How to Enable Innovation in Program and Policy Design

Insight

Innovation fails not because people lack good ideas, but because the system isn’t designed to support them. Decades of entrenched policies, program guidelines, and risk-averse cultures have created a system that is deeply reactive rather than adaptive—one where stability is prioritized over experimentation.

Systems don’t shift overnight. The challenge is creating the conditions for innovation to take hold, both at the center (policy design) and the periphery (frontline implementation).

So how do we enable innovation within systems built to resist it?

Insight in Practice

Practical steps in solution design that are likely to enable innovation:

• Talk about failure and expect it. Failure isn’t a crisis, it’s a signal. Yet, in policy and social impact work, failure is often seen as something to avoid at all costs. To build a culture of innovation, we have to normalize failure as part of the process. That means documenting missteps, sharing lessons learned, and rewarding teams for testing, not just succeeding.
• Reduce the risk of failure. Even though failure is part of innovation, minimizing unnecessary risk makes it easier for systems to adapt. Instead of betting big on untested ideas, start with small-scale pilots and create structured pathways to scale what works. The key isn’t avoiding failure: it’s making it manageable, generative, and informative.
• Adjust KPIs. What gets measured drives behaviour. If success is defined solely by cost reduction and compliance, the system will prioritize predictability over experimentation. Shifting KPIs toward learning, adaptability, and impact creates space for innovation.
• Increase institutional capacity. Innovation efforts fail when the people expected to implement them don’t have the resources, decision-making authority, or flexibility to act. Building embedded experimentation into large systems—with clear mandates and safe testing environments—ensures that innovation isn’t a one-off project but a core capability of the system.

Case Study

By funding small-scale pilots instead of committing to large projects, Lithuania’s GovTech Challenge Series have tested nearly 100 GovTech solutions, many of which now play a role in public service delivery. [Source]

One example is Trafi, a smart city solution for real-time mapping of public transport that improves urban mobility. Trafi's success is rooted in its ability to integrate multiple transportation modes into a single platform: public transport, bike shares, scooters, ride-hailing apps, and ride-pooling services. By enabling shared transportation, it helps reduce emissions and costs associated with private vehicle usage.

Tested in Lithuania, Trafi has since scaled internationally, with adoption in Germany, Indonesia, and Switzerland, showing how small-scale pilots can drive global impact. [Source]

Question to Consider

Instead of asking, How do we innovate?, consider asking:

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‍What about the system is preventing innovation from happening?

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Innovation is no longer a choice, it’s a necessary part of healthy growth and continuous improvement.