5 Lessons from the private sector on strategy and innovation

By Sandra Naranjo Bautista

One common question from our audience is what can the public sector learn from the private sector on strategy and innovation. In this blog, I summarize the key takeaways from a conversation with Dr. Sam MacAulay, a Senior Lecturer in Innovation at the University of Queensland. We talked about what defines a good strategy, some common mistakes you want to avoid and some lessons from managing complex projects in government. We also talked about innovation in government projects and organizations. You can listen to the full interview below or read the key points. 

(01:53) 3 Key elements of a good strategy with examples

There are three characteristics that a good strategy needs to have at the same time. 

• Diagnosis of the situation. In other words, a clear understanding of the problem you want to solve. 
• Guiding policy, or a clear objective. 
• Coherent actions that support the previous two. 

When a strategy has a problem it’s generally because one of the elements is missing. Sam illustrated this with two examples: Netflix and the University of Melbourne.

(10:06) Common mistakes when designing a strategy

One of the most common mistakes people make is missing one of the three elements of a good strategy. Either the problem or the objective is confusing, or there is no clarity of what set of actions is required to achieve a specific purpose. Sam illustrates it with a simple example from South Park, Underpants Gnome Strategy (I never thought South Park would be part of Better Govs).

(15:30) Managing large and complex projects 

Sam and his colleagues spent together around 10 years studying large and complex projects to understand how they are managed and particularly the role of innovation. They found there were 5 common principles, or lessons, to approach their management. 

1. Assess what’s worked before
2. Organize for the unforeseen. One of the aspects he mentioned is to accept that in this type of projects contracts need some flexibility. 
3. Rehearse first. Explore options, prototypes, or online simulations. 
4. Calibrate and apportion risks appropriately. Thinking about who has the expertise and knowledge, as well as right incentives, to assume that risk and manage it properly. 
5. Harness innovation from start to finish. This is more than just hoping your project will innovate. This implies formalizing structures and processes for guiding, shaping, creating, and using innovations. 

Full article here. 

(25:45) How does innovation look like in a mega project. 

Sam and his colleagues built a model where they identified four stages–-or windows of opportunity–-to intervene to generate, discover, and implement innovation in a megaproject:

1. Before – the bridging window during the front-end when ideas, learning, and practices from other projects and industries can be used to create an innovative project process, organization, and governance structure; 
2. Contractual phase – the engaging window, when tendering and contractual processes can be used by the client to encourage contractors and suppliers to develop novel ideas and innovative solutions; 
3. During – the leveraging window, when all the parties involved–-clients, delivery partners, and suppliers–-are mobilized to develop novel ideas, new technologies, and organizational practices to improve performance; and 
4. After – the exchanging window at the back-end, when ideas and resources for innovation can be (re) combined with those of other projects in the wider innovation ecosystem to improve performance.

Sam also talks about ways to foster innovation in an organization. He suggests understanding why it matters first. 

Full article here. 

(34:00) Role of networks, like who you know or who you go to for advice, in innovation 

There are rarely unique ideas from one person. We might hear of one person, but it comes from the combination of others’ ideas too. Innovation is a team sport. 

(37:45) 3-2-1 Segment

3 Things you wish you knew earlier. 

1. Large complex organizations mean you’ll always find someone that will say no. But you’ll also find someone that says yes. Keep looking for that yes!
2. Reflect on yourself and your interaction with other people. Give space to others to contribute
3. The value of understanding when you’re facing uncertain situations. 

Two main lessons to someone interested in improving strategy and fostering innovation in the public sector?

1. Be alert from “Underpant’s gnome strategy” and call it when you see it. 
2. Always ask yourself: does my strategy have a diagnosis, a guiding policy and a set of coherent actions. 

Sam’s number one tip to getting things done.  

When you hit an immovable obstacle, stop digging. Go for a walk. And if that doesn’t work, talk to a friend. 

Final reflections

There are 5 lessons I took from my conversation with Sam.

1. A good strategy has a clear understanding of the problem, a well-defined objective and a coherent set of actions. 
2. Avoid Underpants Gnome Strategy at all cost. 
3. Large and complex projects require flexibility and adaptation. Learn from others, test your own ideas and prepare for the unforeseen. 
4. Innovation requires more than hope. A clear plan and processes are required. 
5. Innovation is a team sport

About 

His research has been published or is forthcoming in a wide variety of top journals ranging from MITSloan Management Review and the Academy of Management Review through to Transportation Research Part A and EMBO Reports.

Resources to complement this conversation

• Good strategy, bad strategy by Richard Rumelt.
• 5 Lessons to improve policy implementation. 
• Five rules for managing large, and complex projects.
• Making Innovation Happen in a Megaproject: London’s Crossrail Suburban Railway System

Credits

Intro: “Too Cool” Kevin MacLeod (incompetech.com) Licensed under Creative Commons: By Attribution 4.0 License http://creativecommons.org/licenses/by/4.0/