Requiring policymak- ers to describe if and how proposed policies are innovative, and requiring decision-makers to take these considerations into account, can incite change.
  • 33. 32  INSTITUTE FOR COMPETITIVENESS PROSPERITY Advance human resource management to strengthen processes Ontario should strengthen process innovation by focusing on human resource management. As suggested in Licence to innovate, revising recruitment messaging and developing training programs to motivate innovative talent are some ways to do this. In addition, the Ontario government should have an honest conversation about employee incentives. Case studies show that non-monetary incentives – like gamification and employee awards – are effective. Hosting an OPS-wide innovation tournament, along with awarding winners with job opportuni- ties within and outside the public sector, is one idea. Partnering with organizations external to government, such as IPAC, to leverage capacity and networks can additionally celebrate innovators. Recognizing individual work and efforts within and outside the office can further strengthen capacity and willingness to innovate. Attributing projects to non-managerial staff is one example. Many public servants are active in their communities and social media – their efforts to engage the public should further be rewarded. In all cases, individual behaviour can be monitored through performance development plans and evaluations. Treasury Board Secretariat, who is centralizing human resource functions, should play a leadership role. Apply behavioural insights to improve design The Institute encourages Ontario to expand the number and scope of policy experiments conducted by the Behavioural Insights Unit. Moreover, government should better commu- nicate the number of experiments conducted, the resources committed to such initiatives, and their results. These recom- mendations were echoed in Licence to innovate. Celebrating the work of the Behavioural Insight Unit internally (through Topical) and externally (through News Releases and social media) can achieve this. In addition to enhancing the quantity and quality of innovation, information sharing can counter the risk-averse culture and advance accountability. This is a role for Ontario’s Policy Innovation Leadership group. Yet behavioural economics may only be a tool to pick low-hanging fruit. As such, government should view itself as a commissioner of services by assessing users’ needs as well as designing and delivering services to meet those needs.
  • 34. LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 33 Revitalize relations between government and delivery agencies to upgrade implementation Most provincial programs are delivered by the private sector. This approach was designed to join public interest values with private sector techniques, but has backfired. Ontario needs to revitalize relations between government and delivery agencies by viewing itself as a commissioner of services. This means focusing less on processes and more on outcomes. As discussed in Licence to innovate, Ontario’s Transfer Payment Agreement Modernization is one way to align registration processes for delivery agencies, but more can be done. Procurement models are due for renewal. The Innovation Procurement Initiative, which emphasizes new ways of collaboration, guidance, funding, and capacity-building, is a step in this direction. Incorporating innovation into government-wide procurement should be a priority, particu- larly by adopting alternative models that focus on buyers and end-users. Ontario’s Ministry of Government and Consumer Services should lead this work. To truly act as a commissioner of services, government must shift its focus from monitoring processes to outcomes – this means developing standards rather than enforcing regulations upon delivery agencies. Adopting a payment-by-outcomes framework to allocate resources to delivery agencies, as well as monitoring performance, can achieve this. There are many areas where this framework can be applied in Ontario, such as skills training, health care, and social services. This approach can be taken a step further by organizing the work of delivery agencies across community hubs. A coordinated approach led by Ontario’s Treasury Board Secretariat in partnership with the Community Hub Secretariat is worth exploring. Modify the quality and scope of engagement to support processes Ontario is willing to engage the public, but more can be done. Institutionalizing open data policies to create a common and transparent framework for future action is a must. This was a proposed in Licence to innovate. Public engagement initiatives should not be hearsay – this would counter the spirit of engagement and backfire on the government’s objectives. This is why Ontario must ensure that it has the institutional frameworks and leadership talent to implement projects. Legislating that the outcomes of hack- athons, mind labs, or other brainstorming activities be made public is one recommendation. A second option is to evaluate senior leaders specifically on their efforts to engage the public. Lastly, the Institute encourages Ontario to undertake its own PB projects, especially in provincially funded organizations such as post-secondary institutions and hospitals. Here, government could require a certain portion of funding to have a participatory requirement. The province must further ensure there is a sufficient number of staff to facilitate PB. Broadening job responsibilities of bureaucrats working in communications departments is one way to do this. To secure funding, govern- ment can allocate existing resources toward projects desired and chosen by people. In all cases, Ontario’s Minister Responsible for Digital Government and Ministry of Finance should play leadership roles.
  • 35. 34  INSTITUTE FOR COMPETITIVENESS PROSPERITY Streamline services to refine implementation As recommended in Licence to innovate, integrated service delivery requires bigger policy silos, or better collaboration across and within government. Ontario’s work to create community hubs is an excellent start, and the Institute encour- ages senior leaders to convene and dedicate resources to this initiative. As it currently stands, there is no body that convenes province-wide community planning.50 Cabinet Office should lead this work and further disseminate information about community hubs across the OPS. In addition, the Institute encourages Ontario to pilot the Collective Impact for Disconnected Youth, communicating successes and failures within and outside government. Doing so would increase transparency and accountability; it would also allow others to learn from best practices and offer alterna- tive insights. On that note, provincial initiatives designed to streamline government-wide services are few and far between. The Institute recommends the province adopt a mission-driven approach to organize public services and internal deci- sion-making. Organizing government’s work across objectives can facilitate resource sharing and service integration – this creates ripe opportunities for innovation. Monitor government innovation to enhance accountability Government should account for individual and organizational innovation. To encourage change, efforts should be communi- cated as ‘opportunity frameworks.’ Broadening individuals’ performance management plans and evaluations to include innovation activities is one way to do this. These suggestions are echoed in Licence to innovate. Adopting other tools and learnings from the government of Canada’s pilot programs are additional suggestions. At the organizational level, the Institute recommends incorporating innovation into Ontario’s Results- based Planning Briefing Books to report on government innovation by policy field. Further, monitoring innovation can complement the Centre of Excellence for Evidence-Based Decision Making’s work. Contributing to other avenues for public reporting, such as the Observatory of Public Sector Innovation, should also be explored. An external third party body should monitor government innovation – the Institute is ready to report on government activities, and third party bodies of the Legislature (like the Auditor General) should do the same. This may require reimag- ining their capacity and mandate. On the political front, elected officials across party lines should engage in open and honest dialogue on what government has done (and should do) to enhance innovation. Allocating Standing Committee meetings or an external review board to account for government innova- tion is a start. Improving the nature of Question Period is a must. Finally, the Institute proposed four criteria to monitor govern- ment innovation: context investigation; input itemization; output identification; and outcome inspection. These criteria are starting blocks to assess innovation and should be amended following broader consultation.
  • 36. LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 35 “Government needs to create an ecosystem that allows them to innovate.” Blaine Woodcock PUBLIC STRATEGY AND INNOVATION Deloitte “Without risk there is no innovation.” Sheldon Levy DEPUTY MINISTER Ministry of Advanced Education and Skills Development “Government needs to create space where people have the time and freedom to think about experimenting and advancing innovation. This means creating a culture that lives beyond an individual leader or team.” Lauren Hunter HEAD OF IN.SPIRE INNOVATION HUB Natural Resources Canada “We’ve all taken the same oath. Now we have to act on it better.” Jay Porter DIRECTOR Cabinet Office
  • 37. 36  INSTITUTE FOR COMPETITIVENESS PROSPERITY and the Ontario College of Art and Design on the Discoverability Design Jam. The objective of this hackathon was to develop media on how content connects with audiences. Climate Hack-To-Action: Unlocking a Low Carbon Future was a third hackathon. Brookfield partnered with the Ministry of Environment and Climate Change to develop innovative solutions that empower people to make low carbon choices and reduce their carbon footprints. This took place between April 7 and 9 2016. Lastly, PoliHack was done with the Ministry of Children and Youth Services on April 12, 2016. The objective of this hackathon was to design and create tools that analyze and share Ministry data. 29 Oakridge and Rustic are considered Neighbourhood Improvement Areas. 30 Given these results, it has been recommended that the PB pilot be extended for 2016 and 2017 in the same wards, with an increase in capital funding allocation in each area from $150,000 to $250,000. “Evaluation Report: Participatory Budgeting Pilot Evaluation,” Environics Research, 2015, http://www.toronto.ca/ legdocs/mmis/2016/bu/bgrd/backgroundfile-87192.pdf. 31 An evaluation will examine the impact of increased funding ($250,000 per region) for 2016 and 2017. 32 Sturgess, Gary L. and Lauren M. Cumming, “Payment by Outcome: A Commissioner’s Toolkit,” 2020 Public Services Trust, 2011. 33 Ibid.; Boyd, Ross, “Better Public Services Results: Putting outcomes for users at the heart of the strategic planning process,” New Zealand Performance Hub. 34 Sturgess, Gary L. and Lauren M. Cumming, “Payment by Outcome: A Commissioner’s Toolkit,” 2020 Public Services Trust, 2011. 35 Ibid. 36 Working Paper 23, “A place to grow: Scaling up Ontario’s firms,” Institute for Competitiveness Prosperity, 2016, http://www.competeprosper.ca/work/ working_papers/working_paper_23. 37 “Community Hubs,” Government of Ontario, 2016, https://www.ontario.ca/page/ community-hubs. 38 Pitre, Karen, “Community Hubs in Ontario: A Strategic Framework Action Plan,” Government of Ontario, 2016, https://www.ontario.ca/page/community-hubs- ontario-strategic-framework-and-action-plan. 39 Ibid. 40 This also reports on stakeholder engagement, identifies provincial barriers and opportunities, and discusses intra-ministerial collaboration. Further, the report highlights community hubs in Ontario, like the Mount Community Centre in Peterborough and the London Family Centre Service System. Ibid. 41 Outcomes have remained stagnant for youth who are not in employment, education, or training. Further, marginalized youth (including racialized, Aboriginal, and new- comers) experience growing outcomes disparities. 42 Corcoran, Mimi, Fay Hanleybrown, Adria Steinberg, and Kate Tallant, “Collective Impact for Opportunity Youth,” FSG, 2012. 43 There are five stages of the Ontario’s Collective Impact for Disconnected Youth Model: developing an integrated approach; sharing resources; seeking youth input; responding to local experiences; and monitoring and adapting to outcomes. “Collective Impact for Disconnected Youth: Provincial Partnership Table,” Ontario Ministry of Children and Youth Services, 2016. 44 Next steps include designing and implementing a measurement framework, and creating a working group to resolve program and funding issues. 45 Wright, C., “Innovation in the Government of Ontario,” 2016. Manuscript in preparation. 46 The Centre’s mandate is six-fold: develop an enterprise-wide framework to embed standards for evidence-based decision making; identify and develop tools to support the framework’s implementation; build capacity for evidence-based activities; support decision-making processes through collaboration and information presentation; identify and leverage internal and external partners to support implementation; and support transparency in public reporting through ministry performance measures. 47 “The Observatory of Public Sector Innovation,” OECD, https://www.oecd.org/ governance/observatory-public-sector-innovation/about/. 48 Ibid. 49 “Transfer Payment Administration Modernization (TPAM),” Ontario Nonprofit Network, http://theonn.ca/our-work/sector-financing/transfer-payment- administration-modernization/. 50 Pitre, Karen, “Community Hubs in Ontario: A Strategic Framework Action Plan,” 2016, https://www.ontario.ca/page/community-hubs-ontario-strategic- framework-and-action-plan. 1 Clarke, Amanda and Jonathan Craft, “From Analogue Traditions to Digital Dreams: Digital Era Policy Design,” ECPR Joint Session, 2015. 2 Wright, C., “Innovation in the Government of Ontario,” 2016. Manuscript in preparation. Research on the American public service further shows that about half of government innovations originate from middle managers or front-line staff. Borins, Sandford, “Leadership and innovation in the public sector,” Leadership Organization Development Journal 23, no. 8, 2002. 3 Wright, C., “Innovation in the Government of Ontario,” 2016. Manuscript in preparation. 4 Borins, Sandford, “The Persistence of Innovation in Government: A Guide for Innovative Public Servants,” IBM Center for The Business of Government, 2014. 5 Borins, Sandford, “Leadership and innovation in the public sector,” Leadership Organization Development Journal 23, no. 8, 2002. 6 Wright, C., “Innovation in the Government of Ontario,” 2016. Manuscript in preparation. 7 Ulrich, Karl T., Design: Creation of Artifacts in Society, Pennsylvania: McGraw-Hill, 2011; Howlett, Michael, “From the ‘old’ to the ‘new’ policy design: design thinking beyond markets and collaborative governance,” Policy Sci 47, 2014. 8 Junginger, Sabine, “Design and Innovation in the Public Sector: Matters of Design in Policy-Making and Policy Implementation,” 10th European Academy of Design Conference – Crafting the Future, 2013. 9 Ibid. 10 “Local Poverty Reduction Fund – Successful applicants,” Government of Ontario, 2016, https://www.ontario.ca/page/local-poverty-reduction-fund-successful- applicants. 11 All 2015 recipients (along with project descriptions, objective, and funding) are online. Ibid. 12 An additional $10 million is allocated for 2016 and 2017. “Local Poverty Reduction Fund,” Government of Ontario, 2016, https://www.ontario.ca/page/ local-poverty-reduction-fund. 13 Ibid. 14 Barriers to online service included form style, minimal awareness, privacy concerns, perceived delay, and individual habit. “Behavioural Insights Pilot Project: Licence Plate Sticker Renewal,” Government of Ontario, 2014, https://www.ontario.ca/ page/behavioural-insights-pilot-project-license-plate-sticker-renewal. 15 Ibid. 16 Topical is a newsletter circulated amongst Ontario’s public servants. 17 Wright, C., “Innovation in the Government of Ontario,” 2016. Manuscript in preparation. 18 Ibid. 19 Ibid. 20 “Why some innovation tournaments succeed and others fail,” University of Pennsylvania, 2014, http://knowledge.wharton.upenn.edu/article/ innovation-tournaments-succeed-others-fail/. 21 Borins, Sandford, “The Persistence of Innovation in Government: A Guide for Innovative Public Servants,” IBM Center for The Business of Government, 2014. 22 The Association of Professional Executives of the Public Service of Canada also offers awards to Canadian public servants. 23 The federal government currently offers a Fellow-in-Residence program for academics, but limited positions are available. 24 “Ontario, Canada - OGP Subnational Pioneers,” Open Government Partnership, 2016, http://www.opengovpartnership.org/node/9015. 25 Ferguson, Rob, “Charles Sousa criticized for ignoring public consultations with early budget plan,” Toronto Star, 2016, https://www.thestar.com/news/queen- spark/2016/02/02/finance-minister-charles-sousa-taken-to-task-for-sham-public- budget-consultations.html. 26 Wright, C., “Innovation in the Government of Ontario,” 2016. Manuscript in preparation. 27 “Budget Talks,” Government of Ontario, https://talks.ontario.ca/. 28 Four hackathons have been conducted. In Hack-cessibility: Innovation to Build a More Accessible Ontario, Brookfield partnered with the Accessibility Directorate of Ontario to design and prototype ideas that improve accessibility. This event was held between October 23 and November 6, 2015. On March 5, 2016, Brookfield worked with the Canadian Radio-television and Telecommunications Commission END NOTES
  • 38. LICENCE TO INNOVATE REVISITED: HOW GOVERNMENT CAN REWARD RISK 37 Annual Reports FIRSTANNUAL REPORT – Closing the prosperity gap, November 2002 SECOND ANNUAL REPORT – Investing for prosperity, November 2003 THIRD ANNUAL REPORT – Realizing our prosperity potential, November 2004 FOURTH ANNUAL REPORT – Rebalancing priorities for prosperity, November 2005 FIFTH ANNUAL REPORT – Agenda for our prosperity, November 2006 SIXTH ANNUAL REPORT – Path to the 2020 prosperity agenda, November 2007 SEVENTH ANNUAL REPORT – Leaning into the wind, November 2008 EIGHTH ANNUAL REPORT – Navigating through the recovery, November 2009 NINTH ANNUAL REPORT – Today’s innovation, tomorrow’s prosperity, November 2010 TENTH ANNUAL REPORT – Prospects for Ontario’s prosperity, November 2011 ELEVENTH ANNUAL REPORT – A push for growth: The time is now, November 2012 TWELFTH ANNUAL REPORT – Course correction: Charting a new road map for Ontario, November 2013 THIRTEENTH ANNUAL REPORT – Finding its own way: Ontario needs to take a new tack, November 2014 FOURTEENTH ANNUAL REPORT – Disruptions ahead: The making of a dynamic and resilient Ontario economy, November 2015 Working Papers WORKING PAPER 1 – A View of Ontario: Ontario’s Clusters of Innovation, April 2002 WORKING PAPER 2 – Measuring Ontario’s Prosperity: Developing an Economic Indicator System, August 2002 WORKING PAPER 3 – Missing opportunities: Ontario’s urban prosperity gap, June 2003 WORKING PAPER 4 – Striking similarities: Attitudes and Ontario’s prosperity gap, September 2003 WORKING PAPER 5 – Strengthening structures: Upgrading specialized support and competitive pressure, July 2004 WORKING PAPER 6 – Reinventing innovation and commercialization policy in Ontario, October 2004 WORKING PAPER 7 – Taxing smarter for prosperity, March 2005 WORKING PAPER 8 – Fixing fiscal federalism, October 2005 WORKING PAPER 9 – Time on the job: Intensity and Ontario’s prosperity gap, September 2006 WORKING PAPER 10 – Prosperity, inequality and poverty, September 2007 WORKING PAPER 11 – Flourishing in the global competitiveness game, September 2008 WORKING PAPER 12 – Management matters, March 2009 WORKING PAPER 13 – Management matters in retail, March 2010 WORKING PAPER 14 – Trade, innovation, and prosperity, September 2010 WORKING PAPER 15 – Small business, entrepreneurship, and innovation, February 2012 WORKING PAPER 16 – Making sense of public dollars: Ontario government revenue, spending, and debt, May 2013 WORKING PAPER 17 – Untapped potential: Creating a better future for service workers, October 2013 WORKING PAPER 18 – Taxing for growth: A close look at tax policy in Ontario, October 2013 WORKING PAPER 19 – The realities of Ontario’s public sector compensation, February 2014 WORKING PAPER 20 – Building better health care: Policy opportunities for Ontario, April 2014 WORKING PAPER 21 – Open for business: Strategies for improving Ontario’s business attractiveness, May 2015 WORKING PAPER 22 – Better foundations: The returns on infrastructure investment in Ontario, September 2015 WORKING PAPER 23 – A place to grow: Scaling up Ontario’s firms, January 2016 WORKING PAPER 24 – Licence to innovate: How government can reward risk, February 2016 WORKING PAPER 25 – Toward a low-carbon economy: The costs and benefits of cap-and-trade, April 2016 PREVIOUS PUBLICATIONS
  • 39. The Institute for Competitiveness Prosperity 105 St. George Street Suite 9000 Toronto, Ontario M5S 3E6 Telephone 416 946 7300 Fax 416 946 7606 Should you wish to obtain a copy of one of the previous publications, please visit www.competeprosper.ca for an electronic version or contact the Institute for Competitiveness Prosperity directly for a hard copy. DESIGN Hambly Woolley Inc. www.hamblywoolley.com Illustration: ©2016 John Krause / The iSpot To learn more about the Institute please visit us at: www.competeprosper.ca Should you have any questions or comments, you may reach us through the website or at the following address: EXECUTIVE DIRECTOR Jamison Steeve 416 946 7585 j.steeve@competeprosper.ca RESEARCH DIRECTOR Dorinda So 416 946 5325 d.so@competeprosper.ca POLICYANALYSTS Erica Lavecchia (Project Lead) 416 946 5595 e.lavecchia@competeprosper.ca Julia Hawthornthwaite 416 978 7843 j.hawthornthwaite@competeprosper.ca Christopher Mack 416 978 7859 c.mack@competeprosper.ca Jonathan Thibault 416 946 3503 j.thibault@competeprosper.ca Saad Usmani 416 978 7839 s.usmani@competeprosper.ca HOW TO CONTACT US