Understanding Innovation as an Approach to Increasing Customer Value in the Context of the Public Sector

Abstract: We live in a society that is constantly developing. New challenges and new opportunities emerge all the time. Fortunately, human beings have a fantastic ability to adapt and find new solutions in new situations, i.e. to be innovative. Not just individuals but also organizations need to make room for innovative development. Organizations need to work on how to develop new products, services and processes. At the same time, each organization needs to work on improving the quality of existing activities. Previous research has shown that high value for the customer, i.e. that which often constitutes the goal of quality work, is achieved by the organization working in parallel on developing existing products, services and processes while at the same time driving innovative development forward. How organizations cope with the balance between these two perspectives has been researched and written about considerably when it comes to manufacturing companies. On the other hand, however, there is a lack of documented knowledge regarding how best to balance these two perspectives in the service sector in general and the public sector in particular. This thesis has been written with a view to contributing to existing knowledge about how innovation can be understood as a possible way of increasing customer value within the public sector. It seeks to create insight into how innovation is perceived as a phenomenon in order to increase value for the customer and into how innovation work relates to other aspects of current quality practices within the Swedish public sector. It has also been written with a view to contributing greater understanding to how some of the quality movement’s tools can increase innovation capacity in the public sector.           To fulfil this aim, a literature study and case studies have been performed. The case studies have been performed in Sweden at Lantmäteriet (Swedish Land Survey) and The Swedish International Development Cooperation Agency, (Sida). One of the case studies also included the Swedish Ministry for Foreign Affairs and the Swedish Government. Three research reports have been written between 2012 and 2014, and these form the basis of the thesis. The research findings give examples of organizations whose quality work focuses closely on systematic measurement and control of the work process and much less on innovatively developing new ways of increase customer value. The findings also show that there are a number of obstacles which the public administrations studied face to combine quality work with a greater ability to work innovatively. Given that innovative development is an important strategy for increasing customer value, the study indicates that some of the existing quality work is an obstacle to achieving greater customer value in the public sector.  At the same time, there are tools and values in the quality movement that can improve the organization’s ability to innovate. The quality movement’s core values and tools, such as systematic cyclical learning, can constitute important tools with which to create favourable conditions to improve innovative ability. This underlines the need for identifying where quality work strengthens and hinders innovation processes respectively. The research findings also stress the need to radically improve the work on innovative processes in the public sector in order to achieve the overarching goals of public administration more effectively.