Innovation labs are becoming popular units in the public sector. As their name suggests, they are tasked with promoting innovation in government and are a relatively recent organizational development. As these labs start becoming part of the public sector landscape, it is worthwhile to ask: why are public sector innovation labs emerging?
We can come up with a number of reasons:
First, recent public sector reforms and their accompanying academic discussions (the so called new public governance discourse) are increasingly focusing on service processes and outcomes. This has opened up the public sector to an influx of various process-oriented methods, such as design thinking, that focus on user experience, frequent experimentation and multiple analytical perspectives. The methods are considered innovative and are thus attracting for such labs.
Second, many governments are operating under some form of fiscal austerity constraints. This has heightened the attention to public service processes and to how we can increase service productivity and citizen trust simultaneously (e.g., through bringing in user experience via co-production methods of participation). Many academics and practitioners agree that innovative methods are required to meet this challenge.
On the flip side of the fiscal constraints arguments are the discussions about the entrepreneurial state. These focus on the public sector’s role in engendering new technological revolutions. Here the focus shifts towards different kinds of policy experimentations, e.g. innovative public procurements and other so-called demand-side innovation policy measures that seek to create new markets.
Third, and perhaps most importantly, governments are under siege from diffusion of new ICT solutions and the possibilities these have created, from participatory feedback mechanisms to utilizing web analytics and big data. These ICT solutions can often be easily and convincingly linked to innovative public solutions.
The emergence of i-labs in the public sector can be tied to larger theoretical debates about organizational and technological (radical) innovations. The disruptive innovation theory popularized by Christensen in The Innovator’s Dilemma is worth mentioning in this context. Simply put, disruptive technologies are technologies that are significantly different from traditional technologies. While they are initially inferior to the latter in performance criteria (mostly evaluated by mainstream customers), they are able to create new markets and provide new functionalities. It has been recognized that established companies tend to excel in incremental innovation, but not at creating breakthrough innovations. Smaller companies are presumed to be better suited for technological breakthroughs. While organizational death can be a legitimate part of the evolutionary perspective of the economy, it has lead management researchers to ask how incumbent firms can deal with these organizational challenges and which solutions there could be for the ‘innovator’s dilemma’. This is even more critical for the public sector, because it is difficult for a government to start anew and there are not many market signals to push and signal change.
In sum, with ICT revolution spreading throughout economy and society at large, we can expect that new organizational forms to deal with rapid changes and to spur on such changes also in the public sector. This is particularly so as governments operate under fiscal constraints and new focus on service processes.