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The dark side of public innovation

11 August 2020

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The positive outcomes of innovation are well known but the dark side of public innovation has received less attention. What is the dark side and how does this affect public value?

At a glance

A paper in Public Performance & Management Review maps the dark side of public innovation, Public innovation involves a range of individual, organisational and community risks. These are termed perverse effects as innovations can produce unforeseen negative consequences. Perverse effects fall into two categories: low public value and low public control.

The perverse effects are not coincidental but emerge from key aspects of innovation processes including risk, uncertainty and incomplete information. The challenge for innovators is to acknowledge the dark side and take measures to prevent perverse effects without killing innovation in organisations.

Related research:

Understanding public innovation

An innovation is broadly defined as the implementation of an idea that is perceived as new and results in change. Public innovation can involve the use of technology and changes in processes, organisations, services, policy approaches, democratic engagement and institutions. The key premise is that generating and implementing new ideas provides the basis for improvements in the public sector.

Public innovation can make the public sector more efficient, effective and legitimate. During times of fiscal stress, public innovation can enable government to do more with less. It is argued there is now an “innovation imperative” given the accelerating pace of change in society. Governments need to be flexible and agile to deal with changing technology, changing social environments and the changing demands of citizens.

The perverse effects of public innovation

Perverse effects are unexpected and undesirable outcomes stemming from public innovation.

  1. A first perverse effect is the lack of stability resulting from the emphasis on continual innovation. Although change may often be desirable, innovations may disrupt what is working well. The lack of stability can have negative consequences for people working in an organisation and also for clients, customers and stakeholders.
  2. Innovation may lead to illegal practices if there are not adequate controls. Rules and regulations may inhibit new approaches and can result in breaches. For example, the Netherlands taxation department established an innovation lab to improve its regulatory processes. However, the application of data science led to a variety of privacy breaches.
  3. Public innovation may result in corruption. Corruption can occur if the focus is only on individual initiative as a driver for innovation with little attention to control. Measures against corruption tend to emphasise rules and procedures and these are generally regarded as barriers to innovation.
  4. Public innovation can involve a waste of public money. Projects often fail to deliver on their promise, and this can mean that public money is spilled. This perverse effect is strongly present when innovation is seen as a goal in itself and the outcomes of innovation are not measured.
  5. Public innovation can cause disruption of a power balance. A disruption in itself is not necessarily a perverse effect. It is only perverse when the innovation results in a concentration of power in the hands of the powerful.
  6. Undesirability can be a perverse effect. This includes practices or processes that produce negative outcomes for stakeholders or innovations that do not constitute an improvement. In some cases, innovation may be pursued for ideological reasons rather than contributing to the efficiency or effectiveness of public services.
  7. Public innovation can create unforeseen security risks that outweigh the benefits of the innovation. This perverse effect is especially relevant for technological innovations.

Mapping the perverse effects of public innovation

The list of perverse effects of public innovation shows a great deal of variation. The variation can be understood using a model with two dimensions: public value and public control. Both are seen as key aspects of government legitimacy:

  • output legitimacy depends on the realisation of public value
  • process legitimacy relies on a system of public control.

Public value

Public innovation can result in failure to strengthen the public sector’s value contribution to society. This dimension is paradoxical since the aim of public innovation is to realise this type of value. However, in implementing innovation projects, the opposite may occur.

Perverse effects in this category include:

  • wasting public money
  • corruption
  • lack of stability
  • unforeseen security risks

Public control

Limitations to public control occur when public innovation is undertaken in the absence of administrative and political control systems and/or when integrity and accountability systems are relatively weak.

Wasting public money and corruption demonstrate a lack of public control, while illegal practices show an absence of public control. Innovation can also limit democratic control when tipping the balance of power and disrupting systems of checks and balances.

What this means for public managers

Failing to produce public value and the lack of public control result from fundamental features of innovation processes. Complete information about the consequences of innovation—and lack of innovation— are unknown from the outset. There is an inherent risk in public innovation decisions being made in an environment of uncertainty and incomplete information.

What is therefore needed is responsible innovation – a collective duty of care. This means rethinking what we want from innovation and then making its pathways responsive in the face of uncertainty. Key operating principles for the public sector innovator include accountability, veracity, fidelity, bureaucratic responsibility, respect for citizens, balancing benefits against risk and costs, and doing no harm.

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Published Date: 11 August 2020