WINTER 2017–18 VOL. 66, NO. 4

Integrity

&Leadership
Eye on the Future

Why Government Leaders 

Should Care About Innovation

By John B. Hill, M.S., MPA; and Tammie Johnson

If you have read any business journal in 

the past year, you probably came across 

an article or two on innovation. A recent 

survey1 of more than 900 private-sector 

CEOs cited their organization’s ability 

to innovate as one of their most urgent 

challenges. But is that also true for 

leaders of public-sector agencies? 

Should we be concerned about our 

ability to integrate new technologies 

and processes into our organizations?

The answer is a resounding “Yes!” — 

first, for the stakeholders we serve; 

and second, for the employees we 

lead. As citizens conduct more of their 

commercial transactions through their 

smartphones, they expect government 

services to keep pace. Equally important, 

these new customer-facing technologies 

offer efficiencies that support the 

current drive to reduce the size 

of government. 

Promoting innovation in our 

organizations is also an effective way 

to attract, motivate and retain the next 

generation of employees. Studies show 

millennials are drawn to organizations 

that are entrepreneurial and encourage 

creative solutions to problems.2 At the 

same time, millennials desire meaningful 

work that makes a difference to 

society — something the public sector 

clearly offers. A public agency should 

think of its innovation strategy as one 

component of its broader human capital 

strategy as it plans for retirements and 

the loss of expertise.

With innovation as such an important part 

of our organizations’ futures, what should 

public sector leaders do to promote it? 

Here are four simple actions leaders can 

take to create a culture of innovation:

1. Demonstrate curiosity

The leader sets the tone for the 

organization, often in subtle ways that 

extend far beyond formal management 

structures and processes. We have 

all heard stories of Henry Ford, Walt 

Disney and Steve Jobs stopping by 

to visit their companies’ engineers, 

artists and scientists as they explore 

new techniques or processes whose 

immediate application is not always 

known. As a leader, the simple act 

of distributing a thought-provoking 

article, attending a future-themed 

seminar or highlighting an employee’s 

creative solution sends a message 

throughout the organization: new 

ideas are welcome here.

2. Integrate innovation into the

strategic planning process

Most public agencies have a 

strategic plan; but how often is that 

plan simply a restatement of their 

current business objectives simply 

extended five years into the future? 

This is understandable, especially for 

an agency whose day-to-day mission 

is vital to the nation’s safety or health. 

Yet, we need to think of innovation 

not as competing with critical daily 

operations — but as a complement.

Even in the most operationally 

focused agency, there is room for a 

“stretch goal” that challenges the 

status quo and inspires employees 

to think beyond the current solutions 

to today’s problems. Think of the 

recent statements by some car 

manufacturers that have committed 

to producing only all-electric cars in 

the not-too-distant future. A clear 

and bold statement in a strategic 

plan is evidence that the senior 

leaders see innovation as vital to the 

organization’s continued operation.

3. Build networks that enable

collaboration

Innovation occurs at all levels in 

an organization and in all places. 

Innovation is not confined to a 

research and development laboratory, 

or a remote office far removed 

from headquarters or front-line 

operations. In most cases, it is a 

highly collaborative exercise where 

the best ideas come from interactions 

across organizational “stovepipes.” 

A leader can enable collaboration by 

developing decentralized networks 

that reach laterally across their 

organization. New electronic media, 

social networks and collaboration 

software make it easier for an 

employee in one location to share 

ideas with someone elsewhere.

Unfortunately, collaboration media 

alone is not enough to spur actual 

collaboration among employees. 

54 JOURNAL OF GOVERNMENT FINANCIAL MANAGEMENT WINTER 2017–18
The leader must create the 

opportunities for collaboration, 

especially across organizational 

boundaries. Some agencies have 

launched innovation competitions 

that exist outside of the normal 

chains of command. These “Shark 

Tank”-like competitions enable 

anyone in the organization to 

present an idea — ideally with 

a convincing pitch and business 

case — to a panel of senior 

leaders. When done properly, 

these idea competitions, combined 

with strong lateral communication 

networks, encourage the crossorganization collaboration that 

spurs innovation.

4. Manage risk strategically

Almost by definition, public agencies 

are risk-averse. The press of 

critical daily operations, budget 

constraints and multiple levels of 

oversight reinforce the status quo 

and discourage change. Investing 

in an innovation when budgets are 

tight — or changing a highly-visible 

process that affects thousands 

of citizens — is something public 

agencies just don’t do naturally. The 

leader must find a way to balance 

innovation while not exposing 

critical operations to unnecessary 

risk. To do this, the leader must first 

establish the need for innovation; 

the leader must present the case 

that not innovating is risky. For 

example, the U.S. Department 

of the Treasury first experimented 

with direct deposit to expand its 

payment capacity in preparation for 

workload increases as the baby boom 

generation began to retire and receive 

Social Security payments. In this 

example, innovation was actually 

a risk reduction strategy.

The leader must also create places 

within their agency where increased 

levels of risk are acceptable. Pilot 

tests and prototypes should be 

designed so they do not affect 

mission-critical operations. This 

requires a sophisticated riskmanagement approach that accounts 

for the difference between the 

immediate risk to daily operations and 

the long-term risk of obsolescence. 

In any organization, the leader has 

a clear and direct responsibility for 

innovation. The leader sets the tone 

where new ideas are valued and 

vital to the organization’s future, 

where employees are encouraged 

to collaborate across traditional 

organizational boundaries, and where 

the environment allows for the testing 

of innovative solutions. Both citizens 

and employees benefit when the 

leader takes on this responsibility. 

Endnotes

1. CEO Challenge 2015, The Conference 

Board, Feb. 11, 2015.

2. “Generations United,” by Gretchen 

Gavett, Harvard Business Review, 

January–February 2016.

John B. Hill, 

M.S., MPA, is 

the assistant 

commissioner 

for Financial 

Innovation and 

Transformation 

(FIT) at the U.S. 

Department of the 

Treasury’s Bureau of the Fiscal Service. 

The FIT office identifies and promotes 

innovative solutions to make federal 

financial management more efficient, 

transparent and customer-oriented. 

Tammie Johnson 

is a FIT program 

analyst. Previously 

she worked in 

Treasury’s Bureau 

of the Fiscal Service’s

Administrative 

Resource Center’s 

Shared Service 

Procurement Office, serving in various 

roles, including purchasing manager. 

WINTER 2017–18 JOURNAL OF GOVERNMENT FINANCIAL MANAGEMENT 55