7 Culture of innovation

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An innovation-friendly culture is an important precondition for innovation. In this report, culture is understood as the overall behaviour in a workplace, and is thus a combination of, among other things, skills, attitudes and values. Politicians, managers and employees are all culture bearers and play an important role in developing an innovation-friendly culture.

7.1 The current situation

In general, an organisation will both influence and be influenced by its skillsets, culture and structure. Striking a balance between innovation and new ways of thinking, on the one hand, and operation and control, on the other, is challenging. A culture characterised by openness, curiosity, risk management, flexibility and development will have more room and capacity for innovation than a culture characterised by close-mindedness, control and complacency with the status quo.

Innovation is often about finding new approaches to a problem or new ways of organising the work. That requires a culture characterised by curiosity, openness and courage, and the ability to learn from failures and successes. Politicians, managers and employees play an important role in this process.

7.1.1 Culture of innovation

The Innovation Barometer surveys emphasise that an organisational culture that is open, willing to take risks, seeks new ideas, recognition and cooperation helps to foster innovation.1 This corresponds to the lesson learned in the insight phase of the work on this report: that competence in innovation is important, but not as important as a culture and capacity for change. The innovation climate in the state sector was one of the topics in the state employee survey for 2018.2 A total of 46 per cent of the respondents said that they work in a good or very good innovation climate. The ‘very good’ proportion varied between the ministries, from 6 to 19 per cent.

Before work on this white paper started, no common description existed of the characteristics of an innovation-friendly culture in the Norwegian public sector. Surveys addressing innovation, reorganisation and the innovation climate, such as the innovation barometers and the state employee survey, show that there is high awareness of the issues, but that implementation is challenging.

A culture of innovation and change can also differ significantly between two public sector bodies that are otherwise governed, organised and financed under the same framework conditions. This means that there is not one set answer to how a public agency should build an innovation culture. Each organisation must build an innovation-friendly culture by systematically identifying and enhancing skills and practices that lead to innovation, and reducing activities that are an obstacle to innovation.

7.1.2 The role of managers

Managers have a particular responsibility for strategic and systematic efforts devoted to innovation, culture, change and competence, and for giving employees room to ask questions, come up with new ideas and work in new ways.

The Innovation Barometer surveys for the central and local government sectors emphasise managers as the most important driving force behind recent innovations.3

The state sector’s program for better governance and leadership (Program for bedre styring og ledelse) focused on implementation and results orientation. A leadership poster (God ledelse i staten) was developed under the ‘better governance’ program (Box 7.2). The poster shows overall expectations of managers in the state sector, and important characteristics of good governance in the central government. A management development and mobility initiative for state employees called the mobility program was also initiated under the program. The mobility program is currently being piloted.

The state employee survey from 2018 shows that managers in the state sector have a high awareness that change and reorganisation are important tasks in the next three years. As many as 72 per cent of employees regard their manager as supportive when mistakes occur.4

The Employer Monitor of the Local and Regional Authorities 2019 shows that managers at municipal and county authority level are concerned with developing innovation competence and capacity, learning skills and a change culture among themselves and their employees. At the same time, they report that reorganisation processes and the ability to innovate and create are among employers’ greatest challenges.5

7.1.3 The role of politicians

The public sector is subject to political control at both the local and central level. Politicians therefore play a key role in innovation, as they define the framework and influence the freedom of action for innovation through strategies, regulations and decisions concerning formal organisation (Chapter 4), as well as through their important role as culture bearers.

Almost 80 per cent of the mayors surveyed in KS’s political innovation barometer for 2020 said that the primary task of politicians is to initiate local government innovations. The majority believe that the administration facilitates politically initiated innovation. At the same time, 70 per cent say that they have insufficient knowledge to initiate innovation in their municipality or county authority. The proportion who agreed with this statement is higher in the smallest municipalities (80 per cent) than in the biggest municipalities (just under 60 per cent). A corresponding survey has not been carried out at the national level.

7.1.4 Cooperation between the social partners, and the role of employees

The Norwegian labour market is characterised by short chains of command and high trust between managers and employees. Employee participation in innovation requires close dialogue between managers and employees, based on mutual trust.6

The Norwegian labour market model, characterised by extensive cooperation between the social partners, is often seen as a precondition for the good results achieved in the form of a well-functioning labour market, a good working environment, low unemployment and high labour force participation. Workers in Norway enjoy a high degree of independence and responsibility compared with many other countries. Direct participation and co-determination are two important components that facilitate influence and involvement. This fosters broad, extensive engagement on the part of individual employees and has a considerable potential for employee-driven innovation and creation.

Bipartite cooperation between the social partners, i.e. employers and employees, is formalised. Employees have a unique insight into and knowledge about their own discipline, and involvement at an early stage ensures that initiatives have broad support. The social partners and individual employees play key roles in innovation by ensuring that new solutions are initiated, carried out and create added value. Employees have ideas, knowledge and experience based on their own area of responsibility and are closest to the issue at hand and thereby also the solution. The Innovation Barometer for the local government sector (2020) showed that employees played a key role in 86 per cent of the newest innovations.

Employee-driven innovation is a collective term for employees’ active participation in the development of new solutions.7

7.2 Assessment of the situation

7.2.1 Culture of innovation

The Government wants all public agencies to work systematically on developing a culture of innovation. A description of what characterises an innovation-friendly culture in the Norwegian public sector has not previously existed. Such a description would give public agencies a good basis for assessing whether the culture in their organisations promotes innovation. We have therefore endeavoured to develop such a definition in connection with this report. The characteristics of an innovation-friendly culture in the Norwegian public sector are presented in section 7.3.1 and Figure 7.2.

7.2.2 Leading for innovation

Leading for innovation and new ways of thinking requires managers to devise procedures and structures that support the development of new ideas and new forms of collaboration. The purpose is to facilitate agility and capacity for change, in addition to ensuring control and operational reliability. Developing new ideas into concrete solutions requires freedom of action, flexibility and risk management.

Managers have to strike a balance between fulfilling the organisation’s social mission and maintaining uninterrupted operations, on the one hand, and meeting increasing expectations of cooperation with other parties to achieve common goals, on the other. Good relations and trust are decisive if results are to be achieved across administrative boundaries that go beyond the organisation’s own mission and area of responsibility.

Making needs rather than solutions the point of departure means that the end result is unknown when an innovation project starts. It is therefore important that managers and politicians document whether the expected effects have been achieved. Addressing needs that are not necessarily possible to fulfil is particularly demanding.

The innovations, i.e. the new solution, will be implemented in organisations that are already in ordinary operation, and many people are likely to feel that things they thought worked well are going to be changed. In other words, the tasks managers face when an organisation is to become more innovative are far from easy.

7.2.3 Politicians as leaders

There are aspects of the role of politicians that can make support for innovation demanding. Among other things, the benefits of innovation processes can be difficult to identify or only materialise long after. This can favour projects that produce visible benefits in the short term. Politicians are elected based on a political manifesto, which means that they may have a high threshold for involving citizens in policy development.8 Democratic processes must be respected when cooperating with citizens, organisations and businesses. This requires transparency about the process, who participates and what opportunities or challenges the process is based on. Stringent transparency requirements apply in the Norwegian public administration, and they should be equally high in innovation processes.

Innovation entails a certain risk, and the solution may be quite different to what was initially envisaged, since the process starts by defining needs rather than solutions. It can be difficult to communicate this aspect of innovation to the public, and politicians may therefore be reluctant to initiate or support innovation processes. Challenges like the ones described above underline the need for transparency about the process, about the fact that the end result is unknown when the process starts and about the possibility that the desired effect may not be achieved within a set deadline.

The key role of politicians in innovation highlights the importance of their being aware of the opportunities and challenges inherent in such processes. These are among the topics of KS’s training program for elected representatives, which is offered to all municipal councils, county councils and district councils in each electoral period. The program aims to strengthen the motivation, understanding of roles and confidence of elected representatives in order to address challenges and create opportunities in their respective local authorities. A handbook for elected representatives, called Tillit (‘Trust’), has been produced as part of the program. One of the topics it addresses is innovation and the role of elected representatives in innovation processes.

7.2.4 Involvement of employees and employee representatives

Employees at all levels and with different expertise and professional backgrounds are involved in innovation.

To make use of employees’ commitment to innovation, they must be shown trust and given responsibility. They must also be given an opportunity to see the bigger picture, to enable them to propose solutions that are aligned with the organisation’s goals, strategies and budget. Managers can ensure this through general information and involvement, and through local-level cooperation between the social partners.

Employee representatives can play an important role in innovation in several ways, including as discussion partners for the management or their members, and by providing information about and making preparations for upcoming change processes.9 Box 7.1 shows an example of cooperation between the social partners for the purpose of innovation and reorganisation.

7.3 The way forward

7.3.1 Culture of innovation

The Government wants to ensure that all public agencies can work systematically on developing an innovation culture. The figure Characteristics of an innovation culture (Figure 7.2) was developed as a compass and tool for the public sector’s efforts to increase the pace of innovation.

The figure illustrates skills, ways of thinking and practices that foster innovation. It can form the basis for public agencies’ discussions of what characterises the status quo, and which changes are most important to begin with in order to develop a more innovation-friendly culture.

Each of the characteristics is important in itself, but they also build on each other. As the figure shows, innovation is driven by skills, curiosity, openness and courage.

Curiosity is the desire to seek out new knowledge and learn new things, and to explore possibilities and incompatibilities. It means investigating an issue from many sides and creatively exploring and considering new solutions to the same problem before reaching a conclusion. Curiosity takes courage and an open mind.

Openness entails the ability to see things in new ways, allowing you to change course as you proceed. It requires empathy, flexibility and reflection. Sharing knowledge and experience, exchanging ideas and giving feedback are important elements of an innovative culture. Both managers and employees must recognise initiative, because it creates engagement and generates new initiatives.

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Source Ministry of Local Government and Modernisation (2020)

To challenge the status quo, you need courage, which also requires perseverance. Doing something new, or doing something in a new way, takes us out of our comfort zone. It can take quite some time from an innovative idea arises or a change process is initiated until new practices have been established. It is important is such situations to stay positive and believe that change is possible.

The figure shows four practices that can foster innovation: 1) seeing opportunities and leading the way, 2) trust and willingness to take risk, 3) cooperation and participation, and 4) learning and changing practices.

Seeing opportunities and leading the way. Solving a problem is not just about the here and now. It is also about what the solution can mean for, and in, the future, and in a larger context. Telling a convincing story creates enthusiasm and demonstrates the value of potential solutions. Stories can thereby create room for manoeuvre. A forward-looking attitude facilitates discussions about possible ways forward (Chapter 8).

Trust and willingness to take risk. Doing something different than today, or doing something in a different way, can entail risk and uncertainty. Risk management is about having an overview of risk factors, implementing measures to reduce or eliminate risk, and determining what is an acceptable level of risk. Trusting that the solution can be improved and trusting one’s partners is also necessary. All chains of command require trust, for example managers’ trust in their employees. This sometimes means engaging in a closer dialogue to maintain trust and deal with risk. The employees, often together with the users or citizens, are the ones closest to the problem and thereby also to the potential solution. Delegating responsibility to and supporting employees will give them more freedom to take the initiative. Managers must also choose to make use of the new ideas that emerge.

Cooperation and participation. Innovation often takes place in cooperation with and through the involvement of users, other citizens, stakeholders and external parties. A multitude of voices leads to a diversity of knowledge, perspectives and experience that enriches the scope of solutions. Many societal challenges the public sector must help to resolve are complex and require solutions across disciplines and sectors. Mediation and bridge building, rather than the cultivation of distinctive features and differences, may be required to find common goals and solutions. This requires team players who are interested in learning from others and who incorporate other people’s perspectives and knowledge.

Learning and changing practices. A change only becomes an innovation when it is utilised and generates added value. That requires learning and changing practices. In this context, learning is both about understanding what the problem is and learning whether a solution may or may not work. Once a solution has been developed, evaluated and implemented, it will be necessary to change established practice.

The Government encourages all public agencies and municipalities to work on developing an innovation culture, and it will develop tools that help them to measure the innovation culture and use the results to develop initiatives in the organisation. Tools will also be developed for measuring the maturity of the culture across public agencies.

7.3.2 Leading for innovation

Managers are responsible for developing their organisation through procedures and structures that foster innovation. This also entails developing employees, the capacity for change and a culture of innovation.

Several guides and descriptions seek to promote good public sector leadership (Box 7.2). The elements of a culture of innovation tally with and supplement them, and must also be seen in conjunction with other management tools.

Textbox 7.2 Culture of innovation and related management tools

The management poster in Figure 7.3 (God ledelse i staten) is intended to promote a results orientation and implementation capability. The poster must be seen in conjunction with a culture of innovation (Figure 7.2). Seeing opportunities and leading the way is both about helping to develop and implement policy and about exercising freedom of action and breaking down missions into goals and strategies. Innovation is not just about coming up with new ideas; the ideas must also be utilised. This is about quality and results, which are key elements of the management poster. In relation to innovation, the poster lacks a description of risk and learning dimensions.

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The guide to good management practices (Guide til god ledelse) was developed by KS as a tool for reflection for local government managers. The guide emphasises that leadership is essential to innovation and development in the local government sector, and the importance of building a culture for creation and learning. The hallmarks of good management emphasised in the guide are demonstrating implementation capability to achieve good results, creating trust through clear roles, facilitating mastery and motivation and creating an organisational culture characterised by a good working environment and high ethical awareness. The guide also emphasises the interplay between change orientation, task orientation and relations orientation as basic management skills.

The Norwegian Digitalisation Agency has defined seven leadership skills required to succeed with digital transformation. They are: citizen centricity, rewarding and motivating, working across organisational boundaries, trying and failing, storytelling, plotting the course and challenging the status quo. Many of these skills are relevant to innovation and tally with the characteristics of an innovation culture.

Source Regjeringen.no/KMD, KS (2018) Guide til god ledelse and the Norwegian Digitalisation Agency

Managers must put their organisation in a position to fulfil its social mission and to do so even better than last year. Their superiors will, in turn, follow up that they achieve this. Managers therefore need to continuously work on skills, culture, structures and procedures that support better quality, results and more efficient operation.

Change competence must be built into the role of manager, so that first-line, middle and top-level managers are prepared for and confident in their work on innovation. Several municipalities, including Asker, Bærum and Trondheim, have organised comprehensive management training programs for all local government managers, specifically with innovation and innovative work methods in mind. This has also resulted in increased change competence. The programs were developed and implemented internally in the municipalities, and independently of each other.

Strategic competence management is essential to ensure the right skillsets and is a managerial task. Strategic competence management10 involves planning which skills the organisation needs now and will need in future, and how they can be built and developed, including through transfer of competence, mobility, reskilling and recruitment. The Government has facilitated mobility through the state sector mobility program, which is being piloted in 2020 in a collaboration between the Norwegian Agency for Public and Financial Management and the Norwegian Government Security and Service Organisation. The mobility program facilitates increased mobility between organisations, sectors and administrative levels, through strategic competence collaboration and the exchange of skills and resources at the organisational level. This can help to achieve better cooperation, a culture for sharing and capacity for change.

The Government has given priority to competence work and digital learning in the state sector through the competence management tool Virksomhetsplattformen and the initiative På nett med læring. The digital tools work in tandem with the organisations’ strategic competence development and management. The organisations can share competence-raising measures with others on the platform.

E-learning courses in change management and competence management are available, but no resources have been developed that address innovation specifically, neither for managers nor employees. The Norwegian Agency for Public and Financial Management and the Norwegian Digitalisation Agency will cooperate on developing competence-raising measures for managers relating to innovation and digitalisation.

7.3.3 Cooperation between the social partners for increased innovation

Cooperation between the social partners will continue to be an essential part of the Norwegian labour market going forward. The ambition is to use tripartite and bipartite cooperation as a tool to enhance work on public sector innovation.

7.4 The Government’s aims

Innovation requires a culture of curiosity, openness and courage, and the ability to learn from failures and successes.

The Government will:

• help to enable all public agencies and municipalities to work systematically on developing an innovation culture

• further develop management programs that support innovation, digitalisation and change in the public sector

• facilitate increased mobility for managers and employees both within and between sectors, through the mobility program

• continue to use cooperation between the social partners as a tool to enhance innovation efforts in the public sector.