Governments Aren’t Bad at Innovation. They’re Bad at Experimenting.

Can the public sector really innovate?

For many people, public sector innovation still sounds like a contradiction. Innovation evokes speed, disruption, and risk-taking. Government, by contrast, is associated with rules, caution, and bureaucracy. If innovation thrives on breaking things, how could it survive in a system designed to prevent mistakes?

This question is not just theoretical for me. Through my research on public sector innovation and experimental spaces, particularly in Finland, I have seen that innovation can happen in government, but only when it is deliberately enabled. And when it does, it can fundamentally change how public problems are addressed.

Governments everywhere are under pressure. Budgets are tightening, trust in institutions is fragile, and the problems public organizations must tackle, from climate adaptation and digital transformation to migration and social inclusion, are increasingly complex and uncertain. Doing things the same way is no longer safe. In many cases, inaction has become the bigger risk.

Why the public sector struggles to innovate

The public sector was not designed to innovate, and that is precisely the challenge. Its strengths, stability, predictability, equal treatment, and accountability also make experimentation difficult.

Public organizations face little competitive pressure to reinvent themselves. Failure is visible, political, and often punished. Rules are built to ensure fairness and control, not flexibility. Responsibilities are fragmented across agencies, budgets are siloed, and meaningful change usually requires coordination across organizational and sectoral boundaries.

In my research on immigrant integration in Finland, this tension was especially clear. National ministries and local governments shared responsibility, yet operated under different logics, timelines, and incentives. Everyone agreed new approaches were needed, but the system itself made it hard to try anything genuinely new.

The result is a public sector optimized to avoid mistakes rather than to learn. Innovation becomes something discussed in strategy documents, not something embedded in everyday practice.

Why experimentation matters

If innovation cannot emerge organically in the public sector, it must be created deliberately. This is where experimentation becomes essential.

Rather than launching large-scale reforms all at once, governments increasingly rely on experiments: small, controlled trials that test new policies, services, and ways of working before full implementation. Experiments make uncertainty manageable. They create space to learn what works, what fails, and why, without putting entire systems at risk.

In Finland, experimental approaches were used to rethink immigrant integration at both national and municipal levels. Instead of rolling out uniform programs, governments tested new service models, cross-sector partnerships, and locally adapted solutions. Framing these initiatives as experiments made it easier for civil servants to engage, collaborate, and accept that not everything would work the first time.

Experimental spaces: protected zones for innovation

Experimental spaces are deliberately designed environments where selected rules, routines, and organizational boundaries are temporarily relaxed to enable innovation.

These are not innovation free-for-alls. Experimental spaces remain embedded in the public sector and accountable to it. But they provide a protected zone where public servants, citizens, researchers, NGOs, and private actors can collaborate, test assumptions, and challenge established practices.

Again and again, I observed the same shift: when people enter an experimental space, they stop defending existing solutions and start asking better questions.

From theory to practice: innovation labs and living labs

Around the world, experimental spaces often take the form of innovation labs or living labs.

Denmark’s MindLab brought civil servants, businesses, and citizens together to co-design policies in areas such as employment and education. By working outside traditional ministerial structures, it helped shift mindsets toward user-centered and experimental approaches.

In Finland, cities such as Helsinki have used living labs and urban experiments to test new approaches to integration, digital services, and sustainable mobility in real-life settings, learning by doing rather than waiting for perfect plans.

Similarly, the UK government’s Policy Lab uses design methods and rapid experimentation to explore complex policy challenges, from border security to social care. Its work has shown that even highly regulated policy areas can benefit from creative, experimental approaches.

In India, state governments have experimented with digital platforms, policy pilots, and innovation units embedded within administrations to improve welfare delivery, urban governance, and migrant services, often starting small before scaling nationally.

In China, local governments routinely use pilot projects and special policy zones to test reforms before nationwide rollout. Experimentation allows innovation while maintaining overall system stability.

Across South America, cities such as Medellín and São Paulo have created urban innovation labs and participatory experimentation initiatives to address social inclusion, education, and inequality, enabling collaboration rarely possible within traditional bureaucratic structures.

What unites these diverse cases is not ideology or context, but method: experimentation as a core tool of governance.

More than new ideas: changing how government learns

The real value of experimental spaces goes beyond the solutions they produce. They change how public organizations think and behave.

In the Finnish integration experiments I studied, participation often reshaped how civil servants understood their roles. Instead of acting only as administrators, they became facilitators, learners, and partners. Failure became a source of insight rather than a stigma.

Over time, these experiences can ripple back into parent organizations, influencing cultures, capabilities, and expectations. Experimental spaces function as learning engines for the wider public sector.

A necessary shift, not a luxury

Experimentation is often dismissed as a luxury. My research suggests the opposite. When problems are complex and the stakes are high, experimentation becomes indispensable.

Experimental spaces help governments reconcile innovation with accountability, and creativity with control. They do not eliminate risk, but they make risk visible, manageable, and learnable.

Based on what I have seen in Finland and beyond, the question is no longer whether the public sector can innovate. The real question is whether it can continue governing complex societies without experimenting.

This post draws on my research on public sector innovation and experimental spaces, including empirical work on immigrant integration experiments in Finland. I share it to spark conversation among policymakers, public managers, and researchers interested in how governments learn, adapt, and innovate under real-world constraints.