This is the third blog in a four-part series that answers questions very much on the minds of government: What is innovation? What does it mean for government to innovate? And why innovate, anyway?
The first blog defined innovation as doing something different to add value for a customer. It differentiated innovation from some close cousins such as invention and improvement. And it addressed the question of why innovate. The second blog looked at what it means to do something different. In this blog, let’s look more closely at the next part of the definition – to add value.
To Add Value
Government is increasingly focused on value to the customer and value to the taxpayer. But what is value? Is it the same for customers and agencies? Is it a must-have or a nice-to-have?
The Economic Market And Value
Our basic understanding of value is rooted in economics where it refers to the worth of one thing in terms of the amount of another for which it can be exchanged. In economic markets, buyer and seller exchange things valued when each determines that what they acquire for what they relinquish satisfies an objective, given preferences they hold and trade-offs they must make. Buyer and seller independently weigh costs and benefits and make the transaction when both determine benefits exceed costs. Commercial innovation adds value when it offers more benefit at an acceptable cost in the form of new or additional transactions.
The Government Market And Value
We can use this economic notion to say value in democratic government also refers to the worth of things exchanged. But the things exchanged are rights, not goods or services. Citizens relinquish some degree of fundamental individual rights – for liberty, self-government, self-development, and more – in exchange for rights better protected and enabled collectively. We can think of a government market where citizens interact to decide which trade-offs they’ll accept and how government will balance them. Citizens create government programs to secure those rights and privileges, and they establish rules to authorize and limit activity in this market place.
There are two ways customers determine value in this market. One is satisfaction with whether a government program provides and protects rights and privileges in exchange for constraints imposed. This is a threshold question about the existence of a public benefit. The second way customers determine satisfaction is with how well a government program provides and protects rights and privileges in exchange for constraints imposed. This is a question of degree or efficacy about how accessible, fast, simple, convenient, effective, and safe it is to use a public benefit.
In the government market, the objective of government innovation is moral. Doing something different to add value for a customer means better protecting and enabling rights and privileges. Customers value government innovation to the degree it delivers more of what governments exist to do. This can mean creating a public benefit which should exist but doesn’t, or improving how well a government program delivers benefits.
Conversations About Adding Value
How do you figure out what value to add? Facilitate conversations using these starters and customers, partners, management and staff will generate plenty of ideas.
What value does your organization currently provide each customer segment? Answer in terms of whether a program provides and protects rights and privileges, and how well, for each segment. Describe how you think customers view the exchange of protections for constraints imposed.
What additional value does each customer segment seek? Answer in terms of whether a program provides and protects rights and privileges, and how well, for each segment.
How does your organization learn what customers value? Understanding and mapping customer experience, especially digital experience, is a growing priority. Organizations are increasing customer research through surveys, stakeholder engagement, direct observation, professional associations, and other methods.
What is your organization learning about value? As you interact with customers to learn what they value, watch for a trap. Don’t confuse value must-haves with value nice-to-haves. Obtaining the full intended benefit of a government program is a must-have. Using a government benefit better, faster or cheaper can be a must-have or a nice-to-have, depending on circumstances. To the customer it might all be value. To your organization, they can mean very different things as you allocate scarce resources in innovation investments.