The title of this column is not a quote from a modern consultant but from Heraclitus, the ancient Greek philosopher. He had it right: While we are always balancing continuity against change -- focusing mostly on continuity because of previously learned routines -- survival and real progress depend ultimately on innovation.
Governments, however, have generally been laggards when it comes to innovation. Historically, this reality has rarely been a problem. If a government could merely avoid falling too far behind in military capacity, it could survive. However, the challenges of maintaining sovereignty or primacy in an area of contention have recently become both bigger and different.
What has changed about change, and what should we do about it?
The fundamental difference is that the pace of change has increased dramatically. New knowledge has exploded in physics, chemistry and biology, spawning an explosive growth in publications. New applications of knowledge have also exploded, as exemplified in Moore's Law. The continued doubling in productivity every two years has produced computers in which the instructions executed per dollar are 33 million times greater than they were 50 years ago. Organizational change, while slower, is also moving more rapidly. Evidence can be seen in the creation of truly multinational firms (as opposed to national firms that sell products in many countries) and the rapid turnover in "successful" organizations (such as the Fortune 500). Jobs are being moved almost anywhere in the world that has adequate Internet connectivity. Economic, social and political relationships are moving to the Internet, which is enabling those relationships to change much more rapidly than before.
Starting with a previous world that was relatively stable -- requiring only infrequent and small moves from the status quo -- we now have more environments that are evolutionary (requiring frequent, small changes) and revolutionary (requiring infrequent, but large changes). At the extreme -- in settings such as markets for high technology -- we have turbulent environments that require changes that are both frequent and large. Now, even governments must respond to a more turbulent pace of change.
The basic answer is that institutions must respond with increasingly energetic, leadership-driven innovation as turbulence increases:
1. "Traditional" innovation: In stable environments, assign innovation to a (relatively small) planning staff. If the need for developing new possibilities is rare, organize the work like other tasks and allow it to be reported through the established hierarchy. This requires some effort, but not much. Leaders make important decisions by assigning responsibilities and approving or disapproving subsequent recommendations. The budget is often the key decision-making process, and it should mandate the search for high-value, cross-program, multi-year innovations. Many of the "online, not in line" service innovations emerged through this approach. The innovations were small in terms of disruption to government even though they offered enormous benefits to citizens.
2. "Active," bottom-up Innovation: In evolutionary environments, add operations personnel to the search. This approach typically requires leaders to allocate a significantly larger budget in order to achieve adequate innovations. It requires dedication from operations personnel because more change is required in production procedures. Decision-making can nevertheless be bottom-up and participatory, since individual changes are relatively small. In today's world, it is the norm for governments to augment their traditional staff-oriented innovation with a strong portfolio of Total Quality Management-style projects. Senior leaders must champion this active search for innovation.
3. "Adaptive" innovation: In revolutionary environments, use authority to drive learning and protect disruptive changes from the status quo. The work is "adaptive" in the Darwinian sense (adapt or perish) and because learning and modifications must continue to take place during implementation. Adaptive innovation has been seen in settings where general-purpose "caseworkers" were required to adapt to radically new procedures to increase and improve productivity. The changes were required because the previous workflow relied on too many specialists and too many work-in-process handoffs, resulting in too many delays and mistakes. Technology-enabled caseworkers have been introduced to cycle times cut by as much as 90 percent and unit costs reduced by up to 40 percent. Such changes typically consume tremendous amounts of attention from leaders who must keep the heat on for change, while also backing off when needed, to keep things from blowing up. Revolutionary change is typically a response to crisis such as the financial turmoil that governments are facing today.
4. "Networked" or "partner-oriented" innovation: In turbulent environments, focus on the external network to negotiate responses. Turbulence requires both large and frequent changes. Flexible coordination to reconfigure external relationships is often essential. Computer networks have eased this process in the world of high technology and outsourcing. Governments are now assessing how to handle turbulence for the military, health care and other missions. Technologies that knit together entire industries, and multiple jurisdictions, continue to evolve. However, it is not clear whether they will require continuing turbulent change.
As new knowledge and other pressures push both innovative and operational jobs around the globe, the responses of governments must become more active, more adaptive and more partner-oriented. For governments, as for all of us, there is nothing permanent except change.
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