Why governments must now invest in innovation capacity and innovation power

This combination of high expectations and structural pressure makes one thing clear: policy ambition alone is not enough. Governments need innovation capacity and innovation power.

Why innovation is not a luxury but a precondition

The societal challenges are becoming more complex. Housing, energy, healthcare, safety and digitalisation are increasingly interconnected. Municipalities operate within networks of interdependencies involving other governments and societal partners. Traditional approaches focused on stability and risk control fall short when challenges cut across domains and existing structures provide insufficient support.

Change is happening faster than organisations can keep up. Digitalisation, AI, the energy transition, changing legislation, labour shortages and new governance frameworks require organisations to continuously adapt – not sporadically, but structurally.

The demand for execution is growing faster than capacity. With limited resources and personnel, scope for experimentation is often small, while exactly that experimentation is essential to effectively address major challenges.

From national to local: innovation as a common thread

In the national coalition agreement of the Jetten-government, innovation plays a central role: as a driver of economic growth and prosperity, as an instrument for strategic autonomy and security, as a catalyst for major transitions and as a means to move from pilots to structural scaling. These national ambitions fall on the shoulders of local authorities, which are grappling with financial pressure, housing challenges, energy poverty, ageing populations and an already overburdened administrative system.

Innovation is therefore not an end in itself, but a precondition for dealing with other challenges. Moreover, local authorities are where innovation takes shape: in implementation, in area-based approaches, in ecosystems and in new forms of service delivery.

What governments need now

We distinguish two domains that are essential for making public organisations agile: innovation capacity (the internal foundation) and mission-driven innovation power (the joint approach across domains).
Innovation capacity: getting the internal foundation in place
Innovation capacity concerns an organisation’s ability to structurally renew, experiment and adopt new ways of working. TNO defines five elements:

1. Leadership: prioritises innovation and creates space
2. Organisation: encourages experimentation, collaboration and learning
3. Network: strong internal and external connections
4. Knowledge management: structural sharing and embedding of knowledge and data
5. Learning: continuous reflection to improve faster

These elements form the basis for moving from isolated pilots to structural renewal. Many governments lack this foundation, causing innovations to stall before reaching practice. Investing in these conditions embeds adaptive capacity within the organisation.

Mission-driven innovation power: collaboration across boundaries

Mission-driven innovation power concerns the ability of public and private organisations to jointly develop innovations that contribute to societal missions, learn from them and scale them. In practice, this often takes place through public–private partnerships, but these frequently get stuck in fragmented pilots due to silos, unclear vision and mandate, limited learning and diffused ownership.

The Mission-driven Innovation Power model builds on existing insights into innovation capacity and provides a coherent framework to understand these bottlenecks. It places innovation processes at the centre and distinguishes five preconditions: open innovation networks, vision and focus, organisational learning, leadership and organisational culture.

This is the moment to put innovation at the centre

The coming years will determine how governments deal with the major challenges of our time. The difference between falling behind and maintaining control lies in the ability to learn, renew and remain agile. Investing in innovation capacity and mission-driven innovation power is therefore not a choice, but a prerequisite for future-proof governance.
TNO Vector supports public organisations with proven methodologies, analytical tools and interventions – ranging from the Innovation Capacity Framework to the Mission-driven Innovation Power model and concrete tools and workshops. This ensures that innovation becomes a natural way of working rather than an exception.

Ready to get started with innovation capacity and innovation power?

Do you want to build a government that can handle complexity, learns faster and collaborates more effectively? Get in touch with our experts.