Encouraging Innovation in the Public Sector`

MANAGING RISK OF FAILURE27 FEBRUARY 2016, SYDNEY

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Klaus FelscheC21 Directions C21Directions@gmail.com http://kfelsche9.wix.com/c21-directions

ˌinəˈvāSH(ə)nA NEW METHOD, IDEA, PRODUCT, …

INNOVATION WITHOUT OPERATIONALISATION IS HALLUCINATION

www.marketingmag.com.au

ˌinəˈvāSH(ə)n – Why?“We have to work more agilely, more innovatively, we have to be more nimble in the way we seize the enormous opportunities that are presented to us. We’re not seeking to proof ourselves against the future. We are seeking to embrace it …”

PM Malcolm Turnbull - 23 Sep 15

http://www.theaustralian.com.au/business/opinion/fostering-innovation-at-heart-of-malcolm-turnbulls-economic-policy/story-e6frg9qo-1227540992168

So, you want to do something that :

- hasn’t been done before?

- may fail?

- may disrupt the way we work?

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That’s a very brave move, perhaps even courageous!

ˌinəˈvāSH(ə)n – How?M

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IT projects take years to provide outdated technology to users, … this needs to change, or else IT risks becoming irrelevant.IT departments are running a "very serious risk" of not

meeting user expectations by continuing their traditional

processes, which are detailed and precise, with lots of

documentation defining business requirements.

Such processes take years, and, when they are done, end up delivering obsolete technology. We are just wasting our time if we go through these processes.http://www.zdnet.com.au/it-just-like-alice-in-wonderland-defence-339334268.htm?ocid=nl_TNB_22032012_fea_1

Department of

Defence

CIO Greg Farr , 2012

Solutions, not ProblemsSOME GOOD NEWS – INNOVATION IN GOVERNMENT IS POSSIBLE!

BAD NEWS – IT TAKES EFFORT

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A Challenge & OpportunityM

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The Challenge:• The usual solutions included:

• Employ more staff• Build bigger ports• Get a bigger computer• Spend more money

• There was no appetite in Government to massively increase spending!

The Opportunity:• Do something differently!

Gentlemen, we have run out of money, now we have to think.

– Winston Churchill /Ernest Rutherford

A ChallengeM

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“”

Case Study: Real time Analytics to identify risk in air traveller caseload

Deploy complex analytics models to assess risk in high-volume, high-speed traveller data.

Challenges: accuracy, robustness, speed, acceptance in the workplace

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New Concept, New TechnologyM

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• Replace rules-based, intuitive risk identification based on experience with the world’s first real-time analytics border risk system

• Screening every one of the 16 million inbound travellers in seconds before they have completed their check-in at the overseas airport

BRIS

Refused Clearance

Manual Inspections

New Concept, New TechnologyM

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• 18 months from concept to full operations• 2 months in the lab• 10 months as a dynamic

prototype• 6 months to deploy as a

full production system• Less than $1 million• Delivered 2013• Conservative ROI to date

• $24 million and rising• Basis for new systems

BRIS

Refused Clearance

Manual Inspections

100 000 λ250 000 R

12 000 000 $

We became a Lean Start-up!

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Managing the RiskM

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Damaging systems / data

Establish a data laboratory suite• Lab 1: Stand alone• Lab 2: Connected

Misuse of data / data leaks / etc

Air gapped labData governanceTrained staffAccess controls

Cost Blow-Out Commodity hardware where possibleOpen source software, trial versions, cheap COTS for development systems

Acceptance failure / inability to ‘sell’ to business.

Prototype solutions (Lean startup and agiledevelopment approach)

Risk of Failure Accept failure but do it fast. Try the next approach …

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•Close to real-world environment

•Follow/mimic normal business processes

•Limit exposure (range/depth)

•Build Business case•Confirm design

•Develop business processes

•Take lessons learnt from prototype

•Incorporates design lessons from prototype

•Low cost•Mimic much of the

operational environment

•Measure potential business impacts

•Small cost for failure•Build business case

•Low Cost•Minimal Consequence if failure

•Freedom to try innovative concepts

•Requires suitable infrastructure

•Administrative processes must be flexible

1. Lab 2. Test

3. Prototype4. Production -

Deployment

Here is a Process that Works

10 Tips:Creating Agility

Lessons Learnt from a case study: The Border Risk Identification System

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The TipsM

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1. Attract, develop and retain smart people.

• The best software, most powerful platforms, highest possible funding level will do little to enhance performance.

• Smart people understand the business and are solution-focussed. They know their trade.

• In most cases you will need team members (different skills but able to work well with others.)

• Hint: retain smart people by letting them achieve.

Of Interest:

A RAAF Fighter pilot gets paid less than a QANTAS jet pilot.

Q. How does the RAAF keep its fighter pilots?

A. They let them fly and do barrel rolls – the latter is frowned upon by QANTAS.

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2. Allow people time and opportunity to think.• People are unlikely to think ‘outside the square’ while

drowning in work.• Create windows of opportunity to ‘think’

3. Provide an opportunity for people to test their ideas.

• Amazon example. The lab needs to be secure and managed without constraining experimentation.

• DIBP and the ATO have multiple labs – each able to support different levels of experimentation and security settings largely dictated by the data used in the lab.

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4. Provide a mechanism for taking good ideas further. Recognise potential value early.

• Lab results can demonstrate potential business value.• If a great idea doesn’t leave the lab it is worth little.• In our experience, a dynamic prototype can expose the

idea to end users and executives who can then identify resources to implement the concept.

5. Accept failure as a positive (failing for the right reason and early, cheaply).

• Fear of failing prevents experimentation.• Accepting failure as a positive encourages innovation.

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6. Seize unexpected opportunities. • There are numerous example where experimenting to

find one solution has resulted in the discovery of others. • Smart people with an understanding of your business will

seize unexpected opportunities and you need to be in a position to exploit this opportunity.

• Examples:• BRIS• UK92480

Angina Pectoris is the name for chest pain—specifically, spasms in the heart's coronary arteries. The pharmaceutical company Pfizer developed a pill named UK92480 to help constrict these arteries to relieve pain. The pill failed its primary purpose, but the secondary side effect was startling.

The drug became known as Viagra. Pfizer sold $288 million worth in the first quarter of 2013.

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7. Deliver incrementally towards strategic goals. Consider a 'spiral', iterative development. Be prepared to make changes as you progress and learn but focus on the strategic vision.

• Around 40% of large ($15m +) projects fail and 17% go so badly as to threaten the existence of the organisation.

• Queensland Department of Health payroll project, which ended in debacle with costs estimated at $1.2 billion

• The abandoned NHZ record system (UK) has cost £10 billion.

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8. If the thing you're doing is new to the organisation, educate the organisation as you progress.

• Consider the value of an agile prototype.• Show the ‘product’• Get comments• Make changes quickly• Show again.

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9. Treat innovation as a culture, not a project. Don't put innovation into an organisational 'box’.

• Grant ‘permission to think’ throughout the organisation, not just in an Innovation Section!

• Reward ideas• Rewards should be appropriate noting that

professionals tend to value seeing their ideas being taken up and used more than a $200 bonus.

• Leverage the world of ideas:• Internal crowd sourcing• Global Crowd Sourcing, competitions, ‘hacks’

Kaggle

Identify individual users across their digital devices

7.5 days316 teams189 scripts$10,000

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10. People first, not platforms, not process, not tools.

• Platforms:• Commodity hardware for lab work is cheap and

readily available. If it fails, get a new one!• Software is either free, cheap or already installed

(eg MS Office). Before committing to an expensive solution, look around – your smart people will assist!

• People:• Build a core team that understands the business,

understands the data and tools.• Ensure that the team has good leadership.

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