To improve the lives of low-income people at scale, we need to mainstream public sector innovation. When the public sector adopts new approaches, uses resources in new ways, and partners with unlikely leaders, there are opportunities to introduce whole new ways of working that are likely to address poverty at the systems level.

Over the past 18 months, Living Cities has been learning about how public sector innovation takes shape in two cities. In early 2012, Living Cities’ Income & Assets Working Group awarded grants to Seattle’s Housing Services Department and the Louisville Metro Department of Community Services and Revitalization. These grants focused on mainstreaming asset building strategies through the integration of financial empowerment services into each city’s homeless services continuum. As the work in Louisville and Seattle comes to a close, we’d like to offer two lessons on public sector innovation:

1. Stakeholder Buy-in is Critical

There is no one right way to make public sector innovation happen. Sometimes this innovation falls completely in control of cities, for example a city might incorporate a new technology (like electronic permitting) to increase municipal efficiency or productivity. These cases are rare. In many cases public sector innovation requires partners outside of city government to reach scale. This was the case for our financial empowerment grants as authority to implement the innovation was more dispersed. These grants supported innovation in services that are primarily delivered through nonprofit agencies.

This type of innovation requires a change management process and stakeholder buy-in. Service providers needed to understand the big audacious goal of the cities and to contribute to the process by which they will train staff to modify services. Engaging the key stakeholders early on and using effective communication to set expectation creates a foundation for innovation and a pathway for change. The importance of stakeholder buy-in is an essential component of the change management process.

2. Balance “process” and “implementation”

Introducing a change in these homeless services systems required a balance in both the “process” of including all stakeholders and the actual “implementation” of changing how services are delivered. In the case of these grants, “process” included convening steering committee meetings, establishing a community vision for a financial empowerment framework, and creating common language to make meaning of the financial empowerment terms and goals of the initiative. The “implementation” involved training front-line staff members on delivering financial empowerment services and embedding financial empowerment language into sub-contracts between cities and agencies.

The balance between process and implementation is difficult to strike, yet essential when the public sector leads innovation that has dispersed implementation. If you spend too long on the process, you start losing stakeholder buy-in as they begin to feel unclear about the goals and direction of the initiative. However, attention to “process” cannot be under-valued, particularly when multiple stakeholders need to embrace the changes required to achieve innovation. Establishing a financial empowerment framework and a set of values and assumptions takes a lot of time and energy. Yet it is important to lay this groundwork before embedding new language into municipal contracts with service providers requiring financial empowerment services.

In Seattle and Louisville, innovation in the disbursed provision of homeless services required a change management process, which prioritized establishing stakeholder buy-in as much as actual training and sub-contract revision and a true balance between “process” and “implementation.” We believe that this learning is essential for those seeking to support the public sector to work in new and catalytic ways.