Guide to Creating and Sustaining a Culture of Innovation for Departments of Transportation (2018)

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13 This section defines a culture of innovation, explores how a culture of innovation is expressed in a public transportation agency, identifies employee groups most responsible for leading inno- vation, addresses how risk can be assessed and managed in the public sector, and outlines key elements of the innovation process. Developing a culture of innovation is both art and science. In this study, the research team surveyed over 300 transportation practitioners across the country and received more than 200 opinions on what constitutes an innovation culture. While the results were wide ranging, some common themes emerged regarding the key aspects of a thriving culture of innovation: • Change that is embedded into the fabric of the organization where employees do not ask how they can change, but suggest where change is needed. • An environment that fosters new ideas or methods and affords opportunities to test them. • A leadership-inspired, employee-embraced environment for introducing, promoting, and taking managed risk to pursue new ways of doing business. • A working environment that cultivates engagement and enthusiasm, challenges employees to take risks within safe limits, and encourages independent thinking to bring about positive change in the organization. • A place where good ideas and new ways to solve challenges—on a large or small scale—are encouraged. Resources are allocated to support new initiatives, instead of people having to work around the system to try new things. Failure is tolerated, rather than punished. These themes are supported by research, including the literature review in the NCHRP Web-Only Document 248 and the case study summaries presented in Section 5 of this guide. More importantly, these themes are at work in DOTs and other transportation agencies across the country. Many DOTs are skilled at both the art and science of building and sustaining a culture of innovation. It is not easy, but it is rewarding and can be transformative. S E C T I O N 3 Innovation Culture 101 Whenever there’s a discrepancy between current culture and objectives of change, culture always wins. – Daryl Conner Change Management Expert“Innovation is in the DNA of the organization and bubbles up naturally, rather than being mandated top-down.– NCHRP 20-108 Survey Respondent“ At its core, a culture is how people “do things” at an organization.

14 Guide to Creating and Sustaining a Culture of Innovation for Departments of Transportation This study attempts to balance anecdotal experiences and examples shared with the researchers by DOTs, with an objective research approach. Learn how to put research into practice by reading the examples provided in the Building Blocks. For a quick primer on innovation culture principles, especially in the public-sector trans- portation arena, read on. 3.1 What Is a Culture? One of the easiest ways to think of culture is to envision a set of consistent, observ- able patterns of behavior or how people “do things” at an organization (Watkins 2013). That definition rightly focuses on behaviors, which are fundamental; however, it also deemphasizes what people feel, think, or believe. According to The Public Innovator’s Playbook: Nurturing Bold Ideas in Government, by William Eggers and Shalabh Kkumar Singh, the culture of an organization is defined by beliefs, behaviors, and assumptions that have accumulated over time. Culture is transmitted both formally with rules, regulations, and hierarchies, and informally via norms, unofficial guidelines, stories, and casual conversations (Eggers and Singh 2009). If you create new rules but do not change informal structures, employees are unlikely to change their behavior. Trying to implement one or two innovation strategies, such as holding an annual innovation contest, will not be sufficient to create or sustain a culture of innovation. DOTs must shift from hierarchy to inclusion, from owner- ship to collaboration, and from invention to adaptation. Rethinking organizational boundaries, acquiring or building new skill sets, and creating flatter (less hierarchical) organizations are required. See Figure 6. 3.2 What Is a Culture of Innovation? A culture of innovation is found in organizations where “employees at all levels in an organization work routinely and organically together to propose and imple- ment new approaches for achieving desired organizational outcomes [regardless of Figure 6. Steps to leading change (based on Kotter 1996). A culture of innovation is achieved when an organi­ zation has created an atmosphere in which anyone can bring an idea forward … value can come as one lump sum or lots of small deposits. In other words, we shouldn’t focus solely on the million­ dollar ideas because a lot of small innovations can build to a million … everyone is equally responsible for innovation and encouraged to find areas where improve­ ment can be made. – NCHRP 20-108 Survey Respondent

Innovation Culture 101 15 magnitude].” Workplaces that foster a culture of innovation believe innovation is not only for top leadership, but can come from anyone in the organization. For more information on defining a culture of innovation, see Section 1 of NCHRP Web-Only Document 248. A clearly communicated mission or vision is necessary for organization-wide innovation efforts to be successful. Innovation is a means to an end rather than an end in itself, and it helps if employees understand what their goals are. Sharing a common definition of innovation is a helpful foundation for an innovative organization, as well as a work culture where everyone is recognized for their innovative actions (Bason 2010). As described by the Organization for Economic Cooperation and Development (OECD), “public sector innovation is about new ideas that work at creating public value. Each public innovation is aimed at addressing a public policy challenge and a successful public innovation is one that achieves the desired public outcome.” (Daglio et al. n.d.). In the public sector, as in other fields, innovation can mean many different things. It can mean new ways of managing and funding projects, such as public-private partnerships; new ways of rewarding people, such as recognizing innovative behavior; or new ways of communicating, such as through social media. 3.3 The Why, How, and What of Innovation Culture in DOTs “Innovation influencers” at multiple levels are critical to establishing and maintaining an innovation culture at a DOT. An agency should have innovation influencers in many places and levels within the organization—not just at its headquarters or at the top of the chain of com- mand. Innovation influencers (and the potential users of this guidance) can be categorized into three broad groups (Sinek 2009): 1. DOT Executives: This small group dedicates high-level attention to inspiring inno- vation. Their voices carry great weight in establishing and sustaining an innovation culture. While executives spend only a fraction of their daily time on innovation, their connections help a culture of innovation permeate the organization. Culture change is the bedrock of creating a culture of innovation and sustain- ing it through continuous improvement. Because leaders influence and motivate employees to desired levels of performance, they must clearly articulate the “why,” or the purpose and benefits of innovation. It is up to them to communicate a sense of urgency and make the case for change. 2. Innovation Team: The bridge between the executives and staff is the innovation team. This group takes the overarching direction from the executive level and con- verts it to a strategy for the organization. This work unit is tasked with leading change efforts, structure, and processes related to building an innovative culture and can expect to work extensively on innovation both at a high level and “in the trenches” with innovation implementers. The innovation team translates the “why” a culture needs to change into “how” it will change. As Sinek explains, leaders at this level know “how” to bring the executive’s vision to life by building the systems and processes to make the “why” tangible. 3. Innovation Implementers: These individuals infuse innovation within the organization and continuously connect with the employee base (e.g., district engineer, area engineer, engineer squad leader, maintenance crew chief, and bureau or section chiefs) by working directly with staff to share energy for innovation, discuss opportunities, and provide feedback on proposed ideas. The role of the leader is not to come up with all the great ideas. The role of the leader is to create an environment in which great ideas can happen. It is the people . . . on the front lines who are best qualified to find new ways of doing things. – Start with Why, Simon Sinek (2009)

16 Guide to Creating and Sustaining a Culture of Innovation for Departments of Transportation Innovations happen in large and small ways, and it is the everyday implementers who generate and put innovative ideas into action. These frontline implementers produce the “what”—the innovation actions and behaviors that, over time, create and sustain a culture of innovation. 3.4 Employee-Driven Innovation In innovative organizations, the job of innovation is not confined to a single team, such as a “research and development” unit. Instead, it is part of every employee’s performance expectations. In a DOT, this means innovation should be encouraged in all areas—from human resources and administration to right-of-way, from planning and design to construction, from operations to maintenance. The NCHRP 20-108 survey results identified highway maintenance, highway construction, traffic opera- tions, and public involvement as the most innovative areas within DOTs. Highway construction received the highest rating. Academic research also supports the value of employee-driven innovation, defined as activating and leveraging the experience and ideas of “ordinary staff” across all levels and areas of the agency. This concept has also been dubbed “everyday innovation.” (Bason 2010). One of the pioneers of the idea of employee-driven innovation is the Danish Confederation of Trade Unions, which conducted a major survey in 2006 of private- sector and public-sector organizations. The results showed as many as half of government innovations are initiated from staff and middle managers. (Bason 2010). Processes and structures are needed to activate, gather, and sustain these all- important everyday innovators, and examples of how to put structures in place to support them can be found in Section 4, Innovation Building Blocks. 3.5 Two Types of Innovations The Innovation Network (www.innonet.org), an organization that does program planning and evaluation consulting for foundations and nonprofits defines inno- vation as “implementing new ideas that create value.” There are generally two types of innovation: 1. Breakthrough or disruptive innovation. These are changes that do not improve existing processes, services, or products. Rather, they replace them. Breakthrough innovations are riskier than incremental innovations, but provide the public sector with a greater opportunity to provide services that are entirely new, significantly improved, or more sustainable. 2. Incremental or evolutionary innovation. Government offices that innovate incre- mentally are searching for ways to reduce costs and inefficiencies, and improve quality. The power of incremental innovation lies in the aggregate results that come from consistent performance improvements over time. To use a baseball analogy, breakthrough innovation looks for the homerun. Incremental innovations score by systematically moving runners one at a time with a single or a bunt— small ball. Both types can be effective in winning games, but they require different player skill sets and game plans. The public sector can and does successfully implement both kinds of innovation. One example of a breakthrough innovation is provided by the Stanford Social Innovation Review of the District of Columbia Department of Transportation (DDOT). In place of traditional, Employees at all levels of the organization are encouraged to consider different ways to do things, from the mundane daily tasks to the sweeping big­picture paradigms. The NCHRP 20­108 survey results identified highway maintenance, highway construction, traffic operations, and public involvement as the most innovative areas within DOTs. Highway construction received the highest rating. A specific definition of innovation culture was not provided; rather, respondents were asked to submit their definition.

Innovation Culture 101 17 coin-operated parking meters, DDOT wanted to create a system in which people simply hit a “pay-my-meter” button on their smartphones. This type of system would be faster and less expensive for the city to operate. Despite these obvious benefits, the improvement required the city to migrate away from an established system that employed many workers and relied on exist- ing infrastructure—exactly the type of situation that has long made it difficult to implement innovations in the public sector. But once the breakthrough innovation was implemented, incremental innovations followed closely behind to improve the new process, and DDOT’s two-year endeavor to phase out coin metering was suc- cessful. The agency successfully pioneered a model that embraced new technology. (Sahni et al. 2013). 3.6 Managing Public-Sector Risk The fear of failure and the wariness of funding untested approaches pose signifi- cant challenges for innovation in the public sector. Political realities drive this risk aversion—failures make headlines, while successes go largely unnoticed. Innovation is about experimentation, and experiments often fail. In The Public Innovator’s Playbook, Eggers and Singh point out three kinds of risk that are especially relevant to DOTs (Eggers and Singh 2009): 1. Organizational Risk: The cost of introducing the change could be higher than the benefits. 2. Political Risk: Senior leaders, often serving at the will of politicians, do not want to be seen as investing in the wrong process or product, while bridge and pavement conditions deteriorate or highway congestion increases. 3. Personal Risk: Failure could damage the career of the person introducing the change, and successfully introducing change does not guarantee career advancement. Some may ask why, in the face of those risks, would anyone want to innovate at a DOT? The answers lies in a more nuanced view of risk and managing risk. Not all risks and errors are equal. “Dumb” errors happen when someone fails at a process that is well known and that should been done without making mistakes. “Smart” errors happen when someone deliberately tries something new and fails. (Bason 2010). Thus, establishing processes to vet innovation ideas is critical to creating a safe and supportive experimental process. See Manage the Risk Management in Section 4 and the case studies pre- sented in Section 5 of this guide for additional details. See Figure 7 to under stand the relationship between the scale of risk to the length of evaluation needed. Figure 7. Level of risk and evaluation length. Failure/risks are the building blocks of innovation. It’s hard to allow taxpayer dollars to be used for agencies where some projects fail. Need to consider how we describe failure. – NCHRP 20­108 Survey Respondent

18 Guide to Creating and Sustaining a Culture of Innovation for Departments of Transportation 3.7 What Is the Process of Innovation? Essentially, the process of innovation means the following: • Generating more ideas. • Efficiently evaluating those ideas in terms of their costs and benefits. • Focusing on the ones that work. • Spreading and scaling them. See Figure 8 for more about the process of innovation. Nesta, a UK-based innovation foundation, developed the graphic in Figure 8 to demonstrate the innovation process. They are keen to point out that innovation does not always proceed in sequence, but can have loops back to previous phases. (Minor et al. 2017). This process is supported by research conducted over 5 years at 154 public companies composed of 3.5 million employees. Researchers used Spigit (an idea management system) to allow employees to post ideas, vote on which ideas are likely to be most beneficial, and provide feedback to improve ideas. With Spigit, or other similar systems, innovation teams can track numbers of ideas, who is suggesting ideas and how many ideas they suggest, and many other attributes. According to Minor et al., the key variable for a successful innovation program is the ideation rate, defined as the number of ideas approved by management divided by the number of active users in the system. Based on Minor et al. 2017, the four factors that drive the ideation rate include: 1. Lots of participants. A large number of participants will “out-ideate” a small group of smart people. 2. Lots of ideas. To get to a few good ideas, you have to sift through lots of ideas. 3. Have many perspectives represented when evaluating and refining the ideas. You need more than a lot of people suggesting a lot of ideas. A broad range of perspectives and disciplines can often provide insights and constructive feedback to refine ideas. 4. Diversity. You need contributions from across the organization, especially those close to the front line where “the work gets done.” Figure 8. Stages of innovation to create change, adapted from Minor et al. 2017.