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The Australian Public Service (APS) aspires to be strategic and forward-looking with an intrinsic culture of evaluation and innovation. In times of fiscal constraint, the APS needs to be more efficient and innovative in how it develops policy, delivers services, manages itself and manages information. In the past, State of the Service reports have noted the twin pressures on the APS to maintain service levels with fewer resources and the need to respond to complex problems with new approaches aimed at maintaining and enhancing productivity. These pressures have increased significantly over the past 12 months.

There have been calls, from inside and outside the APS, for public servants to be more innovative. For example, former Secretary Don Russell reflecting on the APS noted that1:

We have to create an APS where departments become ideas factories; ideas that have been properly researched and tested and that are only looking for objectives and values to be harnessed by the Minister or government of the day.

Tony Shepherd, AO, however, reflecting on his time as the President of the Australian Business Council and his experience as Chair of the National Commission of Audit, suggested that the deficiency of imagination and innovation spread beyond the public service2:

In these last several months working on the audit, it's struck me how much the country has been held back in recent years by a lack of imagination—in policymaking and, at times, in business.

Typically, public sector innovation takes an inside-out approach. That is, innovation is seen to emerge from the way in which public servants and agency resources are organised to deliver innovative outcomes. Beyond the public sector, the way innovation is achieved has changed substantially from this model.

The open source software movement crystallised an alternative approach to innovation where resources external to the organisation (in the form of user communities) design, develop, distribute, and support complex products. Sometimes this is in alliance with incumbent businesses and sometimes in opposition to those businesses. The rise, and increasing prevalence, of an open innovation approach—which locates innovation outside traditional organisational structures—and its use of non-hierarchical ways of organising and accessing people and resources, challenges the way the APS and its agencies have traditionally approached innovation.3 There are, however, good examples of open innovation approaches within the APS and these will be highlighted.

In the private sector, open innovation has been more formally defined as:

… the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively.4

In the public sector, innovation similarly depends on the openness of the APS to think and work beyond traditional institutional boundaries, to accelerate internal innovation and beyond the APS, to collaborate with broader (and often non-traditional) communities to ensure better outcomes for government and citizens. The Household, Income and Labour Dynamics in Australia (HILDA) survey is a good example of this. It will be discussed in more detail later in this chapter.

Two key ideas underpin open innovation: no organisation, however big, can rely exclusively on internal innovation resources to improve performance in an interconnected business environment; and organisational capability in open innovation requires a predisposition to sharing, collaborating, experimenting and managing risk.

This chapter reports on the ‘culture of innovation’ in the APS, focusing on a broad understanding of open innovation as sharing, collaborating and experimenting. It examines the ways in which the APS engages in open innovation at an organisational level, and the enablers of and barriers to ‘bottom-up’ innovation in APS workplaces.

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1 Russell, D 2014, Dr Don Russell: reflections on my time in Canberra, Crawford School of Public Policy: Australian National University College of Asia & the Pacific, Canberra, viewed 19 September 2014, https://crawford.anu.edu.au/news/3851/dr-don-russell-reflections-my-time-canberra.

2 Shepherd, T 2014, Farewell Address by Tony Shepherd AO, Outgoing President of the Business Council of Australia, Business Council of Australia, Business Council of Australia, Melbourne, viewed 19 September 2014, http://www.bca.com.au/newsroom/speeches-and-presentations.

3 Lakhani, KR, Lifshitz-Assaf, H & Tushman, M 2013, ‘Open Innovation and Organizational Boundaries: Task Decomposition, Knowledge Distribution and the Locus of Innovation’ in A Grandori (ed), Handbook of Economic Organization: Integrating Economic and Organization Theory, Edward Elgar Publishing, Northampton, Massachusetts, pp. 355–382.

4 Chesbrough, HW, West, J & Vanhaverbeke, W 2006, Open innovation: Researching a new paradigm, Oxford University Press, Oxford, p. 1.