Innovation as the Engine of Public Value: Driving Productivity in Government

Rethinking Public Value Creation

In the public sector, value extends beyond profit - it is measured by improved societal outcomes, trust, and the efficient use of public resources. Public value means delivering benefits that matter to citizens: accessible healthcare, effective education, safe communities, and responsive government. Unlike the private sector, where value creation centres on competitive advantage and shareholder returns, public value is co-produced through interactions among government, citizens, and stakeholders, anchored in principles of equity, transparency, and accountability.

The Productivity Challenge in Public Service

Despite clear mandates, public sector organisations globally grapple with stagnant or declining productivity. Key challenges include:

• legacy systems and processes that hamper agility
• difficulty in measuring outputs and outcomes, especially for complex, multi-agency services
• budget rigidity and competing policy priorities
• risk aversion and a culture that often punishes failure
• fragmented accountability, resulting in siloed initiatives.

Productivity in this context is not only about reducing costs. It is about achieving more impactful outcomes per unit of input. Metrics can include service delivery speed, cost per outcome, citizen satisfaction, operational effectiveness, and broader social impacts.

 Three Ways Innovation Drives Productivity in Government

1. Digital Transformation

Investment in digital technologies such as automation, AI, cloud platforms and citizen portals can streamline workflows, reduce errors, and dramatically increase the speed and accessibility of services. Examples include:

• automated processing in funding systems, cutting application turnaround times
• chatbots and virtual assistants for 24/7 citizen support, freeing up staff for more complex tasks
• interoperable data platforms that break down silos and better support evidence-based decisions.

Such initiatives deliver measurably better productivity: faster case resolution, lower cost per transaction, and improved user satisfaction.

2. Process Innovation

Redesigning processes using innovation methodologies (eg Agile, human-centred design) can address systemic inefficiencies:

• simplified regulations reduce red tape and administrative overhead
• cross-agency service integration creates seamless citizen journeys (eg one-stop shops)
• data-driven resource allocation aligns effort with areas of greatest need.

These innovations not only improve productivity but also increase fairness and accessibility.

3. Service Design and Co-Creation

Engaging citizens and frontline staff in designing services grounds innovation in real needs and unlocks latent productivity:

• solutions are tailored, reducing waste from missed or inappropriate interventions
• citizens are empowered, raising compliance and satisfaction
• continuous feedback loops ensure that services adapt and remain relevant.

Evidence-Based Innovation

Innovation should be grounded in robust evaluation - using pilots, randomised trials, or benchmarking:

• measure before and after changes in cost per outcome, delivery time, or service quality
• model long-term productivity impacts (eg preventative health measures)
• scale only those innovations with proven productivity gains.

Demonstrating measurable returns is crucial for building support in the authorising environment (including executive and political support).

Overcoming Barriers: Making the Productivity Case for Innovation

While many leaders embrace the rhetoric of innovation, progress stalls amid tight budgets and risk aversion. The strongest lever for change is a productivity-based business case:

• quantify the productivity gap: Use metrics that resonate (unit cost, wait times, staff time saved)
• showcase successful pilots: point to quick wins with tangible impact
• model long-term benefits: as well as counting immediate savings highlight avoided costs, improved outcomes, or increased capacity
• link innovation to strategic commitments: Frame innovation as essential for delivering on priority outcomes in a resource-constrained environment
• tie innovation to trust: Demonstrate how increased productivity translates into better public experiences and higher institutional legitimacy.

A Framework for Embedding Innovation-Driven Productivity

Senior leaders can catalyse transformational change by adopting a systematic approach:

 Actionable Recommendations for Public Sector Leaders

• lead with ambitious clarity: make productivity a core narrative in your innovation strategy
• prioritise high-impact, scalable solutions: channel resources into innovations that show measurable gains
• demand and reward evidence: insist on robust measurement and build a culture that learns from both successes and failures
• leverage digital and data: invest in digital infrastructure and analytics to make productivity gains visible
• foster collaboration over competition: facilitate knowledge and practice sharing across teams, sectors, departments and jurisdictions

Innovation as a Productivity Supercharger

The demands on public services will continue to grow in scale and complexity, and so will citizen expectations for value. Innovation cannot be considered a luxury - it is the engine for realising greater productivity and public value. By reframing innovation as a productivity imperative, leaders can overcome inertia, cut through scepticism, and build a high-performing public sector that rewards ambition. The path is clear: governments must invest strategically in innovation, measure what matters, and lead a purposeful conversation about the tangible productivity dividends for all.