In January of 2011 shortly after taking office as Governor Andrew Cuomo signed an executive order creating the Spending and Government Efficiency (SAGE) Commission. The purpose of SAGE is to modernize and rightsize government to make it more efficient, effective and accountable through four activities:

On December 15, 2011, the SAGE Commission met and approved some interesting recommendations. As a supporter of increasing new approaches in government, I was pleased to see that the Commission has recommended the following:

Create a dedicated Innovation Fund to finance Business Process Redesign and efficiency-creating technology projects based on the following criteria:
• Can be completed in 1-3 years
• Generate a Return on Investment of at least 30% annually
•Materially improve agency performance and/or government customer service

The Innovation Fund would focus on the following type of initiatives:

1) Business Process Redesign 

•Identifying and redesigning processes that touch consumers, businesses, and/or staff to improve service, cost and quality
•Understanding pain points and opportunities for efficiency and effectiveness gains

2) Leveraging Technology

•Automating standardized and routine processes or functions
•Utilizing sophisticated analytics to detect variances and target activities

3) Integrating Government Customer Facing Activities

•Improving customer service levels to citizens and businesses
•Integration across touch points with the government to make government service delivery more seamless

These projects produce a high ROI, but may need financial support because they require an up-front investment. Government is very much behind the times as far as customer service, technology and efficient processes.

Many private sector organizations invest in innovation to improve their operations. Earlier this year Allstate  Insurance opened its Insight, Design & Innovation Center, which has become a testing center for more than 30 projects at any given time. Allstate is working on an automated claims process that will allow a customer to submit a claim through a smartphone without help from a claims center representative or agent. One method being looked at is a drive through setup at an Allstate location or auto dealership where with lasers and photo equipment take pictures of damaged vehicles.

Government needs to take the same approach to encourage and fund innovation. The City of Baltimore recently established a $1 million Innovation Fund. The purpose of the fund is to provide seed money for one-time investments that will lead to improved results, increased revenue, and/or reduced ongoing operating costs for City services. The Innovation Fund is meant to be self-sustaining; savings from the investments are returned to the Fund so that other projects may be funded. Continuing this Fund is one way to keep City agency heads and staff focused on innovation and spur creative solutions on how to use limited resources.

Innovation funding in Baltimore is awarded through a competitive process among City agencies. City agencies submit proposals for review by a committee of city and private sector leaders that make recommendations for funding to the Mayor. The Innovation Fund Committee this year reviewed 30 proposals from 15 different City agencies, which ranged from requests for $100,000 to $1.8 million and recommended three proposals for funding.

Innovation is about experiments that don’t always work. It is not uncommon for seventy to ninety percent of innovation efforts to fail. Even in failure lessons are learned and improvements often result through additional efforts down the road. Most government officials and the public have a low tolerance rate for failure, which is a huge problem in encouraging innovation in government.

Would you support your state or local government establishing an innovation fund in an effort to improve government performance? Is the public accepting of failure in government when it comes to trying new ways of designing and delivering government services?