1. Introduction

The OECD has collaborated with the Government of Brazil on a study of the innovation system of the Public Service of Brazil. This chapter explains why a focus on public sector innovation is warranted in general terms, as well as in regard to the specific context of Brazil. It also presents an outline of the methodological steps and structure of the report.

The Federative Republic of Brazil is a large and heterogeneous country. As its name suggests, it is a federal system, with 26 states and a Federal District, and over 5 000 different municipalities. It is one of the world’s most populous countries with over 200 million inhabitants, as well as one of the largest global economies. The Government of Brazil must cope with a diverse range of issues and needs, and respond with new and effective solutions. This report examines the public sector innovation system of the Federal Public Service of Brazil, and assesses its ability to help the public sector anticipate and respond to the existing, evolving and emerging needs of citizens.

Why is a focus on innovation necessary?

Governments serve many purposes including economic development, ensuring the health and welfare of their citizens, and supporting and stewarding the cultural, environmental and social systems that underpin a functioning society. For each of these responsibilities, it is crucial that governments deliver the best results they can. In turn, being able to deliver the best outcomes often depends upon the ability to conceive, develop, test, deliver, evaluate and embed new approaches, approaches that go further than those tried before. Innovation, defined as “implementing something novel to context in order to achieve impact” (OECD, 2017a), therefore needs to be a part of the repertoire of an effective government.

Governments now operate in a rapidly changing world where new possibilities emerge and older ones fade at an increasing rate. In this context, innovation is becoming increasingly pertinent. As the rate of change accelerates or shifts in direction or magnitude, existing defaults – whether interventions, practices, processes or preferences – must be reviewed to ensure they remain relevant or appropriate and constitute the best available options.

For instance, the emergence of new possibilities can reveal deficiencies in existing measures, gaps that may previously have been unnoticed because there were no better alternatives at the time. As an example, the introduction of email uncovered the weaknesses of faxes as a communication tool, online dynamic tax returns revealed the limitations of static paper-based forms, and real-time updates exposed the shortfalls of unchanging public transport timetables. While each option sufficed in its time, new advances led to the realisation that better alternatives were within reach. These alternatives must then be explored and engaged with, and their interplay with society and citizen expectations appreciated:

The speed and uncertainty of technological change challenge policymakers to exert sufficient oversight of emerging technologies. Governments therefore need to become more agile, more responsive, more open to stakeholder participation and better informed. (OECD, 2018d: 21)

In an environment of adjustment or disruption, adhering to older solutions will likely result in disappointment as previously reliable strategies cease to work, have a reduced impact or suffer in comparison to newer possibilities. In such circumstances, innovation is often (although not always) needed to respond and to prepare for what might come next.

Of course, innovation is not new to governments. Public sector innovation has occurred, to some extent, ever since public sector organisations have existed. Therefore, it can be said that there has always been a public sector innovation system – the actors, assets, relationships and flows of information, technology and resources that influence or determine whether and to what extent innovation occurs within the public sector. However, innovation has tended to occur as a sporadic, opportunistic and reactive activity in response to particular crises or priorities, or something driven by the passions and whims of individuals willing to go ‘above and beyond’ (OECD, 2018a). Public sector innovation – innovation that relates to the development and delivery of public policies, processes, services and engagement – has generally been a fortunate by-product of other, specific processes or has required exceptional effort, by individuals and organisations. The public sector innovation systems that have existed, therefore, have tended to be neither sophisticated nor consistent. These systems have not been explicit or deliberate, but rather a side-effect of other systems, structures and strategies and/or reliant upon exceptional circumstances.

In the current context of volatility, uncertainty, complexity and ambiguity (VUCA), increasing technological change, and significant social, demographic, economic and environmental transformation, it is no longer viable to treat innovation as a side effort, a lucky accident or an eventuality that will somehow occur without deliberate support and investment. A more deliberate approach is required if innovation is to be a resource that can be relied upon to contribute to better outcomes in a fast-changing world.

In order to take such a deliberate approach, it is first necessary to identify and make explicit the public sector innovation system, as it is difficult to improve something that remains ambiguous, undescribed or not apparent. Only once the system and its dynamics are understood and appreciated, will a strategic approach become possible. Until then, innovation will remain governed and shaped by factors unknown, and thus seem random or unmanageable.

A deliberate approach must also be a pervasive and ubiquitous one. Every area of government must be interrogated to ascertain whether they are employing the best available approaches, and to ask if other, more innovative options might not be better. And if the need for innovation may strike anywhere, and if no area is immune from having to ask itself whether new options might be better, then individuals and organisations everywhere must have some capacity and readiness for innovation (OECD, 2018a). A deliberate approach should also consider the ecosystem in which innovation takes place, in particular the actors and organisations within or connected to the public sector innovation system, and the ways in which they contribute to generating and implementing innovative outcomes.

In short, there is a need for explicit attention to national public sector innovation systems and their functioning – in other words, the ability of a country to consistently and reliably develop and deliver innovative solutions that contribute to achieving the goals and priorities of the government and its citizens.

Box 1.1. The need for a systems perspective for public sector innovation

Key drivers for why public sector innovation needs to move from a sporadic activity to a systemic resource:

Changing functions: In an environment of change, governments must also change how they operate.
Running to stay in place: In an evolving economy, governments have to change policy setting just in order to maintain the same outcomes.
No room for spectators: In order to remain effective decision-makers, governments have to have experiential knowledge of innovation; they cannot wait for the answers to be given to them.
We want more: Many politicians, citizens and public servants want and expect things to change.
Risk of a mismatch: A government that does not innovate is one that is at risk of always being behind, always reacting yet forever disappointing.
Innovation as a core competency: The need for innovation can strike anywhere, therefore everyone must be ready to play a part.

Source: OECD, 2018a

Embedding innovation as a core capability is thus one of the fundamental challenges facing governments today. New and better ways of doing things are emerging or becoming possible, and citizens have a right to expect that governments will continually search for new and, hopefully, better solutions. Innovation must move from the edge of government, from being seen or treated as an often-serendipitous side-activity, towards the very core of operations where it must become strategic and deliberate.

Why is a focus on innovation needed within the Public Service of Brazil?

Brazil has pioneered a variety of public service innovations, in 1936 authoring civil service examinations and becoming one of the first countries in Latin America to establish a merit-based career civil service with tenure and retirement rights. (Majeed, 2010: 2)

Evidence of innovation within the Brazilian public sector is well-documented. The Federal Management Innovation Award, established in 1996, has catalogued hundreds of cases of innovation (ENAP, 2019). As with most governments, it is possible to point to many innovative projects and highlight significant progress, whether it relates to administrative reforms or progress in digital transformation (OECD, 2018b).

Nonetheless, it cannot be assumed that past successes and existing activity will be sufficient to meet current and future needs. Past performance is no guarantee of future success. A changing environment for the public sector suggests that change within the public sector will also be required to adjust and respond in turn.

In addition, a number of specific challenges suggest that further innovation, and support for greater innovation, is warranted within the federal public sector of Brazil. For instance, a recent OECD Economic Survey (2018c: 10-11) noted that Brazil has made considerable progress on a range of policy agendas in recent years, but highlighted a number of areas in need of improvement or enhanced attention:

Inequality remains high and fiscal accounts have deteriorated substantially.
Efforts to fight corruption will require continuing reforms to improve accountability.
Growth, which was supported by a rising labour force over many years, will slow due to rapid population aging.
Political consensus building has required costly and inefficient expenditures without systematic audits and reduced the effectiveness of the public sector. The need for consensus building has been a key obstacle to passing reforms.

The World Bank (2017: 9) was more succinct in its assessment: “Brazil spends a lot more than the country can afford and on top of this spends poorly.” Additionally, Brazil has had high tax revenues and spending but has failed to convert this into strong levels of trust or citizen satisfaction with government (OECD, 2017b: 18). The Government of Brazil also rates poorly in terms of corruption, ranking 105th on the Corruption Perceptions Index (Transparency International, 2019).

In 2016, the government adopted a constitutional expenditure limit (teto dos gastos), which further complicated the public sector operating environment:

Its implementation requires a reduction in spending of around 0.6 percent of GDP every year relative to the current trend for the next decade. This corresponds to a nearly 25 percent cumulative reduction in federal primary expenditure (as a share of GDP), which would reduce the size [of the] federal budget (as a share of GDP) to the levels of the early 2000s. Finding these savings will be challenging as budgetary rigidities, ample spending mandates and budget cuts in the past few years have already greatly reduced discretionary spending. (World Bank, 2017: 9-10)

This spending cap will likely be difficult to meet, as nearly 90% of expenditure is fixed or tied to inflation or the minimum wage (Bertelsmann Stiftung, 2018: 29). Innovative approaches will thus be needed to address this situation.

While innovation is not a magic cure for all ailments, and cannot (and should not) be the answer to every problem, it is likely that innovative approaches can assist greatly in responding effectively to many of these demands.

An in-depth exploration of public sector innovation is thus warranted to assist the Public Service of Brazil with general demands for effectiveness in a changing world, and preparation for meeting the specific needs of the national context, both known and as yet unidentified. Whether such innovation will be sufficient, and whether the innovative initiatives that emerge and are adopted will satisfy the context, will depend upon the functioning of the innovation system.

Purpose and methodology of the study

This is the second in-depth investigation of a national government’s public sector innovation system by the OECD’s Observatory of Public Sector of Innovation (OPSI), following the inaugural study with the Public Service of Canada (OECD, 2018a). The study seeks to:

Reconstitute the history of the public sector innovation system by determining which events and developments shaped the system, what has been done or tried before, and which factors have shaped current possibilities. Understanding the historical innovation journey (where the system has come from) is essential to establishing what is feasible (where the system can go next and how things are likely to play out). Making this history explicit is essential to recognising and reconciling its influence on the current state and future options of innovation in the public sector.
Introduce the OECD public sector innovation determinants model and the public sector innovation facets model, in order to support reflection on how and why public sector innovation occurs at a systemic level, and how a systemic approach can be steered within the public sector.
Reflect the lived experience of innovation and assess whether and to what extent the determinants model is applicable to the context of the Federal Public Service of Brazil. Insight into this lived experience is crucial to establishing the factors currently influencing innovation. In order to understand the factors affecting whether and to what extent innovation occurs, it is necessary to identify the factors affecting whether and to what extent people, organisations and the wider systems are able to innovate.
Appraise the progress made to date. What are the outcomes of existing activities, interventions, policies and laws? How are they shaping the public sector innovation system (even if they do not directly relate to the system)?
Highlight and explore the dynamic nature of the system. How might current interventions and new efforts play out in the system over time? Three scenarios (continuing as is, dedicating new effort, and putting innovation at the centre) enable the investigation of different system dynamics and the examination of trade-offs and tensions within the system, and help understand the potential implications of different courses of action going forward.
Identify potential areas for intervention. A public sector innovation system is dynamic. How it functions is therefore dependent on the interplay of many different factors. Furthermore, the demand for innovation, and thus what is expected and/or needed from the system, will continually shift in response to political requirements and preferences. A public sector innovation system can be understood as the ability of a country to consistently and reliably develop and deliver innovative solutions that contribute to the achievement of the goals and priorities of the government and citizens. As these goals and priorities will continually shift, so too will the elements of the system that support them. Suggestions can be provided to improve the functioning of the system and identify areas where there might be potential value in intervening, but no set prescription can deliver contextually appropriate results.

Box 1.2. Key steps in the study

The study consisted of the following steps:

1. Agreement on the scope of the study (April 2018). The Observatory of Public Sector Innovation (OPSI) reached an agreement with the then Ministry of Planning, Development and Management (Ministério do Planejamento, Desenvolvimento e Gestão) and the National School of Public Administration (Escola Nacional de Administração Pública, ENAP), with the support of the Federal Court of Accounts (Tribunal de Contas da União, TCU) and the Federal Justice Court, to undertake a study of the innovation system of the Public Service of Brazil. The terms of reference for the study are provided in Annex A.
2. Desktop research (April 2018 to March 2019). The second phase consisted of ongoing investigation and analysis of relevant formal literature and documentation relating to the public sector innovation system.
3. First exploratory mission to Brazil (May 2018). This mission involved three teams conducting over 50 semi-structured interviews with public servants and relevant stakeholders (the interviewees are listed in Annex B). The interviews aimed to capture the “lived experience” of innovation in the Federal Public Service of Brazil, including how innovation is understood, efforts to try to introduce new approaches in the public sector and the nature of the system itself. The interviews helped test the OECD’s public sector innovation determinants model and its applicability to the Brazilian context. Discussions also took place on mapping the ecosystem and the historical innovation journey of the public service. This mission was undertaken in conjunction with an OECD companion review of innovation skills and leadership in Brazil’s senior civil service (OECD, 2019).
4. Analysis of data collected (June to August 2018). The interviews provided a rich source of data for the development of an initial set of observations about the innovation system. These observations were provided to the Brazilian sponsors for comments and feedback in order to elicit further information about the system.
5. Second mission to Brazil (September 2018). The second mission involved further interviews (with over 35 people) and further investigation into issues and facts uncovered in the first mission. A number of cases were explored to help better understand and illustrate the functioning and features of the public sector innovation system. Two workshops with public servants and stakeholders helped to validate the initial findings and further test whether the OECD’s framework was suitable and appropriate to the Brazilian context. The mission ended with a tentative exploration of different scenarios, including how the functioning of the system might play out under different settings.

Peers from Canada and South Africa (selected together with the Brazilian Government) participated in this mission. The role of the peers was to reflect on and help articulate an understanding of the innovation system of Brazil, drawing on experience with their respective public sector innovation systems. This helped to identify particularities of the Brazilian context and to determine which interventions from other contexts might be of relevance.
6. Third mission to Brazil (November 2018). The third mission involved participation in the 2018 Innovation Week, the launch of “Preliminary findings on the innovation system of the Public Service of Brazil” (OECD, 2018e) and a workshop with system participants to explore further how the system might evolve under three different scenarios (continue as is, increased effort and radical emphasis on innovation).
7. Survey of public servants (November to January 2018). The partner review on senior civil service skills and leadership in Brazil undertook a survey of public servants and interested stakeholders (with over 2 500 respondents). The survey included questions on the public sector innovation system, providing further evidence to support the development of the final report. The questions were:
- What was the most significant innovation in your organization in the last year?
- What are the most interesting things that your organisation is currently working on in the field of innovation?
- How is your organisation exploring emerging needs and new technologies?
- What needs to be changed to make innovation more prevalent in the Brazilian public service?
8. Drafting and validation (December 2018 to June 2019). This final phase covered drafting of the report and liaison with Brazilian sponsors to ensure that the report accurately reflected, summarised and articulated the key issues.

A system is made up of details, but details can distract from seeing the system

Public sector innovation is influenced by any number of policies, procedures, laws, regulations, budgets, human resources, risk management, structures and data, information and knowledge management (OECD, 2017c). Each of these elements interacts to create the public sector innovation system, and is deserving of individual attention, but none of them alone can explain or determine the overall functioning of the system. The whole is greater than its constituent parts.

For instance, the OECD (2019) companion review of innovation skills and leadership in Brazil’s senior civil service, which explores the human resources side of public sector innovation, highlights the ways that the Public Service of Brazil can strengthen its leadership capacity and ensure public servants are better equipped to engage with innovation and undertake innovative activity. However, this perspective is limited, both intentionally and necessarily, to one specific part of the system.

The intent of this study, therefore, is to illustrate the underlying dynamics and determinants of the system (i.e. what factors shape whether and to what extent innovation occurs and how it manifests within the context of the Public Service of Brazil). It does not seek to explore or explain all of the specifics that influence the system, but rather attempts to provide a framework for understanding the nature of the system. The aim is to provide those who have an interest in or responsibility for specific issues (e.g. budgeting policies, risk management or knowledge management) with a better understanding of how they can contribute to and shape the broader system, and empower them to reflect on how they enable and constrain innovative practice.

An ongoing journey

Innovation is inherently contextual and relates to what has already occurred in a specific context. What is innovative in one policy domain (e.g. establishing randomised controlled trials within a social welfare context) may not be in another (e.g. such trials have been used for some time in the health sector). Innovation is thus a continually evolving practice. Innovating in 2000, let alone 1900, involved different things to innovating in 2019.

While much of the content of this study describes the past or relates to a specific snapshot in time (primarily the year 2018), it is also intended to be of use for navigating the ongoing innovation journey. Through the use of OECD public sector innovation models and insights from the lived experience of innovation in Brazil, the report aims to provide a means for the different players within the public sector innovation system to adjust and respond to changing circumstances and contexts. Only by seeing the system can actors appreciate, or even recognise, their contribution to the system.

References

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ENAP (Escola Nacional de Administração Pública) (2019), “Concurso Inovação”, ENAP, Brasilia, https://inovacao.enap.gov.br.

Majeed, R. (2010), “Strengthening public administration: Brazil, 1995-1998”, Innovation for Successful Societies, Princeton University, Princeton, NJ, https://web.archive.org/web/20190328081701/https://successfulsocieties.princeton.edu/sites/successfulsocieties/files/Policy_Note_ID150.pdf.

OECD (2019), Innovation skills and leadership in Brazil’s public sector: Towards a Senior Civil Service System, OECD Publishing, Paris.

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OECD (2018e), “The Innovation System of the Public Service of Brazil: Preliminary Findings from the OECD”, https://oecd-opsi.org/wp-content/uploads/2018/11/Brazil-innovation-findings-EN-3.pdf.

OECD (2017a), Fostering Innovation in the Public Sector, OECD Publishing, Paris, https://doi.org/10.1787/9789264270879-en.

OECD (2017b), Brazil's Federal Court of Accounts: Insight and Foresight for Better Governance, OECD Public Governance Reviews, OECD Publishing, Paris, https://doi.org/10.1787/9789264279247-en.

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World Bank (2017), A Fair Adjustment: Efficiency and equity of public spending in Brazil, World Bank Group, http://documents.worldbank.org/curated/en/643471520429223428/pdf/Volume-1-Overview.pdf.

1. Introduction