Empire State of Minds: Open Innovation in NYC
The Big Apple is big on open innovation.
“Believe me, when they finish the Second Avenue Subway, this apartment will quadruple in value.”
Aside from being a favorite inside joke among New Yorkers, this line—spoken by a real estate broker to protagonist Peggy Olson in the 1960s-set television show Mad Men [i]—hints at the pace at which the New York City government has historically implemented new ideas. The Second Avenue Subway is a proposed branch of the city’s underground public transit system that was approved by the Board of Transportation of the City of New York in 1929. In 2017, New Yorkers saw the first signs of progress in nearly a century, when three new subway stops opened on the Upper East Side of Manhattan. [ii]
From policy cycle to idea funnel
This anecdote is an extreme example of how slowly—and expensively: the three recently-opened stations cost the city $2.5 billion per mile [iii]—it can be for local governments to take on initiatives geared towards improving the lives of their constituents. Currently, the vast majority of public projects happen via the public policy cycle, in which government agencies send out requests for proposals, decide on contractors, and manage implementation.[iv]
A myriad of factors contribute to the inefficiency of this process. These include but aren’t limited to: the many conflicting priorities of government stakeholders (e.g. agencies, unions, state and federal representatives), rule-heavy internal decision-making processes, and a workforce that’s more motivated to maintain the status quo than to take risks—thanks to compensation structures that reward tenure rather than impact—and, of course, electoral politics.[v]
The wisdom of the city that never sleeps
While there’s no silver bullet for the city’s sluggish innovation process, the city has in the past decade embraced crowdsourcing as one solution. Take the much-maligned subway system as an example. In March, the Metropolitan Transit Authority (MTA; NYC’s public transportation agency) announced the winners of its Genius Transit Challenge, which gathered ideas about what can be done to improve the subway system. The contest yielded submissions from both transportation professionals and those with no engineering backgrounds (indeed, one of the winners was a lawyer who proposed a new passenger-loading technique). The ideas are currently being vetted by the MTA board, who says they will be developed “as quickly as possible.”[vi]
The ultimate outcome of the MTA’s contest remains to be seen. However, the city has already seen the value in opening up their idea creation processes through other initiatives. One successful ongoing effort is the annual BigApps contest, in which participants submit prototypes of “civic apps” using licensed datasets from various city agencies. The 2017 challenge has birthed PASSNYC, an app linking city kids to after-school activities, and Nesterly, which connects elderly New Yorkers with room to spare to young people needing a place to live.[vii]
The Bill de Blasio administration is also leveraging distributed innovation to meet longer-term challenges head-on through the Call for Innovations online platform. Currently, the city is asking for help in reducing the housing authority’s heat and hot water load (the agency oversees the city’s public housing projects); planning for the driverless future; and building predictive tools to project public school student population trends.[viii]
Narrowing the development funnel
While the Big Apple’s efforts to disrupt its innovation process are laudable, there is much work to be done to ensure that the ideas emerging from the contests it holds are being tracked and implemented. Currently, its innovation challenges are scattered throughout its network of agencies, creating unnecessary complexity for would-be participants. This fragmented external communication may hint at internal disjointedness as well.
In addition to centralizing these efforts, both the city and its residents would benefit from an increased level of transparency of the development process. However, I would not recommend opening up the selection process in addition to the idea creation one. Allowing the public to see and select winning ideas may discourage people from submitting them for fear of copycats [ix]—which may then result in a weaker idea pool. This last point begs a few questions that New York City—and likely many public offices around the world—are asking:
- How can the public sector cast a wide and deep net via its innovation challenges without the resources and financial incentives that private companies can afford to pay participants? Is civic duty enough?
- Is there a way to reduce the risk of idea theft while also increasing transparency? How do we think about tracking the status of “winners” from ideation to pilot to implementation in a way would help keep politicians accountable and innovators inspired?
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[i] Chris Barsanti, The Handy New York City Answer Book, Detroit: Visible Ink Press, 2017.
[ii] Nick Baumgarten, “The Second Avenue Subway Is Here!”, The New Yorker, February 13, 2017, https://www.newyorker.com/magazine/2017/02/13/the-second-avenue-subway-is-here, accessed November 10, 2018.
[iii] Brian M. Rosenthal, “The Most Expensive Mile of Subway Track on Earth,” The New York Times, December 28, 2017, https://www.nytimes.com/2017/12/28/nyregion/new-york-subway-construction-costs.html, accessed November 10, 2018.
[iv] Maximilian Heimstädt & Georg Reischauer. “Framing Innovation Practices in Interstitial Issue Fields: Open Innovation in the NYC Administration.” Innovation: Organisation & Management via Taylor & Francis Online, accessed November 13, 2018.
[v] Barry Bozeman. “A Theory of Government ‘Red Tape.’” Journal of Public Administration Research and Theory: J-PART 3, no. 3 (1993): 273-303 via JSTOR, accessed November 10, 2018.
[vi] “MTA Selects 8 Winners, 2 Honorable Mentions of MTA Genius Transit Challenge,” MTA press release (March 9, 2018), accessed November 28, 2018.
[vii] New York City Economic Development Corporation, “BigApps 2017,” http://www.bigapps.nyc, accessed November 12, 2018.
[viii] City of New York, “Call for Innovations,” http://www.nyc.gov/html/cfi/html/index.html, accessed November 12, 2018.
[ix] A. Malhotra, A. Majchrzak, L. Kesebi, and S. Looram. Developing innovative solutions through internal crowdsourcing. MIT Sloan Management Review (Summer 2017): 73–79 via ProQuest, accessed November 12, 2018.
Civic duty is not enough, but it can be a start. Offering grants, prizes, or a job to the winners of innovation contests would certainly be cheaper than 2.5 billion dollars per mile. In addition, the city could leverage the civic arms of its highly profitable businesses. There are some people working in NYC who are highly trained in evaluating start up ideas and valuing companies. If the government brought some of them in as advisers or judges, they could improve the success rate of the projects and contests. They could even utilize some of them as an independent arm with different rules about distribution of funds in order to eliminate red tape, a strategy the Department of Defense is piloting now with Defense Innovation Unit.
I agree that the heart of the struggle for innovation in the public sector is a talent issue. Some of our generations brightest minds are working on problems that provide great commercial benefits, but unfortunately do not always directly align with the public good. It’s hard to convince a 23-year-old engineer with offers from Google and Microsoft to accept a lower salary and a job outside the Valley. In regards to your first question, I’d assert that civic duty is not enough and that the public sector – particularly state and local government – is not set up to drive innovation through public dollars. To me, this is an opportunity for public-private partnerships, where innovative, well-funded private organizations or philanthropic foundations with the prestige and access to diverse talent can complement the commitment to serving the needs of community. To tie in our Marketing class, social good can actually align with both the mission and competencies of private companies and public-private partnerships to drive open innovation seems like a great place to start.
Personally, I appreciate the initial attempt by NYC to leverage the power of open innovation to bring to light advances within the public sector. As this article concludes, I am worried by the lack of urgency, disconnected approach, and disparate resources at hand. In order for open innovation to work and to produce ideas that are brought to market a strong innovation funnel and supporting stage-gate must be put in place. However, this is will only be effective if there is a clear innovation/growth strategy put in place. This will provide a framework by which open innovation prompts should be structured and in turn guiding the crowd’s responses – ultimately providing desired solutions and outcomes.
I agree the other comments that civic duty alone is not enough to encourage public sector innovation, but I actually think that NYC has an opportunity to make a compelling economic case without spending public funds. NYC could take the BigApps contest to the next level and instead of crowd sourcing ideas that they then select to scale and purchase themselves, they could make all of the licensed datasets mentioned publicly available at all times. This would give programmers the data they need to develop B2C apps that create social value for city residents, AND would give them a monetization model turning loose the open innovation and removing government from the selection process.
Thank you sharing this super compelling piece – love to see more applications of open innovation in the public sector! I share your belief that open innovation can be a truly powerful (and cheap) approach for government agencies to innovate more efficiently. I also really like your recommendation of better centralizing the existing innovation challenges – how do you think this breadth/depth could be best managed? I could imagine a world in which one centralized innovation conference would garner the media attention and attract enough talent that you wouldn’t need a dispersed network of challenges.
Crowd sourcing ideas by the government is a great idea that allows people to actually be a part of the process. Similar to New York, there are initiatives in India that enable citizens to reach out to the government and give ideas to resolve the burning issues the country faces. I do agree with you that civic duty may not be an incentive in the long term, simply because even great ideas need to be implemented and implementation often gets blocked due to bureaucratic reasons. For this to truly work and keep the network effect going, I believe the government should involve private companies through a revenue sharing model that would help with monetization of the project and will continue to grow the network.
Thank you for the article on open innovation! Definitely reminisce the days where going to the Upper East side was a struggle. Your article raises a valid question on how to make the process transparent yet protected, so people don’t feel like their idea can be stolen. In addition, the ideas run the risk of becoming irrelevant if the time to implementation is similar to the one for the Subway systems. However, in addition to the time to implementation, how can the funneling of ideas happen so that many ideas are narrowed down to a short list. Would be helpful to know if there are specific KOLs or other groups who are responsible for judging these ideas that can protect the ideas, but also get insight from a group of people with different perspectives.
Thank you for your post! I would say that although civic duty is not enough to fully engage the population, it can be the basis of a motivation platform. For instance, NYC could promote people who contributed in the platform on its social media (giving exposure to people) channels or using it as a platform for hiring talent. Both these initiatives would not be very expensive and difficult to manage and would create a lot of value to people contributing to the city.
Very well written article. I am actually quite torn on the debate between civic duty and rewarding participants as it relates to crowd sourcing for public services. By rewarding ideas with financial gain, you create the obvious incentive of participation alongside attracting high quality ideas. However, you also incentivize protectionism – people wanting to guard their ideas in order protect this potential financial gain. One of the many benefits I have read about when it comes to open innovation is people sharing and iterating off each others ideas. This might sound a little utopian, but I think its an idea worth considering in the public service arena – where public contribution is ideally the driver for innovation over profitability. As a former military person, open innovation challenges where quite successful even without financial compensation. Ideas were published in innovation journals, and people openly provided suggestions/critiques or even suggested integrating ideas with their own. The central premise of this argument is that if you don’t tie money to projects, people become a lot more open to sharing their ideas. This could also help out local governments that don’t have the money or resources to provide compensation that is competitive with the private sector.
Thank you for this interesting read. The question you pose about the effectiveness of civic duty versus financial compensation in terms of incentives is crucial for the public sector to address. I would argue that there exists a middle ground between these two ends of the spectrum. Perhaps civic duty could be publicly celebrated and lauded without financial compensation. Could initiatives that are set in place with a crowdsourced idea be named after the winning contributor? I also think this middle ground could be reached if there was simply more awareness around these open innovation opportunities. I believe your recommendation to centralize these open innovation efforts would help booster awareness. If there was a central body organizing these open innovation initiatives, it would be easier to generate broader, more consistent buzz around these opportunities and thus promote more participation.
I do not believe that civic duty is enough to incentivize the most innovative citizens to invest their time and energy in improving their cities future, when a more lucrative and stable career is waiting for them at the doorstep of any large company. This is the biggest issue with government these days: we are not investing enough money in getting the best talent our country has to offer to work on solving our communities’ problems. We underpay civil servants, we do not recruit on campuses, and we do not take care of those few people who dedicate their lives to public service. If we want open innovation to really work, we need to put our money where our mouth is.
Thanks for this great read. As someone who lived on Second Avenue for 5 years, I have witnessed the inefficiency of this specific process firsthand. I believe this is a great opportunity for a public private partnership to catalyze innovation. Though not a public private partnership yet, Elon Musk’s Boring Company is good example of the impact an innovative private company can have on public infrastructure. It was created from a bottoms up solution to a resident’s pain point (Musk sitting in endless traffic). While the goals of the company are aligned with the public’s for the time being, purely private innovation is primarily driven by commercial opportunity. A public private partnership adds a certain level of alignment while maintaining incentives for innovation.
Thanks for the interesting article. I would love to learn more about the process by which the city is trying to solicit feedback. Are they compensating the winners of the challenges? I would love to know how they are motivating people to get involved and share their ideas since these are important issues that they are trying to solve!
In addition, you mention that they have a closed model whereby participants do not see others’ ideas. You point out that this prevents copycats. However, I do believe there is benefit to participants having the ability to view other participants’ ideas, such as collaboration amongst participants. I wonder if there is a way to accomplish both (preventing copycats, and collaboration).
Thank you for a very well written article. I do not think that engagement in this case is influenced only by civic duty and/or financial compensation only, I’d argue that personal branding and publicity are probably the main motivators. It is exactly like in the fields of advertising and architecture. Young talents apply to all sorts of international competitions to get their name out there and gain credibility. Winning such competitions increases their chances of getting into a more prestigious firm/studio, or charge clients a premium if they are freelancing. No one cares about idea theft as long as their idea is publicly attributed to them by a legitimate organization/entity/platform.
Thanks for sharing Cardi V – it was a very interesting read. I had not realized that open innovation was being used in this context. It definitely seems like a great opportunity for projects like this. I would question though how much is financially is actually being saved however, as I would imagine the bulk of the cost of these large projects such as transport would come from the actual implementation. It would also be interesting to see how detailed these ideas are – are they detailed ideas including implementation plans or are the solely ideas which individuals may have. You also raise some very interesting questions, I do think given the sheer scale of these government projects relative to private projects will allow compensation to remain at decent levels (i.e. 0.1% of a $2.5B project is still $2.5M)
Thanks so much for this article! I find your second question to be very interesting. I think that we live today in a world where ideas are not that valuable anymore to the vast amount of information. Hence, the trade-off between transparency and idea theft seems to be more inclined towards increasing benefits of transparency at a decreasing expense of idea theft.
Ms. V, thank you for sharing this eloquently written article. New York seems like the perfect city to deploy an open innovation initiative, given its population and the high frequency of subway usage. It adds a democratic element to what is normally a closed, bureaucratic process of transportation development. To answer your first question, I believe it is valuable for government agencies to introduce some monetary element to increase participation in such initiatives (such as a modest cash prize), but overall citizens (especially frequent users of subways who have to deal with its problems on a daily basis) will also have enough self-driven incentives such that they will be motivated to contribute.