Innovation in the public sector is about creating value: doing things better, cheaper or quicker. But it is not always about technology or building shiny new products.

There could also be a particularly knotty problem to solve or a strategic, emerging theme that needs addressing around policy, process or people. In all of these cases, I would encourage leaders to look at their issues through the lens of problem solving and innovation.

Currently the UK public sector spends over £300 billion on third party goods and services every year, so is in a great position to shape new markets through innovation. Innovation is critical to the public sector to ensure we can get more with our spend, and at the same time, create new innovative products that could be sold around the world.

Sometimes authorities fall into a trap of trying to do everything themselves, but public bodies need to work with the market to co-create new ideas and solutions. A key starting point is to define the problem and go out to the market with a mission focused approach and setting out the right conditions to successfully scale, which includes using the right procurement route to market.

Citizens demand more

Ultimately, it is important to innovate because our citizens expect more, and we in the UK are the engine room of creative innovation. In this regard, we are in a good place: barriers to entry for smaller companies wanting to try new ideas have reduced, and we are seeing more diversity of thought with different types of innovators entering the market.

If we embrace different thinking, we will be able to better represent the city, region or country we serve.

But challenges do remain. There is still a large aversion to risk: senior leaders potentially worry about what key stakeholders such as the media or politicians might say. The key is to put the right safeguards in place, engage early with stakeholders and objectively build the evidence through testing new ideas.

Another issue is the fear of failure. Change is generally hard, especially in the public sector and it is difficult to do anything new at scale. This fear must be overcome by winning hearts and minds internally and externally.

During my time as Transport for London’s head of open innovation, much was learnt about the role of data, and its value. The authority’s decision to open its data to app developers, for instance, meant that for every £1 spent, £130  in benefit was generated. At its peak, we had over 700 apps (businesses) creating new products through TfL data; our focus was to define the right challenges and produce the right supporting data – the market brought the innovation.

One of my recent projects was around procuring an e-scooter trial, and that involved using a completely new procurement route to the organisation which allowed us to introduce the scheme more swiftly and with the right safety measures in place.

Beware the hype

Unfortunately, there is also a lot of hype and a lack of understanding around certain innovations so it’s necessary for  public sector bodies to be an ‘intelligent client’ as sometimes, so it can accurately manage the hype. One example is the much touted ‘Generative AI’ – but does everyone really understand it?

A few years ago, people were talking about robotics, artificial intelligence, and quantum computing as if there was no question they were all the next big things. Of course, they have added immense value but it’s when the technology has been effectively applied. So, my previous team members haven’t focused on the technology that was used; they were interested in whether the problem had been defined, and explored the possible solutions building and refining in an iterative manner.

If robotics or AI is the answer, great – let’s test it. But my starting position is always: ‘Have we clearly articulated the problem?’ Only then should we go to the market to come up with solutions that may solve our challenges. We created a Design Thinking capability at TfL that spent a lot of time on defining and contextualising the problem, and not immediately running into solution-mode. Quite often they asked tough yet pertinent questions upfront to help set out the right conditions for success.

Assets fit for the future

I’m joining Connected Places Catapult at a really exciting time for innovation, when ideas from several different sectors are being transferred to other applications. But we have to be mindful that the assets we procure now will be around in many years’ time, so they have to be fit for the future, particularly at the rapid rate technology is advancing.

Horizon scanning exercises are useful to work out if new lamp posts in the street, for instance, could provide other services in the years to come such as interacting with connected vehicles or be an air quality sensor, rather than just a light. Also, how would this work if you are procuring 20,000 lamp posts?

Strategies and processes need to be right. Working with groups like Connected Places Catapult and the Innovation Procurement Empowerment Centre will mean clients are more likely to bring intelligence to the conversation.

The Innovation Procurement Empowerment Centre will work with the public sector and the market to help create the right conditions for the public sector to be a leader in innovation through new capability support from procurement, design thinking, leadership and culture, horizon scanning and so forth.

Getting others on board

Innovative new ideas also need buy-in from people across an organisation to succeed. Heads of procurement and innovation need to work closely together to see what a pipeline of future work looks like over the next few years; to see where innovation could help with a challenge, and to ensure new approaches create value.

This can definitely be achieved: but a mindset shift is sometimes required. Public bodies must also ensure that taxpayers’ money is spent wisely; when it comes to innovation it doesn’t matter whether the spend is £10,000 or £100 million: good partnerships between innovation and procurement colleagues are essential.

If we get the right culture in place, I expect to see public bodies trying more new things and as a result creating more value in the long run. Some innovation will fail, but that’s the point: you don’t always know what’s going to happen with new concepts. If you go in with the right controls and safeguards in place, it’s okay to see things failing.

Creating this entrepreneurial mindset shift can be difficult – and that is what I’m hoping the new Procurement Bill going through Parliament can encourage. Finally, I would urge procurement leaders not to be scared to talk to the market about their problems: it is important to go out there early and see what innovative answers may be available.

Rikesh Shah participated in a recent Connected Places Catapult webinar tilted ‘Smarter Spending: the Power of Public Procurement to Drive Innovation and Growth’ from which this piece has been written.