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Report - June 2013

Innovation and the City

New York’s next mayor will need to address a number of critical challenges facing the city. This report spotlights 15 innovative policies from cities across the U.S. and around the globe that could serve as a model.

by Neil Kleiman, Adam Forman, Jae Ko, David Giles and Jonathan Bowles

Tags: economic growth economic opportunity workforce development human capital tech low income youth small business transportation immigrants entrepreneurship housing

IDEA 4: PEAK ACADEMY
Denver   •  Sending Agency Staff to Innovation School

INNOVATION IN A NUTSHELL
Based on the belief that true innovation must be embraced by line-level staff as much as by mayors and agency heads, Denver has launched Peak Academy, an innovation school where city employees can get training, develop new ideas and gain support for new approaches.

KEY COMPONENTS

  • Agency managers nominate staff to undergo a five-day training, where they learn performance measurement skills and tools for continuous improvement
  • Incentives for supervisors and agency heads are in place to support the work of Academy graduates

BENEFITS

  • Innovations developed by the Mayor and department heads are more likely to receive support than resistance at the agency level
  • Agency workers themselves are developing new ideas that are being implemented throughout the city

“Culture will eat strategy for lunch every time,” warns David Edinger, Denver’s chief performance officer.

Edinger spent time in the private sector and then worked for the previous mayor. In his governmental role, he saw many good innovations die inside the agencies in which they were born. As he and other management experts have noted, direct-line workers either wait out reform ideas that they dislike, or simply lack the tools and training orientation to move a promising new initiative to actuation.

When Mayor Michael Hancock took office in 2011, he had grand reform plans of his own, and tapped Edinger to help lead them. The initial thinking was for the City to implement a version of CitiStat, a notable data-driven approach to accountability and reform that began in Baltimore and has been replicated widely. But Edinger was clear with the mayor that such ambitions would never reach their full potential without everyone who worked for the City embracing a culture of innovation Reform cannot be cooked up at the senior level and pushed down, he said; it has to take root throughout the city, from entry-level workers all the way up to department heads. 

To spread such a culture, the Hancock administration created the Peak Academy, the City’s first-ever innovation school. The Academy is staffed by two analysts from the budget office who teach all the classes. No money is spent on the courses, since the Academy has adopted an off-the-shelf performance improvement curriculum called Lean, used internally by many corporations.

Each participant is encouraged to generate new ideas at the training itself and bring them back to his or her home agency. This practice has already led to the implementation of dozens of common sense cost-saving reforms. In one session, staff from the police, 911 and license departments realized that manually inputting alarm permit data was wasting time, leading to missed data and needlessly costing the city thousands of dollars. In a few days at the Academy, they charted an automated and coordinated approach, which went into effect this summer. And, eight colleagues at the City’s human services agency realized that their myriad contracts with nonprofits lacked clarity of purpose, data and expectations. The workers created consistent, cross-silo forms and procedures. They have also instituted an Open House for community groups, a forum that provides a friendly opportunity to meet with providers and reduce contract misunderstandings. 

Edinger and his team are adamant about continuing to support front-line staff on these and future endeavors. For those who receive training, agency management raises and promotions are now tied to the number and quality of innovations advanced by their employees. Additionally, ideas are profiled monthly on a public website. And the mayor himself is prompted by Edinger to nudge agency heads about recent Academy grads, asking them what reforms the mayor can expect to see from them.

Neither New York, nor any city we could identify, has anything quite like a Peak Academy. Denver’s experience demonstrates that such a school creates cross-currents of fresh thinking and reformer energies. The mayor and his managers’ reinvention plans are now reaching a more receptive audience at the agency level. Meanwhile, line-level staff members are advancing reforms big and small within their departments, increasing morale.

A well-equipped workforce will be a huge issue in New York as tens of thousands of employees face retirement. Experts at the Mayoral Lab roundtable sessions noted that a Peak Academy-like approach could work well in New York to address issues of morale, improving retention of younger workers. But it would have to be retrofitted for the scale and scope of the Big Apple. To do this, roundtable participants recommended partnering with an established institution such as Coro or the City University. And they stressed that in New York there must be buy-in and strong support from organized labor, which was not the case in Denver.

There was general agreement that a Peak Academy enterprise that empowers New York’s public workforce will be crucial in the years ahead. As in Denver, the key is fostering an internal culture of innovation that can immediately take root and receive support for creating a better city.


 

IDEA 5: PROJECT ORACLE
London   •  Measuring Impact in Human Services

INNOVATION IN A NUTSHELL
A mayoral-led consortium of foundations and universities in London is moving all nonprofit youth organizations toward consistent, academically rigorous evaluation measures, a revolutionary turn away from the norm in performance monitoring of social service providers. The new system will for the first time enable the city to gauge and compare the relative progress made by publicly funded entities who work with disadvantaged teens and families.

KEY COMPONENTS

  • Rather than forcing evaluation on nonprofits, the mayor introduced a uniform and easy-to-use evaluation system within a supportive environment
  • Every participating nonprofit receives subsidized training and is matched with university professors and college students. Successes are celebrated through inter-agency competitions and cash prizes

BENEFITS

  • A common framework for assessment allows the public and philanthropic sectors to determine which social service programs are working, while allowing nonprofits to analyze what’s making a real difference and what needs to be addressed operationally

When London Mayor Boris Johnson took office in 2008 with a promise to lower youth crime, he asked his top aides to identify the best youth services programs. The aides confessed that London—like every city in the world—really didn’t know for sure. Most organizations just did not measure impact.

Paucity of data is a fact throughout the human services field. Systems such as child care, child welfare and youth services provide lifelines and enrichment, often serving the most troubled and disadvantaged. Yet as Johnson found out, the success of these programs—unlike road construction or crime fighting—is less than concrete and exceedingly difficult to measure.

Johnson decided he had to solve this. He assigned a top lieutenant to the project who consulted with experts around the world. Based on this research, a five-level “standards of evidence” framework was created. The framework—dubbed Project Oracle—is cumulative, meaning that it is necessary to get one and then two of them right before advancing to higher levels. Level one is a basic theory of change—a simple articulation of the organization’s goals, which remarkably few nonprofits have. Level two is a straightforward evaluation plan. From there, additional levels become increasingly thorough in their ability to measure impact.

With the framework in hand, the issue of how to get buy-in from youth organizations came up next. First, the mayor converted an advisory board of London grantmakers and academics into a governing consortium for the entire effort, tapping the expertise of a wide range of stakeholders and leaders dedicated to both performance measurement and nonprofit success.

The consortium devised a bundle of supports and incentives. All nonprofits can access highly subsidized training in evaluation methods. And there are also lively evaluation competitions featuring cash prizes. But probably the biggest support has been a connection to local universities for any participating nonprofit. Local colleges make students available as onsite project managers and data collectors, while professors offer technical assistance.

Another key aspect of the Project Oracle approach is the openness to organizational creativity. There is a common framework that ensures data are tracked and results are reported, but within that, groups can design their evaluation in vastly different ways. So organizations that already have a plan or want one that is unique to them still fit within the broader Oracle framework.

Nearly 100 organizations have signed up, and Ruth Puttick at Nesta, a London policy outfit evaluating the consortium program, noted, “This is the only citywide evidence-generation campaign of its kind anywhere in the world.”

New York is well positioned to initiate a similar citywide evaluative effort. Major city-based grantmakers such as Robin Hood and the Edna McConnell Clark Foundation base their giving on strict adherence to evaluation and outcomes. And some nonprofits, including the Harlem Children’s Zone, have developed sophisticated internal accountability systems. Still, these nationally recognized organizations make up a tiny fraction of the larger field of nonprofit organizations under government contract.

On the public side, the Bloomberg administration has moved the needle. City Hall’s main program evaluation mechanism, the HHS Accelerator System, for the first time is tracking the vast array of City service contracts. Though a big step forward, it stops well short of a full effort to measure impact. Another notable initiative is the Mayor’s Center for Economic Opportunity (CEO), a mayoral-controlled entity that uses a mix of City and foundation dollars to develop and rigorously assess new human service programs. The difference is that CEO is a vehicle for new programs, not existing ones. 

Taken together, these initiatives position New York to launch an effort akin to Project Oracle. The city is home to strong, metric-committed philanthropies; City Hall has created the building blocks for consistent tracking and evaluation; and there is a wide range of universities throughout the boroughs. What New York needs is a common plan and a commitment by the City and nonprofits to work together.


IDEA 6: SPACEHIVE
London   •  Crowdsourcing Capital Projects

INNOVATION IN A NUTSHELL
Using a new crowdsourcing website, the funding of capital projects—bridges, gardens, community centers—is being transformed throughout the United Kingdom as communities develop and jointly fund major new projects with local government.

KEY COMPONENTS

  • An easy-to-use internet platform with government matching funds is available for community-generated capital ideas

BENEFITS

  • Cities fund capital projects without additional debt
  • The process generates community interest and a sense of public ownership
  • Some projects may garner enough community support to be achieved without any government investment

New York City commits an average of $6.8 billion yearly to major capital projects. Unlike the City’s yearly expense budget, the capital budget is primarily funded through long-term bonds. Overall, the City’s capital budget is relatively robust. New York’s bond rating is high, allowing the City to issue debt at low interest rates and fund many projects at once. But as in many cities, the capital program has room for improvement. The City’s capital expenditures exceed its funding commitments by about $1.4 billion annually, and the City is projected to incur greater imbalance in years to come. At the same time, the City’s capital funding process remains somewhat insular. Community Boards submit requests to the mayor and their borough president, but the power of allocation still remains in the hands of relatively few government officials.

Several cities in the United Kingdom have begun to transform their capital processes. Rather than allowing projects to be determined chiefly by city and regional agencies, these cities are turning to their local communities for ideas. And rather than relying solely on government, they are opening the way to receiving private, individual and philanthropic dollars to match public sector allocations.

This radically different approach is being propelled by a London-based start-up called Spacehive. Launched two years ago as the world’s first “funding platform for public space projects,” Spacehive is modeled on the pioneering crowdfunding site Kickstarter. The difference—and it’s a big one—is that Spacehive is focused on the civic sector, building close relationships and full-on partnerships with local governments in the UK.

Using the website, any organization or individual can propose a new capital project or new use for a public space, and raise funds to launch it. To ensure its viability and success, a project only gets a green light when its funding target is met.

Additionally, Spacehive is closely attuned to the complexities of planning and capital funding. Project risk management, contract frameworks and funding verification are all built in to the platform, and no project advances without required planning and regulatory permissions.

Spacehive has invested a great deal of time in meeting with regional officials to explain the workings of the website and its potential utility. The result has led to a spate of projects that originated at the community level, as well as other endeavors in which individuals or businesses have stepped up to support government-initiated works.

In High Wycombe, a private entrepreneur proposed a capital project to create a business incubator. Given its popularity on Spacehive, both the national and local government authority pledged one-third of the needed funding. In Wales, the government struggled for eight years to secure funding to build a community center. Utilizing Spacehive, the remaining $55,000 was quickly raised, assisted by celebrity and corporate support.

This is only the beginning of what may amount to an “inversion of the capital process,” according to Spacehive CEO Chris Gourlay. The company is in the final stages of drafting full-partnership agreements with UK governments to create a new capital program. Under it, a local government authority would dedicate a sizeable portion of its capital budget in advance to match worthy projects.

Under this model, a New york City agency could potentially carve out a set percentage of its capital budget to support crowdsourced projects. Communities would be able to draft projects and raise funds. Once a threshold of, say, $1 million in private capital was reached, a full government match would be triggered. Government would get not only the benefit of local creativity and ownership, but also private funding from individuals, foundations and businesses toward specific projects.

Clearly, many issues need to be addressed, including how best to vet proposals. But New York is already fertile ground for civic-oriented initiatives. The City Council Participatory Budgeting process allocates small amounts of Council funds for community projects. But capital projects funded by crowdsourcing can be an avenue to even greater heights, allowing communities, companies and government to fund and create new public spaces jointly, working hand in hand to improve existing infrastructure.


 

IDEA 7: ZERO WASTE
San Francisco   •  A Comprehensive Approach to Increasing Recycling & Improving Waste Management

INNOVATION IN A NUTSHELL
San Francisco introduced its Zero Waste program in 2002. Progress has been swift. From 1990 to 2010, recycling rates rose from 20 percent to 77 percent. Recent waste management reforms have targeted retail, packaging, consumption, public events, government procurement and construction and debris.

KEY COMPONENTS

  • The 2002 Zero Waste Resolution sets explicit goals: 75 percent landfill diversion by 2010 and zero waste by 2020
  • SF Environment drafts an annual zero waste strategic plan
  • Relentless policy experimentation and incremental reform
  • Permanent no-bid, no-franchise-fee contract with Recology, a private garbage collection and resource recovery company

BENEFITS

  • Dramatic increase in recycling rates
  • Dramatic reduction in methane emissions from landfills
  • Each category of waste is directed to its economically optimal disposal route, increasing recycling revenue for government, business and developers

A meager 15 percent of New York City’s household waste is recycled, ranking it 16th among 27 major American cities. This environmental and managerial shortfall comes at a substantial expense. New York’s disposal costs have risen dramatically in the past two decades, from $81 million in 1991 to $320 million in 2011. Each year, the city’s Department of Sanitation trucks log 40 million miles hauling 2.9 million tons of garbage to remote landfills. Emissions from transport and landfills equate to 679,145 metric tons of greenhouse gas, equivalent to the annual emissions of 133,000 cars.

In San Francisco, the nation’s leader in waste management, recycling rates have reached an extraordinary 77 percent. This achievement is not simply the product of Pacific Northwest progressive culture, but of strategic, multidimensional, and long-term planning. Much of San Francisco’s success stems from the city’s Zero Waste Goal, passed by the San Francisco Board of Supervisors in 2002. It established an unambiguous mission: 75 percent landfill diversion by 2010 and zero waste by 2020.

The Zero Waste Goal was the catalyst for a succession of new policy initiatives, each of which has played a role in bringing up the recycling rate. The policies, orchestrated by the city’s Department of Environment, are generally divided into a handful of fields: production and packaging, consumption, public and private disposal, government procurement, and construction and debris. Policies are rolled out incrementally, conscious of their interplay. This long-term strategy now amounts to a collection of pragmatic and effective reforms: The city banned styrofoam and plastic shopping bags in all retail establishments, including grocery stores; food-service ware and packaging in restaurants, coffee shops, food courts, and cafeterias must be recyclable or compostable, including napkins, paper bags, wooden coffee stir sticks and beverage cups and lids; all public events must be stocked with sufficient recycling and compost receptacles and staffed by trained waste liaisons to assist and direct residents and tourists;  Yellow Pages distributors must obtain opt-in agreements from all residents before delivering phone book directories;  and a cigarette litter abatement fee of $0.20 per pack was established to recover the cost of collecting and deterring cigarette litter on city streets, sidewalks and parks.

To exploit its procurement leverage and bully pulpit, the San Francisco city government directed its most stringent regulations inward. A Zero Waste coordinator was designated at every city department location. All City agencies are required to purchase approved green products with recycled content, to refrain from purchasing bottled water and to reduce paper usage, setting small margins as a default on all government computers.

In what is credited as the major contributing factor to San Francisco’s high rate of recycling, former mayor Gavin Newsom introduced the Construction and Demolition Debris Recovery Ordinance in July 2006. In the first year alone, registered facilities diverted an additional 26,000 tons of mixed debris, a 25 percent increase. As of 2012, the Department of Building Inspection approved 210 Demolition Debris Recovery Plans tailored to individual projects, achieving diversion rates of 65-99 percent.

Not all of San Francisco’s policies, of course, are easily replicable. Legal enforcement of recycling and composting as well as pay-as-you-throw disincentive programs—foundational components in each of America’s high performing cities (San Francisco, Seattle, Portland, and Los Angeles)—is poorly suited to New York’s housing stock. In Seattle, for instance, the gap between recycling rates in single-family and multi-family housing is staggering: 71 percent versus 30 percent. Coordinating between landlords and residents is expensive, time-consuming and rife with hostility. In New York, where only 16 percent of residents occupy single-family homes (compared to 49 percent in Seattle and 33 percent in San Francisco), this is a major hurdle. The problem is exacerbated by New York’s almost complete lack of alleys, leaving inadequate space for multiple, waste-specific dumpsters. A more borough-specific approach would be necessary in New York, reserving recycling and composting requirements and pay-as-you-throw programs for less dense neighborhoods.

But while a comprehensive waste management model must consider New York’s unique terrain, Department of Sanitation studies have rightly designated San Francisco as the most comparable American city. For instance, their retail, packaging, consumption, public event, government procurement and construction and debris reforms are not dependent on geography and housing stock—making them highly replicable.

Earlier this year, Mayor Bloomberg announced a goal of doubling the city’s recycling rate to 30 percent by 2017, and rolled out plans to add 1,000 new recycling containers on city streets and ban styrofoam packaging from stores and restaurants. This is a great first step, but the next mayor will have to execute these plans. In doing so, they should aim higher and follow San Francisco’s lead in overhauling its waste management system.

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