Charles Chieppo is a research fellow at the Ash Center of the Harvard Kennedy School.E-mail: Charlie_Chieppo@hks.harvard.edu
In a hyper-competitive world transformed by technology, it's clear that fostering a government culture that encourages innovation should be a priority. But just what is innovation, and how do you measure it?
Colorado Springs, Colo., is facing that challenge head-on. Last August, the city unveiled its Office of Innovation and Sustainability (OIS), which focuses on promoting the spirit of innovation and facilitating financial and environmental sustainability. OIS has developed a novel formula to measure the value of innovation, and the office is funded from the savings its innovations generate.
To illustrate, OIS offered to let the city's streets division retain the proceeds from selling its under-used assets. All told, the division pulled in $585,000 for 69 pieces of equipment, which will be spent on new, more efficient equipment that will be under warranty and therefore less expensive to operate and maintain. Maintenance savings are expected to be $450,000 over three years; the "net present value" (the savings after discounting for inflation and foregone investment returns) is $424,000.
Add the two together and you get what OIS calls an "Innovation Value" of more than $1 million. But OIS is conservative in calculating the true value of innovation. In this case, it doesn't include the $585,000 from the equipment sale, since that represents money that taxpayers had already spent. Nor does it add in additional savings that likely will flow from the innovation, such as reduced fuel costs. "We're very careful not to take too much credit for the savings we help create," says Innovation and Sustainability Manager Nick Kittle. "If we did that, other departments wouldn't want to partner with us."
By helping to create real, measurable value and sharing the credit with partners, OIS has quickly become the first stop for good ideas in Colorado Springs. Even using very conservative cost estimates, the office more than paid for itself during its first year of operation and is already 80 percent of the way toward paying for its second year. Among the future projects the office is contemplating are energy-efficiency retrofits for public buildings and installing LED streetlights, both of which generate significant energy savings elsewhere.
But Kittle points out that any organization that wants to create a culture of innovation must understand that some of those innovations will fail. Responding to failure by becoming less willing to take chances is the surest way to snuff out innovation, and learning from failure helps make future endeavors more successful.
During its launch, the wise use of federal stimulus money helped OIS produce immediate savings. But the office is working to generate the kind of ongoing internal savings that lead to long-term structural sustainability. A proven track record of using funds wisely makes Colorado Springs a more appealing place for state, federal and foundation investment.
And it's not just about external investment. Colorado Springs is a fiscally conservative community in which taxpayers won't fund a lavish government. In a frugal environment, necessity becomes the mother of invention. Investment must be earned, and in its first year, the Office of Innovation and Sustainability is making a compelling case for itself.