The need for a public-service institution to innovate increases as society continues to develop. Where a corporate business has the individuals and capital in order to jump-start a new entrepreneurial business and invest in innovation, the public-service institution such as a school or a church does not have the same amount of resources. With the investment of capital being injected into “research and development” labs for new products in a corporation, the typical university or charitable organization needs to use its asset of people to generate new ideas and effective ways of delivering service.

With the absence of “profit” being a scorecard in order to judge success, the public-service institution usually relies on growth of its supporters or customer base. Being successful in growth can unfortunately put a mindset of “if our mission and strategy of growth have gotten us this far, why do we bother to innovate?” If a church gains more followers by knocking door to door, why change this strategy? If a hospital gains more patients by just adding more beds, why change this strategy? If a charity gains more funds from giving out forms to businesses, why change this strategy? Why focus on optimization rather than maximization.

There are three reasons why entrepreneurship and innovation are obstacles to a variety of public-service institutions.

1. The public-service institution is based on a budget, and success pertains to being “in-line” with the budget. Many businesses pay out executives and managers on results, budget may be in there as a factor but the priority is obtaining business objectives. A public-service institution on the other hand receives it’s funds not primarily through profit, but through funds that others have earned through government tax deductions, charitable donations or community support. Success is defined as obtaining a larger budget to maneuver in, not through innovation and abandonment of programs that work or do not work. The need for keeping under budget outweighs the need to take risks needed to move forward.
2. A service institution “customer” is usually “all customers”. The “market share” is all “market share”. When a business creates a product or service, it is usually tied to a niche in order for that business to take over that market. A luxury goods retailer is not going to design its business around the individual in a low-income household. A software company for small business is not going to focus all its resources in maintaining the personal software market. Once a business has defined “Who is our Customer?”, the focus can then be towards the shareholders, suppliers, community and staff.

   A public-service institution is focused on growth of members and takes everyone into account. Whether you are an entrepreneur, student, stay at home parent, small business or corporation, the goal is to maximize supporters. It is in this case, if the institution begins to “innovate”, one of the constituencies may veto and decline it as it does not suit their needs. If a service institution wishes to drop and abandon a program, another constituency may oppose as it does not suit their needs. The variety of different types of customers can stunt changes within the service institution, keeping the institution stagnant because no one wishes to “rock the boat”.

3. Finally, the moral aspects of a public-institution can stunt entrepreneurship and innovation. The reason these institutions came into being into the world is a person or group of people wanting to achieve a “moral good” throughout society, and spreading that moral throughout as many people as possible. The church is not a profit center, it is a center designed to deliver values in an individual’s life. The school is designed to deliver an education and provide it to all whoever you are. Government is in power to maintain a fair playing field for all within a country whoever you are. While these are indeed noble causes, the results are not relative and are difficult to measure.

   A business exists to achieve maximum output from its input, and success is determined by the business’s yield. Greater optimization of processes results in a higher yield which means more profit. In a public-service institution, there is no “higher yield”. If you are providing education to all already, what more can you innovate? If everyone is feeling “great” within a charitable organization, why would there be a need to optimize “great”? The need to optimize the institution based on objectives and not emotions can help a public-service institution perform exceptionally.

A developing society needs these service institutions in order to thrive and prosper. What a developing society needs as well, is an institution that can perform and not waste resources which could be put to different projects. The need for an institution to look past these barriers and continue to innovate and optimize itself is a requirement for not only those contributing into it, but for those receiving its services as well.