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How a Dedicated Innovation Team Can Tackle ‘Good Problems’

The London transportation agency’s unit has focused on the needs of the customer by leveraging existing assets and shifting from traditional procurement models to engage with private-sector innovators.

The London Underground
The London Underground, among the transportation agencies overseen by Transport for London. (Shutterstock)
Leaders of government at all levels who aspire to create innovative organizations always need help. That help might come from borrowing and adapting the ideas of another jurisdiction. At Harvard, we ran an Innovations in American Government program for many years that collected thousands of ideas for that purpose. Support for innovation can also come from outside of government, such as the Bloomberg Philanthropies’ important funding of the first government innovation delivery teams in 2011.

Yet another source of support comes from studying and adopting structures and approaches that generate innovation, and one place worthy of such attention is Transport for London (TfL), which oversees the Underground transit system and most of the rest of the city’s public transportation network. Rikesh Shah took on the task of generating new ideas at TfL when he helped start its first innovation unit, known as the Innovation Hub, in 2017. Previously, Shah had spent three years heading up TfL’s impactful Digital Partnerships and Open Data team, and he knew that a dedicated innovation team could take those successes even further.

Further successes were certainly realized, from the millions of pounds in health-care costs saved through a reduction in exposure to air pollution to eased traffic congestion linked to increased walking and cycling, enabled by infrastructure improvements. Train and bus riders reported increased satisfaction and benefited from improved accessibility and real-time information that, for example, supported transportation to hospitals during the COVID-19 pandemic.

Transformative innovation starts with clear goals in mind, ones focused on the needs of the customer, not just the processes of the organization. Shah saw TfL’s mission as more than just providing transportation. His goals included delivering services that helped Londoners lead better lives by helping them get where they needed to go in a more efficient, convenient and less time-consuming manner.

To accomplish these goals, as a starting point for driving creative change Shah looked to leverage — not displace — TfL’s existing assets. This meant he needed to create a true partnership with the agency’s operating units and identify and make better use of undervalued assets.

“I wanted to make sure we understood the needs of the business units,” said Shah, “so we asked for secondees from these units to be placed in our new agency, people who really understood the business area and who would sit with us and pursue better responses.” Directors from those operational units, Shah added, “gave us good problems” and allocated budgets and other resources.

Shah established “matrix teams” that could tackle the specific problems elevated by the departments. Those teams included not only members of the innovation unit and representatives from the business units but also representatives from the IT, human resources and engineering departments.

Support from the specific business area was crucial. If the business unit representative didn’t support tackling a particular problem, Shah would direct his team to a different issue “even if the work in their opinion might be a more boring problem statement and the innovation may not be as revolutionary.” He knew that garnering early successes with downstream value was important for proving the innovation unit’s worth.

For creativity to produce results, it must rest on clarity of outcomes that captures what is valuable to the customer, not the agency. TfL sought to address customer concerns, integrate feedback into policies and foster trust with the community. To force this concentration, the unit put a monetary value on customers’ time. In 2017, Shah commissioned an independent study to assess the value of such tangible items as time saved from shorter waiting or travel times. The study valued economic benefits and savings to travelers, the city and TfL itself at £130 million a year.
Rakesh Shah
Rikesh Shah: “When I first came in, my ethos was, we don't have to do everything ourselves.” (Photo: Harvard Technology and Entrepreneurship Center)

Another pillar of innovation involved using data to leverage private-sector efforts. TfL valued its data as one of its key assets, and by making it more available to innovators and app developers, it opened up a broad new area of better service. At one point there were 700 customer-facing apps powered by TfL’s data being used by 42 percent of Londoners.

In addition to encouraging developers to use available data to create their own solutions under rules established by TfL, Shah also needed to formally acquire innovation from the private sector, which necessitated well-structured public-private partnerships. “When I first came in, my ethos was, we don't have to do everything ourselves,” said Shah. Shah advocated for a shift from TfL’s traditional purchasing models toward “innovation procurement,” including engaging a diverse ecosystem of innovators that helped small startups to contract more easily. Once an innovation unit team fully defined a problem, he would determine how much funding, if any, TfL should allocate for an external solution.

Traditional procurement practices delay reforms and strain the resources of startups. TfL’s innovation unit dealt with the irony that its own procurement and implementation delays resulted in opportunity costs for consumers as well as private partners. As Shah put it, “What you don't want to do is have multiple different procurements where you're having to constantly go back and forth with the market. If you're a startup and you've just worked with a transit agency or a city authority, you have very limited resources. Once they prove the offering from a technical point of view, additional RFPs delay the answer and sap resources.”

TfL streamlined this acquisition process and in so doing encouraged a broader ecosystem of startups by making it much easier for them to bid instead of having to maneuver through a time-consuming and complicated traditional procurement process. One particular program, RoadLab, aimed to reduce the impact of road work on safety and mobility. In creating this program, TfL was one of the first European agencies to apply a new approach called the Innovation Partnership Procedure, which enabled TfL to go out with a problem statement, carry out R&D trials including some iteration, and then buy the best solution at scale.

Shah has taken lessons learned at TfL to a broader constituency as head of the U.K.’s Innovation Procurement Empowerment Centre, which helps local agencies across the country employ market innovation to do things “better, cheaper, faster, greener and safer.” These efforts show how by fostering collaboration across stakeholders and focusing first and foremost on the needs of the user, governments can navigate complex challenges with agility and empathy.

Governing’s opinion columns reflect the views of their authors and not necessarily those of Governing’s editors or management.
Stephen Goldsmith is the Derek Bok Professor of the Practice of Urban Policy at Harvard Kennedy School and director of Data-Smart City Solutions at the Bloomberg Center for Cities at Harvard University. He can be reached at
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