Why Innovation Matters Now

More than Ever

Karen Thoreson, Alliance for Innovation

Vuja de

Navigating the Fiscal Crisis: Tested Strategies for Local

Leaders

What did we Ask?

•What defines the current crisis?•What has worked in previous

efforts?•Which organizations cope better?•Why innovation is critical?•How can local governments

contribute to the recovery?

Deeper and DifferentThan the Last 50 Years

• Housing Market

• Auto and Financial Services

• Manufacturing and Exports

• Service and Retail

• Even Energy is ImpactedAll Levels of GovernmentAll Sectors of the EconomyNone of Us Have Experienced Before

Deeper and Different

• Sales Tax

• Property Tax

• State Government Transfers

• Capital Markets – Public and Private

• Pension and Other Investment Funds

Lessons from the Past

•Tax cuts have less impact than cash investments.•Investment in capital projects is

better than support for operating costs.•Continue projects with low versus

high operating costs. •Block grants speed recovery

compared to competitive grants.

Lessons From the Past

Cutback Management?• Across the Board Cuts• Freezing the Workforce

Or Strategic Management?• Predict the Decline• Focus on Core Mission• Educate the Public• Long Term Savings, Not One Time

Contributing to Recovery

• Maintain Spending, Don’t Cut Revenues• Avoid Across the Board Cuts• Don’t Cut Capital Projects With Low

Operating Costs• Avoid Random Hiring Freezes• Lead Inclusively• Draw on Ideas from All Sectors

Opportunity in Crisis

• Improve the Organization

• Resize or Restructure

• Develop New Partnerships

• Focus on Community Priorities

• Proactive, Not Reactive

• Embrace the Future’s Possibilities

So What Have We Seen?3 Strategies:

1. Hunker Down

2. All Expenditures are Equal – Lower Tide, Lower All Boats

3. Transformation – “What If,” Not “Why Me”

CRISIS IS AN OPPORTUNITYRIDING ON A DANGEROUS WIND

Who Copes Best in Hard Times?

• Strong Management Capacity • Targeted and Flexible Spending

Choices• Revenue Diversity• Have a Long Term Financial Plan• Maintain Adequate Reserves• Fees for Service Reflecting Cost of

Delivery• Educated Stakeholders• Adaptive but Resolute Organization

Promoting Constructive Change Cut Quickly, Avoid Delay Long Term View Core Mission, Highest Priorities Innovation and Continuous Improvement Manage Revenues, Not Just Expenditures Organizational Design and Processes Employee Stewardship Embrace Inevitability, Stick With It Communicate with Stakeholders

What do Transformed GovernmentsLook Like?

Anchored Around Purpose, Mission & Values

Risk Tolerance Profile – Innovation Matters Understand the Brutal Facts but Focused

on the Possibilities Not the Problems Engaged with all Stakeholders See a Path to a Desirable Future that

others don’t Individuals & Organizations Use Both Left

and Right Brain

Areas of InnovationTop 22 in 2004 (Joshua Franzel, Review of Policy

Research, 2008)• Managerial/Administrative (3), e.g., 3-1-1• Technological (10), e.g., web portal, video

streaming, online GIS, online transactions/applications, wifi, online training

• Area-Specific (9)Emergency coordinationTraffic photoHydrogen fuel cellsLED signals and smart signsMonitoring traffic flowsCrime technology-shoe wearNatural storm water runoff controlAffordable housingPublic-private partnerships in parks

Areas of Innovation-CurrentThoreson and Svara, Municipal Year Book 2009

• Sustainability• Youth

advancement• Law enforcement

and technology• Health and

wellness• Business process

reform• E-gov

• Organizational improvement

• Succession planning and regeneration

• Citizen participation /engagement

• Community renewal

• Cities and schools

Correlates of Innovation

• Wealthier and larger organizations • Sunbelt• Cities/counties without unions • Cities/counties with public pressure for change• Cities/counties competing with other

governments• Democratic vote• Council-manager form cities/counties

Correlation does not mean causation.What’s happening on the inside to convert these conditions or overcome these conditions to produce innovation?

Six Qualities Linked to Innovation

1. Leadership2. Creativity3. Internal Collaboration4. External Partnerships5. Community Connections6. Results Focused

“I’m happy to give you

innovative thinking.

What are the guidelines?”

Innovation: #1 Key Qualities

Leadership:• Elected Officials• At the Top• In the Middle• Organization-wide• Unselfish - Shares:

• Credit and Recognition• Level 5 leaders

• Looks to the Next • Generation to Sustain

Creativity• Unleashing the potential• Not Satisfied with Status Quo• Look for ideas elsewhere• Working on Multiple Fronts• Allows for Failure • Constantly Revising and Changing• Breakthrough and Incremental

Innovation: #2 Key Qualities

Innovation: #3 Key Qualities

Internal Collaboration• Unusual• Non-Hierarchal Teams• Diverse teams• Disrespect the Silos• Staff are Supported & Heard• Members Want to Be There

Innovation: #4 Key Qualities

External Partnerships• Public, Private, NGO• Not Quid Pro-Quo• Know How to Disagree• Are Willing to Trust and Take Risk• Understanding Value From New

Perspectives• Deep Level of Cross-fertilization

Innovation: #5 Key QualitiesCommunity Connections

• Real connection, Not Lip Service• Deep Sustained Involvement• Public: Not “me-centric”• Looking for Long –term Value

Innovation: #6 Key Qualities

Results Focused• If You Count It, It Will Change• Useful and serves need• Sustained Impact, Not Flash in the Pan• Knowing Who Benefits

Fostering Innovation

If you create the qualities, will innovation come? • No, Innovation is never automatic• Yes, Will generate the ideas and foster the

spirit that supports innovation• Support with a culture of innovation• Consider what has worked and not worked in

your organization• Consider the straddler (and the stragglers)• Set the bar high. Invite all to determine how

to get over it.

Combination of Individual and Organizational

CharacteristicsOrganization is

reactiveOrganization is

proactive

Staff members

hunker downDenial

Resistance/Anxiety over risk taking

Staff members are

resilientFrustration Constructive

Can you be constructive but still be tired and discouraged?

What Kind of Change?

Continuum of response to crisis:

INNOVATION< Reaction Adaptation Adoption Invention >

“Re-Invention”

Continuum of outcomes:< Status quo Improvement Transformation >

Characteristics of Innovative Leaders*

Senior executives of the most innovative companies—only 15% the total—don’t delegate creative work. They do it themselves.

*Jeffrey H. Dyer, Hal B. Gregersen, & Clayton M. Christensen, “The Innovator’s DNA,” Harvard Business Review (December, 2009). Study of the habits of 25 innovative entrepreneurs and survey of more than 3,000 executives and 500 individuals who had started innovative companies or invented new products.

Five “Discovery Skills” that Distinguish the Most Creative

Executives• AssociatingSuccessfully connecting seemingly unrelated ideas. • QuestioningConstantly ask questions that challenge common wisdom; ask Why, Why not, What if…• ObservingScrutinize common phenomena, particularly the behavior of potential customers. •Experimenting

Try out new ideas and approaches.• Networking Find and test ideas through a network of diverse

individuals.

How Innovators Stack Up

What is Working?

Reassess Community Priorities

• Delray, FL (60K)• Polk County, FL• Jefferson County, FL

What is Working?

Re-engineer Organization

• Montgomery, OH (10K)• Oakland Park, FL (42K)• Olathe, KS (100K)

What is Working?

Fix Structural Deficits (personnel)

• Dublin, OH (38K)• Washtenaw County, MI• Palo Alto, CA (57K)

What is Working?

Advance Technological Solutions

• Decatur, GA (17K)• Winter Park, FL (25K)• Southlake, TX (26K)• Palm Bay, FL (100K)

What is Working?

Increase Revenues

• Charlottesville, VA (41K)• Hickory, NC (40K)• Howard, WI (16K)• Leesburg, VA (28K)• Sarasota County, FL

What is Working?

Partnerships

• High Springs, FL (4K)• Morgan Hill, CA (38K)• Manassas, VA (35K)

What is Working?

Management Flexibility and Transparency

• South Jordan, UT (51K)• Fort Collins, CO• Las Vegas, NV

• Reassess Community Priorities• Re-engineer Organization• Fix Structural Deficits (personnel)• Advance Technological Solutions• Increase Revenues• Partnerships• Management Flexibility and

Transparency

What is Working?

• Re-engineering Organization• Partnership

What is Working for You?

Thank You MCMA

Karen Thoreson, kthoreson@transformgov.orgRegan Gerlt, rgerlt@transformgov.org