Australian State develops fund to spark government innovation

Recently, I interviewed Sam Hannah-Rankin, who is Director Public Sector Innovation for Department of Premier and Cabinet (Vic) in Australia. She has previously been Director of ICT Innovation for the Department of State Development, Small Business and Innovation in Victoria.

In addition, Sam was General Manager of the Australia Post, where she was focused on identities.  Beyond working on Fairfax Digital, where she helped to launch mycareer.com.au, Sam is a McKinsey alum who gained extensive experience working in the banking industry on innovation of benefits projects as Chief Manage of Strategic Capital Projects with Bendigo and Adelaide Bank.

She is a graduate of the University of Melbourne and received an Executive MBA from the Australian Graduate School of Management.

Why did you start the Public Sector Innovation Fund? Is this part of the strategy to reinvent and spark innovation in Australia? Did you get any motivation from what Georgetown University is doing, for I know they started up a “Public Sector Innovation Fund”?

The Public Sector Innovation Fund as an initiative of the Special Minister of State, to create sustainable value for citizens and the public sector. Our goal is to encourage and support collaborative projects that test innovative solutions to complex public sector problems.

A lot of innovation policy is focused on industry innovation – which is still obviously an interest to us, but not our primary focus. Our main driver is about finding new ways in which government can work better, to deliver better outcomes for Victorians.

The Georgetown Social Innovation and Public Service Fund looks great, but it wasn’t a motivation. The Victorian Government’s been innovating in different ways – for instance focusing on technology, or on social services – for most of the past decade. The Public Sector Innovation Fund is the latest manifestation of this long-term commitment to fostering innovation.

Who can apply to receive monies from the fund? How are you identifying new deal flow?

The fund is open to applications from anyone that works in, or with, the Victorian Government. Startups, SMEs, academics, not-for-profits, social enterprises, government departments and agencies are all eligible. The only prerequisite for an application is that projects need to be led by (or in collaboration with) a Victorian Government department or agency.

The fund is open on an ongoing basis, and discussion usually comes to us from word of mouth, promotion across government, through our public-facing website and as a result of a lot of external networking.

We get out of the office and meet with colleagues across the Victorian Public Service (VPS) as well, keeping our eyes open for opportunities to fund, formally collaborate or just provide advice and connections.

What types of projects, and in what niche, have you funded to date? And, what types ventures do plan to fund moving forward?

The fund has supported projects across a broad range of policy and service delivery areas including health, courts, policing, family violence reform, emergency services, transport, indigenous services and workforce capability.

We’ve supported local social enterprises like Infoxchange, to improve access to health and wellbeing services for Aboriginal Victorians through the Ask Izzy mobile website. And we’ve worked with one of Melbourne’s busiest health services, Melbourne Health to support a Health Accelerator inside the Royal Melbourne hospital for health technology startups and clinical staff.

In terms of ‘niche’, we do have several family violence projects – which isn’t surprising given the government’s commitment to implementing all 227 recommendations of the Royal Commission into Family Violence. 

These projects have included great outcomes like piloting the provision of Family Violence Intervention Orders online, which is getting rolled out across the state (partially supported by Commonwealth funding), as well as the launch of a new tool that provides faster and easier emergency accommodation for family violence victim survivors. 

Both these projects were undertaken in deep collaboration with users, service providers, government and local technology businesses, driving improved outcomes for all parties, as well as building cross-sectoral understanding and ongoing relationships.

In terms of future ventures, we’re getting a lot of requests and interest about predictive tools. As data and evidence come to the fore there’s a bigger drive to understand how to identify and respond to citizen need, to allocate resources early to improve people’s life trajectory and steer them away from compounding disadvantage.

What trends are you seeing in the social investing space? Also, are there any barriers to do the work you’re doing? To be more specific, have projects failed fast, or have you been able to imagine what if?

I think New Zealand is doing some amazing work with their Social Investment Agency.

More broadly, we’re seeing an overall shift to much more deliberate focus on evidence, evaluation and outcomes – with data being used more consciously to inform policy development and service design.

There’s also an increased appetite for – and understanding of – cross-sectoral partnerships, where traditional distrust between providers and government and not-for-profits and industry is being set aside in favor of more collaborative approaches with a shared focus on the common good.

In terms of barriers, the most difficult challenge is getting the right parties together at the right time to act. It’s less around imagining ‘what if’, and more around working with the natural shifts and changes in project momentum that happen when priorities are spread across multiple partners in a dynamic environment.

I don’t think we’ve necessarily ‘failed’ fast, but part of that is because we make the effort to ensure our project partners are fully committed, and we work closely with our partners to design projects in a way that’s most likely to deliver outcomes. We stagger funding release against decisions to enable space to explore, while still allowing us to have confidence in delivery before funding is fully committed. We’ve certainly learnt a lot through each of our projects, both what’s worked well, and what we can improve going forward.

What is more, I saw that you’re issuing grants versus taking equity. Some countries are purposefully standing up funds to invest in companies, which helps drive direct foreign investment. For example, Oman started a $250M fund, and Russia and China partnered to start the Russian China Investment Fund. Do you plan on taking equity in the future or stay grants based? Or, evolve the fund strategy?

We’re modest in comparison to the funds you mention – we have $11 million over four years. At this stage it’s about using this funding to help reduce barriers to the public sector innovating – letting private organizations generate intellectual property where they can (hopefully for economic uplift and jobs for the state) and providing exemplars of best practice to the public sector and how it might operate, in a way that can scale and replicate where it’s successful.

Do you have global partners who are helping to advance your work? (i.e. 500 Startups)

We’ve just started a collaboration with the UK innovation foundation, Nesta, joining their ‘States of Change’ program. This is a collective of the world’s best innovation practitioners and experts who have joined together to increase the innovation capacity within governments globally.

As part of this partnership, we are co-developing a States of Change innovation learning program with Nesta, leveraging their international faculty and tailored to the Victorian Public Service. This will be a world-first pilot when it kicks off a little later this year, and we’re looking forward to learning from the experience.

The great thing about the Nesta partnership is that it opens a whole new realm of practitioners, academics and thought leaders globally for us to collaborate with and learn from – so I anticipate a lot more engagement with international partners as we go forward.

What advice would you give to an entrepreneur seeking to receive investment from the Public Sector Innovation Fund?

Figure out what the public sector problem is you’re trying to solve and who it’s impacting. Work with the government owners of the problem to understand the details – if it really is a problem – and what benefits come from solving it.

If you’re serious, also spend at least a little time looking into how government works:  organizational structures, departmental priorities, and how the internal stakeholders’ roles intersect. It really is a whole new world, full of unfamiliar processes and jargon – and as foreign to those outside government as the startup world is to those inside government.

But unlike the startup world, government has much of its organizational information publicly available – it’s just a matter of doing a little research on your customer.

Being able to interface with those in government is a two-way street, and we encourage both our government colleagues and those outside of government to find ways to interact for the benefit of the broader community.

To this end, a lot of your strategy plan focused on the P (people, note: referring to McKinsey). For example, I loved reading about the VPS academy, cross-sector exchange, and Learning Lab Trial. Was this purposeful? Also, what types of insights does the Victorian Behavioral Insights Unit generate for other agencies?

Our ‘P’ approach comes about because government genuinely believes it really is about the people – the people we serve as public servants, and how we public servants collaborate and share information with each other, how we’re led, empowered, our skills, attitudes and behaviors.

The Behavioral Insights Unit itself focuses very much on the pragmatic aspects of people and change. Behavioral insights bring psychology, behavioral economics and human-centered design into policy development and service delivery. We help government to better understand human behavior, how people make decisions, and how they interact with services and each other, to make policies and services more accessible and useful where it really counts.

The unit works with departments and agencies across government in everything from improving immunization rates in children, to designing more efficient payment approaches, to analyzing information sharing between front-line workers. The ‘insights’ may include the results of randomized control trials, policy advice, literature reviews, statistical analysis or ethnographic research. But whatever we do, we work closely with the agencies and their stakeholders to ensure that we’re building capability and understanding and appetite for change, as well as delivering improved value through better outcomes.

This pragmatic focus is at the core of our work in public sector innovation, and in the broader public sector reform agenda that we support. There is a lot of innovative work that’s going on across Victoria to really improve the way that government serves the public – through initiatives like EngageVic, which provides a platform for citizens to have their say on government policy and programs; through new agencies, like the Victorian Centre for Data Insights, which brings together government data for analysis and evidence that drives more evidence-based policies; and through whole-of-system change, like the family violence reforms being designed and delivered in partnership with the Victorian community, transforming services and introducing new practices to make it easier for people to get the help, protection and support they need.

Throughout all this work, the focus is consistently on outcomes: how can we use new ways of working – new partners, new methodologies, new technologies – to deliver better value for our public.