Innovation and creativity to spur public sector productivity

The Productivity, innovation ability and innovative procurement report is a guide for public organisations and enterprises in the process of change

Media release 7 September 2006

The public sector is the largest economic sector in Finland. Hence, a healthy national economy and economic growth are integrally linked with the productivity and operative models of the public sector.

The report entitled Tuottavuus, innovaatiokyky ja innovatiiviset hankinnat (Productivity, innovation ability and innovative procurement), recently published by Sitra, discusses the challenges facing the public sector as regards increasing its productivity. The gist of the report is that solutions for the necessary reforms in the public sector lie primarily in innovativeness.

“It is not an exaggeration to say that the future of the welfare society depends on attaining increased productivity in the public sector. Finland’s unfavourable population structure and poor employment rate will inevitably cause a rise in public expenditure. We must find new, sustainable means to cover the costs,” says Jukka Yliherva, D.Sc. (Tech.), the author of the report.

The report provides tools for innovation management, efficient procurement and collaboration between the public sector and private enterprises. It is the result of a joint project by Sitra, the Finnish Ministry of Finance and the Ministry of Trade and Industry.

Public procurement is a major economic factor

One of the decisive factors in public sector productivity is procurement competence and the opportunities innovations would create for this activity.

There are tens of thousands of enterprises that provide services to the public sector worth €15–20 billion every year. The procurement methods and collaboration models are also highly significant in a wider context, and procurement competence is of major strategic importance. “The better the client organisation handles its purchases and is capable of incorporating innovation incentives into its procurement activity, the better use can be made of the supply on the market and the bigger the savings,” says Yliherva.

Creative solutions will work better if the activity supports those who invest in innovation instead of routine procurement. “Public procurement should not focus solely on competitive pricing. It should also take into consideration other aspects, such as customer satisfaction and productivity. This would initiate a creative process in the providers, which would eventually lead to innovative solutions,” says Yliherva.

Innovation brings results

Innovativeness can be promoted within an organisation in many different ways. Innovations are most likely to evolve at the interface between different branches, when creativity, skills, knowledge and other resources are exchanged and shared. At best, these interfaces are where best practices and operative models are transferred from one sector to another and new economic solutions are invented.

There may, however, be several obstacles to the transfer, acceptance and implementation of new ideas within an organisation. These obstacles can be removed by steering the innovation ability of the organisation in the right direction.

“In the public sector, innovations are nearly always related to a change in modes of operation, which requires reorganisation of work. The report provides practical tools for increasing innovativeness in terms of productivity and competitiveness in procurement and collaboration between organisations,” Yliherva concludes.

Further information

Jukka Yliherva
Director, The Finnish Road Enterprise
Tel. 0400 291 874
jukka.yliherva@tieliikelaitos.fi

Antti Hautamäki
Innovation Programme, Sitra
antti.hautamaki@kolumbus.fi

Publication details

Tuottavuus, innovaatiokyky ja innovatiiviset hankinnat (Productivity, innovation ability and innovative procurement)
Jukka Yliherva
Sitra Reports 64
Sitra. Helsinki 2006.
ISBN 951-563-525-X (bound)
ISSN 1457-571X (bound)

You can order the report from Sitra, tel. +358 (9) 618 991, e-mail: publications@sitra.fi. Download report (pdf, in Finnish) »