Innovation, growth and public services

By Nick C Jones, Director of PwC’s Public Sector Research Centre

Innovation is a competitive necessity for business and for government. Along with skills and infrastructure, innovation is fundamental to achieving good growth. Indeed, PwC’s recently released research on global innovation reveals that, over the last three years, leading innovators have grown at an impressive rate which is 16% higher than the least innovative. 

So how can government play its part in creating an innovation ecosystem that supports the stepping stones to growth? Particularly in the light of perhaps the most striking finding for government from the research that just under half of the 1,757 companies interviewed internationally take advantage of any form of government funding for innovation (48%) or tax incentives (45%).

This picture does vary across the globe, with more companies taking advantage of government support in France, The Netherlands, the Nordic countries and China and fewer in Russia, Saudi Arabia and the UAE. But it raises the question of whether governments’ funds are being directed to best effect. 

Strategically, the future public body therefore needs to consider its role in local and national innovation strategies, based on areas of competitive advantage. One approach – smart specialisation – involves formulating an economic transformation agenda which builds on, and innovatively combines, existing strengths in new ways. This means identifying a place’s competitive advantages and mobilising regional stakeholders and resources around an inspirational vision for the future.

We are also seeing the rise of public entrepreneurs – individuals and organisations within the public sector which create new ventures and ultimately increase local, regional and national
innovation absorption capacity. Their efforts are in turn championed by political entrepreneurs, who are key in channelling political will and vision to support innovative strategies.

But innovation is equally important for the public sector. Tomorrow’s leading public body needs to be capable of incubating ideas and delivery models itself and accelerating their impact (scaling up via rapid prototyping).  

Operationally, this means having the right (new) service delivery models for the right results, with an eye on measurable outcomes and real impact. Especially today, with money becoming ever tighter, it is about reconfiguring existing models or developing new ones to do more with less and increase productivity. We will return to this theme as we delve into the detail of our survey results.

Nick C Jones:
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