Bridging the gap between Innovation and Value Creation in Public Services : Case Study of a Public Transport Authority

Abstract: In the past, left to themselves, private sector companies have developed the field of operations management using a Goods-Dominant Logic (GDL). These developments were adapted by the public sector as a means to improve their service delivery. This has predominantly led to a Goods-Dominant Logic in the approach to governance in Public Sector Organisations (PSO’s). However, in the pursuit of equality of opportunity, it is the responsibility of a PSO to provide an array of services to users irrespective of their access to resources, capabilities and skills. To this end, it is necessary for PSO’s to transition to a Service-Dominant Logic (SDL). The transition of Public Service Organisations to a SDL promotes a bottom-up approach to delivering services to users. Academics of SDL have concluded that the way forward is to co-create value between service provider and customer. The literature review has identified that the field of public service management is lacking in being able to define value. Currently, the concept of value in Public Service Organisations is monitored conceptually and explained vaguely. This thesis adapts that the concept of value creation in a system is a result of the innovation within it. Value creation for the service provider and user is the result of innovating from these respective perspectives. The literature review makes the case that for the formal acceptance of innovation in PSO’s a stakeholder inclusive, systemic, structured and function oriented methodology of innovation is necessary. The literature review outlines that the innovation approach used by SAVE International, referred to as the ‘Value Methodology’ (VM), satisfies all the prerequisites necessary to accept an innovation approach for PSO’s. Through the functional representation of a system from the perspective of the service provider and the user, PSO’s can begin to create value within the organisation and co-create value with its users. To explain how the Value Methodology can be employed by PSO’s illustrative case study of a Public Transport Organisation, Bangalore Metropolitan Transport Corporation (BMTC) is used as the research approach. Using functions, the case study successfully represents the public transport system from the perspective of the service provider and service user. Data collection was done through one-on-one interviews with Subject Matter Experts. This paper intends to share the first steps to engage PSO’s with the Value Methodology approach and begin to create value through innovation.