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Innovation in government procurement: is it really possible?

Sue Leslie discusses the complexities of capturing innovation into procurement, and has come up with a solution.

‘Innovation’ seems to be the new buzzword being spruiked around many government agencies these days. For example, have a look at the ACT Government’s Innovation; Northern Territory’s The Northern Territory Government welcomes innovation; NSW Government’s ProcurePoint; Queensland Government’s Procurement Transformation; South Australian Government’s Innovative Government; Tasmanian Government’s Government Open for Innovative Business Ideas; Victorian Government’s Procurement reform guidelines; and Western Australian Government’s Sustainable Procurement Practice Guidelines.

Even our new Prime Minister has cited it as ‘a must-have’ for the country –

The Australia of the future has to be a nation that is agile, that is innovative, that is creative.

(Turnbull, 2015)

But its application into the tendering process is often positioned as an ‘alternative tender’ or as an ill-defined surprise that may provide some unforeseen benefit to the project – using the “I know it when I see it” defence (to quote the infamous Potter Stewart’s opinion although he was referring to the detection of obscenity in a 1964 USA Supreme Court case).

Three disparate concepts, from quite diverse fields, offer insight into a method for actually capturing and applying ‘innovation’ so that the benefits expected from it can be realised.

The first concept worth exploring comes from the field of psychology. Langer’s (2014; 2015) research into ‘mindfulness’ has focused on how attention to novelty within the context can unlock creativity and innovation. It is Langer’s notion of ‘novelty’ that separates it from the eastern concept of ‘mindfulness’. Langer (2015) consistently found that mindfulness produced “…greater innovation in solving problems and developing possibilities…”.

Langer’s converse construct of ‘mindlessness’ can be recognised in most organisations, and is quite quite pervasive. In fact it is often encouraged in the routinisation of work. While checklists and procedures are often used to enhance safety and efficiency, Langer (2014, 2015) found they can actually produce the opposite effect when context is ignored. So, the checklist may do nothing more than engender an apathetic way of thinking – hardly a recipe for creative thought and innovation. As an example of mindless attention – did you spot the extra word in the first sentence of this paragraph?

The second concept comes from sociologist Rogers’ theory of ‘diffusion of innovations’. The most relevant part of his theory focuses on how innovations are adopted. According to Rogers (1962, 2003) people dislike uncertainty, so for an innovation to be well-received and therefore adopted, its benefit and value to the current context needs to be perceived (Greenhalgh et al, 2004; Rogers, 2003; Rogers, 1962).

It seems that people are also more likely to adopt an innovation if they see that it can be easily adapted into the current system. Conversely, if people cannot see the value of the innovation’s application within the current context, the likelihood of it being accepted is low. Rogers (2003 p.232) bases this on people’s need for ‘uncertainty-reduction’ or their risk tolerance levels, which can be a great inhibitor to an innovative idea being adopted.

When mindlessness is paired with people’s tendency to avoid uncertainty, the quality of the tender process often suffers. Take for example the number of times a tenderer may have been confused by the inclusion of some criteria or terms. They may have suspected a ‘search and replace’ action had been performed from a previous tender document. Although it may have been expedient to ‘get the document out to submission’, a more realistic explanation may be that re-working the previous tender was perceived as less risky than to create a bespoke document. Or the ‘cut and paste’ decision may have been considered as a more viable commercial alternative.

Innovative ideas then, need to focus on their direct applicability to the context of the project. As an example, consider 3M’s experience with Post-it notes. What was originally considered a failure, became a huge success – and seen as an innovation – in another context. Or, to refer back to Potter Stewart – what is obscene in one context may be completely fine in another.

The third concept comes from vocational education’s concept of competency-based training and assessment (CBT), where outcomes are clearly defined in terms of results or consequence-based criteria. The concept has undergone a great deal of scrutiny over many years (Hodge, 2007) so anyone involved in education and training is well-aware of the rigor embedded in the process. As a final concept, it unites innovation and context.

Competency-based assessment focuses on evaluating performance against pre-defined criteria using valid, reliable and objective evidence (ASQA, 2015). So, when applied to the tendering process, it fills a gap missing in the tendering process – a rigorous method to define tangible and intangible criteria, such as ‘innovation’, with a reliable, defensible method for evaluation.

If the project’s context provides tenderers with the target for their innovative ideas and creativity then, assessing these innovative ideas will not be a matter of ‘we’ll know it when we see it’, or ‘we’ll wait to be surprised’. Innovation targets, phrased as challenges or problems to the project and defined in terms of the project’s outcomes should form the basis for their assessment. In fact, this is not a new concept. Rosenberg (2015) cites numerous international examples where problem-based procurement has been successfully introduced. She argues that a greater uptake of innovation may provide “…the most creative solution…” because the “…typical RFP…is guaranteed to be innovation-free” – supporting Langer’s concept of ‘mindlessness’.

The ©Competitive Assessment Tendering Process is a methodology that has been developed to capture innovation targets. The Process assesses criteria, such as innovation by defining it as a challenge based on the strategic reasons for undertaking the project in the first place. By defining context in this way, the benefits of innovative ideas are captured within the entire tender process, and not an adjunct to it. And they are given an applied value relative to the weightings assigned to the project’s outcomes. Consequently, the innovative benefits of the project can then be realised during the subsequent project delivery and asset appreciation stages.

The ©Competitive Assessment Tendering Process also enhances competition among tenderers. Because tenders can only be assessed against pre-defined, objective, relevant criteria derived from the project’s objective, any bias for irrelevant criteria such as: ‘large annual turnover’ or ‘recognisable name’ is removed. This means all tenderers, including small to medium organisations, start-up companies, and entrepreneurs have an equal chance to engage in the procurement process without being disqualified before they even get a chance to be heard. The result is an authentic competitive process.

These three disparate concepts support the point that innovation should not be seen an afterthought in the tendering process, and made to sit outside the traditional evaluation process as an ‘alternative tender’. Innovation should be integrated throughout the process and given a tangible value.

The ©Competitive Assessment Tendering Process addresses many of the current issues embedded in the tender process that result in irrelevant criteria being considered as the ‘safer’ alternative. It also results in truer competition among tenderers. The ©Competitive Assessment Tendering Process then, is a positive step in the right direction, based on sound applied research.

For more information or if you would like to discuss the ©Competitive Assessment Tendering Process, contact ENDSTATE at info@endstate.com.au.

References

  • ACT Government. Innovation, Trade and Investment. Innovation. Accessed on 2 October 2015. Link
  • Argyris, C. 1982. Reasoning, Learning, And Action. California: Jossey-Bass Inc.
  • Australian Government. Public Sector Innovation Toolkit. Accessed 2 October 2015 Link
  • Australian Skills Quality Authority (ASQA). 2015. Users’ Guide to the Standards for Registered Training Organisations 2015. Clauses 1.8 – 1.12. Accessed October 2015. Link
  • Government of South Australia. Innovative Government. Accessed 3 October 2015. Link
  • Greenhalgh, T.; Robert, G.; Macfarlane, F.; Bate, P.; Kyriakidou, O. (2004). Diffusion of Innovations in Service Organizations: Systematic Review and Recommendations. The Milbank Quarterly 82: 581–629.
  • Groom, M. Minister for State Growth. 20 November 2014. Government Open for Innovative Business Ideas. Tasmanian Government. Accessed 2 October 2015. Link
  • Hodge, S. 2007. The Origins of Competency-Based Training. Australian Journal of Adult Learning. V47. N.2. pp179-207. July 2007.
  • Langer, E. 2015. Mindfulness at work. The Langer Mindfulness Institute. Accessed 30 September. Link
  • Langer, E. 2014. Mindfulness in the Age of Complexity. Harvard Business Review. March 2014 Issue.
  • Northern Territory Government. The Northern Territory Government welcomes innovation. Accessed 2 October 2015. Link
  • NSW Government. Innovate NSW. Accessed 2 October 2015. Link
  • NSW Government ProcurePoint. About NSW procurement reform. Accessed 2 October 2015. Link
  • Queensland Government. 12 February 2015. Procurement Transformation. Heads of Corporate Services. Accessed 2 October. Link
  • Rogers E. 1962. Diffusion of Innovations. New York: Free Press of Glencoe.
  • Rogers, E. 2003. 5th ed. Diffusion of Innovations. New York: Free Press.
  • State Government of Victoria. Department of Treasury and Finance. 25 October 2012 Innovation and the procurement process – procurement guide.
  • Stewart, P. USA Supreme Court Justice. 1964. Opinion on ‘Jacobellis v Ohio’. Accessed August 2015. Link
  • Turnbull, M. 2015. Victory speech. Pedestrian Daily. Accessed September 14, 2015. Link
  • Western Australian Government. Department of Finance. July 2014. Sustainable Procurement Practice Guidelines. Accessed October 2015. Link
2 replies
  1. Gilbert Arnold
    Gilbert Arnold says:

    Procurement processes are a minefield of problems in the construction industry. Even government departments fail to provide an adequate brief and impose assessment criteria that are irrelevant to the performance of the building and certainly penalize innovation. Just consider the impact of digital technology which should result in high design and documentation resolution and even more reasonable cost estimates before any project tender process. Alternatively a contractor can be introduced during the early design stage to assist decisions in the BIM (building information model) documentation. However the procurement processes remain in century old methodology prohibiting involvement of a contractor until all design and documentation decisions are made. The result is many-fold: design and documentation changes once the contractor is appointed; adversary behaviour; contractors exploiting sub-contractors who assisted the tender because once they have the contract they can “ask the sub-contractors for their real price”.
    In short, technology provides an ideal opportunity to drag the construction industry away from the “jack-hammer” solution to costly mistakes on site to high resolution of design and documentation to meet all three of the tenors of your article. When will that happen? Tell him he is dreaming!

    Reply

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