Explore the bizarre

This is surely among the terms I love most in literature about sustainable innovation. Here's why this might be important in the context of radical public sector innovation.

TL;DR - exploring the bizarre feeds curiousity, which is key to seizing unexpected opportunities.

Explore the bizarre means exactly what it sounds like. By exploring what you do not understand, or which sounds and looks weird, you use #curiousity, which is the main driver to understanding what else is possible and desirable.

My main association with the idea stems from "Loonshots" by Safi Bahcall and is used with reference to one of the key figures of early innovation theory (and more importantly, practice) - Vannevar Bush.

The context was allowing US government structures focused on R&D to take some odd turns on their path to new knowledge, find new pathways, adjacent possibles etc, and use those findings for the benefit of national security. At the time, the US was fighting WW II, and losing, until exploring the bizarre became an option under leadership by Vannevar Bush.

Maybe a more modern term would be "academic freedom", or the ability to choose one's own path in any endeavour. Sounds good so far?

The complexity lies within exploring the bizarre in institutional settings. For example, would you like your government to explore the bizarre?

I know I would.

And thus I am happy that such a call to help top level civil servants apply radical innovation was launched roughly a month ago here in Estonia*. I must confess that my own thinking on the subject has not changed much since writing on this to Apolitical Foundation - risky thinking can benefit government, because it is exactly what government is supposed to do.

In a subtler way, the same idea was mentioned by the Prime Minister of Estonia - Kaja Kallas - just prior to the 106th birthday of our lovely country: "The point of having our own country is to do things that none of us could do separately."

I might just add, that the reason we choose to do stuff together, not separately, is linked to a high risk or high cost of the endeavor to a particular company, co-operative, or an individual. Would you prefer to run your own social services, security, or education? Didn't think so. Thus, tasks delegated to government are inherently linked to high risk (or lack of a sustainable business model, if you wish), or only working when scaled to a societal degree.

Consider this example.

I What if it turned out that investing into a cleaner environment is good for business?

The latest headlines would have it differently - that going green won't make you richer. Well, during a recent visit to an Estonian startup Grünfin I learned the exact opposite - according to actual market data from S&P500, the subset of companies with a green track record are ... doing better!

The illustration below is provided by Liisi Kirch from Grünfin, who compared S&P 500 Paris Aligned Climate Index with the regular S&P500. The white line, representing green companies, is doing better than the general index!

Ain't that bizarre?

Well, it does sound counterintuitive until you remind yourself of the fact that if you cause less waste, you create more value from less resources. And it does show in business results, including economies of scale. Kind of obvious, but not at first sight.

Surely I am happy about this initially-bizarre-but-then-logical-when-you-think-about-it finding given my position at Rohetiiger , and also because this is one of the key topics for the training programme I referred to previously:

If going green is profitable, and this is the goal of national policy, what next?

II What has this got to do with radical public sector innovation?

In the second half of this example, let's get a bit more curious and bizarre still.

Not too long ago, a somewhat bizarre offer for radical innovation was turned down here in Estonia. The logic of the offer was both simple and bizarre:

Company X could retrain N amount of (low-skilled or lacking fair access to the market) workers with zero (0 EUR) upfront cost to government, but Company X would gain Y% percent of additional national tax revenue over a limited period of time if the re-skilling led to the participants getting hired for a higher salary. In Estonia, it is fairly easy to connect extra earnings to particular subset of re-trained people and changes in tax revenue associated with their earnings.

If the reskilling did not work - no cost (except opportunity cost for participants). If it did work - low % of added value paid to Company X. No upfront cost to government, all risks upon the Company X. Nothing to lose except if the intervention is successful, and even then only a % of the extra tax gains.

But no - radical innovation did not find a favourable atmosphere (mindset, openness, appetite for risk) at the time. Curiousity lost the case. It can happen, of course, but the probability of curiousity losing to entrenched interests should be lower. So if the tender on radical innovation tilts the favourability of such ideas towards "Yes, let's try", then as a citizen, I am super happy. And I hope Company X comes for another try.

So I am hoping that the new circumstances - high level civil servants being trained in radical innovation, will help set more ambitious goals and give them leeway to explore the bizarre when confronting such opportunities.

For example, say we want to increase the % of businesses that conduct innovative activities to 75% of all companies by 2030, especially those that contribute more to the twin transition (green + digital). Sounds like a clear and reasonable mission, right?

Who should we be nudging, and how? What role should the state be playing, and with which policy mix? What does it take to "double the economy", as the brand new economic policy promises?

I do not have a clear answer, but consider the following thought experiment.

The rate of innovative companies (self-reported innovation within relevant surveys) has been quite stable over the past decade. According to a quite recent (2020) study - the likelyhood of non-innovative companies to stay non-innovative is close to 75%, and companies exercising science-based innovation have a 43,5% likelyhood on staying on track. All the rest, which is a majority of companies, can be affected to prefer one mode of innovation to another, with probabilities of different interventions explained in the same study. To get a better perspective, it is best if you read the study yourself (it only takes a few hours).

As a generalisation, though, we already know which kind of intervention works for which kind of innovation trajectories on firm level.

So if we are looking for "a personalised country" as the next big thing, it can just as easily be operationalised on company level! You get the "treatment" that is relevant for your self-reported innovation habits, and which leads to innovation that is in line with strategic goals associated with government intervention.

And as we know from the previous example - it is possible to condition trainings offered by government to be paid for based on outputs. If there is no value added within 5 years of a training, then no gain to government training contractors. If strategic climate goals, such as reduction of waste or adopting circular business models, are met as a result of the training, then the gain for government training contractors can be significant.

If that sounds bizarre enough, then get on with it!

* I am not connected to any of the applications for the tender.