Designing an Innovative Municipal Organisation: Using service design to enable city-wide innovation

A quick Google search for ‘innovation’ pulls up thousands of results: leading-edge technology, business school case studies, how-to guides for innovation in corporate environments, and more. ‘Innovation’ is a big, ambiguous term that often looks very different depending on where and how it is applied. Different contexts for innovation include: sector (private or public), service delivery innovation versus business model innovation, a focus on innovation tools or on innovation outcomes, and evolutionary-scale innovation versus revolutionary-scale innovation. Each of these circumstances offer unique aspects and perspectives of innovation, and deliver different values.

In the summer of 2018, as PwC embarked on an innovation initiative with the City of Ottawa, there were two dimensions that focused our journey: service delivery innovation and the public sector. But what kind of innovation is possible in this heavilyregulated environment, where traditional private sector market forces aren’t present?

What is innovation?

For the City of Ottawa, Canada’s national capital, it started with a single (but far from simple) question: How do we embed innovation into the organisation, across every department?

What’s interesting about this particular question is its perspective. So much of what we see in municipal innovation tends to be focused on external initiatives, such as creating better places for people to live, work, play and visit. These initiatives include research and investment in Smart Cities activities, policies and programmes to attract government and private sector investment, building start-up communities and public/private partnerships. These are all critical initiatives, but they often require significant investment and partnerships. Rarely do we see cities reflect on what’s required to build an innovative city from the inside out, looking internally at what’s required as an organisation to enable employees to create those external innovation initiatives at the grassroots level.

With the support of the senior management team, and under the leadership of the Director of Service Transformation, Marc René de Cotret, PwC and the City of Ottawa partnered to answer the question that was posed, and understand how the city could embed, support, and empower innovation across all of its services and departments – starting from the inside.

From the outset, Marc understood the importance of clearly defining what innovation meant for the Ottawa. It meant building a unique definition of what innovation means in the public sector, within the city’s own organisation and operating model constraints, while at the same time keeping focus on delivering real results for ‘clients’ (the city’s term for a diverse group of end users, including residents, businesses, visitors, partners, etc.).

This meant moving beyond a theoretical exercise or falling back upon stereotypical innovation examples from Silicon Valley and tech start-ups. As Marc put it, “we’re not going to be developing the next iPhone at the City. Nor should we be measuring ourselves against that kind of innovation. If you’re a service delivery organisation, in a public sector environment, in a municipal setting, how do you define innovation that makes it something that’s real and tangible that can be incorporated into the way you deliver services to citizens?”

Why an Innovation Operating Model?

The city had a very clear need to identify actionable, implementable changes to its internal processes, operating model and culture in order to enable what it called ‘innovation at the edges’. This means innovation that happens closest to the point of service, empowering employees who are interacting with clients to identify the need for something to change, and then going out and changing it.

As Marc put it, “we’re not going to be developing the next iPhone at the City. Nor should we be measuring ourselves against that kind of innovation. If you’re a service delivery organisation, in a public sector environment, in a municipal setting, how do you define innovation that makes it something that’s real and tangible that can be incorporated into the way you deliver services to citizens?”

“At our core, Ottawa (like any city) is a service delivery organisation,” said Marc. “And like any service delivery organisation, we need to find a way to keep pace with changing client expectations that are driving towards more and more personalised, customised, and in-context service experiences. In order to be able to keep up with that pace of change, we have to extend our ability to innovate, in our organisation.”

With our goal of delivering exceptional client service through grassroots innovation, we needed to understand what processes, systems and cultural factors were acting as enablers of – and barriers to – this innovation ‘at the edges’. Why was innovation happening in certain pockets of the organisation, but not in others? What was making service transformation possible sometimes, but not always? Was there truly a recipe for success that we could formalise, replicate, and embed across the organisation?

With these questions simmering in our minds, PwC and the City of Ottawa embarked on a four-month service design journey to define a new innovation operating model. The goal of the operating model was to go beyond simply creating a ‘culture of innovation’. The choice of an operating model was deliberate, because both the city and PwC understood that for a culture of innovation to be sustainable, innovation enablers must be defined and embedded into core operating principles, touching upon data and analytics, IT systems, governance, people skills, individual development plans and more. All the individual components of an operating model needed to work together to create an ecosystem of support for innovation internally.

The Innovation Operating Model: The Three Levels

1. Strategic : Enabling city-wide outcomes (tied to city-wide strategic planning, council direction, etc.).

2. Corporate : Enabling organisation-wide outputs and culture change across functions and departments.

3. Department/Line of Service : Enabling service delivery improvements in branches/units

In order to enhance and enable innovation within the city organisation, the first step was to embed these new ways of working at every level, including staff and senior leadership. As a result, the Innovation Operating Model recognises the need for enabling factors at three levels, with recommendations for organisational (internal) enablers focused on the corporate and department/line of service levels.

Why service design?

Our approach leveraged some of the critical tools of service design, such as user research, co-creation, prototyping and user testing.

Using service design methods to develop the operating model with employees had two clear benefits. Firstly, the user-centred approach helped develop a focus on the people that are delivering the services. Secondly, engaging staff in a client-centric approach taught them the value ofuser-centricity, and how applying a client-centric mindset could support the process of grassroots innovation in their delivery of services.

“In a service delivery organisation like the City [of Ottawa], it’s two sides of the same coin. The experience of the citizen is married up with the experience of the front-line service provider – our employees,” said Marc. “That relationship is more symbiotic today than it ever has been. It’s one of the underlying transformational market forces that is impacting service delivery today. So, for us to use a client-centric approach to innovation when we were consulting with employees was critical.”

Demonstration of the dual value of the process also came directly from employees. After one of our operating model testing sessions with employees, a city staff member provided feedback on the value of the model itself and the education in a user-centred approach, and said, “… with a formal innovation process and model … the biggest impact is listening to our clients to guide our thinking.” This change in mindset was a critical outcome for the project, and one the city continues to strengthen and scale.

Consistently bringing innovation into the organisation, across every department

In order to create a new operating model that was relevant and actionable, we knew we needed to start by understanding what changes might be required to the current model in order to scale the new approach organisation-wide.

When it came to innovation, we knew that Ottawa was not starting from scratch. There were already pockets of staff developing ad hoc innovative solutions to client needs, with several great examples in existence. The goal was to learn from these pioneer innovators.

In a series of co-creation sessions with frontline employees across different lines of service, departments, and functional roles – all identified as grassroots innovators – we sought to understand their approaches to service innovation, what sup- ported their process, what acted as significant barriers they needed to overcome, and how they tackled those barriers. Through these co-creation workshops, we aimed to learn the ‘secret sauce’ of innovation from those who had already been successful in building, piloting and launching new service transformation initiatives.

We learned that, like in many organisations, the most commonly-cited barriers had to do with working in operating silos, cultural aversion to risk and a lack of dedicated time to commit to innovation efforts. What employees cited as the most common enablers of innovation were support at the leadership level, access to collaborative partners (both inside and outside the organisation), access to and availability of technology to support their innovations, and having dedicated time to commit to innovation efforts.

As we considered how to embed support for service innovation into the operating model, we knew that it would need to both address these critical challenges and amplify the factors that contribute to success.

We identified two critical levels of the operating model for embedding support across the organisation. At the corporate level, we identified the right cultural and organisational conditions to enable and support innovation, within functions such as human resources, procurement, IT, etc. We then worked with the city to identify initiatives under five capabilities: People, Process, Organisation, Information and Technology.

Secondly, at the department/line of service level, which is where the process of service innovation happens ‘at the edges’ within actual service delivery, we identified key initiatives (both process-related and digital-related) that will embed innovation supports within the five steps of the city’s standard model of service delivery. In total, we developed 85 unique and actionable recommendations to deliver improved services.

User research

How we used it: We conducted interviews, group discussions, and research labs with corporate employees, senior leaders and front-line staff to understand the current barriers and enablers to innovation at the city. With front-line staff, we used journey mapping templates to better understand the individual journeys they had each had in their past pursuits of innovation, and had them identify their own biggest pain points and moments of delight.

What we learned: There is nothing more valuable than inputs directly from the user! Partway through the project we identified the need to gain more input from senior leaders as key users and enablers of the corporate level of the operating model. As a result, we modified our research approach and built in additional working sessions with leaders to learn from their thoughts and perspectives.

Cocreation

How we used it: We conducted a series of cocreation sessions with front-line staff and external city partners to create a future state definition of what innovation at the city should mean, and what it should look like. We used generative brainstorming activities and discussions to articulate what the desired future state would entail, what desired outcomes of innovation would include, and how the city would support and enable innovation.

What we learned: In service design, co-creation is king! Our most valuable and richest insights for the operating model came from the cocreation sessions. In fact, many of the ideas generated in these sessions made it directly into the final recommendations. Our only learning here is where time and budget allow, we’d look for more opportunities for co-creation. In fact, the co-creation session with external partners was added later in the process because we identified that many of the key innovation enablers that employees cited relied on the ability to partner more easily with external providers.

Prototyping

How we used it: Between the first draft of the operating model and the final recommendation, we went through multiple iterations of the prototype. We prototyped and evolved the content, the structure, the visualisations and individual component parts as we gathered more insights and perspectives.

What we learned: Prototyping is incredibly valuable when it comes to articulating complex concepts –especially for something as abstract as an operating model. It was really useful for the PwC and city teams to get concepts on paper and start socialising those concepts within the team and with user audiences. Our key learning in the prototyping process was that we should have started it even earlier. We built our first prototype after the research and co-creation sessions were completed, but we could have built it earlier in the research process once we had only a few inputs. An earlier prototype (though much lower fidelity) would have allowed is to use it as a co-creation tool, moving to more concrete feedback from users earlier.

User testing

How we used it: We identified a specific use case to use as a testing ground for the operating model prototype. In this case, we looked at how the city could innovate in the area of mobilising volunteers during an emergency response (something that was topical and top of mind after a recent tornado). We gathered a group of emergency and volunteer subject matter specialists for a half-day workshop to generate innovative ideas while testing the recommendations in the operating model.

What we learned: While user testing creates significant value in the process, and identifies opportunities to iterate solutions, it can be difficult to test abstract concepts such as an operating model. The testing method we used was an out-of-context workshop environment because many of the operating model recommendations were not yet implemented (or not yet possible to implement) at the time of testing. Some of the recommendations required stretching significantly beyond what was possible in the current operating model, and required participants to ‘pretend’ and hypothesise about what the impact of the recommendations might be. While we were able to get valuable feedback on some pieces of the operating model, some recommendations were too abstract to resonate in a half-day workshop environment. In the future we would explore the possibility of breaking out pieces of the operating model, and applying different, more focused testing methods depending on the content of the recommendations.

What we learned applying service design tools to a ‘meta’ problem Our approach leveraged some of the critical tools of service design, such as user research, co-creation, prototyping and user testing. We quickly realised that the questions we were wrestling with were much bigger than, “How do we deliver this service in a better, more innovative way”? Instead, we were looking at a more substantive question: “How might we, as an organisation, design an innovation model for how we enable innovative service delivery across all our services?” With flexible tools, we could adapt and adjust throughout the process to get to the answers we were seeking.

At the corporate level, the operating model recommendations included things such as:

— People – Creating a rotating innovation team, deployed in an ad hoc manner, to provide relevant skills, specialised resources and expertise to innovation teams, to accelerate innovation initiatives.

— Processes – Expanding the implementation ofinnovation requirements for large-scale, long- term contracts with core vendors.

— Organisation – Leverage the ecosystem (including higher education, civic tech groups, third party developers, etc.) on innovation projects, to bring the outside in.

— Information – Promoting internal and external development of APIs and open data sets to foster innovation with third party developers.

— Technology – Implementing a client hub to drive client insights and deliver a unified client experience.

At the department/line of service level, the operating model included recommendations such as:

— Establishing client experience data collection by service classification to support decision making and continuous improvement.

— Embeding components of an agile methodology into pilots and scaling iteratively.

— Providing training to select staff on core new technology platforms embedded in innovation ecosystem to understand ‘the art of the possible’.

— Expanding the public engagement capability to engage citizens earlier in the innovation process.

What next?

What’s most exciting about this work is that the development of the operating model was truly just the starting point. While it’s only been five months since the recommendations were finalised, the city has already begun to implement key pieces of the operating model by integrating the recommendations into the city-wide transformation roadmap for the next four year term of council (2019 to 2022).

In conversation with Marc René de Cotret, he identified the importance of moving beyond the operating model itself and into the implementation and rollout stage, saying that the city is “… moving forward with integrating the recommendations into the way we operate.”

The degree and speed at which the recommendations were accepted and adopted is a testament to the city’s commitment to supporting service innovation, but also to the manner in which the team worked. As in any great service design engagement, the best solutions are ones that are co-created and tested with multiple stakeholders. The final operating model recommendations were the result of consultations with front-line and administrative employees, external partners and a blended core team of City of Ottawa and PwC staff, working towards a shared goal: to prove that service delivery innovation is more than possible in a public sector environment.

Katie Monteith is a Director in PwC Canada’s Experience Practice. She’s worked in both the public and private sector, using service design to redefine a national defence organisation’s approach to service delivery, re-design a bank’s mortgage experience and imagine the future of telecommunications billing.