In this article, Peter Nichols examines the sources of municipal innovation and discusses the role business planning can have as an impetus to change.

This regular column focuses on innovation and change in the municipal sector and most of the articles will centre on particular types and examples of innovation. But what is the genesis of innovation in local government? How are innovative ideas and approaches identified?

There are, of course, a number of avenues by which municipalities can search out new approaches to the way they do business. Meetings, conferences, and informal contacts with representatives of other municipalities can be useful sources of ideas. Publications and newsletters such as Urban Perspective can be another. Research reports and documented case studies can be helpful as well, although the challenge of obtaining and reviewing the large amounts of information that become available on an on-going basis can be daunting.

These external sources can "plant the seeds" of new ideas but even then it remains necessary for individuals within the municipality itself to promote, approve, and implement the changes.

The greatest source of innovative ideas is, in the final analysis, the municipality itself -- the Council, management and staff, advisers, and local residents. Ideas for improving the performance of local government can reveal themselves through the budgeting process, through internal operational, organizational, and policy reviews, and through the knowledge and insights of individuals involved in the management and operation of the municipality. The ideas can originate from the top or the bottom of the municipal organization.

These on-going innovations are important to any dynamic organization and, cumulatively, they can have significant impacts on the effectiveness and efficiency of a municipality. But it may be fair as well to say that, in the main, the changes conceived and introduced in the context of the normal day-to-day operations of an organization tend to be incremental, rather than fundamental.

There is convincing evidence that, through the operationally oriented processes described above, innovation is occurring in the municipal sector and, more significantly, the pace of change appears to be accelerating. Nevertheless, more dramatic and farther-reaching municipal transformation is required. In the private sector, the combination of competition, rewards and incentives, and signals from the marketplace provide a pervasive and on-going impetus for change and improvement. Those same factors are not nearly so strong in the municipal field.

It is in this context that business planning processes are introduced as a complementary vehicle for initiating significant innovation in the municipal setting.

Boiled down to its essentials, business planning typically involves:

• First, an examination by a municipality of the key issues it faces. This examination strips away the "background noise" of day-to-day operational concerns.
  
• Second, a formulation of what the municipality wants to accomplish in respect to those issues.
  
• Third, a review of the external and internal factors and changes that will affect the municipality's ability to achieve its objectives.
  
• Fourth, the identification and analysis of alternative approaches. This involves an explicit discussion about how the challenges can be best addressed.
  
• Fifth, the development of an action plan.
  
• Sixth, and finally, the implementation and ongoing monitoring of the plan.

The beauty of business planning as a source of inspiration and change comes from a number of factors. In the first instance, the process usually involves the participation of a number of people -- and it provides a forum for drawing together a host of perspectives and ideas, often in "brainstorming" sessions.

Further, the business planning process generally is conducted within an environment that is conducive to exploring opportunities for change. Often, for example, discussions of budgets and municipal operational issues are constrained by time and procedure and tend to be very focused. Business planning, on the other hand, provides an opportunity, within a less bridled framework, to discuss and debate important issues in a more open manner.

Most important of all, business planning processes tend to focus the attention of the participants toward the more strategic, the more fundamental, and the longer-term issues facing the municipality. The changes and innovations that culminate from those processes tend often to have a more singularly dramatic impact on the municipality than do those innovations that derive from more operational and regularized processes, although the improvements generated by the two different approaches serve to complement one another.

A particular factor that contributes to the success of business planning as a medium for strategic-level innovation is the discipline it imposes in terms of articulating key municipal issues and defining desired end-results and objectives. "Necessity is the mother of invention" and those objectives force the participants in the planning process to work back through alternative solutions or innovations. For these reasons, municipalities are encouraged to pursue business planning processes as an important element in their search for enhanced long-term performance.