I have spent the vast majority of my professional life as a member of small, scrappy teams where the ability to innovate meant the ability to survive. Innovation was baked into our DNA. I have had technical successes with patents and business successes with launching new groups in new markets, but never with innovation in the public sector. So, when I joined the State Compensation Insurance Fund — a workers’ compensation insurer that was created as a “public enterprise fund” by the state of California, and has partial autonomy from the rest of the state government — almost two years ago, I had to ask myself the question: “What did I get myself into?”
From my experience, what I’ve noticed is that the primary differences between the private and public sectors can be compared across accepted and well-known business characteristics: urgency, diversity of thought, procurement, processes, and culture.
Urgency
I’ve been on a team where a single critical product contract was the difference between coming into work the next day, or freshening up the resume. Entrepreneurial endeavors are surrounded with urgency. Few people in my professional circles haven’t been through layoffs. Urgency isn’t something you build on the private side; it’s something you nourish. On the state agency side, the benefit of job security can sometimes manifest in undesirable ways, like a lack of urgency.
One of the tactics that I’ve seen used successfully to increase urgency is to pay attention to the question framing. This is typically driven by leadership. For instance, in my agency, prior to the COVID-19 pandemic, there were already conversations about remote work. Leadership knew the workforce wanted the option. Prior to COVID, we approached the problem with questions like: “Can we find a way to support remote work?” And most of the answers started along the lines of “No, because…” There was no urgency. When the pandemic hit and it became clear that there was going to be a big impact, the question changed to “how do we find a way to support remote work?”
When you begin a question with the words “can we,” the first individual to answer “no” causes an avalanche effect. When you say “how do we,” it does the opposite. You’re not asking people if it’s possible. You’re asking them to figure out how to make it possible. No one wants to be the last one to that party, so the urgency comes for free.
Diversity of Thought
For a brief period of time, I worked in Perth, Australia. I led a team that included myself (effectively a Sales Engineer at this point), a South African Project Manager, and a Korean Software Developer. To date, it was some of my most challenging and rewarding work. This kind of diversity on a project team is ubiquitous in the private sector — it shows globalization’s impact on the workforce.
State agencies have a classification system in many cases that have prerequisites built on top of each other. So, if I am a couple of years into an IT classification, for instance, it would be nearly impossible for me to make a lateral move to finance due to my lack of prerequisites and required experience.
When you begin a question with the words “can we,” the first individual to answer “no” causes an avalanche effect. When you say “how do we,” it does the opposite.
There are ways to combat this, of course. State Fund, as a whole, has made efforts to bring different skill sets together, including operationalizing and institutionalizing job shadow programs. We also have an “Emerging Leader Program” that’s internally run. It combines staff relatively new to the organization into disparate teams and provides each team with a problem to solve. It ups engagement and continues to cycle new and fresh ideas into the business units.
Procurement
In the private sector, purchasing products in many cases comes down to money and desire. Contracts can be negotiated quickly if you have the right people in the room. Unless there’s something egregious happening, most private-entity contracts don’t get a lot of scrutiny.
Due to the public nature of state agencies and our necessary compliance with public records acts, our procurement arm is forced to act with more due diligence. The contracting can be long and tedious for us, as the customer, and for the vendor. The cybersecurity requirements we ask our vendors to comply with are a critical roadblock to many smaller software shops.
While there’s only so much an organization that is bound by legislative decree can do, we have implemented some changes. Our Enterprise Procurement department is in the process of defining vendor risk-tiers. This will allow the organization to engage quickly with low-risk vendors and efforts, like a proof-of-concept with test data. The innovation team also has a procurement analyst embedded with us. She has visibility into all our work and can get the ball rolling on some of the stickier issues.
Process
“Forced waterfall” decision-making is popular in civil service. When writing a grant, for instance, the expectations are that you are clear and concise about the outcomes. There is a sense that since you’re funded with taxpayer money, there should be transparency, predictability, and repeatability in your work. This is the perfect breeding ground for a robust and thorough process, but not for experimentation and acceptance of “failure.”
I’ve worked in offices with game rooms, movie rooms, and even nap rooms. Once the novelty wears off, you can’t help but wonder if the company is purely providing those perks in an effort to maximize your time at work.
What we have found is that business units that instill “bend, don’t break” processes usually acclimate to innovation efforts easier. We try to be aware of BU processes with critical single points of failure. If I don’t have a signed executive business sponsor, will the work stall out? If we can’t guarantee the nature of conversations (in an online collaboration tool, for instance), will the privacy department work through that to approve, or is it a show stopper?
Culture
I’ve actually never worked for an organization with a solid culture. I’ve worked in offices with game rooms, movie rooms, and even nap rooms. Once the novelty wears off, you can’t help but wonder if the company is purely providing those perks in an effort to maximize your time at work. I didn’t really have expectations one way or the other coming into state service. But I got my first clue during my first interview, when the interviewer asked me: “If you could rewrite this organization’s mission, what would it be?”
The term “mission-driven” is not taken lightly at my organization. While I realize not all governmental bodies focus on culture the way the State Fund does, I do think the opportunity is there. By definition, these organizations exist to serve the people. It’s a relatively easy message to tap into if leadership is willing. From an innovation perspective, it has turned a lot of decision points I’m used to upside down.
In my previous work, all innovation on some level boiled down to profit. The intent was always to get more market share, or higher subscriptions numbers, or newer product suites. Working for a not-for-profit, we can let strategy and mission drive a lot of those decisions. Now, that solution that we believe will have a very positive (but admittedly hard to quantify) benefit on our customers has the green light to proceed.
The cultural advantage goes to the private sector if the leadership wants to leverage it. I’m lucky to have leaders that are committed to the advancement of the organization through innovation. Design thinking is mandatory training at State Fund. Many of the workarounds to the issues above we have solved by virtue of our culture, and it’s through this culture that we have been able to continue to innovate.
So, what have I gotten myself into? The challenge is considerable. It comes in a different form than I’m used to, but it’s not insurmountable. And as long as it’s in the realm of possible, isn’t that a green light for us innovators?
Sean Adams is the Senior Vice President Innovation Design at the State Compensation Insurance Fund in California. His previous experience includes work at UC Davis Medical Center, Oracle, and more.
