Finance professionals see innovations in public sector

The public sector’s image, as a place where little or no innovation happens, is challenged in a global research report, which showed to the contrary, some kind of innovation is actually happening.

Specifically, 91 per cent of the public sector finance professionals and those in the private sector are affirming the new development.

The report by the Association of Chartered Certified Accountants (ACCA), involved about 4,436 members across 142 countries, with online panel discussions with 89 members across 32 countries.

The level of innovation was measured across three areas: people-based, data and technology, and process innovation, with the report aiming to investigate what kind of innovation is taking place in public finance, while also looking ahead to future challenges.

The respondents’ insights reveal a public sector that is innovating incrementally, but when asked the type of innovation required to meet today’s complex challenges, the finance professionals believed governments would need to embrace more radical forms of innovation.

Public Sector expert at ACCA and author of the report, Alex Metcalfe, said: “

The findings show that innovation in the public sector is broadly incremental, and not radical or transformative innovation.

“But with considerable challenges facing the public sector – from budget reductions to talent shortages – our respondents said a more radical approach is needed in the future. Their clear message is that governments need to shift from the current dominance of incremental innovation to more radical reforms.’

The Chief Executive of The Royal Society for the Encouragement of Arts, Manufactures and Commerce (RSA), Matthew Taylor, pointed out that the report “dispels the lazy myth that the public sector is adverse to innovation.

“The future is unpredictable. Leaders– whether of nations or cities, need to be able to experiment and adapt. At the RSA, we advocate ‘thinking like a system and acting like an entrepreneur’. Change can come from anywhere in a system, but transformation means the ability continuously to experiment and adapt.

“We need leaders whose understanding of our challenges and whose determination to make a difference is such that they will openly embark on a journey without knowing where it will end.

“Any leader who claims to be doing this without often feeling disorientated and vulnerable is deluding themselves. Ultimately, however, as many of those who responded to the ACCA’s survey recognised, aiming for transformation may be less risky than hoping it can be avoided.”

The report however, recommended a shift from the current dominance of incremental innovation to more radical forms of innovation, where policymakers and public sector leaders would share a vision and strategic direction, allowing staff to understand how the organisation can proactively address the complex challenges it faces.

It also showed that finance function has a critical role to play in the wider public sector innovation process, while finance professionals should apply the concepts of integrated thinking and value creation through multiple forms of “capital” to help in the construction and assessment of business cases for innovation, among others.

Metcalfe added: “Unlike the private sector, moving to radical innovation for the public sector is a challenge in itself– stability has to be sustained. This is a double-bind for the public sector innovator.

“With the public sector, first-mover advantages do not apply, not just because of the lack of traditional market pressures, but also due to the need to manage risk, while trying to scale-up innovation.”